Delaware | 001-11073 | 47-0731996 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
225 LIBERTY STREET 29th FLOOR NEW YORK, NEW YORK | 10281 |
(Address of Principal Executive Offices) | (Zip Code) |
Exhibit Number | Exhibit Description | |
FIRST DATA CORPORATION | |||
(Registrant) | |||
Date: | August 13, 2018 | By | /s/ Himanshu A. Patel |
Himanshu A. Patel | |||
Executive Vice President, Chief Financial Officer | |||
(principal financial officer) | |||
Date: | August 13, 2018 | By | /s/ Matthew Cagwin |
Matthew Cagwin | |||
Senior Vice President, Corporate Controller and Chief Accounting Officer | |||
(principal accounting officer) |
/s/ Ernst & Young LLP | |
Atlanta, Georgia | |
August 13, 2018 |
Year ended December 31, | ||||||||
2017 | 2016 | 2015 | ||||||
Total generated from processing transactions: | ||||||||
Domestic | 85 | % | 85 | % | 86 | % | ||
International | 15 | % | 15 | % | 14 | % | ||
Long-lived assets attributable to operations: | ||||||||
Domestic | 89 | % | 89 | % | 89 | % | ||
International | 11 | % | 11 | % | 11 | % |
• | Global Business Solutions - GBS provides a wide-range of solutions to merchants. These solutions include retail point-of-sale merchant acquiring and eCommerce services as well as next-generation offerings such as mobile payment services, and our cloud-based Clover point-of-sale operating system, which includes a marketplace for proprietary and third-party business applications. |
• | Global Financial Solutions - GFS provides technology solutions for bank and non-bank issuers. These solutions include general purpose credit, retail private label, commercial card, and loan processing within the United States and international markets, as well as licensed financial software systems, such as our VisionPLUS processing application. GFS also provides financial institutions with a suite of account services including card personalization and embossing, customer communications, remittance processing, professional services, and customer servicing, including call center solutions and back office processing. |
• | Network & Security Solutions - NSS provides a wide range of value-added solutions that we sell to clients in our GBS and GFS segments, smaller financial institutions, and other enterprise clients. These solutions include our EFT network solutions, such as our STAR Network, our debit card processing solutions, our Stored Value Network solutions, such as Money Network, Gift Solutions and our Security and Fraud solutions, such as TransArmor and TeleCheck. NSS also supports our other digital strategies, including online and mobile banking, and our business supporting mobile wallets. |
1. | Once the consumer is ready to make a purchase, he or she presents their card for payment; |
2. | The card is swiped in the Point-of-Sale (POS) device at the business location, which captures the account information contained on the card's magnetic stripe or Europay, MasterCard and Visa (EMV) - compliant chip; |
• | In a mobile commerce transaction facilitated by a mobile wallet, such as Apple Pay, the appropriate card details are stored virtually on an application on the phone and transmitted to the POS device through a chip equipped with near-field communication (NFC) technology; |
• | In an eCommerce transaction, the POS device is replaced by a virtual terminal application and the consumer types the card number into the check-out page of the online storefront. In some circumstances, an online wallet, such as PayPal, may be used to transmit the appropriate payment credentials; |
3. | The customer's card details are transmitted from the POS to the merchant acquirer, or the merchant acquirer's processor, via an internet connection or a phone line; |
• | In an eCommerce transaction, the information is encrypted and then transmitted to the merchant acquirer, or merchant acquirer's processor, via an online gateway; |
4. | The merchant acquirer, or the merchant acquirer's processor, identifies the appropriate payment network affiliated with the card, such as Visa, MasterCard, or STAR, and forwards the card details to the appropriate network; |
5. | The payment network receives the request for payment authorization, identifies the appropriate card issuing bank, and routes the transaction to the bank or its issuer processor; |
6. | The card issuing bank, or its issuer processor, receives the request and then executes a series of inquiries into its account systems to assess the potential risk of fraud for the transaction, establish that the account is in good standing, and verify that the cardholder has sufficient credit or adequate funds to cover the amount of the transaction; |
7. | The card issuing bank, or its issuer processor, approves or declines the transaction and sends back the response to the payment network. In this example the transaction is approved; |
8. | The payment network receives the approval and forwards the authorization to the merchant acquirer, or merchant acquirer's processor; and |
9. | The merchant acquirer, or merchant acquirer's processor, sends the authorization back to the POS device at the business location, which provides an approval confirmation and prints a receipt; |
• | In a mobile commerce transaction, the approval confirmation and receipt may also be transmitted to the consumer's mobile wallet application or to the consumer via email; |
• | In an eCommerce transaction, the authorization is sent to the online storefront, which communicates the approval to the consumer on the screen, and may provide the receipt for printing online or via email. |
10. | Typically at the end of the day, the business submits a batch of all of its approved authorizations to the merchant acquirer, or the merchant acquirer's processor, through a function on its POS device; |
• | In the case of an eCommerce business, the online storefront's gateway sends the batch to the merchant acquirer, or to the merchant acquirer's processor; |
11. | The merchant acquirer, or the merchant acquirer's processor, receives the batch, notes the final amounts due for settlement, and routes the batch of approved authorizations to each applicable payment network; |
12. | Each payment network sends the batch of approved authorizations to the applicable card issuing bank, or its issuer processor, which posts the transaction to the consumer's statement; |
13. | Typically within 48 hours, the payment network calculates net settlement positions for the merchant acquirer and the card issuing bank, sends advisements to the merchant acquirer and card issuing bank, and submits a fund transfer order to a settlement bank; and |
14. | The settlement bank facilitates the exchange of funds between the merchant acquirer and the card issuing bank; and the merchant acquirer transfers the funds to the business owner's account. |
Year ended December 31, | |||||||||
2017 | 2016 | 2015 | |||||||
Segment revenue | 61 | % | 60 | % | 62 | % | |||
Segment EBITDA | 59 | % | 60 | % | 62 | % |
• | Discount fees charged to a merchant, net of credit and debit card interchange and assessment fees charged by the payment networks. The discount fee is typically either a percentage of the purchase amount or an interchange fee plus a fixed dollar amount; |
• | Processing fees charged to our alliances; |
• | Processing fees charged to merchant acquirers who have outsourced their transaction processing to us; |
• | Sales and leases of POS devices; |
• | Fees from providing reporting and other services; and |
• | Software fees such as security applications and Clover related fees. |
• | Retail POS - Physical businesses or storefront locations, such as retailers, supermarkets, restaurants, and petroleum stations, with brick and mortar facilities; |
• | Mobile POS - Physical businesses with remote or wireless storefront locations, such as small retailers and service providers that use mobile devices to accept electronic payments; and |
• | Online POS (eCommerce) - Online businesses or website locations, such as retailers, digital content providers, and mobile app developers with Internet-based storefronts that can be accessed through a personal computer or a mobile device. |
Year ended December 31, | ||||||||
2017 | 2016 | 2015 | ||||||
Segment revenue | 20 | % | 21 | % | 19 | % | ||
Segment EBITDA | 22 | % | 22 | % | 20 | % |
Year ended December 31, | ||||||||
2017 | 2016 | 2015 | ||||||
Segment revenue | 19 | % | 19 | % | 19 | % | ||
Segment EBITDA | 24 | % | 23 | % | 23 | % |
• | a fee from the card issuing financial institution for running the transaction through the STAR Network; |
• | a fee from the card issuer for obtaining the authorization; |
• | a fee from the business for acquiring the transaction, recognized in GBS; and |
• | a network acquirer fee from the business for accessing the STAR Network. |
• | Gift Solutions - Includes ValueLink, Gyft, and Transaction Wireless. |
◦ | ValueLink - Provides card and account issuing, program management, and transaction processing services for a range of prepaid card programs. Our closed-loop prepaid programs include gift, incentive, and rebate cards. We serve over 200 brands globally and several thousand SMBs. Our programs include reloadable and non- |
◦ | Gyft - A leading digital platform that enables consumers to buy, send, manage, and redeem virtual closed-loop cards using mobile devices. The Gyft solution, combined with our leadership in prepaid issuing solutions, creates a unique combination to support growth in a rapidly expanding market for virtual cards. |
◦ | Transaction Wireless - A leading digital platform that enables businesses to sell virtual gift cards online, either to consumers through an integration with their eCommerce storefront, or to other businesses through a proprietary business-to-business solution. |
• | Payroll Solutions - Includes Money Network which provides open-loop electronic payroll distribution solutions that reduce or eliminate an employer's expense associated with traditional paper paychecks and helps employees without bank accounts avoid check cashing fees. The solution also provides important employee security as the funds are stored on the account, not as cash that can be lost or stolen. Money Network accounts can be used at any business location that accepts Visa, MasterCard, or STAR branded cards, includes a packet of checks to be used to pay bills and avoid the cost of money orders, and offers a web portal to track account activity. |
ITEM 6. | SELECTED FINANCIAL DATA |
December 31, | |||||||||||||||||||||
(in millions, except per share amounts) | 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Statement of operations data (Year-end): | |||||||||||||||||||||
Revenues | $ | 12,052 | $ | 11,584 | $ | 11,451 | $ | 11,152 | $ | 10,809 | |||||||||||
Total revenues (excluding reimbursables) | 8,129 | 7,839 | 7,764 | 7,548 | 7,302 | ||||||||||||||||
Operating expenses (a) | 10,201 | 9,921 | 10,231 | 9,708 | 9,632 | ||||||||||||||||
Other operating expenses, net (b) | 143 | 51 | 53 | 13 | 56 | ||||||||||||||||
Total expenses (excluding reimbursables) | 6,421 | 6,227 | 6,597 | 6,117 | 6,181 | ||||||||||||||||
Interest expense, net | (931 | ) | (1,078 | ) | (1,534 | ) | (1,721 | ) | (1,853 | ) | |||||||||||
Net income (loss) | 1,664 | 660 | (1,268 | ) | (265 | ) | (775 | ) | |||||||||||||
Net income (loss) attributable to First Data Corporation | 1,465 | 420 | (1,481 | ) | (458 | ) | (952 | ) | |||||||||||||
Depreciation and amortization (c) | 1,073 | 1,061 | 1,133 | 1,163 | 1,212 | ||||||||||||||||
Net income (loss) per share (d): | |||||||||||||||||||||
Basic | $ | 1.60 | $ | 0.47 | $ | (7.70 | ) | $ | (458,000 | ) | $ | (952,000 | ) | ||||||||
Diluted | 1.56 | 0.46 | (7.70 | ) | (458,000 | ) | (952,000 | ) | |||||||||||||
Weighted-average common shares outstanding (d): | |||||||||||||||||||||
Basic (f) | 916 | 902 | 192 | — | — | ||||||||||||||||
Diluted (f) | 940 | 921 | 192 | — | — | ||||||||||||||||
Balance sheet data (As of year-end): | |||||||||||||||||||||
Total assets | $ | 48,269 | $ | 40,292 | $ | 34,362 | $ | 34,034 | $ | 34,962 | |||||||||||
Settlement assets | 20,363 | 14,795 | 8,150 | 7,557 | 7,553 | ||||||||||||||||
Total liabilities | 42,183 | 36,088 | 30,625 | 31,434 | 33,318 | ||||||||||||||||
Settlement obligations | 20,363 | 14,795 | 8,150 | 7,557 | 7,553 | ||||||||||||||||
Long-term borrowings | 17,927 | 18,131 | 18,737 | 20,697 | 22,499 | ||||||||||||||||
Other long-term liabilities (e) | 963 | 1,240 | 1,243 | 1,223 | 1,202 | ||||||||||||||||
Redeemable noncontrolling interest | 72 | 73 | 77 | 70 | 69 | ||||||||||||||||
Total equity | 6,014 | 4,131 | 3,660 | 2,530 | 1,575 | ||||||||||||||||
Cash flow data (Year-end): | |||||||||||||||||||||
Net cash provided by operating activities | $ | 2,047 | $ | 2,111 | $ | 795 | $ | 1,035 | $ | 715 | |||||||||||
Net cash used in investing activities | (1,952 | ) | (361 | ) | (685 | ) | (330 | ) | (354 | ) | |||||||||||
Net cash provided by (used in) financing activities | 9 | (1,734 | ) | (16 | ) | (743 | ) | (532 | ) |
(a) | Operating expenses include Cost of services; Cost of products sold; Selling, general, and administrative; Depreciation and amortization; and Reimbursable debit network fees, postage and other. |
(b) | Other operating expenses, net includes restructuring, net; impairments; litigation and regulatory settlements; integration cost and other as applicable to the periods presented. See note 10 "Other Operating Expenses" to our consolidated financial statements in Part II, Item 8 of this Form 10-K for details. |
(c) | Includes amortization of initial payments for new contracts, which is recorded as a contra-revenue within “Transaction and processing service fees” and amortization related to equity method investments, which is netted within “Equity earnings in affiliates” in our consolidated statements of operations. |
(d) | As a result of the HoldCo Merger, all outstanding shares of FDH were converted into Class B common stock, which are entitled to ten votes per share. All of FDC's outstanding common stock was eliminated upon the merger. We accounted for the HoldCo Merger as a transfer of assets between entities under common control and have reflected the transactions impact on net loss per share and weighted-average shares on a prospective basis. |
(e) | Other long-term liabilities include Deferred tax liabilities. |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
◦ | Innovate for tomorrow's client needs |
◦ | Accelerate top line revenue growth |
◦ | Maintain positive operating leverage |
◦ | Generate significant free cash flow |
• | Discount fees, net of credit and debit card interchange and assessment fees charged by the payment networks. The discount fee is typically either a percentage of the purchase amount or an interchange fee plus a fixed dollar amount; |
• | Processing fees charged to our alliances; |
• | Processing fees charged to merchant acquirers who have outsourced their transaction processing to us; |
• | Sales and leases of POS devices; |
• | Fees from providing reporting and other services; and |
• | Software fees such as security and Clover related fees. |
Year ended December 31, | ||||||||||||
(in millions) | 2017 | 2016 | 2015 | |||||||||
Cost of services | $ | 72 | $ | 112 | $ | 130 | ||||||
Selling, general, and administrative | 173 | 151 | 199 | |||||||||
Total | $ | 245 | $ | 263 | $ | 329 |
• | The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. |
