Last10K.com

Fidelity National Information Services, Inc. (FIS) SEC Filing 10-Q Quarterly report for the period ending Sunday, June 30, 2019

Fidelity National Information Services,

CIK: 1136893 Ticker: FIS
fislogoq22018a19fa08.jpg    
Exhibit 99.1
News Release

FIS Reports Second Quarter 2019 Results for FIS and Worldpay, and Issues Combined Company Guidance for 2019

FIS GAAP revenue flat; organic revenue increased 5 percent
FIS Diluted EPS of $0.47; Adjusted EPS of $1.78
Worldpay GAAP revenue increased 7 percent; constant currency revenue increased 8 percent
Worldpay Diluted EPS of $0.46; Adjusted EPS of $1.24
FIS issues consolidated guidance for third and fourth quarter 2019, including the impact of the Worldpay acquisition, which closed on July 31, 2019

JACKSONVILLE Fla., August 6, 2019 - FIS™ (NYSE:FIS), a global leader in financial services technology, today reported its second quarter 2019 results and also reported second quarter 2019 results for Worldpay, Inc. (Worldpay) following the July 31, 2019 acquisition of Worldpay by FIS.

FIS Second Quarter 2019 Results

“We are very pleased with our strong quarter, which was underpinned by robust sales and continued operational execution,” said Gary Norcross, FIS chairman, president and chief executive officer. “Our recent closing of the Worldpay acquisition is a demonstrable proof point in our overall growth strategy. We are confident that our focus on innovating with purpose to advance the way the world pays, banks and invests will continue to deliver long-term value to our clients and shareholders.”

On a GAAP basis, revenue was flat at $2,112 million from $2,106 million in the prior year quarter driven by solid growth in the continuing operations, partially offset by the impact of divestitures in 2018. Net earnings attributable to common stockholders was $154 million for the quarter, or $0.47 per diluted share, compared to $0.64 per diluted share in the prior year quarter, a decrease of 27 percent.

On an adjusted basis, organic revenue increased 5 percent, excluding the impact of divestitures and foreign currency fluctuations. Adjusted EBITDA margin expanded 170 basis points to 37.6 percent. Adjusted net earnings was $582 million, or $1.78 per diluted share, compared to $1.63 per diluted share in the prior year quarter, an increase of 9 percent.

($ millions, except per share data, unaudited)
 
Three Months Ended June 30,
 
 
 
 
 
 
%
 
Organic
 
 
2019
 
2018
 
Change
 
Growth
Revenue
 
$
2,112

 
$
2,106

 
 
5%
Integrated Financial Solutions
 
1,179

 
1,124

 
5%
 
6%
Global Financial Solutions
 
865

 
899

 
(4)%
 
4%
Corporate and Other
 
68

 
83

 
(18)%
 
3%
Adjusted EBITDA
 
$
794

 
$
757

 
5%
 
 
Adjusted EBITDA Margin
 
37.6
%
 
35.9
%
 
170 bps
 
 
Net earnings attributable to FIS common stockholders (GAAP)
 
$
154

 
$
212

 
(27)%
 
 
Diluted EPS (GAAP)
 
$
0.47

 
$
0.64

 
(27)%
 
 
Adjusted net earnings
 
$
582

 
$
544

 
7%
 
 
Adjusted EPS
 
$
1.78

 
$
1.63

 
9%
 
 




The following information was filed by Fidelity National Information Services, Inc. (FIS) on Tuesday, August 6, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

 
 
 
 
 
 
 
 
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________
Form 10-Q
_______________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
 
to
 


For the transition period from  to
Commission File No. 001-16427
_______________________________________________
Fidelity National Information Services, Inc.
(Exact name of registrant as specified in its charter)
Georgia
 
 
37-1490331
(State or other jurisdiction of incorporation or organization)
 
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
 
 
 
601 Riverside Avenue
 
 
 
Jacksonville
Florida
 
32204
(Address of principal executive offices)
 
(Zip Code)
(904438-6000
(Registrant’s telephone number, including area code)
(Former Name or Former Address, if Changed Since Last Report)



