Investment in Unconsolidated Affiliate

12 Months Ended

Dec. 31, 2020

Equity Method Investments and Joint Ventures [Abstract]

Investment in Unconsolidated Affiliate

Investments in Unconsolidated AffiliatesThe Company maintains investments in various affiliates that are accounted for as equity method investments at both December 31, 2020 and 2019, the most significant of which are related to the Company’s merchant bank alliance affiliates. The Company’s share of net income or loss from these investments is reported within income from investments in unconsolidated affiliates and the related tax expense or benefit is reported within the income tax provision in the consolidated statements of income.

Merchant Alliances

The Company maintains ownership interests of significant influence in various merchant alliances and strategic investments in companies in related markets. A merchant alliance, as it pertains to investments accounted for under the equity method, is an agreement between the Company and a financial institution that combines the processing capabilities and management expertise of the Company with the visibility and distribution channel of the bank. A merchant alliance acquires credit and debit card transactions from merchants. The Company provides processing and other services to the alliance and charges fees to the alliance primarily based on contractual pricing (see Note 20). The Company’s investment in its merchant alliances was $2.4 billion and $2.5 billion at December 31, 2020 and 2019, respectively, and is reported within investments in unconsolidated affiliates in the consolidated balance sheets.

Other Equity Method Investments

Following the sale of a controlling financial interest of the Investment Services business (see Note 4), as of December 31, 2020, the Company maintained a 40% ownership interest in Tegra 118 which is accounted for as an equity method investment. The Company also maintains a 45% ownership interest in Sagent M&C, LLC (formerly known as Fiserv LS, LLC) and a 31% ownership interest in defi SOLUTIONS, which are accounted for as equity method investments (see Note 4). The Company’s aggregate investment in these entities was $212 million and $56 million at December 31, 2020 and 2019, respectively, and is reported within investments in unconsolidated affiliates in the consolidated balance sheets.

The Lending Joint Ventures maintain variable-rate term loan facilities with aggregate outstanding borrowings of $385 million in senior unsecured debt and variable-rate revolving credit facilities with an aggregate borrowing capacity of $45 million with a syndicate of banks, which mature in March 2023. Outstanding borrowings on the revolving credit facilities at December 31, 2020 were $13 million. The Company has guaranteed this debt of the Lending Joint Ventures and does not anticipate that the Lending Joint Ventures will fail to fulfill their debt obligations. See Note 10 for additional information regarding the Company’s debt guarantee arrangements with the Lending Joint Ventures.

Summary of Financial Information

The following tables present a summary of financial information for the Company’s unconsolidated affiliates accounted for under the equity method of accounting:

(In millions)
December 31,	2020		2019
Total current assets	$	5,534	$	4,288
Total long-term assets	769		1
Total assets	$	6,303	$	4,289
Total current liabilities	$	5,478	$	4,243
Total long-term liabilities	336		—
Total liabilities	$	5,814	$	4,243

The primary components of assets and liabilities are settlement asset and obligation related accounts similar to those described in Note 6 to the consolidated financial statements.

(In millions)
Year Ended December 31,	2020		2019
Total revenue	$	963	$	467
Total expenses	597		249
Operating income	$	366	$	218
Net income	$	351	$	215

The Company’s share of investee’s net income or loss includes the amortization basis difference between the estimated fair value and the underlying book value of equity method intangible assets.

The Company classifies distributions from its investments accounted for using the equity method in the consolidated statements of cash flows using the cumulative earnings approach. Under this approach, distributions received from

unconsolidated affiliates are classified as cash flows from operating activities to the extent that the cumulative distributions do not exceed the cumulative earnings on the investment. To the extent the current period distribution exceeds the cumulative earnings on the investment, the distribution is considered a return of investment and is classified as cash flows from investing activities. The Company received cash distributions from unconsolidated affiliates of $151 million, $136 million and $2 million, of which $109 million, $113 million and $0 million were recorded as cash flows from investing activities in the Company’s consolidated statements of cash flows during 2020, 2019 and 2018, respectively.

The Company also maintains investments in various equity securities without a readily determinable fair value. Such investments totaled $160 million and $167 million at December 31, 2020 and 2019, respectively, and are included within other long-term assets in the Company’s consolidated balance sheets. The Company reviews these investments each reporting period to determine whether an impairment or observable price change for the investment has occurred. When such events or changes occur, the Company evaluates the fair value compared to its cost basis in the investment. Gains or losses from a change in fair value are included within other income (expense) in the consolidated statement of income for the period. Adjustments made to the values recorded for these equity securities during 2020, 2019 and 2018 were not significant.