• | Intersegment revenues are eliminated in the segment that sells directly to the end market. |
• | Segment revenue excludes reimbursable debit network fees, postage, and other revenue. |
• | Segment EBITDA includes equity earnings in affiliates and excludes depreciation and amortization expense, net income attributable to noncontrolling interests, other operating expenses, and other income (expense). Additionally, segment EBITDA is adjusted for items similar to certain of those used in calculating our compliance with debt covenants. The additional items that are adjusted to determine segment EBITDA: |
• | stock-based compensation and related expenses are excluded; and |
• | Kohlberg Kravis Roberts & Co. (KKR) related items including annual sponsor and other fees for management, consulting, financial, contract termination, and other advisory services are excluded. Upon our public offering on October 15, 2015, we are no longer required to pay management fees to KKR. |
• | For significant affiliates, segment revenue and segment EBITDA are reflected based on our proportionate share of the results of our investments in businesses accounted for under the equity method and consolidated subsidiaries with noncontrolling ownership interests. For other affiliates, we include equity earnings in affiliates, excluding amortization expense, in segment revenue and segment EBITDA. |
• | Corporate operations include corporate-wide governance functions such as our executive management team, tax, treasury, internal audit, corporate strategy, and certain accounting, human resources and legal costs related to supporting the corporate function. Costs incurred by Corporate that are attributable to a segment are allocated to the respective segment. |
• | Certain measures exclude the estimated impact of foreign currency changes (constant currency). To present this information, monthly results during the periods presented for entities reporting in currencies other than U.S. dollars are translated into U.S. dollars at the average exchange rates in effect during the corresponding month of the prior fiscal year, rather than the actual average exchange rates in effect during the current fiscal year. Once translated, each month during the periods presented is added together to calculate the constant currency results for the periods presented. |
Year ended December 31, | Percent Change | Reported Constant Currency Percent Change | ||||||||||||||||||||||
(in millions) | 2017 | 2016 | 2015 | 2017 vs. 2016 | 2016 vs. 2015 | 2017 vs. 2016 | 2016 vs. 2015 | |||||||||||||||||
Consolidated revenues | $ | 12,052 | $ | 11,584 | $ | 11,451 | 4 | % | 1 | % | 4 | % | 2 | % | ||||||||||
Adjustments: | ||||||||||||||||||||||||
Non wholly owned entities | (64 | ) | (80 | ) | (74 | ) | (20 | )% | 8 | % | NM | NM | ||||||||||||
Reimbursable debit network fees, postage, and other | (3,923 | ) | (3,745 | ) | (3,687 | ) | 5 | % | 2 | % | 5 | % | 2 | % | ||||||||||
Total segment revenues | $ | 8,065 | $ | 7,759 | $ | 7,690 | 4 | % | 1 | % | 4 | % | 3 | % | ||||||||||
Segment revenues: | ||||||||||||||||||||||||
Global Business Solutions | $ | 4,899 | $ | 4,681 | $ | 4,731 | 5 | % | (1 | )% | 5 | % | 2 | % | ||||||||||
Global Financial Solutions | 1,623 | 1,593 | 1,495 | 2 | % | 7 | % | 3 | % | 10 | % | |||||||||||||
Network & Security Solutions | 1,543 | 1,485 | 1,464 | 4 | % | 1 | % | 4 | % | 1 | % |
Year Ended December 31, 2016 | Core Growth (Decline) | Currency Impact(a) | Acquisitions/Dispositions(b) | Accounting Change(c) | Year Ended December 31, 2017 | Percent Change | Reported Constant Currency Percent Change | |||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||
North America | $ | 3,690 | $ | (23 | ) | (d) | $ | 1 | $ | 84 | $ | 62 | $ | 3,814 | 3 | % | 3 | % | ||||||||||||
EMEA | 611 | $ | 28 | (e) | — | — | — | 639 | 5 | % | 5 | % | ||||||||||||||||||
LATAM | 178 | $ | 101 | (f) | (6 | ) | — | — | 273 | 53 | % | 56 | % | |||||||||||||||||
APAC | 202 | $ | 16 | (g) | 3 | (48 | ) | — | 173 | (14 | )% | (16 | )% | |||||||||||||||||
Total segment revenue | $ | 4,681 | $ | 122 | $ | (2 | ) | $ | 36 | $ | 62 | $ | 4,899 | 5 | % | 5 | % |
(a) | Currency impact is the difference between the current year's actual results and the same year's results converted with the prior year's foreign exchange rate. Constant currency percentage change is a measure of revenue growth before foreign currency impact. |
(b) | North America revenue was impacted by acquisitions of CardConnect in July 2017 and BluePay in December 2017. The Acquisitions/Dispositions column includes July 2016 to December 2016 and December 2016 revenues for CardConnect and BluePay, respectively, and current period growth for CardConnect and BluePay is included in Core Growth (Decline). APAC balance represents revenue associated with the disposition of the Australian ATM business in September 2016. See note 12 "Acquisitions and Dispositions" to our consolidated financial statements in Part II, Item 8 of this Form 10-K for additional information. |
(c) | Effective January 2017, we changed our accounting for Clover hardware sales to recognize revenue upon shipment as opposed to deferring such revenue and recognizing over an established period, typically three years. Previously deferred revenue on hardware shipped in previous years continued to be amortized over the established period. See Deferred Revenue in note 1 "Summary of Significant Accounting Policies" to our consolidated financial statements for additional information. |
(d) | North America revenue decrease was driven by a decline in our bank alliances. The decline was partially attributed to $13 million of fee increases which occurred in 2016 which did not reoccur in 2017. |
(e) | EMEA revenue increased due to growth in United Kingdom of $9 million, related to growth in sales volumes, and in Germany and Austria of $9 million, related to growth in terminal hardware sales. |
(f) | LATAM revenue increased due to growth in Brazil of $62 million, related to increases in our active customer base and sales volumes, and growth in Argentina of $35 million. |
(g) | APAC revenue increased due to growth in India. |
Year Ended December 31, 2015 | Core Growth (Decline) | Currency Impact(a) | Acquisitions/ Dispositions(b) | Accounting Change | Year Ended December 31, 2016 | Percent Change | Reported Constant Currency Percent Change | |||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||
North America | $ | 3,750 | $ | (61 | ) | (c) | $ | 1 | $ | — | $ | — | $ | 3,690 | (2 | )% | (2 | )% | ||||||||||||
EMEA | 584 | $ | 49 | (d) | (22 | ) | — | — | 611 | 5 | % | 9 | % | |||||||||||||||||
LATAM | 164 | $ | 71 | (e) | (57 | ) | — | — | 178 | 9 | % | 44 | % | |||||||||||||||||
APAC | 233 | $ | (9 | ) | (f) | (4 | ) | (18 | ) | — | 202 | (14 | )% | (12 | )% | |||||||||||||||
Total segment revenue | $ | 4,731 | $ | 50 | $ | (82 | ) | $ | (18 | ) | $ | — | $ | 4,681 | (1 | )% | 2 | % |
(a) | Currency impact is the difference between the current year's actual results and the same year's results converted with the prior year's foreign exchange rate. Constant currency percentage change is a measure of revenue growth before foreign currency impact. |
(b) | APAC revenue adjusted to exclude revenue associated with the disposition of the Australian ATM business in September 2016. See note 12 "Acquisitions and Dispositions" to our consolidated financial statements in Part II, Item 8 of this Form 10-K for additional information. |
(c) | North America revenue decrease was driven by lower hardware sales of $50 million, partially offset by an increase of $25 million in software sales as a result of growth in our merchant suite of products, including continued growth of our Transarmor Solution. Processing revenue remained flat as transaction growth of 7% was offset by lower blended yield. |
(d) | EMEA constant currency revenue increased as a result of volume growth and an approximate $10 million benefit from changes in interchange pricing during the first quarter of 2016. |
(e) | Revenue increase in our LATAM region was benefited by growth in Brazil and Argentina of $35 million and $30 million, respectively during 2016. Remaining growth in LATAM was driven by growth in Uruguay, Mexico and the Caribbean. |
(f) | Revenue in the APAC region was impacted by a decrease in ATM fees for the year ended December 31, 2016. |
Year ended December 31, | Percent Change | ||||||||||||||
(in millions) | 2017 | 2016 | 2015 | 2017 vs. 2016 | 2016 vs. 2015 | ||||||||||
Key indicators: | |||||||||||||||
North America merchant transactions(a) | 49,248 | 46,372 | 43,362 | 6 | % | 7 | % | ||||||||
International merchant transactions(b) | 9,760 | 8,246 | 6,826 | 18 | % | 21 | % |
(a) | North American merchant transactions include acquired Visa and MasterCard credit and signature debit, American Express and Discover, PIN-debit, electronic benefits transactions, processed-only and gateway customer transactions at the Point of Sale (POS). North American merchant transactions reflect 100% of alliance transactions. |
(b) | International transactions include Visa, MasterCard, and other payment network merchant acquiring transactions for clients outside the U.S. and Canada. Transactions include credit, signature debit, PIN-debit POS, POS gateway, and Automated Teller Machine (ATM) transactions. |
Year Ended December 31, 2016 | Core Growth (Decline) | Currency Impact(a) | Dispositions(b) | Year Ended December 31, 2017 | Percent Change | Reported Constant Currency Percent Change | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
North America | $ | 956 | $ | (7 | ) | (c) | $ | — | $ | — | $ | 949 | (1 | )% | (1 | )% | ||||||||||
EMEA | 433 | 30 | (d) | (13 | ) | (6 | ) | 444 | 3 | % | 6 | % | ||||||||||||||
LATAM | 122 | 13 | (e) | (3 | ) | — | 132 | 9 | % | 12 | % | |||||||||||||||
APAC | 82 | 13 | (f) | 3 | — | 98 | 19 | % | 16 | % | ||||||||||||||||
Total segment revenue | $ | 1,593 | $ | 49 | $ | (13 | ) | $ | (6 | ) | $ | 1,623 | 2 | % | 3 | % |
(a) | Currency impact is the difference between the current year's actual results and the same year's results converted with the prior year's foreign exchange rate. Constant currency percentage change is a measure of revenue growth before foreign currency impact. |
(b) | Business disposition of Lithuania, Latvia and Estonia (i.e. the Baltics) in September 2017. See note 12 "Acquisitions and Dispositions" to our consolidated financial statements in Part II, Item 8 of this Form 10-K for additional information. |
(c) | North America revenue was driven by growth in account processing, offset by $20 million plastics revenue decline and a prior year one-time termination fee of $7 million. |
(d) | EMEA revenue increase was driven by $24 million of new business and existing client growth in the United Kingdom and $12 million of existing client growth in the Middle East & Africa, partially offset by attrition and lower volumes in the region. |
(e) | LATAM revenue increase was driven by $13 million of existing client growth in Argentina and $6 million of new business in Colombia, partially offset by a year over year decrease in license resolutions fees. |
(f) | APAC revenue increase was driven by professional services in Australia and Singapore of $6 million and $5 million respectively, as well as internal growth in Australia. |
Year Ended December 31, 2015 | Core Growth (Decline) | Currency Impact(a) | Dispositions | Year Ended December 31, 2016 | Percent Change | Reported Constant Currency Percent Change | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
North America | $ | 883 | $ | 73 | (b) | $ | — | $ | — | $ | 956 | 8 | % | 8 | % | |||||||||||
EMEA | 435 | 29 | (c) | (31 | ) | — | 433 | — | % | 7 | % | |||||||||||||||
LATAM | 102 | 43 | (d) | (23 | ) | — | 122 | 20 | % | 42 | % | |||||||||||||||
APAC | 75 | 8 | (e) | (1 | ) | — | 82 | 9 | % | 10 | % | |||||||||||||||
Total segment revenue | $ | 1,495 | $ | 153 | $ | (55 | ) | $ | — | $ | 1,593 | 7 | % | 10 | % |
(b) | North America revenue increase was driven by growth in our print business and our credit and retail card processing business. Our print business grew by $38 million principally due to a new enterprise win from an existing customer. Credit and retail processing grew by $44 million from an increase in card accounts on file split evenly between growth in existing customers and new business. In addition, our North America credit and retail processing business benefited by $7 million from a termination fee, principally in the fourth quarter. |
(c) | EMEA constant currency revenue increase was driven by new and existing business growth and professional services growth of $28 million in the United Kingdom and existing business growth of $14 million in the Middle East and Africa. Growth in professional services was partially offset by price compression in Greece. Greece price compression was driven by renewal of one large client in 2015. |
(d) | LATAM constant currency revenue increase was primarily driven by strong growth in Argentina of $20 million, which benefited by volume growth and inflation, an increase in VisionPLUS licensing revenues of $17 million mostly due to license fee resolutions, and an increase in Colombia of $6 million from a new processing deal. The remaining $4 million growth came from our Caribbean business due to higher processing and professional services revenue. |
(e) | APAC constant currency revenue increase was driven by professional services and a new processing client in Australia. |
Year ended December 31, | Percent Change | ||||||||||||||
(in millions) | 2017 | 2016 | 2015 | 2017 vs. 2016 | 2016 vs. 2015 | ||||||||||
Key indicators: | |||||||||||||||
North America card accounts on file(a) | 906 | 855 | 813 | 6 | % | 5 | % | ||||||||
International card accounts on file(b) | 170 | 151 | 135 | 13 | % | 12 | % |
(a) | North America card accounts on file reflect the total number of bankcard credit and retail credit accounts as of the end of the periods presented. |
(b) | International card accounts on file reflect total bankcard and retail accounts outside the United States and Canada as of the end of the periods presented. 2015 International card accounts on file reflect an updated card account total. |
Year Ended December 31, 2016 | Core Growth (Decline) | Dispositions(a) | Year Ended December 31, 2017 | Percent Change | |||||||||||||||
(in millions) | |||||||||||||||||||
Revenues: | |||||||||||||||||||
EFT Network | $ | 491 | $ | (4 | ) | (b) | $ | — | $ | 487 | (1 | )% | |||||||
Security and Fraud | 434 | 15 | (c) | — | 449 | 3 | % | ||||||||||||
Stored Value Network | 358 | 47 | (d) | — | 405 | 13 | % | ||||||||||||
Other | 202 | 7 | (e) | (7 | ) | 202 | — | % | |||||||||||
Total segment revenue | $ | 1,485 | $ | 65 | $ | (7 | ) | $ | 1,543 | 4 | % |
(a) | Other revenue adjusted to exclude net revenue associated with business that was contributed to our digital banking joint venture with Live Oak on October 2, 2017 offset by our 50% of the joint ventures revenue. See note 12 "Acquisitions and Dispositions" to our consolidated financial statements in Part II, Item 8 of this Form 10-K for additional information. |
(b) | EFT Network revenue decreased due to increased transaction growth of $20 million offset by increased client incentives. |
(c) | Security and Fraud revenue increase was driven by growth in our Security and Fraud product categories, offset by declines within the Telecheck business of $14 million. |