Securities registered pursuant to Section 12(b) of the Act:
 
 
 
 
 
 
 
Trading
 
Name of each exchange
Title of each class
 
Symbol(s)
 
on which registered
Common Stock, par value $0.01 per share
 
FIS
 
New York Stock Exchange
0.400% Senior Notes due 2021
 
FIS21A
 
New York Stock Exchange
Floating Rate Senior Notes due 2021
 
FIS21B
 
New York Stock Exchange
0.125% Senior Notes due 2021
 
FIS21C
 
New York Stock Exchange
1.700% Senior Notes due 2022
 
FIS22B
 
New York Stock Exchange
0.750% Senior Notes due 2023
 
FIS23A
 
New York Stock Exchange
1.100% Senior Notes due 2024
 
FIS24A
 
New York Stock Exchange
2.602% Senior Notes due 2025
 
FIS25A
 
New York Stock Exchange
1.500% Senior Notes due 2027
 
FIS27
 
New York Stock Exchange
2.000% Senior Notes due 2030
 
FIS30
 
New York Stock Exchange
3.360% Senior Notes due 2031
 
FIS31
 
New York Stock Exchange
2.950% Senior Notes due 2039
 
FIS39
 
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer  
Smaller reporting company
 
 
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES NO
As of August 5, 2019, 613,444,279 shares of the Registrant’s Common Stock were outstanding.
 
 
 
 
 
 
 
 
 
 



FORM 10-Q
QUARTERLY REPORT
Quarter Ended June 30, 2019
INDEX
 
Page
 
 
 


1





FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions, except per share amounts)
(Unaudited)
 
June 30, 2019
 
December 31, 2018
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
9,756

 
$
703

Settlement deposits
538

 
700

Trade receivables, net of allowance for doubtful accounts of $27 and $17 as of
June 30, 2019 and December 31, 2018, respectively
1,366

 
1,472

Contract assets
122

 
123

Settlement receivables
289

 
281

Other receivables
137

 
166

Prepaid expenses and other current assets
297

 
288

Total current assets
12,505

 
3,733

Property and equipment, net
541

 
587

Goodwill
13,542

 
13,545

Intangible assets, net
2,863

 
3,132

Computer software, net
1,798

 
1,795

Other noncurrent assets
1,049

 
503

Deferred contract costs, net
561

 
475

Total assets
$
32,859

 
$
23,770

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable, accrued and other liabilities
$
1,030

 
$
1,099

Settlement payables
792

 
972

Deferred revenue
788

 
739

Short-term borrowings
1,507

 
267

Current portion of long-term debt
53

 
48

Total current liabilities
4,170

 
3,125

Long-term debt, excluding current portion
16,682

 
8,670

Deferred income taxes
1,295

 
1,360

Other long-term liabilities
664

 
326

Deferred revenue
56

 
67

Total liabilities
22,867

 
13,548

Equity:
 
 
 
FIS stockholders’ equity:
 
 
 
Preferred stock, $0.01 par value, 200 shares authorized, none issued and outstanding as of June 30, 2019 and December 31, 2018

 

Common stock, $0.01 par value, 600 shares authorized, 433 and 433 shares issued as of June 30, 2019 and December 31, 2018
4

 
4

Additional paid in capital
10,887

 
10,800

Retained earnings
4,599

 
4,528

Accumulated other comprehensive earnings (loss)
(438
)
 
(430
)
Treasury stock, $0.01 par value, 109 and 106 common shares as of June 30, 2019 and December 31, 2018, respectively, at cost
(5,067
)
 
(4,687
)
Total FIS stockholders’ equity
9,985

 
10,215

Noncontrolling interest
7

 
7

Total equity
9,992

 
10,222

Total liabilities and equity
$
32,859

 
$
23,770


See accompanying notes to unaudited condensed consolidated financial statements.

