Subsidiary Guarantors of Long-Term Debt

6 Months Ended

Jun. 30, 2013

Subsidiary Guarantors of Long-Term Debt

14. Subsidiary Guarantors of Long-Term Debt

Certain of the Company’s 100% owned domestic subsidiaries (“Guarantor Subsidiaries”) jointly and severally, and fully and unconditionally, guarantee the Company’s indebtedness under its revolving credit facility and senior notes. Under the indentures governing the senior notes, a guarantee of a Guarantor Subsidiary will terminate upon the following customary circumstances: the sale of such Guarantor Subsidiary if such sale complies with the indenture; if such Guarantor Subsidiary no longer guarantees certain other indebtedness of the Company, including as a result of the release of the Guarantor Subsidiaries if Standard & Poor’s and Moody’s Investors Service, Inc. increase the Company’s credit rating to A- and A3, respectively; or the defeasance or discharge of the indenture. The following condensed consolidating financial information is presented on the equity method and reflects summarized financial information for: (a) the Company; (b) the Guarantor Subsidiaries on a combined basis; and (c) the Company’s non-guarantor subsidiaries on a combined basis. The following condensed consolidating financial information reflects the reporting of Club Solutions as a discontinued operation for all periods presented.

Condensed Consolidating Statement of Income and Comprehensive Income

Three Months Ended June 30, 2013

(In millions)	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Processing and services	$	—		$	724		$	332		$	(41	)	$	1,015
Product		—			170			29			(16	)		183
Total revenue		—			894			361			(57	)		1,198
Expenses:
Cost of processing and services		—			356			208			(41	)		523
Cost of product		—			152			21			(16	)		157
Selling, general and administrative		31			160			54			—			245
Total expenses		31			668			283			(57	)		925
Operating income (loss)		(31	)		226			78			—			273
Interest expense, net		(32	)		(5	)		(4	)		—			(41	)
Income (loss) from continuing operations before income taxes and income from investment in unconsolidated affiliate		(63	)		221			74			—			232
Income tax (provision) benefit		26			(82	)		(25	)		—			(81	)
Income from investment in unconsolidated affiliate		—			1			—			—			1
Equity in earnings of consolidated affiliates		189			—			—			(189	)		—
Income from continuing operations		152			140			49			(189	)		152
Loss from discontinued operations, net of income taxes		(1	)		—			—			—			(1	)
Net income	$	151		$	140		$	49		$	(189	)	$	151
Comprehensive income	$	146		$	140		$	44		$	(184	)	$	146

Condensed Consolidating Statement of Income and Comprehensive Income

Three Months Ended June 30, 2012

(In millions)	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Processing and services	$	—		$	640		$	309		$	(45	)	$	904
Product		—			173			23			(13	)		183
Total revenue		—			813			332			(58	)		1,087
Expenses:
Cost of processing and services		—			338			178			(45	)		471
Cost of product		—			153			15			(13	)		155
Selling, general and administrative		26			123			55			—			204
Total expenses		26			614			248			(58	)		830
Operating income (loss)		(26	)		199			84			—			257
Interest (expense) income, net		(25	)		(16	)		3			—			(38	)
Income (loss) from continuing operations before income taxes and income from investment in unconsolidated affiliate		(51	)		183			87			—			219
Income tax (provision) benefit		38			(65	)		(33	)		—			(60	)
Income from investment in unconsolidated affiliate		—			3			—			—			3
Equity in earnings of consolidated affiliates		175			—			—			(175	)		—
Income from continuing operations		162			121			54			(175	)		162
(Loss) income from discontinued operations, net of income taxes		(1	)		1			—			(1	)		(1	)
Net income	$	161		$	122		$	54		$	(176	)	$	161
Comprehensive income	$	150		$	122		$	50		$	(172	)	$	150

Condensed Consolidating Statement of Income and Comprehensive Income

Six Months Ended June 30, 2013

(In millions)	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Processing and services	$	—		$	1,437		$	625		$	(81	)	$	1,981
Product		—			352			51			(34	)		369
Total revenue		—			1,789			676			(115	)		2,350
Expenses:
Cost of processing and services		—			740			386			(81	)		1,045
Cost of product		—			339			42			(34	)		347
Selling, general and administrative		59			304			111			—			474
Total expenses		59			1,383			539			(115	)		1,866
Operating income (loss)		(59	)		406			137			—			484
Interest expense, net		(64	)		(11	)		(7	)		—			(82	)
Income (loss) from continuing operations before income taxes and income from investment in unconsolidated affiliate		(123	)		395			130			—			402
Income tax (provision) benefit		52			(144	)		(47	)		—			(139	)
Income from investment in unconsolidated affiliate		—			6			—			—			6
Equity in earnings of consolidated affiliates		340			—			—			(340	)		—
Income from continuing operations		269			257			83			(340	)		269
Loss from discontinued operations, net of income taxes		(1	)		—			—			—			(1	)
Net income	$	268		$	257		$	83		$	(340	)	$	268
Comprehensive income	$	261		$	257		$	73		$	(330	)	$	261

Condensed Consolidating Statement of Income and Comprehensive Income

Six Months Ended June 30, 2012

(In millions)	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Processing and services	$	—		$	1,286		$	593		$	(77	)	$	1,802
Product		—			363			50			(31	)		382
Total revenue		—			1,649			643			(108	)		2,184
Expenses:
Cost of processing and services		—			685			357			(77	)		965
Cost of product		—			312			33			(31	)		314
Selling, general and administrative		49			246			114			—			409
Total expenses		49			1,243			504			(108	)		1,688
Operating income (loss)		(49	)		406			139			—			496
Interest expense, net		(52	)		(29	)		—			—			(81	)
Income (loss) from continuing operations before income taxes and income from investment in unconsolidated affiliate		(101	)		377			139			—			415
Income tax (provision) benefit		63			(138	)		(52	)		—			(127	)
Income from investment in unconsolidated affiliate		—			6			—			—			6
Equity in earnings of consolidated affiliates		332			—			—			(332	)		—
Income from continuing operations		294			245			87			(332	)		294
(Loss) income from discontinued operations, net of income taxes		(1	)		2			—			(2	)		(1	)
Net income	$	293		$	247		$	87		$	(334	)	$	293
Comprehensive income	$	298		$	247		$	88		$	(335	)	$	298