(d) | Stored Value Network revenue increased due to higher rate and volume of $16 million and $24 million, respectively, and a $7 million benefit associated with a contract amendment. |
(e) | Growth was driven by our government business. |
Year Ended December 31, 2015 | Core Growth (Decline) | Dispositions | Year Ended December 31, 2016 | Percent Change | |||||||||||||||
(in millions) | |||||||||||||||||||
Revenues: | |||||||||||||||||||
EFT Network | $ | 491 | $ | — | (a) | $ | — | $ | 491 | — | % | ||||||||
Security and Fraud | 412 | 22 | (b) | — | 434 | 5 | % | ||||||||||||
Stored Value Network | 359 | (1 | ) | (c) | — | 358 | — | % | |||||||||||
Other | 202 | — | — | 202 | — | % | |||||||||||||
Total segment revenue | $ | 1,464 | $ | 21 | $ | — | $ | 1,485 | 1 | % |
(a) | EFT Network revenue was relatively flat as STAR growth was offset by the impact of a long-term debit processing contract renewal which negatively impacted segment revenue by $14 million. |
(b) | Security and Fraud revenue increased due to growth from our suite of Security and Fraud products, partially offset by revenue declines within our TeleCheck business of $21 million. |
(c) | Stored Value Network revenue was flat driven by a change in contract terms for one client in the prior year for $10 million offset by increased volumes. |
Year ended December 31, | Percent Change | ||||||||||||||
(in millions) | 2017 | 2016 | 2015 | 2017 vs. 2016 | 2016 vs. 2015 | ||||||||||
Key indicators: | |||||||||||||||
Network transactions (EFT Network and Stored Value) (a) | 22,114 | 20,258 | 18,918 | 9 | % | 7 | % |
(a) | Network transactions include the U.S. debit issuer processing transactions, STAR Network issuer transactions, and closed loop and open loop POS transactions. |
Year ended December 31, | Percent Change | Reported Constant Currency Percent Change | ||||||||||||||||||||||
(in millions) | 2017 | 2016 | 2015 | 2017 vs. 2016 | 2016 vs. 2015 | 2017 vs. 2016 | 2016 vs. 2015 | |||||||||||||||||
Cost of services (exclusive of items shown below) | $ | 2,769 | $ | 2,855 | $ | 2,874 | (3 | )% | (1 | )% | (3 | )% | 1 | % | ||||||||||
Cost of products sold | 359 | 337 | 356 | 7 | % | (5 | )% | 7 | % | (3 | )% | |||||||||||||
Selling, general, and administrative | 2,178 | 2,035 | 2,292 | 7 | % | (11 | )% | 7 | % | (10 | )% | |||||||||||||
Depreciation and amortization | 972 | 949 | 1,022 | 2 | % | (7 | )% | 2 | % | (6 | )% | |||||||||||||
Other operating expenses | 143 | 51 | 53 | 180 | % | (4 | )% | 180 | % | (2 | )% | |||||||||||||
Total expenses (excluding reimbursable items) | 6,421 | 6,227 | 6,597 | 3 | % | (6 | )% | 3 | % | (5 | )% | |||||||||||||
Reimbursable debit network fees, postage, and other | 3,923 | 3,745 | 3,687 | 5 | % | 2 | % | 5 | % | 2 | % | |||||||||||||
Total expenses | $ | 10,344 | $ | 9,972 | $ | 10,284 | 4 | % | (3 | )% | 4 | % | (2 | )% |
Year ended December 31, | Percent Change | Reported Constant Currency Percent Change | ||||||||||||||||||||||
(in millions) | 2017 | 2016 | 2015 | 2017 vs. 2016 | 2016 vs. 2015 | 2017 vs. 2016 | 2016 vs. 2015 | |||||||||||||||||
Salaries, wages, and bonus | $ | 1,443 | (a) | $ | 1,474 | $ | 1,481 | (2 | )% | — | % | |||||||||||||
Stock-based compensation | 72 | (b) | 112 | (d) | 130 | (35 | )% | (14 | )% | |||||||||||||||
Outside professional services | 258 | (c) | 264 | (e) | 250 | (2 | )% | 6 | % | |||||||||||||||
Software, telecommunication infrastructure, and repairs | 387 | (c) | 396 | (e) | 380 | (2 | )% | 4 | % | |||||||||||||||
Other | 609 | 609 | (f) | 633 | — | % | (4 | )% | ||||||||||||||||
Cost of services expense | $ | 2,769 | $ | 2,855 | $ | 2,874 | (3 | )% | (1 | )% | (3 | )% | 1 | % |
(a) | Expense decreased in 2017 compared to 2016 due to a $31 million decline in salaries and wages related to productivity improvements and enhancements. |
(b) | The decline in stock based compensation of $40 million resulted from a $34 million decrease relating to reallocation from cost of services to selling, general and administrative expenses to better align with our operations, $22 million decline in one-time expense related to our initial public offering in 2015, offset by an increase of $16 million in recurring stock-based compensation incurred over the vesting life of normal service-based stock awards. |
(c) | Outside professional services and Software, telecommunication, infrastructure and repairs expense decreased by $15 million due to benefits achieved through our cost initiatives. |
(d) | Stock compensation expense decreased in 2016 compared to 2015 by $18 million as a result of a $78 million one-time expense in 2015 related to our initial public offering, partially offset by an increase of $60 million in recurring stock-based compensation incurred over the vesting life of normal service-based stock awards. |
(e) | Outside professional services and Software, telecommunication, infrastructure and repairs expense increased by $30 million as we continue to invest in our core operating businesses. |
(f) | Other expenses declined as 2015 was negatively impacted by two client-related matters totaling $24 million. In addition, included within other expenses is an increase of approximately $25 million in merchant credit losses, partially offset by a decline of warranty expense within NSS of $10 million. Merchant credits losses increased due to higher fraud rates and charge-backs resulting from a liability shift post EMV. Warranty expense declined driven by lower volumes within our TeleCheck business. The remaining decline in other expense was driven by expense rationalization from our previously announced cost management initiatives. |
Year ended December 31, | Percent Change | Reported Constant Currency Percent Change | ||||||||||||||||||||||
(in millions) | 2017 | 2016 | 2015 | 2017 vs. 2016 | 2016 vs. 2015 | 2017 vs. 2016 | 2016 vs. 2015 | |||||||||||||||||
Salaries, wages, bonus, and other | $ | 655 | $ | 659 | (e) | $ | 697 | (1 | )% | (5 | )% | |||||||||||||
Stock-based compensation | 173 | (a) | 151 | (f) | 199 | 15 | % | (24 | )% | |||||||||||||||
Independent sales organizations (ISOs) commissions | 637 | 618 | (g) | 642 | 3 | % | (4 | )% | ||||||||||||||||
Outside professional services | 219 | (b) | 182 | (h) | 295 | 20 | % | (38 | )% | |||||||||||||||
Commissions | 182 | (c) | 137 | (e) | 158 | 33 | % | (13 | )% | |||||||||||||||
Other | 312 | (d) | 288 | (e) | 301 | 8 | % | (4 | )% | |||||||||||||||
Selling, general, and administrative expense | $ | 2,178 | $ | 2,035 | $ | 2,292 | 7 | % | (11 | )% | 7 | % | (10 | )% |
(a) | Stock based compensation expense increased $22 million. The increase in stock based compensation of $22 million resulted from a $34 million increase relating to reallocation from cost of services to selling, general, and administrative expenses to better align with our operations, $18 million in recurring stock-based compensation incurred over the vesting life of normal service-based stock awards offset by $30 million decline in one-time expense related to our initial public offering in 2015. |
(b) | Outside Professional services expense increased $37 million due to higher legal and consulting fees. |
(c) | Commissions increase is attributed to the acquisitions of CardConnect and BluePay. |
(d) | Other expenses increased due to $15 million increase related to advertising expenses for marketing initiatives in 2017 and $11 million related to the acquisition of CardConnect and BluePay. |
(e) | Salaries, wages, bonus, and other decrease was driven by Commissions expense decline of $21 million and miscellaneous other expenses decline of $13 million, all driven by expense rationalization from our previously announced cost management initiatives. |
(f) | Stock based compensation expense declined $48 million. The decline in stock-based compensation resulted from a $124 million decline in one-time expense related to our initial public offering in 2015, partially offset by an increase of $76 million in recurring stock-based compensation incurred over the vesting life of normal service-based stock awards. |
(g) | Retail ISO commissions declined $24 million due to consolidation of Retail ISOs to Wholesale ISOs via acquisition. |
(h) | The Outside professional services expense decline was driven by a $100 million decline in KKR related expenses, of which $78 million related to termination of our Management Agreement with KKR during 2015. |
Year ended December 31, | Percent Change | |||||||||||||||||
(in millions) | 2017 | 2016 | 2015 | 2017 vs. 2016 | 2016 vs. 2015 | |||||||||||||
Depreciation expense | $ | 321 | $ | 300 | $ | 290 | 7 | % | 3 | % | ||||||||
Amortization expense | 651 | 649 | 732 | — | % | (11 | )% | |||||||||||
Depreciation and amortization | $ | 972 | $ | 949 | $ | 1,022 | 2 | % | (7 | )% |
Year ended December 31, | Percent Change | |||||||||||||||||
(in millions) | 2017 | 2016 | 2015 | 2017 vs. 2016 | 2016 vs. 2015 | |||||||||||||
Restructuring, net | $ | 83 | (a) | $ | 49 | $ | 53 | 70 | % | (8 | )% | |||||||
Deal and deal integration costs | 27 | (b) | — | — | NM | NM | ||||||||||||
Asset impairment | 13 | (c) | — | — | NM | NM | ||||||||||||
Other | 20 | (c) | 2 | (d) | — | NM | NM | |||||||||||
Other operating expenses | $ | 143 | $ | 51 | $ | 53 | NM | (4 | )% |
(a) | Other operating expenses increased in 2017 compared to 2016 as restructuring expense increased $34 million due to our ongoing expense management initiative. |
(b) | Deal and deal integration costs related to costs associated with the acquisitions of CardConnect and BluePay. |
(c) | Asset impairment and other costs increased $31 million due to the resolution of two customer related matters of $10 million, a $6 million loss on a prepaid asset related to an early contract terminated, and a write-down of abandoned technology. |
(d) | Other increased in 2016 compared to 2015 as we incurred a $5 million loss from the settlement of a client related matter in 2016. |
Year ended December 31, | Percent Change | |||||||||||||||||
(in millions) | 2017 | 2016 | 2015 | 2017 vs. 2016 | 2016 vs. 2015 | |||||||||||||
Interest expense, net | $ | (931 | ) | $ | (1,078 | ) | $ | (1,534 | ) | (14 | )% | (30 | )% |
Year ended December 31, | Percent Change | |||||||||||||||||
(in millions) | 2017 | 2016 | 2015 | 2017 vs. 2016 | 2016 vs. 2015 | |||||||||||||
Loss on debt extinguishment | $ | (80 | ) | $ | (70 | ) | $ | (1,068 | ) | 14 | % | (93 | )% |
Year ended December 31, | ||||||||||||
(in millions) | 2017 | 2016 | 2015 | |||||||||
Investment gains | $ | 1 | $ | 35 | (a) | $ | — | |||||
Derivatives | — | (5 | ) | (b) | (17 | ) | ||||||
Divestitures, net gain (loss) | 18 | (c) | (34 | ) | 5 | |||||||
Non-operating foreign currency (loss) gains | (1 | ) | (d) | 19 | (d) | 41 | ||||||
Other miscellaneous (loss) income | (2 | ) | 2 | — | ||||||||
Other income | $ | 16 | $ | 17 | $ | 29 |
(a) | Investment gains in 2016 represent the sale of our share in Visa Europe (VE). Additionally in 2016, we sold our 49% minority interest in an international joint venture which resulted in a pretax gain of $7 million. |
(b) | The losses on derivatives in 2016 and 2015 are driven by fair value adjustments on our nondesignated interest rate contracts. See note 13 "Derivative Financial Instruments" to our consolidated financial statements in Part II, Item 8 of this Form 10-K for additional information on our derivative contracts. |
(c) | Divestitures, net gain (loss) in 2017 relates to our online banking business, which we contributed in exchange for a 50% ownership in Apiture, a joint venture, both of these businesses are reported within the NSS segment. The loss in 2016 represents the sale of our Australian ATM business on September 30, 2016. The Australian ATM business was reported as part of GBS. See note 12 "Acquisitions and Dispositions" to our consolidated financial statement in Part II, Item 8 of this Form 10-K for additional information on our significant divestitures. |
(d) | Non-operating foreign currency (loss) gain represents net gains and losses related to currency translations on our intercompany loans in all years as well as gains on euro-denominated debt in 2015. We designated all of our euro-denominated debt as a hedge against our net investment in euro business as of January 1, 2016, which would have eliminated income statement gains of $70 million prior to 2016, if the hedge was in place and fully effective during those periods. |
Year ended December 31, | |||||||||||||
(in millions) | 2017 | 2016 | 2015 | ||||||||||
Income tax (benefit) expense | $ | (729 | ) | $ | 81 | $ | 101 | ||||||
Effective income tax rate | (78 | )% | 11 | % | (9 | )% |
Year ended December 31, | |||||||||||||||||||||||||||||||||||||
2017 | 2016 | 2015 | |||||||||||||||||||||||||||||||||||
(in millions) | Domestic | Foreign | Total | Domestic | Foreign | Total | Domestic | Foreign | Total | ||||||||||||||||||||||||||||
Pre-tax income (loss) | $ | 484 | $ | 451 | $ | 935 | $ | 492 | $ | 249 | $ | 741 | $ | (1,332 | ) | $ | 165 | $ | (1,167 | ) | |||||||||||||||||
Income tax (benefit) expense | (827 | ) | 98 | (729 | ) | 40 | 41 | 81 | 21 | 80 | 101 | ||||||||||||||||||||||||||
Effective income tax rate | (171 | )% | 22 | % | (78 | )% | 8 | % | 16 | % | 11 | % | (2 | )% | 48 | % | (9 | )% |
Year ended December 31, | Percent Change | |||||||||||||||||
(in millions) | 2017 | 2016 | 2015 | 2017 vs. 2016 | 2016 vs. 2015 | |||||||||||||
Equity earnings in affiliates | $ | 222 | $ | 260 | $ | 239 | (15 | )% | 9 | % |
Year ended December 31, | Percent Change | |||||||||||||||||
(in millions) | 2017 | 2016 | 2015 | 2017 vs. 2016 | 2016 vs. 2015 | |||||||||||||
Net income attributable to noncontrolling interests and redeemable noncontrolling interest | $ | 199 | $ | 240 | $ | 213 | (17 | )% | 13 | % |
Year ended December 31, | Percent Change | Reported Constant Currency Percent Change | ||||||||||||||||||||||
(in millions) | 2017 | 2016 | 2015 | 2017 vs. 2016 | 2016 vs. 2015 | 2017 vs. 2016 | 2016 vs. 2015 | |||||||||||||||||
Segment EBITDA: | ||||||||||||||||||||||||
Global Business Solutions | $ | 1,824 | $ | 1,725 | $ | 1,681 | 6 | % | 3 | % | 6 | % | 5 | % | ||||||||||
Global Financial Solutions | 680 | 646 | 547 | 5 | % | 18 | % | 6 | % | 22 | % | |||||||||||||
Network & Security Solutions | 729 | 666 | 639 | 9 | % | 4 | % | 9 | % | 4 | % | |||||||||||||
Corporate | (167 | ) | (145 | ) | (140 | ) | 15 | % | 4 | % | 15 | % | 4 | % | ||||||||||
Total Segment EBITDA | $ | 3,066 | $ | 2,892 | $ | 2,727 | 6 | % | 6 | % | 7 | % | 8 | % |
Year ended December 31, | Change | ||||||||||||
2017 | 2016 | 2015 | 2017 vs. 2016 | 2016 vs. 2015 | |||||||||
Segment EBITDA Margin: | |||||||||||||
Global Business Solutions | 37.2 | % | 36.9 | % | 35.5 | % | 30 | 140 | |||||
Global Financial Solutions | 41.9 | % | 40.6 | % | 36.6 | % | 130 | 400 | |||||
Network & Security Solutions | 47.2 | % | 44.8 | % | 43.6 | % | 240 | 120 | |||||
Total Segment EBITDA Margin | 38.0 | % | 37.3 | % | 35.5 | % | 70 | 180 |
Year ended December 31, | Percent Change | ||||||||||||||||
(in millions) | 2017 | 2016 | 2015 | 2017 vs. 2016 | 2016 vs. 2015 | ||||||||||||
Net income (loss) attributable to First Data Corporation | $ | 1,465 | $ | 420 | $ | (1,481 | ) | NM | NM | ||||||||
Adjustments: | |||||||||||||||||
Stock-based compensation | 245 | 263 | 329 | (7 | )% | (20 | )% | ||||||||||
Loss on debt extinguishment | 80 | 70 | 1,068 | 14 | % | (93 | )% | ||||||||||