2


FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(In millions, except per share amounts)
(Unaudited)

 
Three months ended
June 30,
 
Six months ended
June 30,
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
Revenue
$
2,112

 
$
2,106

 
$
4,169

 
$
4,172

Cost of revenue
1,404

 
1,414

 
2,785

 
2,828

Gross profit
708

 
692

 
1,384

 
1,344

Selling, general and administrative expenses
317

 
339

 
678

 
697

Operating income
391

 
353

 
706

 
647

Other income (expense):
 
 
 
 
 
 
 
Interest expense, net
(72
)
 
(73
)
 
(147
)
 
(144
)
Other income (expense), net
(120
)
 
(4
)
 
(172
)
 
(2
)
Total other income (expense), net
(192
)
 
(77
)
 
(319
)
 
(146
)
Earnings before income taxes and equity method investment earnings (loss)
199

 
276

 
387

 
501

Provision (benefit) for income taxes
40

 
51

 
72

 
85

Equity method investment earnings (loss)
(4
)
 
(7
)
 
(11
)
 
(8
)
Net earnings
155

 
218

 
304

 
408

Net (earnings) loss attributable to noncontrolling interest
(1
)
 
(6
)
 
(2
)
 
(14
)
Net earnings attributable to FIS common stockholders
$
154

 
$
212

 
$
302

 
$
394

 
 
 
 
 
 
 
 
Net earnings per share — basic attributable to FIS common stockholders
$
0.48

 
$
0.64

 
$
0.93

 
$
1.20

Weighted average shares outstanding — basic
324

 
329

 
323

 
329

Net earnings per share — diluted attributable to FIS common stockholders
$
0.47

 
$
0.64

 
$
0.92

 
$
1.18

Weighted average shares outstanding — diluted
327

 
333

 
327

 
334


See accompanying notes to unaudited condensed consolidated financial statements.



3



FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Earnings
(In millions)
(Unaudited)

 
Three months ended June 30,
 
Six months ended June 30,
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
 
 
$
155

 
 
 
$
218

 
 
 
$
304

 
 
 
$
408

Other comprehensive earnings, before tax:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gain (loss) on derivatives
$
(16
)
 
 
 
$

 
 
 
$
(16
)
 
 
 
$

 
 
Reclassification adjustment for (gains) losses included in net earnings
(4
)
 
 
 

 
 
 
(4
)
 
 
 

 
 
Unrealized gain (loss) on derivatives, net
(20
)
 
 
 

 
 
 
(20
)
 
 
 

 
 
Foreign currency translation adjustments
11

 
 
 
(102
)
 
 
 
17

 
 
 
(88
)
 
 
Minimum pension liability adjustment

 
 
 

 
 
 
(4
)
 
 
 

 
 
Other comprehensive earnings (loss), before tax:
(9
)
 
 
 
(102
)
 
 
 
(7
)
 
 
 
(88
)
 
 
Provision for income tax expense (benefit) related to items of other comprehensive earnings
2

 
 
 

 
 
 
1

 
 
 

 
 
Other comprehensive earnings (loss), net of tax
$
(11
)
 
(11
)
 
$
(102
)
 
(102
)
 
$
(8
)
 
(8
)
 
$
(88
)
 
(88
)
Comprehensive earnings:
 
 
144

 
 
 
116

 
 
 
296

 
 
 
320

Net (earnings) loss attributable to noncontrolling interest
 
 
(1
)
 
 
 
(6
)
 
 
 
(2
)
 
 
 
(14
)
Other comprehensive (earnings) loss attributable to noncontrolling interest
 
 

 
 
 
17

 
 
 

 
 
 
17

Comprehensive earnings attributable to FIS common stockholders
 
 
$
143

 
 
 
$
127

 
 
 
$
294

 
 
 
$
323

See accompanying notes to unaudited condensed consolidated financial statements.