Condensed Consolidating Balance Sheet

June 30, 2013

(In millions)	Parent Company		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	32	$	68		$	220		$	—		$	320
Trade accounts receivable, net		—		452			239			—			691
Prepaid expenses and other current assets		60		248			135			—			443
Total current assets		92		768			594			—			1,454
Investments in consolidated affiliates		9,839		—			—			(9,839	)		—
Intangible assets, net		22		1,960			227			—			2,209
Goodwill		—		4,171			1,060			—			5,231
Other long-term assets		50		387			103			—			540
Total assets	$	10,003	$	7,286		$	1,984		$	(9,839	)	$	9,434
Liabilities and Shareholders’ Equity
Accounts payable and accrued expenses	$	109	$	456		$	196		$	—		$	761
Current maturities of long-term debt		—		2			—			—			2
Deferred revenue		—		254			156			—			410
Total current liabilities		109		712			352			—			1,173
Long-term debt		3,948		3			—			—			3,951
Due to (from) consolidated affiliates		1,725		(1,408	)		(317	)		—			—
Other long-term liabilities		758		60			29			—			847
Total liabilities		6,540		(633	)		64			—			5,971
Total shareholders’ equity		3,463		7,919			1,920			(9,839	)		3,463
Total liabilities and shareholders’ equity	$	10,003	$	7,286		$	1,984		$	(9,839	)	$	9,434

Condensed Consolidating Balance Sheet

December 31, 2012

(In millions)	Parent Company		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	85	$	66		$	207		$	—		$	358
Trade accounts receivable, net		—		403			258			—			661
Prepaid expenses and other current assets		45		186			160			—			391
Assets of discontinued operations		—		33			—			—			33
Total current assets		130		688			625			—			1,443
Investments in consolidated affiliates		8,498		—			—			(8,498	)		—
Intangible assets, net		22		1,479			243			—			1,744
Goodwill		—		3,695			1,010			—			4,705
Other long-term assets		55		445			105			—			605
Total assets	$	8,705	$	6,307		$	1,983		$	(8,498	)	$	8,497
Liabilities and Shareholders’ Equity
Accounts payable and accrued expenses	$	73	$	417		$	231		$	—		$	721
Current maturities of long-term debt		—		2			—			—			2
Deferred revenue		—		213			166			—			379
Liabilities of discontinued operations		—		3			—			—			3
Total current liabilities		73		635			397			—			1,105
Long-term debt		3,223		4			1			—			3,228
Due to (from) consolidated affiliates		1,295		(988	)		(307	)		—			—
Other long-term liabilities		697		22			28			—			747
Total liabilities		5,288		(327	)		119			—			5,080
Total shareholders’ equity		3,417		6,634			1,864			(8,498	)		3,417
Total liabilities and shareholders’ equity	$	8,705	$	6,307		$	1,983		$	(8,498	)	$	8,497

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2013

(In millions)	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operating activities from continuing operations	$	(42	)	$	324		$	115		$	—		$	397
Cash flows from investing activities:
Capital expenditures, including capitalization of software costs		(2	)		(79	)		(29	)		—			(110	)
Payment for acquisition of business, net of cash acquired		(55	)		39			—			—			(16	)
Other investing activities		508			120			(5	)		(507	)		116
Net cash (used in) provided by investing activities from continuing operations		451			80			(34	)		(507	)		(10	)
Cash flows from financing activities:
Proceeds from long-term debt		1,210			—			—			—			1,210
Repayments of long-term debt		(1,444	)		—			—			—			(1,444	)
Issuance of treasury stock		24			—			—			—			24
Purchases of treasury stock		(254	)		—			—			—			(254	)
Other financing activities		6			(438	)		(68	)		507			7
Net cash used in financing activities from continuing operations		(458	)		(438	)		(68	)		507			(457	)
Net change in cash and cash equivalents from continuing operations		(49	)		(34	)		13			—			(70	)
Net cash flows from (to) discontinued operations		(4	)		36			—			—			32
Beginning balance		85			66			207			—			358
Ending balance	$	32		$	68		$	220		$	—		$	320

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2012

(In millions)	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operating activities from continuing operations	$	(70	)	$	330		$	120		$	—		$	380
Cash flows from investing activities:
Capital expenditures, including capitalization of software costs		(3	)		(72	)		(26	)		—			(101	)
Other investing activities		335			(2	)		6			(335	)		4
Net cash (used in) provided by investing activities from continuing operations		332			(74	)		(20	)		(335	)		(97	)
Cash flows from financing activities:
Proceeds from long-term debt		156			—			—			—			156
Repayments of long-term debt		(136	)		(2	)		—			—			(138	)
Issuance of treasury stock		52			—			—			—			52
Purchases of treasury stock		(396	)		—			—			—			(396	)
Other financing activities		6			(257	)		(77	)		335			7
Net cash used in financing activities from continuing operations		(318	)		(259	)		(77	)		335			(319	)
Net change in cash and cash equivalents from continuing operations		(56	)		(3	)		23			—			(36	)
Net cash flows from (to) discontinued operations		(3	)		4			—			—			1
Beginning balance		73			71			193			—			337
Ending balance	$	14		$	72		$	216		$	—		$	302