Amortization of acquisition intangibles and deferred financing costs(a) | 403 | 422 | 579 | (5 | )% | (27 | )% | ||||||||||
(Gain) loss on disposal of businesses | (18 | ) | 34 | — | NM | NM | |||||||||||
Gain on Visa Europe share sale | — | (29 | ) | — | NM | NM | |||||||||||
Restructuring | 83 | 49 | 53 | 69 | % | (8 | )% | ||||||||||
Intercompany foreign exchange gain (loss) | 1 | (19 | ) | 41 | NM | NM | |||||||||||
Fees paid on debt modification | 10 | 29 | — | (66 | )% | NM | |||||||||||
Impairment, litigation, and other(b) | 24 | 11 | 96 | 118 | % | (89 | )% | ||||||||||
Deal and deal integration costs | 27 | — | — | NM | NM | ||||||||||||
Mark-to-market adjustment for derivatives and euro-denominated debt | — | 5 | (53 | ) | (100 | )% | (109 | )% | |||||||||
Income tax on above items(c) | (895 | ) | (35 | ) | (11 | ) | NM | NM | |||||||||
Adjusted net income attributable to First Data Corporation | $ | 1,425 | $ | 1,220 | $ | 621 | 17 | % | 96 | % |
(a) | Represents amortization of intangibles established in connection with the 2007 Merger and acquisitions we have made since 2007, excluding the percentage of our consolidated amortization of acquisition intangibles related to non-wholly owned consolidated alliances equal to the portion of such alliances owned by our alliance partners. Also, includes amortization related to deferred financing costs of $10 million, $29 million and $6 million for the years ended December 31, 2017, 2016, and 2015, respectively. |
(b) | Represents impairments, non-normal course litigation and regulatory settlements, investments gains (losses), and other, as applicable to the periods presented. The 2015 balance includes a $78 million termination fee paid to KKR upon consummation of our initial public offering. |
(c) | The tax effect of the adjustments between our GAAP and adjusted results takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s). Generally, this results in a tax impact at the U.S. effective tax rate for certain adjustments, including the majority of amortization of intangible assets, deferred financing costs, stock compensation, and loss on debt extinguishment; whereas the tax impact of other adjustments, including restructuring expense, depends on whether the amounts are deductible in the respective tax jurisdictions and the applicable effective tax rate(s) in those jurisdictions. Income tax (expense) benefit also includes the impact of significant discrete tax items impacting Net income (loss) attributable to First Data Corporation. The significant change in income taxes in the current period is primarily driven by a $1,289 million tax benefit associated with the release of valuation allowances in the U.S. federal jurisdiction, partially offset by a $353 million tax expense associated with the impact of tax reform on our deferred tax assets. |
As of December 31, | ||||||||
(in millions) | 2017 | 2016 | ||||||
Total long-term borrowings | $ | 17,927 | $ | 18,131 | ||||
Total short-term and current portion of long-term borrowings | 1,271 | 358 | ||||||
Total borrowings | 19,198 | 18,489 | ||||||
Unamortized discount and unamortized deferred financing costs | 126 | 156 | ||||||
Total borrowings at par | 19,324 | 18,645 | ||||||
Less: settlement lines of credit and other arrangements | 205 | 84 | ||||||
Debt | 19,119 | 18,561 | ||||||
Less: cash and cash equivalents | 498 | 385 | ||||||
Net debt | $ | 18,621 | $ | 18,176 |
As of December 31, 2017 | As of December 31, 2016 | ||||||||||||||||||||||
(in millions) | Available | Unavailable | Total | Available | Unavailable | Total | |||||||||||||||||
Domestic | $ | 50 | $ | 101 | (a) | $ | 151 | $ | 12 | $ | 102 | (a) | $ | 114 | |||||||||
International | 227 | 120 | (b) | 347 | 127 | 144 | (c) | 271 | |||||||||||||||
Total | $ | 277 | $ | 221 | $ | 498 | $ | 139 | $ | 246 | $ | 385 |
(a) | Represents cash held by two of our domestic entities that are not available to fund operations outside of these entities unless the Board of Directors of those respective entities declare a dividend. Also, one of these entities is subject to regulatory capital requirements that must be satisfied before a dividend may be declared. |
(b) | Consolidated foreign joint ventures held $110 million in cash and cash equivalents until the joint ventures' Board of Directors authorize a distribution. In addition, $10 million of the remaining unavailable cash and cash equivalents in our international subsidiaries is held in countries that have currency controls. |
(c) | Consolidated foreign joint ventures held $134 million in cash and cash equivalents until the joint ventures' Board of Directors authorize a distribution. In addition, $10 million of the remaining unavailable cash and cash equivalents in our international subsidiaries is held in countries that have currency controls. |
Year ended December 31, | ||||||||||||
Source/(use) (in millions) | 2017 | 2016 | 2015 | |||||||||
Net cash provided by operating activities | $ | 2,047 | $ | 2,111 | $ | 795 | ||||||
Net cash used in investing activities | (1,952 | ) | (361 | ) | (685 | ) | ||||||
Net cash provided by (used in) financing activities | 9 | (1,734 | ) | (16 | ) |
Year ended December 31, | ||||||||
Source/(use) (in millions) | 2017 | 2016 | ||||||
Net cash provided by operating activities, previous period | $ | 2,111 | $ | 795 | ||||
Increases (decreases) in: | ||||||||
Net income, excluding other operating expenses and other income (a) | 270 | 840 | ||||||
Depreciation and amortization | 12 | (72 | ) | |||||
Working capital | (346 | ) | 548 | |||||
Net cash provided by operating activities, end of period | $ | 2,047 | $ | 2,111 |
(a) | Excludes loss on debt extinguishment, stock-based compensation expense and other non-cash items. |
Year ended December 31, | |||||||||||
Source/(use) (in millions) | 2017 | 2016 | Change | ||||||||
Accounts receivable, current and long term (a) | $ | (196 | ) | $ | (81 | ) | $ | (115 | ) | ||
Other assets, current and long term (b) | (36 | ) | 61 | (97 | ) | ||||||
Accounts payable and other liabilities, current and long term (c) | (82 | ) | 35 | (117 | ) | ||||||
Income tax accounts (d) | (16 | ) | 1 | (17 | ) | ||||||
Total working capital change | $ | (330 | ) | $ | 16 | $ | (346 | ) |
(a) | Decrease due to year-end timing and growth in pre-funding for one of our retail clients. |
(b) | Decrease resulted from $49 million related to inventory working capital initiative in 2016, $24 million in prepaid maintenance contacts, and interest rate swaps. |
(c) | Decrease is attributable to timing of payments. |
(d) | Decrease is related to income tax payments in 2017. |
Year ended December 31, | |||||||||||
Source/(use) (in millions) | 2016 | 2015 | Change | ||||||||
Accounts receivable, current and long term (a) | $ | (81 | ) | $ | (184 | ) | $ | 103 | |||
Other assets, current and long term (b) | 61 | (199 | ) | 260 | |||||||
Accounts payable and other liabilities, current and long term (c) | 35 | (162 | ) | 197 | |||||||
Income tax accounts (d) | 1 | 13 | (12 | ) | |||||||
Total working capital change | $ | 16 | $ | (532 | ) | $ | 548 |
(a) | Increase is driven by $102 million reclassification related to settlement activities to conform certain domestic and international businesses to our global policies. |
(b) | Increase due to $96 million from the settlement of cross-currency swaps in 2016 and the timing of working capital requirements and operational improvements impacting inventory levels. |
(c) | Increase is resulting from $271 million of accelerated interest payments in 2015 related to debt extinguishments offset by the non-recurrence of two supplier signing bonuses received in the prior year. |
(d) | Decrease related to income tax payments in 2016. |
Year ended December 31, | |||||||||||
Source/(use) (in millions) | 2017 | 2016 | Change | ||||||||
Acquisitions (a) | $ | (1,607 | ) | $ | (6 | ) | $ | (1,601 | ) | ||
Dispositions (b) | 88 | 38 | 50 | ||||||||
Capital expenditures | (518 | ) | (477 | ) | (41 | ) | |||||
Other (c) | 85 | 84 | 1 | ||||||||
Net cash used in investing activities | $ | (1,952 | ) | $ | (361 | ) | $ | (1,591 | ) |
(a) | Decrease is related to acquisition of Acculynk, CardConnect and BluePay during 2017. For additional detail about these acquisitions, see note 12 "Acquisitions and Dispositions" to our consolidated financial statements in Part II, Item 8 of this Form 10-K for the year ended December 31, 2017. |
(b) | Increase driven by proceeds from our 2017 Baltics disposition offset by 2016 sale of the Australian ATM business. For additional detail about these dispositions, see note 12 "Acquisitions and Dispositions" to our consolidated financial statements in Part II, Item 8 of this Form 10-K for the year ended December 31, 2017. |
(c) | Other represents proceeds from maturity of net investment hedge, proceeds from sale of property and equipment, purchase of equity method investments, and other investing activities. |
Year ended December 31, | |||||||||||
Source/(use) (in millions) | 2016 | 2015 | Change | ||||||||
Acquisitions (a) | $ | (6 | ) | $ | (89 | ) | $ | 83 | |||
Dispositions (b) | 38 | 4 | 34 | ||||||||
Capital expenditures | (477 | ) | (602 | ) | 125 | ||||||
Other (c) | 84 | 2 | 82 | ||||||||
Net cash used in investing activities | $ | (361 | ) | $ | (685 | ) | $ | 324 |
(a) | Increase driven by the 2015 acquisitions of Spree, First Pay, and Transaction Wireless Inc. For additional detail about these acquisitions, see note 12 "Acquisitions and Dispositions" to our consolidated financial statements in Part II, Item 8 of this Form 10-K for the year ended December 31, 2017. |
(b) | Increase driven by the 2016 sale of the Australian ATM business. For additional detail about these dispositions, see note 12 "Acquisitions and Dispositions" to our consolidated financial statements in Part II, Item 8 of this Form 10-K for the year ended December 31, 2017. |
(c) | Increase is driven by 2016 sale of two facilities of $38 million, $27 million of cash received from our investment in Visa Europe. Change was partially offset by $17 million of proceeds from the sale of two facilities in 2015 and an investment in an international joint venture. |
Year ended December 31, | |||||||||||
Source/(use) (in millions) | 2017 | 2016 | Change | ||||||||
Net debt transactions (a) | $ | 382 | $ | (1,335 | ) | $ | 1,717 | ||||
Proceeds from issuance of common stock | 50 | 23 | 27 | ||||||||
Other (b) | (423 | ) | (422 | ) | (1 | ) | |||||
Net cash provided by (used in) financing activities | $ | 9 | $ | (1,734 | ) | $ | 1,743 |
(a) | We are regularly looking for opportunities to lower our interest expense and extend maturity dates. The increase in net debt transactions is due to the capital needs associated with acquiring BluePay and CardConnect. Details regarding our debt structure are provided in note 2 "Borrowings" to our consolidated financial statements in Part II, Item 8 of this Form 10-K for the year ended December 31, 2017. |
(b) | Other represents payment of call premiums and debt issuance cost, payment of taxes related to net settlement of equity awards, distributions and dividends paid to noncontrolling interests and redeemable noncontrolling interest and other financing activities. |
Year ended December 31, | |||||||||||
Source/(use) (in millions) | 2016 | 2015 | Change | ||||||||
Net debt transactions (a) | $ | (1,335 | ) | $ | (1,341 | ) | $ | 6 | |||
Proceeds from issuance of common stock (b) | 23 | 2,718 | (2,695 | ) | |||||||
Other (c) | (422 | ) | (1,393 | ) | 971 | ||||||
Net cash used in financing activities | $ | (1,734 | ) | $ | (16 | ) | $ | (1,718 | ) |
(a) | We are regularly looking for opportunities to lower our interest expense and extend maturity dates. Details regarding our debt structure are provided in note 2 "Borrowings" to our consolidated financial statements in Part II, Item 8 of this Form 10-K for the year ended December 31, 2017. |
(b) | Decrease driven by $2.7 billion of proceeds from our initial public offering in 2015. |
(c) | Increase due to payments of call premiums and debt fees related to 2015 debt extinguishments. |
Year ended December 31, | ||||||||||||
Source/(use) (in millions) | 2017 | 2016 | Change | |||||||||
Net cash provided by operating activities (a)(c) | $ | 2,047 | $ | 2,111 | $ | (64 | ) | |||||
Capital expenditures | (518 | ) | (477 | ) | (41 | ) | ||||||
Distributions and dividends paid to noncontrolling interests, redeemable noncontrolling interest, and other (b)(c) | (170 | ) | (418 | ) | 248 | |||||||
Free cash flow | $ | 1,359 | $ | 1,216 | $ | 143 |
(a) | Net cash provided by operating activities decreased due to the items noted previously in the "Cash flows from operating activities" above. |
(b) | Distributions and dividends paid to noncontrolling interests and redeemable noncontrolling interest and other decreased due to $90 million received from the maturity of three net investment hedges in 2017, lower noncontrolling interest earnings, and the timing of distributions totaling $53 million. |
(c) | The year ended December 31, 2016 balance includes a $102 million reclassification related to settlement activities to conform certain domestic and international businesses to our global policies, which increased "Cash and cash equivalents" and decreased "Accounts receivable, net" in our consolidated balances sheets. Free cash flow excludes the impact of reclassification. |
Year ended December 31, | ||||||||||||
Source/(use) (in millions) | 2016 | 2015 | Change | |||||||||
Net cash provided by operating activities (a)(c) | $ | 2,111 | $ | 795 | $ | 1,316 | ||||||
Capital expenditures (b) | (477 | ) | (602 | ) | 125 | |||||||
Distributions and dividends paid to noncontrolling interests, redeemable noncontrolling interest, and other(c) | (418 | ) | (312 | ) | (106 | ) | ||||||
Free cash flow | $ | 1,216 | $ | (119 | ) | $ | 1,335 |
(a) | Net cash provided by operating activities increased due to the items noted previously in the "Cash flows from operating activities" above. |
(b) | Change in capital expenditures is due to a $132 million increase in new capital leases and other financing arrangements. Capital leases and other financing arrangements are reflected within "Short-term and current portion of long-term borrowings" and "Long-term borrowings" within the consolidated balance sheets. |
(c) | The year ended December 31, 2016 balance includes a $102 million reclassification related to settlement activities to conform certain domestic and international businesses to our global policies, which increased "Cash and cash equivalents" and decreased "Accounts receivable, net" in our consolidated balances sheets. Free cash flow excludes the impact of reclassification. |
Total Available (a) | Total Outstanding | |||||||||||||||
As of December 31, | As of December 31, | |||||||||||||||
(in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Letters of credit (b) | $ | 283 | $ | 250 | $ | 29 | $ | 41 | ||||||||
Lines of credit and other (c) | 546 | 489 | 205 | 84 |
(a) | Total available without giving effect to amounts outstanding. |