4


FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Equity
Three and six months ended June 30, 2019
(In millions, except per share amounts)
(Unaudited)
 
 
 
 
 
Amount
 
 
 
 
 
FIS Stockholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
Number of shares
 
 
 
Additional
 
 
 
other
 
 
 
 
 
 
 
Common
 
Treasury
 
Common
 
paid in
 
Retained
 
comprehensive
 
Treasury
 
Noncontrolling
 
Total
 
shares
 
shares
 
stock
 
capital
 
earnings
 
earnings (loss)
 
stock
 
interest
 
equity
Balances, March 31, 2019
433

 
(110
)
 
$
4

 
$
10,844

 
$
4,558

 
$
(427
)
 
$
(5,083
)
 
$
7

 
$
9,903

Exercise of stock options

 
1

 

 
19

 

 

 
16

 

 
35

Stock-based compensation

 

 

 
24

 

 

 

 

 
24

Cash dividends paid ($0.35 per share per quarter) and other distributions

 

 

 

 
(113
)
 

 

 
(1
)
 
(114
)
Net earnings

 

 

 

 
154

 

 

 
1

 
155

Other comprehensive earnings, net of tax

 

 

 

 

 
(11
)
 

 

 
(11
)
Balances, June 30, 2019
433

 
(109
)
 
$
4

 
$
10,887

 
$
4,599

 
$
(438
)
 
$
(5,067
)
 
$
7

 
$
9,992


 
 
 
 
 
Amount
 
 
 
 
 
FIS Stockholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
Number of shares
 
 
 
Additional
 
 
 
other
 
 
 
 
 
 
 
Common
 
Treasury
 
Common
 
paid in
 
Retained
 
comprehensive
 
Treasury
 
Noncontrolling
 
Total
 
shares
 
shares
 
stock
 
capital
 
earnings
 
earnings (loss)
 
stock
 
interest
 
equity
Balances, December 31, 2018
433

 
(106
)
 
$
4

 
$
10,800

 
$
4,528

 
$
(430
)
 
$
(4,687
)
 
$
7

 
$
10,222

Exercise of stock options

 
1

 

 
44

 

 

 
43

 

 
87

Treasury shares held for taxes due upon exercise of stock options

 

 

 

 

 

 
(23
)
 

 
(23
)
Purchases of treasury stock

 
(4
)
 

 

 

 

 
(400
)
 

 
(400
)
Stock-based compensation

 

 

 
43

 

 

 

 

 
43

Cash dividends paid ($0.35 per share per quarter) and other distributions

 

 

 

 
(226
)
 

 

 
(2
)
 
(228
)
Other

 

 

 

 
(5
)
 

 

 

 
(5
)
Net earnings

 

 

 

 
302

 

 

 
2

 
304

Other comprehensive earnings, net of tax

 

 

 

 

 
(8
)
 

 

 
(8
)
Balances, June 30, 2019
433

 
(109
)
 
$
4

 
$
10,887

 
$
4,599

 
$
(438
)
 
$
(5,067
)
 
$
7

 
$
9,992


See accompanying notes to unaudited condensed consolidated financial statements.

5



FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Equity
Three and six months ended June 30, 2018
(In millions, except per share amounts)
(Unaudited)
 
 
 
 
 
Amount
 
 
 
 
 
FIS Stockholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
Number of shares
 
 
 
Additional
 
 
 
other
 
 
 
 
 
 
 
Common
 
Treasury
 
Common
 
paid in
 
Retained
 
comprehensive
 
Treasury
 
Noncontrolling
 
Total
 
shares
 
shares
 
stock
 
capital
 
earnings
 
earnings (loss)
 
stock
 
interest
 
equity
Balances, March 31, 2018
432

 
(102
)
 
$
4

 
$
10,585

 
$
4,186

 
$
(318
)
 
$
(3,962
)
 
$
116

 
$
10,611

Issuance of restricted stock
1

 

 

 

 

 

 

 

 

Exercise of stock options

 
2

 

 
59

 

 

 
53

 

 
112

Treasury shares held for taxes due upon exercise of stock options

 

 

 
(10
)
 

 

 
(3
)
 

 
(13
)
Purchases of treasury stock

 
(2
)
 

 

 

 

 
(200
)
 

 
(200
)
Stock-based compensation

 

 

 
25

 

 

 

 

 
25

Cash dividends paid ($0.32 per share per quarter) and other distributions

 