(b) | Outstanding letters of credit are held in connection with lease arrangements, bankcard association agreements, and other security agreements. Letters of credit are issued against our revolving credit facility with a $250 million limit in 2017 and 2016. The largest amount of letters of credit outstanding during 2017 was approximately $44 million. All letters of credit expire on or prior to December 15, 2018 with a one-year renewal option. We expect to renew most of the letters of credit prior to expiration. On December 14, 2017, the Company executed a $33 million senior unsecured revolving credit facility maturing December 20, 2019, available for letters of credit. The interest rate associated with the credit facility was 1.85% for the year ended December 31, 2017. At the end of 2017, we were in the process of transitioning our letters of credit from the revolving credit facility to the senior unsecured credit facility. This resulted in duplicate letters of credit totaling $19 million, which are not included in the total outstanding balance above. |
(c) | As of December 31, 2017 we had $531 million of committed lines of credit as well as certain uncommitted lines of credit and other agreements that are available in various currencies to fund settlement and other activity. We cannot use these lines of credit for general corporate purposes. Certain of these arrangements are uncommitted but, as of the dates presented, we had borrowings outstanding against them. Increase due to year-end timing and growth in pre-funding for one of our retail clients. |
(in millions) | Year Ended December 31, 2017 | |||
Net income attributable to First Data Corporation | $ | 1,465 | ||
Interest expense, net | 931 | |||
Income tax benefit | (729 | ) | ||
Depreciation and amortization | 1,073 | |||
EBITDA | 2,740 | |||
Loss on debt extinguishment | 80 | |||
Stock-based compensation | 245 | |||
Net income attributable to noncontrolling interests and redeemable noncontrolling interest | 199 | |||
Projected near-term cost savings and revenue enhancements (1) | 111 | |||
Restructuring, net | 83 | |||
Non-operating foreign currency (gains) and losses | 1 | |||
Equity entities taxes, depreciation and amortization (2) | 14 | |||
Divestitures, net | (18 | ) | ||
Other (3) | 68 | |||
Covenant EBITDA | $ | 3,523 |
(1) | Reflects cost savings and revenue enhancements we expect to realize as a result of specific actions as if they were achieved on the first day of the period. Includes cost savings initiatives associated with the business optimization projects and other technology initiatives. We may not realize the anticipated cost savings pursuant to our anticipated timetable or at all. |
(2) | Represents our proportional share of income taxes, depreciation, and amortization on equity method investments. |
(3) | Includes items such as deal and deal integration costs, earn-outs, litigation and regulatory settlements, and other as applicable to the period presented. |
Payments Due by Period | ||||||||||||||||||||
(in millions) | Total | Less than 1 year | 1-3 years | 3-5 years | After 5 years | |||||||||||||||
Borrowings (a) | $ | 22,806 | $ | 941 | $ | 3,101 | $ | 5,329 | $ | 13,435 | ||||||||||
Capital lease obligations (b) | 331 | 99 | 194 | 18 | 20 | |||||||||||||||
Operating leases | 346 | 63 | 104 | 74 | 105 | |||||||||||||||
Purchase obligations (c): | ||||||||||||||||||||
Technology and telecommunications (d) | 962 | 391 | 441 | 130 | — | |||||||||||||||
All other (e) | 50 | 29 | 12 | 5 | 4 | |||||||||||||||
Total (f) (g) | $ | 24,495 | $ | 1,523 | $ | 3,852 | $ | 5,556 | $ | 13,564 |
(a) | Includes future principal and cash interest payments on long-term borrowings through scheduled maturity dates. Includes $10.0 billion of variable rate debt, $4.3 billion of which is subject to fixed interest rate collar contracts which mitigate exposure to interest rate fluctuations, but are subject to contractual ceilings and floors. Borrowings and interest rate swaps are discussed in note 2 "Borrowings" and note 13 "Derivative Financial Instruments", respectively, to our consolidated financial statements in Part II, Item 8 of this Form 10-K. Interest payments for the variable rate debt and the associated interest rate swaps were calculated using interest rates as of December 31, 2017. |
(b) | Represents future payments on existing capital leases, including interest expense, through scheduled expiration dates. |
(c) | Many of our contracts contain clauses that allow us to terminate the contract with notice, and with or without a termination penalty. Termination penalties are generally an amount less than the original obligation. Certain contracts also have an automatic renewal clause if we do not provide written notification of our intent to terminate the contract. Obligations under certain contracts are usage-based and are, therefore, estimated in the above amounts. Historically, we have not had any significant defaults of our contractual obligations or incurred significant penalties for termination of our contractual obligations. |
(d) | Technology and telecommunications represents obligations related to hardware purchases, including purchases of ATMs and terminals, as well as software licenses, hardware and software maintenance and support, technical consulting services, and telecommunications services. |
(e) | All other includes obligations related to materials, data, non-technical contract services, facility security, investor management fees, maintenance, and marketing promotions. |
(f) | We evaluate the need to make contributions to our pension plans after considering the funded status of the pension plans, movements in the discount rates, performance of the plan assets and related tax consequences. Expected contributions to our pension plan have not been included in the table as such amounts are dependent upon the considerations discussed above, and may result in a wide range of amounts. See note 15 "Employee Benefit Plans" to our consolidated financial statements in Part II, Item 8 of this Form 10-K. |
(g) | As of December 31, 2017, we had approximately $270 million of tax contingencies comprised of approximately $259 million reported in long-term income taxes payable in the “Other long-term liabilities” line of our consolidated balance sheets, including approximately $4 million of income tax liabilities for which The Western Union Company (Western Union) is required to indemnify us, and approximately $11 million recorded as an increase of our deferred tax liability. These amounts have been excluded from the table because the settlement period cannot be reasonably estimated. The timing of these payments will ultimately depend on the progress of tax examinations with the various tax authorities. |
• | Global economic, political, and other conditions may adversely affect trends in consumer, business, and government spending, which may adversely impact the demand for our services and our revenue and profitability; |
• | Our ability to anticipate and respond to changing industry trends and the needs and preferences of our clients and consumers may affect our competitiveness or demand for our products, which may adversely affect our operating results; |
• | Substantial and increasingly intense competition worldwide in the financial services, payments, and technology industries may materially and adversely affect our overall business and operations; |
• | Potential changes in the competitive landscape, including disintermediation from other participants in the payments value chain, could harm our business; |
• | The market for our electronic commerce services is evolving and may not continue to develop or grow rapidly enough for us to maintain and increase our profitability; |
• | If we are unable to maintain merchant relationships and alliances, our business may be adversely affected; |
• | Failure to obtain new clients or renew client contracts on favorable terms could adversely affect results of operations and financial condition; and |
• | Cost savings initiatives may not produce the savings expected and may negatively impact our other initiatives and efforts to grow our business. |
As of December 31, | ||||||||
(in millions) | 2017 | 2016 | ||||||
Cash and cash equivalents collateral | $ | 499 | $ | 494 | ||||
Collateral in the form of letters of credit | 133 | 134 | ||||||
Total collateral | $ | 632 | $ | 628 |
Year ended December 31, | ||||||||||||
(in millions) | 2017 | 2016 | 2015 | |||||||||
First Data and consolidated and unconsolidated alliances credit losses | $ | 98 | $ | 93 | $ | 67 | ||||||
First Data and consolidated alliances credit losses | 89 | 83 | 55 | |||||||||
Total dollar volume processed (in billions) | 2,401 | 2,153 | 1,885 |
As of December 31, | ||||||||
(in millions) | 2017 | 2016 | ||||||
First Data and consolidated and unconsolidated alliances merchant credit loss reserves | $ | 33 | $ | 28 | ||||
First Data and consolidated alliances merchant credit loss reserves | 29 | 23 |
As of December 31, | ||||||||
(in millions) | 2017 | 2016 | ||||||
Estimate of losses on returned checks | $ | 4 | $ | 5 | ||||
Fair value of checks guaranteed | 14 | 17 |
Year ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Aggregate face value of guaranteed checks (in billions) | $ | 26 | $ | 28 | $ | 32 | ||||||
Aggregate amount of checks presented for warranty (in millions) | 179 | 188 | 216 | |||||||||
Warranty losses net of recoveries and service fees (in millions) | 52 | 55 | 61 |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
First Data Corporation and Subsidiaries: | |
Consolidated Financial Statements: | |
Schedules: | |
/s/ Ernst & Young LLP | |
EY or one of its predecessors began serving consecutively as the Company’s (or one of its predecessors) auditor in 1980. | |
Atlanta, Georgia | |
February 20, 2018, except as to Note 1, Note 5, Note 7, Note 10, Note 14, Note 18, and Note 19, as to which the date is August 13, 2018 |
Year ended December 31, | ||||||||||||
(in millions, except per share amounts) | 2017 | 2016 | 2015 | |||||||||
Revenues: | ||||||||||||
Transaction and processing service fees (a) | $ | 6,757 | $ | 6,600 | $ | 6,597 | ||||||
Product sales and other (a) | 1,372 | 1,239 | 1,167 | |||||||||
Total revenues (excluding reimbursable items) | 8,129 | 7,839 | 7,764 | |||||||||
Reimbursable debit network fees, postage, and other | 3,923 | 3,745 | 3,687 | |||||||||
Total revenues | 12,052 | 11,584 | 11,451 | |||||||||
Expenses: | ||||||||||||
Cost of services (exclusive of items shown below) | 2,769 | 2,855 | 2,874 | |||||||||
Cost of products sold | 359 | 337 | 356 | |||||||||
Selling, general, and administrative | 2,178 | 2,035 | 2,292 | |||||||||
Depreciation and amortization | 972 | 949 | 1,022 | |||||||||
Other operating expenses | 143 | 51 | 53 | |||||||||
Total expenses (excluding reimbursable items) | 6,421 | 6,227 | 6,597 | |||||||||
Reimbursable debit network fees, postage, and other | 3,923 | 3,745 | 3,687 | |||||||||
Total expenses | 10,344 | 9,972 | 10,284 | |||||||||
Operating profit | 1,708 | 1,612 | 1,167 | |||||||||
Interest expense, net | (931 | ) | (1,078 | ) | (1,534 | ) | ||||||
Loss on debt extinguishment | (80 | ) | (70 | ) | (1,068 | ) | ||||||
Other income | 16 | 17 | 29 | |||||||||
Income (loss) before income taxes and equity earnings in affiliates | 713 | 481 | (1,406 | ) | ||||||||
Income tax (benefit) expense | (729 | ) | 81 | 101 | ||||||||
Equity earnings in affiliates | 222 | 260 | 239 | |||||||||
Net income (loss) | 1,664 | 660 | (1,268 | ) | ||||||||
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interest | 199 | 240 | 213 | |||||||||
Net income (loss) attributable to First Data Corporation | $ | 1,465 | $ | 420 | $ | (1,481 | ) | |||||
Net income (loss) per share: | ||||||||||||
Basic | $ | 1.60 | $ | 0.47 | $ | (7.70 | ) | |||||
Diluted | $ | 1.56 | $ | 0.46 | $ | (7.70 | ) | |||||
Weighted-average common shares outstanding: | ||||||||||||
Basic | 916 | 902 | 192 | |||||||||
Diluted | 940 | 921 | 192 |
(a) | Includes processing fees, administrative service fees, and other fees charged to merchant alliances accounted for under the equity method of $215 million, $198 million, and $205 million for the years ended December 31, 2017, 2016, and 2015, respectively. |
Year ended December 31, | ||||||||||||
(in millions) | 2017 | 2016 | 2015 | |||||||||
Net income (loss) | $ | 1,664 | $ | 660 | $ | (1,268 | ) | |||||
Other comprehensive income (loss), net of tax: | ||||||||||||
Foreign currency translation adjustment | 201 | (153 | ) | (290 | ) | |||||||
Pension liability adjustments | 72 | 38 | (13 | ) | ||||||||
Derivative instruments | 9 | 3 | — | |||||||||
Marketable securities | — | — | 3 | |||||||||
Total other comprehensive income (loss), net of tax | 282 | (112 | ) | (300 | ) | |||||||
Comprehensive income (loss) | 1,946 | 548 | (1,568 | ) | ||||||||
Less: Comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interest | 211 | 235 | 203 | |||||||||
Comprehensive income (loss) attributable to First Data Corporation | $ | 1,735 | $ | 313 | $ | (1,771 | ) |
As of December 31, | ||||||||
(in millions, except par value) | 2017 | 2016 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 498 | $ | 385 | ||||
Accounts receivable, net of allowance for doubtful accounts of $45 and $74 | 2,176 | 1,877 | ||||||
Settlement assets | 20,363 | 14,795 | ||||||
Prepaid expenses and other current assets | 335 | 360 | ||||||
Total current assets | 23,372 | 17,417 | ||||||
Property and equipment, net of accumulated depreciation of $1,588 and $1,416 | 951 | 883 | ||||||
Goodwill | 17,710 | 16,696 | ||||||
Customer relationships, net of accumulated amortization of $5,940 and $5,660 | 2,184 | 1,739 | ||||||
Other intangibles, net of accumulated amortization of $2,665 and $2,365 | 1,935 | 1,800 | ||||||
Investment in affiliates | 1,054 | 988 | ||||||
Other long-term assets | 1,063 | 769 | ||||||
Total assets | $ | 48,269 | $ | 40,292 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 1,659 | $ | 1,564 | ||||
Short-term and current portion of long-term borrowings | 1,271 | 358 | ||||||
Settlement obligations | 20,363 | 14,795 | ||||||
Total current liabilities | 23,293 | 16,717 | ||||||
Long-term borrowings | 17,927 | 18,131 | ||||||
Deferred tax liabilities | 77 | 409 | ||||||
Other long-term liabilities | 886 | 831 | ||||||
Total liabilities | 42,183 | 36,088 | ||||||
Commitments and contingencies (See note 14) | ||||||||
Redeemable noncontrolling interest | 72 | 73 | ||||||
First Data Corporation stockholders' equity: | ||||||||
Class A Common stock, $0.01 par value; 1,600 shares authorized as of December 31, 2017 and December 31, 2016, 492 shares and 372 shares issued as of December 31, 2017 and December 31, 2016, respectively; and 482 shares and 368 shares outstanding as of December 31, 2017 and December 31, 2016, respectively | 5 | 4 | ||||||
Class B Common stock, $0.01 par value; 523 and 625 shares authorized as of December 31, 2017 and December 31, 2016, respectively; 443 shares and 544 shares issued and outstanding as of December 31, 2017 and December 31, 2016 respectively | 4 | 5 | ||||||
Preferred stock, $0.01 par value; 100 shares authorized as of December 31, 2017 and December 31, 2016 ; no shares issued and outstanding as of December 31, 2017 and December 31, 2016 | — | — | ||||||
Class A Treasury stock, at cost, 11 shares and 5 shares as of December 31, 2017 and December 31, 2016, respectively | (149 | ) | (61 | ) | ||||
Additional paid-in capital | 13,495 | 13,210 | ||||||
Accumulated loss | (9,059 | ) | (10,524 | ) | ||||
Accumulated other comprehensive loss | (1,144 | ) | (1,414 | ) | ||||
Total First Data Corporation stockholders' equity | 3,152 | 1,220 | ||||||
Noncontrolling interests | 2,862 | 2,911 | ||||||