 

 

 
(107
)
 

 

 

 
(107
)
Net earnings

 

 

 

 
212

 

 

 
6

 
218

Other comprehensive earnings, net of tax

 

 

 

 

 
(85
)
 

 
(17
)
 
(102
)
Balances, June 30, 2018
433

 
(102
)
 
$
4

 
$
10,659

 
$
4,291

 
$
(403
)
 
$
(4,112
)
 
$
105

 
$
10,544


 
 
 
 
 
Amount
 
 
 
 
 
FIS Stockholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
Number of shares
 
 
 
Additional
 
 
 
other
 
 
 
 
 
 
 
Common
 
Treasury
 
Common
 
paid in
 
Retained
 
comprehensive
 
Treasury
 
Noncontrolling
 
Total
 
shares
 
shares
 
stock
 
capital
 
earnings
 
earnings (loss)
 
stock
 
interest
 
equity
Balances, December 31, 2017
432

 
(99
)
 
$
4

 
$
10,534

 
$
4,109

 
$
(332
)
 
$
(3,604
)
 
$
109

 
$
10,820

Issuance of restricted stock
1

 

 

 

 

 

 

 

 

Exercise of stock options

 
3

 

 
91

 

 

 
113

 

 
204

Treasury shares held for taxes due upon exercise of stock options

 

 

 
(11
)
 

 

 
(20
)
 

 
(31
)
Purchases of treasury stock

 
(6
)
 

 

 

 

 
(601
)
 

 
(601
)
Stock-based compensation

 

 

 
45

 

 

 

 

 
45

Cash dividends paid ($0.32 per share per quarter) and other distributions

 

 

 

 
(212
)
 

 

 
(1
)
 
(213
)
Net earnings

 

 

 

 
394

 

 

 
14

 
408

Other comprehensive earnings, net of tax

 

 

 

 

 
(71
)
 

 
(17
)
 
(88
)
Balances, June 30, 2018
433

 
(102
)
 
$
4

 
$
10,659

 
$
4,291

 
$
(403
)
 
$
(4,112
)
 
$
105

 
$
10,544


See accompanying notes to unaudited condensed consolidated financial statements.

6


FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
 
Six months ended
June 30,
 
2019
 
2018
Cash flows from operating activities:
 
 
 
Net earnings
$
304

 
$
408

Adjustment to reconcile net earnings to net cash provided by operating activities:
 
 
 
Depreciation and amortization
736

 
706

Amortization of debt issue costs
10

 
9

Acquisition-related financing foreign exchange
104

 

Loss (gain) on sale of businesses and investments

 
(6
)
Loss (gain) other
17

 

Loss on extinguishment of debt

 
1

Stock-based compensation
43

 
45

Deferred income taxes
(68
)
 
(24
)
Net changes in assets and liabilities, net of effects from acquisitions and foreign currency:
 
 
 
Trade and other receivables
93

 
189

Contract assets
1

 
(3
)
Settlement activity
(27
)
 
13

Prepaid expenses and other assets
(140
)
 
(11
)
Deferred contract costs
(174
)
 
(119
)
Deferred revenue
39

 
(2
)
Accounts payable, accrued liabilities, and other liabilities
(118
)
 
(383
)
Net cash provided by operating activities
820

 
823

 
 
 
 
Cash flows from investing activities:
 
 
 
Additions to property and equipment
(57
)
 
(83
)
Additions to computer software
(228
)
 
(233
)
Net proceeds from sale of businesses and investments
43

 
49

Other investing activities, net
(42
)
 
(6
)
Net cash provided by (used in) investing activities
(284
)
 
(273
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Borrowings
19,201

 
5,703

Repayment of borrowings and other financing obligations
(10,028
)
 
(5,521
)
Debt issuance costs
(71
)
 
(24
)
Proceeds from exercise of stock options
86

 
203

Treasury stock activity
(423
)
 
(637
)
Dividends paid
(226
)
 
(211
)
Other financing activities, net
(24
)
 
(2
)
Net cash provided by (used in) financing activities
8,515

 
(489
)
 
 
 
 
Effect of foreign currency exchange rate changes on cash
2

 
(43
)
Net increase (decrease) in cash and cash equivalents
9,053

 
18

Cash and cash equivalents, beginning of period
703

 
665

Cash and cash equivalents, end of period
$
9,756

 
$
683

 
 
 
 
Supplemental cash flow information:
 
 
 
Cash paid for interest
$
159

 
$
146

Cash paid for income taxes
$
149

 
$
353

See accompanying notes to unaudited condensed consolidated financial statements.