Total equity | 6,014 | 4,131 | ||||||
Total liabilities and equity | $ | 48,269 | $ | 40,292 |
Year ended December 31, | ||||||||||||
(in millions) | 2017 | 2016 | 2015 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net income (loss) | $ | 1,664 | $ | 660 | $ | (1,268 | ) | |||||
Adjustments to reconcile to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization (including amortization netted against equity earnings in affiliates and revenues) | 1,073 | 1,061 | 1,133 | |||||||||
Deferred income taxes | (853 | ) | (38 | ) | (7 | ) | ||||||
Charges related to other operating expenses and other income | 127 | 34 | 24 | |||||||||
Loss on debt extinguishment | 80 | 70 | 1,068 | |||||||||
Stock-based compensation expense | 245 | 263 | 329 | |||||||||
Other non-cash and non-operating items, net | 41 | 45 | 48 | |||||||||
(Decrease) increase in cash, excluding the effects of acquisitions and dispositions, resulting from changes in: | ||||||||||||
Accounts receivable, current and long term | (196 | ) | (81 | ) | (184 | ) | ||||||
Other assets, current and long term | (36 | ) | 61 | (199 | ) | |||||||
Accounts payable and other liabilities, current and long term | (82 | ) | 35 | (162 | ) | |||||||
Income tax accounts | (16 | ) | 1 | 13 | ||||||||
Net cash provided by operating activities | 2,047 | 2,111 | 795 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Additions to property and equipment | (271 | ) | (232 | ) | (282 | ) | ||||||
Payments to secure customer service contracts, including outlays for conversion, and capitalized systems development costs | (247 | ) | (245 | ) | (320 | ) | ||||||
Acquisitions, net of cash acquired | (1,607 | ) | (6 | ) | (89 | ) | ||||||
Proceeds from dispositions | 88 | 38 | 4 | |||||||||
Proceeds from the maturity of net investment hedges | 90 | — | — | |||||||||
Proceeds from sale of property and equipment | — | 38 | 17 | |||||||||
Other investing activities, net | (5 | ) | 46 | (15 | ) | |||||||
Net cash used in investing activities | (1,952 | ) | (361 | ) | (685 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Short-term borrowings, net | 823 | 205 | (31 | ) | ||||||||
Proceeds from issuance of long-term debt | 4,968 | 3,533 | 10,258 | |||||||||
Payment of call premiums and debt issuance cost | (63 | ) | (53 | ) | (1,062 | ) | ||||||
Principal payments on long-term debt | (5,409 | ) | (5,073 | ) | (11,568 | ) | ||||||
Payment of taxes related to net settlement of equity awards | (94 | ) | (61 | ) | — | |||||||
Proceeds from issuance of common stock | 50 | 23 | 2,718 | |||||||||
Distributions and dividends paid to noncontrolling interests and redeemable noncontrolling interest | (260 | ) | (316 | ) | (312 | ) | ||||||
Other financing activities, net | (6 | ) | 8 | (19 | ) | |||||||
Net cash provided by (used in) financing activities | 9 | (1,734 | ) | (16 | ) | |||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 7 | (34 | ) | (23 | ) | |||||||
Change in cash, cash equivalents and restricted cash | 111 | (18 | ) | 71 | ||||||||
Cash, cash equivalents and restricted cash at beginning of period | 414 | 432 | 361 | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 525 | $ | 414 | $ | 432 | ||||||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||||||
Income tax payments, net of refunds received | $ | 142 | $ | 118 | $ | 95 | ||||||
Interest paid | 916 | 1,032 | 1,815 | |||||||||
Distributions received from equity method investments | 266 | 304 | 289 | |||||||||
NON-CASH TRANSACTIONS: | ||||||||||||
Capital leases, net of trade-ins | $ | 112 | $ | 136 | $ | 83 | ||||||
Other financing arrangements | $ | 102 | $ | 79 | $ | — |
First Data Corporation Stockholders' | |||||||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||||||||||||||||||
(in millions) | Class A | Class B | Class A | Additional Paid-In Capital | Accumulated Loss | Noncontrolling Interest | |||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Total | |||||||||||||||||||||||||||||||||||
Balance, December 31, 2014 (a) | — | $ | — | — | $ | — | — | $ | — | $ | 9,906 | $ | (9,459 | ) | $ | (1,017 | ) | $ | 3,100 | $ | 2,530 | ||||||||||||||||||||
Dividends and distributions paid to noncontrolling interests (b) | — | — | — | — | — | — | — | — | — | (277 | ) | (277 | ) | ||||||||||||||||||||||||||||
Net income (loss) (c) | — | — | — | — | — | — | — | (1,481 | ) | — | 179 | (1,302 | ) | ||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | — | — | (290 | ) | (10 | ) | (300 | ) | |||||||||||||||||||||||||||
Adjustments to redemption value of redeemable noncontrolling interest | — | — | — | — | — | — | (8 | ) | — | — | — | (8 | ) | ||||||||||||||||||||||||||||
Stock compensation expense and other | — | — | — | — | — | — | 316 | — | — | — | 316 | ||||||||||||||||||||||||||||||
Cash dividends paid by First Data Corporation to former Parent | — | — | — | — | — | — | — | (4 | ) | — | — | (4 | ) | ||||||||||||||||||||||||||||
Holding company merger (a) | — | — | 719 | 7 | — | — | (20 | ) | — | — | — | (13 | ) | ||||||||||||||||||||||||||||
Initial Public Offering | 180 | 2 | — | — | — | — | 2,716 | 2,718 | |||||||||||||||||||||||||||||||||
Balance, December 31, 2015 (a) | 180 | 2 | 719 | 7 | — | — | 12,910 | (10,944 | ) | (1,307 | ) | 2,992 | 3,660 | ||||||||||||||||||||||||||||
Dividends and distributions paid to noncontrolling interests (b) | — | — | — | — | — | — | — | — | — | (283 | ) | (283 | ) | ||||||||||||||||||||||||||||
Net income (loss) (c) | — | — | — | — | — | — | — | 420 | — | 207 | 627 | ||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | — | — | (107 | ) | (5 | ) | (112 | ) | |||||||||||||||||||||||||||
Adjustments to redemption value of redeemable noncontrolling interest | — | — | — | — | — | — | 4 | — | — | — | 4 | ||||||||||||||||||||||||||||||
Stock compensation expense | — | — | — | — | 263 | — | — | — | 263 | ||||||||||||||||||||||||||||||||
Stock activity under stock compensation plans and other | 188 | 2 | (175 | ) | (2 | ) | 5 | (61 | ) | 33 | — | — | — | (28 | ) | ||||||||||||||||||||||||||
Balance, December 31, 2016 | 368 | 4 | 544 | 5 | 5 | (61 | ) | 13,210 | (10,524 | ) | (1,414 | ) | 2,911 | 4,131 | |||||||||||||||||||||||||||
Dividends and distributions paid to noncontrolling interests (b) | — | — | — | — | — | — | — | — | — | (229 | ) | (229 | ) | ||||||||||||||||||||||||||||
Net income (loss) (c) | — | — | — | — | — | — | — | 1,465 | — | 168 | 1,633 | ||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | — | 270 | 12 | 282 | ||||||||||||||||||||||||||||||
Adjustment to redemption value of redeemable noncontrolling interest | — | — | — | — | — | — | 1 | — | — | — | 1 | ||||||||||||||||||||||||||||||
Stock compensation expense | — | — | — | — | — | — | 245 | — | — | — | 245 | ||||||||||||||||||||||||||||||
Stock activity under stock compensation plans and other | 114 | 1 | (101 | ) | (1 | ) | 6 | (88 | ) | 39 | — | — | — | (49 | ) | ||||||||||||||||||||||||||
Balance, December 31, 2017 | 482 | $ | 5 | 443 | $ | 4 | 11 | $ | (149 | ) | $ | 13,495 | $ | (9,059 | ) | $ | (1,144 | ) | $ | 2,862 | $ | 6,014 |
(a) | 1,000 shares relates to common stock without a class that was eliminated upon the merger with First Data Holdings. |
(b) | The total distribution presented in the consolidated statements of equity for the years ended December 31, 2017, 2016, and 2015 excludes $31 million, $33 million, and $35 million, respectively, in distributions paid to redeemable non-controlling interest not included in equity. |
(c) | The total net income (loss) presented in the consolidated statements of equity for the years ended December 31, 2017, 2016, and 2015 is $31 million different, $33 million different, and $34 million different, respectively, than the amount presented on the consolidated statements of operations due to the net income attributable to the redeemable noncontrolling interest not included in equity. |
Year ended December 31, | ||||||||||||
(in millions) | 2017 | 2016 | 2015 | |||||||||
Amortization of initial payments for new contracts | $ | 56 | $ | 65 | $ | 51 | ||||||
Amortization related to equity method investments | 45 | 47 | 60 |
Year ended December 31, | ||||||||||||
(in millions) | 2017 | 2016 | 2015 | |||||||||
Interchange fees and assessments | $ | 26,069 | $ | 23,810 | $ | 21,711 | ||||||
Debit network fees | 3,227 | 3,121 | 2,991 |
As of December 31, | ||||||||
(in millions) | 2017 | 2016 | ||||||
Estimate of losses on returned checks | $ | 4 | $ | 5 | ||||
Fair value of checks guaranteed | 14 | 17 |
Year ended December 31, | ||||
(in millions) | Amount | |||
2017 | $ | 321 | ||
2016 | 300 | |||
2015 | 290 |
• | Level 1 Inputs—Quoted prices (unadjusted) for identical assets or liabilities in active markets that are accessible as of the measurement date. |
• | Level 2 Inputs—Inputs other than quoted prices within Level 1 that are observable either directly or indirectly, including but not limited to quoted prices in markets that are not active, quoted prices in active markets for similar assets or liabilities, and observable inputs other than quoted prices such as interest rates or yield curves. |
• | Level 3 Inputs—Unobservable inputs reflecting the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. |
As of December 31, | ||||||||
(in millions) | 2017 | 2016 | ||||||
Short-term borrowings: | ||||||||
Foreign lines of credit and other arrangements | $ | 205 | $ | 84 | ||||
Senior Secured Revolving Credit Facility June 2, 2020 at LIBOR plus 3.50% or a base rate plus 2.50% | 272 | — | ||||||
Receivable securitized loan at LIBOR plus 1.5% or a base rate equal to the highest of (i) the applicable lender's prime rate, or (ii) the federal funds rate plus 0.50% | 600 | 160 | ||||||
Unamortized deferred financing costs(a) | (3 | ) | (2 | ) | ||||
Total short-term borrowings | 1,074 | 242 | ||||||
Current portion of long-term borrowings: | ||||||||
Senior secured term loan facility due June 2020 at LIBOR plus 1.75% or a base rate plus 0.75% | 78 | — | ||||||
Other arrangements and capital lease obligations | 119 | 116 | ||||||
Total current portion of long-term borrowings | 197 | 116 | ||||||
Total short-term and current portion of long-term borrowings | 1,271 | 358 | ||||||
Long-term borrowings: | ||||||||
Senior secured term loan facility due April 2024 at LIBOR plus 2.25% or a base rate plus 1.25% | 3,892 | — | ||||||
Senior secured term loan facility due July 2022 at LIBOR plus 2.25% or a base rate plus 1.25% | 3,758 | — | ||||||
Senior secured term loan facility due June 2020 at LIBOR plus 1.75% or a base rate plus 0.75% | 1,404 | — | ||||||
Senior secured term loan facility due March 2021 at LIBOR and euro LIBOR plus 3.0% or, solely with respect to U.S. dollar-denominated term loans, a base rate plus 2.0% | — | 4,379 | ||||||
Senior secured term loan facility due July 2022 at LIBOR plus 3.0% or a base rate plus 2.0%, or solely with respect to euro-denominated term loans, euro LIBOR plus 3.25% | — | 3,583 | ||||||
6.75% Senior secured first lien notes due 2020 | — | 1,398 | ||||||
5.375% Senior secured first lien notes due 2023 | 1,210 | 1,210 | ||||||
5.0% Senior secured first lien notes due 2024 | 1,900 | 1,900 | ||||||
5.75% Senior secured second lien notes due 2024 | 2,200 | 2,200 | ||||||
7.0% Senior unsecured notes due 2023 | 3,400 | 3,400 | ||||||
Unamortized discount and unamortized deferred financing costs (a) | (123 | ) | (154 | ) | ||||
Other arrangements and capital lease obligations | 286 | 215 | ||||||
Total long-term borrowings (b) | 17,927 | 18,131 | ||||||
Total borrowings (c) | $ | 19,198 | $ | 18,489 |
(a) | Unamortized deferred financing costs and certain lenders' fees associated with debt transactions were capitalized as discounts are amortized on a straight-line basis, which approximates the effective interest method, over the remaining term of the respective debt. |
(b) | As of December 31, 2017 and 2016, the fair value of the Company's long-term borrowings was $18.2 billion and $18.8 billion, respectively. The estimated fair value of the Company's long-term borrowings was primarily based on market trading prices and is considered to be a Level 2 measurement. |
(c) | The effective interest rate is not substantially different than the coupon rate on any of the Company's debt tranches. |
Year ended December 31, (in millions) | Par Amount | |||
2018 | $ | 197 | ||
2019 | 228 | |||
2020 | 1,404 | |||
2021 | 37 | |||
2022 | 3,759 | |||
Thereafter | 12,622 | |||
Total | $ | 18,247 |
(in millions) | Global Business Solutions | Global Financial Solutions | Network & Security Solutions | Totals | ||||||||||||
Balance as of January 1, 2016 | ||||||||||||||||
Goodwill | $ | 15,567 | $ | 2,054 | $ | 2,284 | $ | 19,905 | ||||||||
Accumulated impairment losses | (1,363 | ) | (683 | ) | (1,013 | ) | (3,059 | ) | ||||||||
14,204 | 1,371 | 1,271 | 16,846 | |||||||||||||
Acquisitions | 5 | — | — | 5 | ||||||||||||
Dispositions | (25 | ) | — | — | (25 | ) | ||||||||||
Other adjustments (primarily foreign currency) | (42 | ) | (88 | ) | — | (130 | ) | |||||||||
Balance as of December 31, 2016 | ||||||||||||||||
Goodwill | 15,505 | 1,966 | 2,284 | 19,755 | ||||||||||||
Accumulated impairment losses | (1,363 | ) | (683 | ) | (1,013 | ) | (3,059 | ) | ||||||||
14,142 | 1,283 | 1,271 | 16,696 | |||||||||||||
Acquisitions | 875 | — | — | 875 | ||||||||||||
Dispositions | — | (17 | ) | (48 | ) | (65 | ) | |||||||||
Other adjustments (primarily foreign currency) | 104 | 100 | — | 204 | ||||||||||||
Balance as of December 31, 2017 | ||||||||||||||||
Goodwill | 16,484 | 2,049 | 2,236 | 20,769 | ||||||||||||
Accumulated impairment losses | (1,363 | ) | (683 | ) | (1,013 | ) | (3,059 | ) | ||||||||
$ | 15,121 | $ | 1,366 | $ | 1,223 | $ | 17,710 |
Year ended December 31, | ||||
(in millions) | Amount | |||
2017 | $ | 752 | ||
2016 | 761 | |||
2015 | 843 |
As of December 31, | ||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||
Accumulated | Net of Accumulated | Accumulated | Net of Accumulated | |||||||||||||||||||||
(in millions) | Cost | Amortization | Amortization | Cost | Amortization | Amortization | ||||||||||||||||||
Customer relationships | $ | 8,124 | $ | (5,940 | ) | $ | 2,184 | $ | 7,399 | $ | (5,660 | ) | $ | 1,739 | ||||||||||
Other intangibles: | ||||||||||||||||||||||||
Conversion costs | $ | 302 | $ | (142 | ) | $ | 160 | $ | 248 | $ | (109 | ) | $ | 139 | ||||||||||
Contract costs | 324 | (179 | ) | 145 | 306 | (149 | ) | 157 | ||||||||||||||||
Software | 2,552 | (1,920 | ) | 632 | 2,236 | (1,726 | ) | 510 | ||||||||||||||||
Other, including trade names | 1,422 | (424 | ) | 998 | 1,375 | (381 | ) | 994 | ||||||||||||||||
Total other intangibles | $ | 4,600 | $ | (2,665 | ) | $ | 1,935 | $ | 4,165 | $ | (2,365 | ) | $ | 1,800 |
Year ended December 31, | ||||
(in millions) | Amount (a) | |||
2018 | $ | 705 | ||
2019 | 615 | |||
2020 | 530 | |||
2021 | 399 | |||
2022 | 310 |
Year ended December 31, (in millions) | Cost of services | Selling, general, and administrative | Total | |||||||||
2017 (c) | $ | 72 | $ | 173 | $ | 245 | ||||||
2016 (a) (c) | 112 | 151 | 263 | |||||||||
2015 (b) (c) | 130 | 199 | 329 |
(a) | Approximately $52 million of stock-based compensation expense was recognized in conjunction with the IPO. |
Year ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Risk-free interest rate | 2.28 | % | 2.08 | % | 1.87 | % | ||||||
Dividend yield | — | — | — | |||||||||
Expected volatility | 38.97 | % | 41.33 | % | 55.15 | % | ||||||