7


FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


Unless stated otherwise or the context otherwise requires, all references to “FIS,” “we,” the “Company” or the “registrant” are to Fidelity National Information Services, Inc., a Georgia corporation, and its subsidiaries.

(1)    Basis of Presentation

The unaudited financial information included in this report includes the accounts of FIS and its subsidiaries prepared in accordance with U.S. generally accepted accounting principles and the instructions to Form 10-Q and Article 10 of Regulation S-X. All adjustments considered necessary for a fair presentation have been included. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The preparation of these Condensed Consolidated Financial Statements (Unaudited) in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements (Unaudited) and the reported amounts of revenue and expenses during the reported periods. Actual results could differ from those estimates. Certain reclassifications have been made in the 2018 Condensed Consolidated Financial Statements (Unaudited) to conform to the classifications used in 2019. Amounts in tables in the financial statements and accompanying footnotes may not sum due to rounding.

We report the results of our operations in three reporting segments: Integrated Financial Solutions (“IFS”), Global Financial Solutions (“GFS”) and Corporate and Other (see Note 13).
(2)    Summary of Significant Accounting Policies

(a)
Change in Accounting Policy

The Company adopted Topic 842, Leases, with an initial application date of January 1, 2019. As a result, the Company has changed its accounting policy for leases. The accounting policy pursuant to Topic 842 for operating leases is disclosed below. The primary impact of adopting Topic 842 is the establishment of a right-of-use ("ROU") model that requires a lessee to recognize ROU assets and lease liabilities on the consolidated balance sheet for operating leases.

The Company applied Topic 842 using the effective date method; consequently, financial information was not updated and the disclosures required under the new standard were not provided for dates and periods before January 1, 2019. For transition purposes, the Company elected the "package of practical expedients," which permits the Company not to reassess under the new standard prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected the practical expedient not to separate lease and non-lease components. The Company did not elect the use-of-hindsight practical expedient nor the short-term lease recognition exemption allowed under the new standard.

The adoption of ASC 842 resulted in the recognition of operating lease ROU assets and lease liabilities on the Company’s Condensed Consolidated Balance Sheet (Unaudited) of $442 million and $446 million, respectively, on January 1, 2019. The standard did not impact the Company’s results of operations or cash flows.

(b)
Operating Leases

The Company leases certain of its property, primarily real estate, under operating leases. Operating lease ROU assets are included in other noncurrent assets, and operating lease liabilities are included in accounts payable, accrued and other liabilities and other long-term liabilities on the Condensed Consolidated Balance Sheets (Unaudited). ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease ROU assets also include any prepaid lease payments and exclude lease incentives received. The Company uses an incremental borrowing rate based on information available at commencement date in determining the present value of lease payments. Lease terms may include options to extend, generally ranging from one to five years, or to terminate the lease when it is reasonably certain that the Company will

8

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


exercise that option. Lease expense is recognized on a straight-line basis over the lease term. Lease agreements may include lease and related non-lease components, which are accounted for as a single lease component. Additionally, for certain equipment leases, the Company applies a portfolio approach to effectively account for the operating lease ROU assets and liabilities.