Expected term (in years) | 7 | 7 | 7 | |||||||||
Fair value of options | $ | 7.52 | $ | 5.33 | $ | 8.68 |
(options in millions) | Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value (in millions) | |||||||||
Outstanding as of December 31, 2015 | 41 | $ | 11.94 | ||||||||||
Granted | 2 | 12.62 | |||||||||||
Exercised | (2 | ) | 9.86 | ||||||||||
Canceled / Forfeited | (2 | ) | 15.39 | ||||||||||
Outstanding as of December 31, 2016 | 39 | $ | 12.00 | 6 years | $ | 98 | |||||||
Granted | — | — | |||||||||||
Exercised | (5 | ) | 9.94 | ||||||||||
Canceled / Forfeited | — | — | |||||||||||
Outstanding as of December 31, 2017 | 34 | $ | 12.27 | 6 years | $ | 150 | |||||||
Options exercisable as of December 31, 2017 | 24 | $ | 11.48 | 5 years | $ | 124 |
(awards/units in millions) | Awards/Units | Weighted-Average Grant-Date Fair Value | |||||
Non-vested as of December 31, 2015 | 32 | $ | 14.30 | ||||
Granted | 18 | 12.49 | |||||
Vested | (10 | ) | 13.91 | ||||
Canceled / Forfeited | (6 | ) | 13.74 | ||||
Non-vested December 31, 2016 | 34 | $ | 13.59 | ||||
Granted | 23 | 16.94 | |||||
Vested | (15 | ) | 13.86 | ||||
Canceled / Forfeited | (4 | ) | 14.11 | ||||
Non-vested as of December 31, 2017 (a) | 38 | $ | 15.47 |
(a) | Includes 7 million of shares subject to market conditions. |
(in millions) | Beginning Balance | Pretax Gain (Loss) Amount | Tax (Benefit) Expense | Net-of- Tax Amount | Ending Balance | |||||||||||||||
As of December 31, 2017 | ||||||||||||||||||||
Foreign currency translation adjustment (a) | $ | (1,317 | ) | $ | 165 | $ | (24 | ) | $ | 189 | $ | (1,128 | ) | |||||||
Pension liability adjustments | (98 | ) | 93 | 21 | 72 | (26 | ) | |||||||||||||
Derivative instruments | 3 | 9 | — | 9 | 12 | |||||||||||||||
Marketable securities | (2 | ) | — | — | — | (2 | ) | |||||||||||||
$ | (1,414 | ) | $ | 267 | $ | (3 | ) | $ | 270 | $ | (1,144 | ) | ||||||||
As of December 31, 2016 | ||||||||||||||||||||
Foreign currency translation adjustment (a) | $ | (1,169 | ) | $ | (149 | ) | $ | (1 | ) | $ | (148 | ) | $ | (1,317 | ) | |||||
Pension liability adjustments (b) | (136 | ) | 34 | (4 | ) | 38 | (98 | ) | ||||||||||||
Derivative instruments | — | 3 | — | 3 | 3 | |||||||||||||||
Marketable securities | (2 | ) | — | — | — | (2 | ) | |||||||||||||
$ | (1,307 | ) | $ | (112 | ) | $ | (5 | ) | $ | (107 | ) | $ | (1,414 | ) | ||||||
As of December 31, 2015 | ||||||||||||||||||||
Foreign currency translation adjustment (a) | $ | (889 | ) | $ | (261 | ) | $ | 19 | $ | (280 | ) | $ | (1,169 | ) | ||||||
Pension liability adjustments | (123 | ) | (19 | ) | (6 | ) | (13 | ) | (136 | ) | ||||||||||
Marketable securities | (5 | ) | 3 | — | 3 | (2 | ) | |||||||||||||
$ | (1,017 | ) | $ | (277 | ) | $ | 13 | $ | (290 | ) | $ | (1,307 | ) |
(a) | Net-of-tax Foreign currency translation adjustment for the years ended December 31, 2017, 2016, and 2015 is different than the amount presented on the consolidated statements of comprehensive income (loss) by $12 million, $(5) million, and $(10) million, respectively, due to the foreign currency translation adjustment related to noncontrolling interests not included above. |
(b) | 2016 pretax benefit includes an approximate $10 million reclassification out of OCI to "Interest expense, net" in the consolidated statements of operations related to the lump sum cash payout of certain U.S. based pension liabilities. |
(in millions) | Redeemable Noncontrolling Interest | |||
Balance as of January 1, 2015 | $ | 70 | ||
Distributions | (35 | ) | ||
Share of income | 34 | |||
Adjustment to redemption value of redeemable noncontrolling interest | 8 | |||
Balance as of December 31, 2015 | 77 | |||
Distributions | (33 | ) | ||
Share of income | 33 | |||
Adjustment to redemption value of redeemable noncontrolling interest | (4 | ) | ||
Balance as of December 31, 2016 | 73 | |||
Distributions | (31 | ) | ||
Share of income | 31 | |||
Adjustment to redemption value of redeemable noncontrolling interest | (1 | ) | ||
Balance as of December 31, 2017 | $ | 72 |
Year ended December 31, | ||||||||||||
(in millions, except per share amounts) | 2017 | 2016 | 2015 | |||||||||
Numerator: | ||||||||||||
Net income (loss) used in computing net income (loss) per share, basic and diluted | $ | 1,465 | $ | 420 | $ | (1,481 | ) | |||||
Denominator: | ||||||||||||
Shares used in computing net income (loss) per share, basic (a) | 916 | 902 | 192 | |||||||||
Effect of dilutive securities | 24 | 19 | — | |||||||||
Total dilutive securities | 940 | 921 | 192 | |||||||||
Basic net income (loss) per share | $ | 1.60 | $ | 0.47 | $ | (7.70 | ) | |||||
Diluted net income (loss) per share (b) | 1.56 | 0.46 | (7.70 | ) | ||||||||
Anti-dilutive shares excluded from diluted net income (loss) per share | 12 | 21 | 27 |
(a) | 2015 weighted-average shares calculated using 1,000 shares outstanding prior to the HoldCo Merger and the filing of the Company's prospectus in October 2015 and the Class A and Class B common stock outstanding after these transactions. |
(b) | Potentially dilutive securities whose effect would have been antidilutive are excluded from the computation of diluted earnings per share. |
• | The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. |
• | Intersegment revenues are eliminated in the segment that sells directly to the end market. |
• | Segment revenue excludes reimbursable debit network fees, postage, and other revenue. |
• | Segment EBITDA excludes Depreciation and amortization expense, Other operating expenses, and Other income (expense). Additionally, segment EBITDA is adjusted for items similar to certain of those used in calculating the Company's compliance with debt covenants. The additional items that are adjusted to determine segment EBITDA are: |
• | stock-based compensation and related expense is excluded; and |
• | Kohlberg Kravis Roberts & Co. (KKR) related items including annual sponsor and other fees for management, consulting, financial, contract termination, and other advisory services are excluded. Upon the Company's public offering on October 15, 2015, the Company is no longer required to pay management fees to KKR. |
• | For significant affiliates, segment revenue and segment EBITDA are reflected based on the Company's proportionate share of the results of the Company's investments in businesses accounted for under the equity method and consolidated subsidiaries with noncontrolling ownership interests. For other affiliates, the Company includes equity earnings in affiliates, excluding amortization expense, in segment revenue and segment EBITDA. |
• | Corporate operations include corporate-wide governance functions such as the Company's executive management team, tax, treasury, internal audit, corporate strategy, and certain accounting, human resources and legal costs related to supporting the corporate function. Costs incurred by Corporate that are attributable to a segment are allocated to the respective segment. |
Year ended December 31, 2017 | ||||||||||||||||||||
(in millions) | Global Business Solutions | Global Financial Solutions | Network & Security Solutions | Corporate | Totals | |||||||||||||||
Revenues: | ||||||||||||||||||||
Transaction and processing service fees | $ | 3,936 | $ | 1,418 | $ | 1,348 | $ | — | $ | 6,702 | ||||||||||
Product sales and other | 933 | 205 | 195 | — | 1,333 | |||||||||||||||
Equity earnings in affiliates | 30 | — | — | — | 30 | |||||||||||||||
Total segment revenues | $ | 4,899 | $ | 1,623 | $ | 1,543 | $ | — | $ | 8,065 | ||||||||||
Depreciation and amortization | $ | 457 | $ | 352 | $ | 126 | $ | 12 | $ | 947 | ||||||||||
Segment EBITDA | 1,824 | 680 | 729 | (167 | ) | 3,066 |
Year ended December 31, 2016 | ||||||||||||||||||||
(in millions) | Global Business Solutions | Global Financial Solutions | Network & Security Solutions | Corporate | Totals | |||||||||||||||
Revenues: | ||||||||||||||||||||
Transaction and processing service fees | $ | 3,819 | $ | 1,372 | $ | 1,309 | $ | — | $ | 6,500 | ||||||||||
Product sales and other | 826 | 221 | 176 | — | 1,223 | |||||||||||||||
Equity earnings in affiliates | 36 | — | — | — | 36 | |||||||||||||||
Total segment revenues | $ | 4,681 | $ | 1,593 | $ | 1,485 | $ | — | $ | 7,759 | ||||||||||
Depreciation and amortization | $ | 435 | $ | 357 | $ | 115 | $ | 14 | $ | 921 | ||||||||||
Segment EBITDA | 1,725 | 646 | 666 | (145 | ) | 2,892 |
Year ended December 31, 2015 | ||||||||||||||||||||
(in millions) | Global Business Solutions | Global Financial Solutions | Network & Security Solutions | Corporate | Totals | |||||||||||||||
Revenues: | ||||||||||||||||||||
Transaction and processing service fees | $ | 3,851 | $ | 1,323 | $ | 1,322 | $ | — | $ | 6,496 | ||||||||||
Product sales and other | 845 | 172 | 142 | — | 1,159 | |||||||||||||||
Equity earnings in affiliates | 35 | — | — | — | 35 | |||||||||||||||
Total segment revenues | $ | 4,731 | $ | 1,495 | $ | 1,464 | $ | — | $ | 7,690 | ||||||||||
Depreciation and amortization | $ | 490 | $ | 393 | $ | 91 | $ | 25 | $ | 999 | ||||||||||
Segment EBITDA | 1,681 | 547 | 639 | (140 | ) | 2,727 |
Year ended December 31, | ||||||||||||
(in millions) | 2017 | 2016 | 2015 | |||||||||
Total segment revenues | $ | 8,065 | $ | 7,759 | $ | 7,690 | ||||||
Adjustments: | ||||||||||||
Non wholly-owned entities (a) | 64 | 80 | 74 | |||||||||
Reimbursable debit network fees, postage, and other | 3,923 | 3,745 | 3,687 | |||||||||
Consolidated revenues | $ | 12,052 | $ | 11,584 | $ | 11,451 | ||||||
Total segment EBITDA | $ | 3,066 | $ | 2,892 | $ | 2,727 | ||||||
Adjustments: | ||||||||||||
Non wholly-owned entities (a) | 30 | 30 | 26 | |||||||||
Depreciation and amortization | (972 | ) | (949 | ) | (1,022 | ) | ||||||
Interest expense, net | (931 | ) | (1,078 | ) | (1,534 | ) | ||||||
Loss on debt extinguishment | (80 | ) | (70 | ) | (1,068 | ) | ||||||
Other items (b) | (132 | ) | (61 | ) | (180 | ) | ||||||
Income tax benefit (expense) | 729 | (81 | ) | (101 | ) | |||||||
Stock-based compensation | (245 | ) | (263 | ) | (329 | ) | ||||||
Net income (loss) attributable to First Data Corporation | $ | 1,465 | $ | 420 | $ | (1,481 | ) |
(a) | Net adjustment to reflect the Company's proportionate share of the results of the Company's investments in businesses accounted for under the equity method and consolidated subsidiaries with noncontrolling ownership interests. Segment revenue for the Company's significant affiliates is reflected based on the Company's proportionate share of the results of the Company's investments in businesses accounted for under the equity method and consolidated subsidiaries with noncontrolling ownership interests. For other affiliates, the Company includes equity earnings in affiliates, excluding amortization expense, in segment revenue. |
(b) | Includes restructuring, certain retention bonuses, non-normal course litigation and regulatory settlements, asset impairments, debt issuance expenses, KKR related items and “Other income" as presented in the consolidated statements of operations, which includes divestitures, derivative gains (losses), non-operating foreign currency gains (losses), and the gain on Visa Europe share sale. KKR related items represent KKR annual sponsorship fees for management, consulting, financial and other advisory services. Upon completing the IPO in October 2015, the Company is no longer obligated to pay KKR annual sponsorship fees. |
Year ended December 31, | ||||||||||||
(in millions) | 2017 | 2016 | 2015 | |||||||||
Segment depreciation and amortization | $ | 947 | $ | 921 | $ | 999 | ||||||
Adjustments for non-wholly owned entities | 70 | 75 | 83 | |||||||||
Amortization of initial payments for new contracts (a) | 56 | 65 | 51 | |||||||||
Total consolidated depreciation and amortization per consolidated statements of cash flows | 1,073 | 1,061 | 1,133 | |||||||||
Amortization of equity method investment (b) | (45 | ) | (47 | ) | (60 | ) | ||||||
Amortization of initial payments for new contracts (a) | (56 | ) | (65 | ) | (51 | ) | ||||||
Total consolidated depreciation and amortization per consolidated statements of operations | $ | 972 | $ | 949 | $ | 1,022 |
(a) | Included in "Transaction and processing service fees" as contra-revenue in the Company's consolidated statements of operations. |
(b) | Included in "Equity earnings in affiliates" in the Company's consolidated statements of operations. |
(in millions) | United States | International | Total | |||||||||
Revenues: | ||||||||||||
2017 | $ | 10,201 | $ | 1,851 | $ | 12,052 | ||||||
2016 | 9,890 | 1,694 | 11,584 | |||||||||
2015 | 9,795 | 1,656 | 11,451 | |||||||||
Long-Lived Assets: | ||||||||||||
2017 | $ | 20,324 | $ | 2,456 | $ | 22,780 | ||||||
2016 | 18,846 | 2,272 | 21,118 | |||||||||
2015 | 19,400 | 2,316 | 21,716 |
Year ended December 31, | ||||||||||||
(in millions) | 2017 | 2016 | 2015 | |||||||||
Components of pretax income (loss): | ||||||||||||
Domestic | $ | 484 | $ | 492 | $ | (1,332 | ) | |||||
Foreign | 451 | 249 | 165 | |||||||||
$ | 935 | $ | 741 | $ | (1,167 | ) | ||||||
Provision for income taxes: | ||||||||||||
Federal | $ | (795 | ) | $ | 20 | $ | 7 | |||||
State and local | (32 | ) | 20 | 14 | ||||||||
Foreign | 98 | 41 | 80 | |||||||||
Income tax (benefit) expense | $ | (729 | ) | $ | 81 | $ | 101 | |||||
Effective income tax rate | (78 | )% | 11 | % | (9 | )% |
Year ended December 31, | |||||||||
2017 | 2016 | 2015 | |||||||
Federal statutory rate | 35 | % | 35 | % | 35 | % | |||
State income taxes, net of federal income tax benefit | 2 | 2 | 3 | ||||||
Nontaxable income from noncontrolling interests | (7 | ) | (11 | ) | 6 | ||||
Impact of foreign operations (a) | (1 | ) | 13 | (1 | ) | ||||
Valuation allowances | (147 | ) | (35 | ) | (54 | ) | |||
Liability for unrecognized tax benefits | 2 | — | (2 | ) | |||||
Prior year adjustments (b) | (10 | ) | 3 | 4 | |||||
Enacted tax rate changes | 27 | (1 | ) | — | |||||
Other tax reform bill impact for foreign related items | 17 | — | — | ||||||
Equity Compensation | — | 5 | — | ||||||
Impact of divestiture | 2 | — | — | ||||||
Other | 2 | — | — | ||||||
Effective tax rate | (78 | )% | 11 | % | (9 | )% |
(a) | The impact of foreign operations includes the effects of earnings and profits adjustments, foreign losses, and differences between foreign tax expense and foreign taxes eligible for the U.S. foreign tax credit. |
(b) | Includes prior year true ups for certain foreign and state net operating loss carryforwards as a result of tax rate and restructuring changes. |
Year ended December 31, | ||||||||||||
(in millions) | 2017 | 2016 | 2015 | |||||||||
Current: | ||||||||||||
Federal | $ | 8 | $ | 22 | $ | 5 | ||||||
State and local | 23 | 24 | 23 | |||||||||
Foreign | 93 | 73 | 80 | |||||||||
124 | 119 | 108 | ||||||||||
Deferred: | ||||||||||||
Federal | (803 | ) | (2 | ) | 2 | |||||||
State and local | (55 | ) | (4 | ) | (9 | ) | ||||||
Foreign | 5 | (32 | ) | — | ||||||||
(853 | ) | (38 | ) | (7 | ) | |||||||
Income tax (benefit) expense | $ | (729 | ) | $ | 81 | $ | 101 |
As of December 31, | ||||||||
(in millions) | 2017 | 2016 | ||||||
Deferred tax assets related to: | ||||||||
Reserves and other accrued expenses | $ | 66 | $ | — | ||||
Employee related liabilities | 121 | 176 | ||||||
Deferred revenues | 30 | 34 | ||||||
Net operating losses and tax credit carryforwards | 2,281 | 3,122 | ||||||
U.S. foreign tax credits on undistributed earnings | 39 | 252 | ||||||