(3)    Acquisition of Worldpay

On March 17, 2019, FIS, Wrangler Merger Sub, Inc., a wholly owned subsidiary of FIS (“Merger Sub”), and Worldpay, Inc. (“Worldpay”) entered into an Agreement and Plan of Merger (the “merger agreement”) pursuant to which FIS would acquire Worldpay through a merger transaction (“Worldpay transaction,” “Transaction” or “ the merger”). On July 31, 2019, FIS completed the Transaction. Through its acquisition of Worldpay, FIS is now a global leader in technology, solutions and services for merchants, as well as banks and capital markets. The Worldpay acquisition brings an integrated technology platform with a comprehensive suite of products and services serving merchants and financial institutions. Worldpay processed over 40 billion transactions annually, supporting more than 300 payment types across 146 countries and 126 currencies. Through the Transaction, FIS will have enhanced global payment capabilities, robust risk and fraud solutions and advanced data analytics.

Pursuant to the merger agreement, FIS acquired 100 percent of the equity of Worldpay at the closing on July 31, 2019. At the closing, Worldpay shareholders received approximately 289 million shares of FIS common stock and $3.4 billion in cash, using an exchange ratio of 0.9287 FIS shares plus $11.00 in cash for each share of Worldpay common stock. FIS also converted approximately 7 million outstanding Worldpay equity awards into corresponding equity awards with respect to shares of FIS common stock pursuant to an exchange ratio in the merger agreement designed to maintain the intrinsic value of the applicable award immediately prior to conversion. In connection with the Transaction, FIS also repaid approximately $7.5 billion in Worldpay debt. The combination of stock and cash valued Worldpay at an enterprise value of approximately $50 billion, including the repayment of Worldpay debt of approximately $7.5 billion. As a result of the Transaction, legacy FIS shareholders own approximately 53 percent and legacy Worldpay shareholders own approximately 47 percent of the combined company on a fully diluted basis. FIS funded the cash portion of the merger consideration, the pay-off of the indebtedness of Worldpay and the payment of transaction-related expenses through a combination of available cash-on-hand and proceeds from debt issuances, including proceeds from concurrent public offerings on May 21, 2019 of Euro-, Pound Sterling-, and U.S. Dollar-denominated senior unsecured notes of FIS and borrowings under the newly established Euro-commercial paper program. See Note 7 for further discussion of these debt issuances.

Due to the close proximity in timing of the Transaction closing date and the Company's filing of this Quarterly Report on Form 10-Q, the initial accounting for the business combination is incomplete; therefore, the Company is unable to disclose certain information required by FASB ASC Topic 805, Business Combinations. The Company plans to provide preliminary purchase price allocation information in FIS' Quarterly Report on Form 10-Q for the quarter ending September 30, 2019.

(4)    Revenue

Disaggregation of Revenue
    
In the following tables, revenue is disaggregated by primary geographical market, type of revenue, and recurring nature of revenue recognized. The tables also include a reconciliation of the disaggregated revenue with the Company’s reportable segments.


9

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


For the three months ended June 30, 2019 (in millions):

 
 
Reportable Segments
 
 
 
 
 
 
Corporate
 
 
 
 
IFS
 
GFS
 
and Other
 
Total
Primary Geographical Markets:
 
 
 
 
 
 
 
 
North America
 
$
1,135

 
$
463

 
$
55

 
$
1,653

All others
 
44

 
402

 
13

 
459

Total
 
$
1,179

 
$
865

 
$
68

 
$
2,112

 
 
 
 
 
 
 
 
 
Type of Revenue:
 
 
 
 
 
 
 
 
Processing and services
 
$
947

 
$
463

 
$
57

 
$
1,467

License and software related
 
99

 
242

 

 
341

Professional services
 
47

 
156

 
3

 
206

Hardware and other
 
86

 
4

 
8

 
98

Total
 
$
1,179

 
$
865

 
$
68

 
$
2,112

 
 
 
 
 
 
 
 
 
Recurring Nature of Revenue Recognition:
 
 
 
 
 
 
 
 
Recurring fees
 
$
1,029

 
$
617

 
$
57

 
$
1,703

Non-recurring fees
 
150

 
248

 
11

 
409

Total
 
$
1,179

 
$
865

 
$
68

 
$
2,112


For the six months ended June 30, 2019 (in millions):

 
 