Total deferred tax assets | 2,537 | 3,584 | ||||||
Valuation allowance | (1,214 | ) | (2,396 | ) | ||||
Realizable deferred tax assets | 1,323 | 1,188 | ||||||
Deferred tax liabilities related to: | ||||||||
Property, equipment, and intangibles | (772 | ) | (969 | ) | ||||
Reserves and other accrued expenses | — | (49 | ) | |||||
Pension obligations | (67 | ) | (4 | ) | ||||
Investment in affiliates and other | (209 | ) | (217 | ) | ||||
Tax on foreign undistributed earnings | (12 | ) | (252 | ) | ||||
Foreign exchange gain | (35 | ) | (91 | ) | ||||
Total deferred tax liabilities | (1,095 | ) | (1,582 | ) | ||||
Net deferred tax asset (liabilities) | $ | 228 | $ | (394 | ) |
As of December 31, | ||||||||
(in millions) | 2017 | 2016 | ||||||
Deferred tax assets | $ | 305 | $ | 15 | ||||
Deferred tax liabilities | (77 | ) | (409 | ) | ||||
Net deferred tax asset (liabilities) | $ | 228 | $ | (394 | ) |
As of December 31, | ||||
(in millions) | 2017 | |||
Federal net operating loss carryforwards (a) | $ | 4,567 | ||
State net operating loss carryforwards (b) | 6,069 | |||
Foreign net operating loss carryforwards (c) | 3,403 | |||
General business credit carryforwards (d) | 12 | |||
Minimum tax credit carryforwards (e) | 30 |
(a) | Will expire if not utilized, for the years 2018, 2019, 2020 of $0.1 million, $0.8 million, $0.1 million, respectively, and the remaining through 2037. |
(b) | Will expire if not utilized, for the years 2018, 2019, 2020 of $90 million, $245 million, $192 million, respectively, and the remaining through 2037. |
(c) | Foreign net operating loss carryforwards of $74 million, if not utilized, will expire in years 2017 through 2035. The remaining foreign net operating loss carryforwards of $3.3 billion have an indefinite life. |
(d) | If not utilized, these carryforwards will expire in years 2027 through 2037. |
(e) | These carryforwards are refundable credits and will be utilized from 2018 through 2021. |
(in millions) | Unrecognized Tax Benefits | |||
Balance as of January 1, 2015 | $ | 236 | ||
Increases for tax positions of prior years | 25 | |||
Decreases for tax positions of prior years | (4 | ) | ||
Increases for tax positions related to the current period | 1 | |||
Decreases for cash settlements with taxing authorities | (3 | ) | ||
Decreases due to the lapse of the applicable statute of limitations | (6 | ) | ||
Balance as of December 31, 2015 | 249 | |||
Increases for tax positions of prior years | 2 | |||
Decreases for tax positions of prior years | (1 | ) | ||
Increases for tax positions related to the current period | — | |||
Decreases for cash settlements with taxing authorities | (1 | ) | ||
Decreases due to the lapse of the applicable statute of limitations | (9 | ) | ||
Balance as of December 31, 2016 | 240 | |||
Increases for tax positions of prior years | 14 | |||
Decreases for tax positions of prior years | (10 | ) | ||
Decreases for tax positions related to the current period | (3 | ) | ||
Decreases for cash settlements with taxing authorities | (1 | ) | ||
Decreases due to the lapse of the applicable statute of limitations | (7 | ) | ||
Decreases due to change in tax rates | (13 | ) | ||
Balance as of December 31, 2017 | $ | 220 |
Year ended December 31, | ||||||||||||
(in millions) | 2017 | 2016 | 2015 | |||||||||
Current year accrued interest expense (net of related tax benefits) | $ | 6 | $ | 5 | $ | 7 | ||||||
Cumulative accrued interest and penalties (net of related tax benefits) | 60 | 48 | 45 |
Year ended December 31, | ||||||||||||
(in millions) | 2017 | 2016 | 2015 | |||||||||
Restructuring, net | $ | 83 | $ | 49 | $ | 53 | ||||||
Deal and deal integration costs | 27 | — | — | |||||||||
Asset impairment | 13 | — | — | |||||||||
Other | 20 | 2 | — | |||||||||
Other operating expenses | $ | 143 | $ | 51 | $ | 53 |
Year ended December 31, | ||||||||||||
(in millions) | 2017 | 2016 | 2015 | |||||||||
Global Business Solutions | $ | (36 | ) | $ | (9 | ) | $ | (20 | ) | |||
Global Financial Solutions | (17 | ) | (10 | ) | (11 | ) | ||||||
Network & Security Solutions | (8 | ) | (3 | ) | (3 | ) | ||||||
Corporate | (22 | ) | (27 | ) | (19 | ) | ||||||
Restructuring, net | $ | (83 | ) | $ | (49 | ) | $ | (53 | ) |
(in millions) | Employee Severance | Other | ||||||
Remaining accrual as of January 1, 2016 | $ | 29 | $ | 1 | ||||
Restructuring, net | 33 | 16 | ||||||
Loss on sale of property and equipment, net | — | (13 | ) | |||||
Cash payments and other | (53 | ) | (4 | ) | ||||
Remaining accrual as of December 31, 2016 | 9 | — | ||||||
Restructuring, net | 83 | — | ||||||
Cash payments and other | (71 | ) | — | |||||
Remaining accrual as of December 31, 2017 | $ | 21 | $ | — |
As of December 31, | ||||||||
(in millions) | 2017 | 2016 | ||||||
Settlement assets: | ||||||||
Cash and cash equivalents | $ | 1,738 | $ | 1,620 | ||||
Due from card associations, bank partners, and merchants | 18,625 | 13,175 | ||||||
Total settlement assets | $ | 20,363 | $ | 14,795 | ||||
Settlement obligations: | ||||||||
Payment instruments outstanding | $ | 11 | $ | 12 | ||||
Card settlements due to merchants | 20,352 | 14,783 | ||||||
Total settlement obligations | $ | 20,363 | $ | 14,795 |
(in millions) | ||||
Other current assets | $ | 58 | ||
Property and equipment | 7 | |||
Intangible assets | 463 | |||
Goodwill | 432 | |||
Current liabilities | (58 | ) | ||
Deferred tax liabilities | (139 | ) |
(in millions) | Acquisition-Date Fair Value | Useful Life (Years) | ||||
Agent relationships | $ | 296 | 18 | |||
Merchant relationships | 84 | 7 | ||||
Software systems | 39 | 5 | ||||
Residual buyouts | 23 | 4 | ||||
Trade name | 21 | 9 | ||||
$ | 463 |
(in millions) | ||||
Other current assets | $ | 27 | ||
Property and equipment | 3 | |||
Intangible assets | 450 | |||
Goodwill | 389 | |||
Current liabilities | (25 | ) | ||
Deferred tax liabilities | (85 | ) |
(in millions) | Acquisition-Date Fair Value | Useful Life (Years) | ||||
Agent relationships | $ | 195 | 18 | |||
Merchant relationships | 216 | 10 | ||||
Software systems | 27 | 5 | ||||
Trade name | 12 | 5 | ||||
$ | 450 |
• | Floating to fixed interest rate collar contracts: The Company uses interest rate collar contracts to mitigate its exposure to interest rate fluctuations on interest payments related to variable rate debt. No payments or receipts are exchanged on interest rate collar contracts unless interest rates rise or fall to exceed a predetermined ceiling or floor rate. The Company uses these contracts in a qualifying hedging relationship. |
• | Foreign exchange contracts: The Company uses cross-currency swaps to protect the net investment in certain foreign subsidiaries and/or affiliates with respect to changes in foreign currency exchange rates. The Company uses these contracts in both qualifying and non-qualifying hedging relationships. |
As of December 31, | ||||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||||
(in millions) | Notional Currency | Notional Value | Assets (a) | Liabilities (a) | Notional Currency | Notional Value | Assets (a) | Liabilities (a) | ||||||||||||||||||
Derivatives designated as hedges of net investments in foreign operations: | ||||||||||||||||||||||||||
Foreign exchange contracts (c) | AUD | 100 | $ | 28 | $ | — | AUD | 211 | $ | 57 | $ | — | ||||||||||||||
Foreign exchange contracts (b) | EUR | 915 | — | 76 | EUR | — | — | — | ||||||||||||||||||
Foreign exchange contracts (c) | GBP | 150 | — | 6 | GBP | 300 | 78 | — | ||||||||||||||||||
Foreign exchange contracts (c) | CAD | 95 | — | 2 | CAD | 130 | 9 | — | ||||||||||||||||||
28 | 84 | 144 | — | |||||||||||||||||||||||
Derivatives designated as cash flow hedges: | ||||||||||||||||||||||||||
Interest rate collar contracts (d) | USD | 4,300 | 12 | — | USD | 3,000 | 3 | — | ||||||||||||||||||
$ | 40 | $ | 84 | $ | 147 | $ | — |
(a) | The Company's derivatives are subject to master netting agreements to the extent that the swaps are with the same counterparty. The terms of those agreements require that the Company net settle the outstanding positions at the option of the counterparty upon certain events of default. |
(b) | The Company entered into new foreign exchange contracts with a notional value of EUR 915 million on June 14, 2017. |
(c) | Three cross-currency swaps matured in April 2017 (notional values of AUD 111 million, GBP 150 million and CAD 35 million). The Company received $90 million related to these swaps. |
Year ended December 31, | ||||||||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||||||
(in millions, pretax) | Interest Rate Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Foreign Exchange Contracts | ||||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||||||
(Loss) gain recognized in "Foreign currency translation adjustment" in the consolidated statements of comprehensive income (loss) (effective portion) | $ | — | $ | (98 | ) | $ | — | $ | 58 | $ | — | $ | 79 | |||||||||||
Gain recognized in "Derivative instruments" in the consolidated statements of comprehensive income (loss) (effective portion) (a) | 9 | — | 3 | — | — | — | ||||||||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||||||
(Loss) gain recognized in "Other income" in the consolidated statements of operations | $ | — | $ | — | $ | (5 | ) | $ | — | $ | (19 | ) | $ | 2 |
(a) | Interest rate collar contracts. |
Year ended December 31, | ||||||||||||
(in millions, after tax) | 2017 | 2016 | 2015 | |||||||||
Accumulated gain included in other comprehensive income (loss) at beginning of the period | $ | 177 | $ | 116 | $ | 67 | ||||||
(Decrease) increase in fair value of derivatives that qualify for hedge accounting, net of tax (a) (b) | (56 | ) | 61 | 49 | ||||||||
Accumulated gain included in other comprehensive income at end of the period | $ | 121 | $ | 177 | $ | 116 |
(a) | Gains are included in "Derivative instruments" and “Foreign currency translation adjustment” on the consolidated statements of comprehensive income (loss). |
(b) | Net of $33 million and $0 million tax benefit for the years ended December 31, 2017 and 2016, respectively. Net of $30 million of the tax expense for the year ended December 31, 2015. |
Year ended December 31, (in millions) | Amount | |||
2018 | $ | 63 | ||
2019 | 59 | |||
2020 | 45 | |||
2021 | 39 | |||
2022 | 35 | |||
Thereafter | 105 | |||
Total | $ | 346 |
Year ended December 31, (in millions) | Amount | |||
2017 | $ | 10 | ||
2016 | 11 | |||
2015 | 12 |
As of December 31, | ||||||||
(in millions) | 2017 | 2016 | ||||||
U.K. plan: | ||||||||
Plan benefit obligations | $ | (686 | ) | $ | (713 | ) | ||
Fair value of plan assets | 891 | 808 | ||||||
Net pension assets (a) | 205 | 95 | ||||||
U.S. and other foreign plans: | ||||||||
Plan benefit obligations | (234 | ) | (222 | ) | ||||
Fair value of plan assets | 166 | 137 | ||||||
Net pension liabilities (b) | (68 | ) | (85 | ) | ||||
Funded status of the plans | $ | 137 | $ | 10 |
(a) | Pension assets are included in “Other long-term assets” of the consolidated balance sheets. |
(b) | Pension liabilities are included in “Other long-term liabilities” of the consolidated balance sheets. |
Year ended December 31, (in millions) | Amount | |||
2018 | $ | 47 | ||
2019 | 48 | |||
2020 | 49 | |||
2021 | 50 | |||
2022 | 52 | |||
2023-2027 | 282 |
Year ended December 31, | ||||||||||||
(in millions) | 2017 | 2016 | 2015 | |||||||||
Investment gains | $ | 1 | $ | 35 | $ | — | ||||||
Derivatives | — | (5 | ) | (17 | ) | |||||||
Divestitures | 18 | (34 | ) | 5 | ||||||||
Non-operating foreign currency (loss) gains | (1 | ) | 19 | 41 | ||||||||
Other miscellaneous (expense) income | (2 | ) | 2 | — | ||||||||
Other income | $ | 16 | $ | 17 | $ | 29 |
As of December 31, | ||||||||
(in millions) | 2017 | 2016 | ||||||
Prepaid expenses and other current assets: | ||||||||
Prepaid expenses | $ | 156 | $ | 168 | ||||
Inventory | 98 | 77 | ||||||
Other | 81 | 115 | ||||||
Total Prepaid expenses and other current assets | $ | 335 | $ | 360 | ||||
Property and equipment: | ||||||||
Land | $ | 58 | $ | 56 | ||||
Buildings | 270 | 269 | ||||||
Leasehold improvements | 96 | 89 | ||||||
Equipment and furniture | 1,508 | 1,386 | ||||||
Equipment under capital lease | 607 | 499 | ||||||
Property and equipment | 2,539 | 2,299 | ||||||
Less: Accumulated depreciation | (1,588 | ) | (1,416 | ) | ||||
Total Property and equipment, net of accumulated depreciation | $ | 951 | $ | 883 | ||||
Accounts payable and accrued liabilities: | ||||||||
Accounts payable | $ | 247 | $ | 206 | ||||
Accrued interest expense | 154 | 169 | ||||||
Other accrued expenses | 712 | 685 | ||||||
Other | 546 | 504 | ||||||
Total Accounts payable and accrued liabilities | $ | 1,659 | $ | 1,564 |
As of December 31, | ||||||||
(in millions) | 2017 | 2016 | ||||||
Total current assets | $ | 5,427 | $ | 4,070 | ||||
Total long-term assets | 239 | 84 | ||||||
Total assets | $ | 5,666 | $ | 4,154 | ||||
Total current liabilities | $ | 5,347 | $ | 3,994 | ||||
Total long-term liabilities | 8 | 9 | ||||||
Total liabilities | $ | 5,355 | $ | 4,003 |
Year ended December 31, | ||||||||||||
(in millions) | 2017 | 2016 | 2015 | |||||||||
Net operating revenues | $ | 1,374 | $ | 1,434 | $ | 1,424 | ||||||
Operating expenses | 712 | 666 | 666 | |||||||||
Operating income | $ | 662 | $ | 768 | $ | 758 | ||||||
Net income | $ | 646 | $ | 749 | $ | 744 | ||||||
FDC equity earnings | 222 | 260 | 239 |
Year ended December 31, (in millions) | Amount | |||
2018 | $ | 29 | ||
2019 | 4 |
2017 | ||||||||||||||||
(in millions, except per share amounts) | First | Second | Third | Fourth | ||||||||||||
Revenues | $ | 2,801 | $ | 3,025 | $ | 3,076 | $ | 3,150 | ||||||||
Expenses | 2,475 | 2,558 | 2,659 | 2,652 | ||||||||||||
Operating profit | $ | 326 | $ | 467 | $ | 417 | $ | 498 | ||||||||
Net income (loss) | $ | 79 | $ | 243 | $ | 340 | $ | 1,002 | ||||||||
Net income (loss) attributable to First Data Corporation | 36 | 185 | 296 | 948 | ||||||||||||
Net income (loss) per share: | ||||||||||||||||
Basic | 0.04 | 0.20 | 0.32 | 1.03 | ||||||||||||
Diluted | 0.04 | 0.20 | 0.31 | 1.00 | ||||||||||||
2016 | ||||||||||||||||
(in millions, except per share amounts) | First | Second | Third | Fourth | ||||||||||||
Revenues | $ | 2,777 | $ | 2,928 | $ | 2,936 | $ | 2,943 | ||||||||
Expenses | 2,539 | 2,498 | 2,482 | 2,453 | ||||||||||||
Operating profit | $ | 238 | $ | 430 | $ | 454 | $ | 490 | ||||||||
Net (loss) income | $ | (6 | ) | $ | 215 | $ | 200 | $ | 251 | |||||||
Net (loss) income attributable to First Data Corporation | (56 | ) | 152 | 132 | 192 | |||||||||||
Net (loss) income per share: | ||||||||||||||||
Basic | (0.06 | ) | 0.17 | 0.15 | 0.21 | |||||||||||
Diluted | (0.06 | ) | 0.17 | 0.14 | 0.21 |
Additions | Deductions | ||||||||||||||||||||
Description (in millions) | Balance at Beginning of Period | Charged to Costs and Expenses | Reclassifications from Other Accounts (a) | Write-offs Against Assets | Balance at End of Period | ||||||||||||||||
Year ended December 31, 2017 deducted from receivables | $ | 87 | $ | 82 | $ | 1 | $ | 116 | $ | 54 | |||||||||||
Year ended December 31, 2016 deducted from receivables | 83 | 85 | 1 | 82 | 87 | ||||||||||||||||
Year ended December 31, 2015 deducted from receivables | 72 | 79 | 3 | 71 | 83 |
(a) | Amounts related to reclassifications from "Accounts payable and accrued liabilities" to "Allowance for doubtful accounts" in the Company's consolidated balance sheets. |
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