Reportable Segments
 
 
 
 
 
 
Corporate
 
 
 
 
IFS
 
GFS
 
and Other
 
Total
Primary Geographical Markets:
 
 
 
 
 
 
 
 
North America
 
$
2,221

 
$
904

 
$
107

 
$
3,232

All others
 
88

 
824

 
25

 
937

Total
 
$
2,309

 
$
1,728

 
$
132

 
$
4,169

 
 
 
 
 
 
 
 
 
Type of Revenue:
 
 
 
 
 
 
 
 
Processing and services
 
$
1,859

 
$
926

 
$
117

 
$
2,902

License and software related
 
184

 
492

 

 
676

Professional services
 
88

 
302

 
5

 
395

Hardware and other
 
178

 
8

 
10

 
196

Total
 
$
2,309

 
$
1,728

 
$
132

 
$
4,169

 
 
 
 
 
 
 
 
 
Recurring Nature of Revenue Recognition:
 
 
 
 
 
 
 
 
Recurring fees
 
$
2,022

 
$
1,235

 
$
117

 
$
3,374

Non-recurring fees
 
287

 
493

 
15

 
795

Total
 
$
2,309

 
$
1,728

 
$
132

 
$
4,169



10

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



For the three months ended June 30, 2018 (in millions):

 
 
Reportable Segments
 
 
 
 
 
 
Corporate
 
 
 
 
IFS
 
GFS
 
and Other
 
Total
Primary Geographical Markets:
 
 
 
 
 
 
 
 
North America
 
$
1,079

 
$
434

 
$
71

 
$
1,584

All others
 
45

 
465

 
12

 
522

Total
 
$
1,124

 
$
899

 
$
83

 
$
2,106

 
 
 
 
 
 
 
 
 
Type of Revenue:
 
 
 
 
 
 
 
 
Processing and services
 
$
936

 
$
521

 
$
73

 
$
1,530

License and software related
 
92

 
228

 

 
320

Professional services
 
43

 
150

 
2

 
195

Hardware and other
 
53

 

 
8

 
61

Total
 
$
1,124

 
$
899

 
$
83

 
$
2,106

 
 
 
 
 
 
 
 
 
Recurring Nature of Revenue Recognition:
 
 
 
 
 
 
 
 
Recurring fees
 
$
991

 
$
680

 
$
73

 
$
1,744

Non-recurring fees
 
133

 
219

 
10

 
362

Total
 
$
1,124

 
$
899

 
$
83

 
$
2,106



For the six months ended June 30, 2018 (in millions):

 
 
Reportable Segments
 
 
 
 
 
 
Corporate
 
 
 
 
IFS
 
GFS
 
and Other
 
Total
Primary Geographical Markets:
 
 
 
 
 
 
 
 
North America
 
$
2,096

 
$
886

 
$
135

 
$
3,117

All others
 
89

 
940

 
26

 
1,055

Total
 
$
2,185

 
$
1,826

 
$
161

 
$
4,172

 
 
 
 
 
 
 
 
 
Type of Revenue:
 
 
 
 
 
 
 
 
Processing and services
 
$
1,831

 
$
1,064

 
$
147

 
$
3,042

License and software related
 
178

 
475

 
1

 
654

Professional services
 
80

 
287

 
4

 
371

Hardware and other
 
96

 

 
9

 
105

Total
 
$
2,185

 
$
1,826

 
$
161

 
$
4,172

 
 
 
 
 
 
 
 
 
Recurring Nature of Revenue Recognition:
 
 
 
 
 
 
 
 
Recurring fees
 
$
1,942

 
$
1,379

 
$
148

 
$
3,469

Non-recurring fees
 
243

 
447

 
13

 
703

Total
 
$
2,185

 
$
1,826

 
$
161

 
$
4,172




11

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



Contract Balances

The Company recognized revenue of $188 million and $170 million during the three months and $508 million and $452 million during the six months ended June 30, 2019 and 2018, respectively, that was included in the corresponding deferred revenue balance at the beginning of the periods.

Transaction Price Allocated to the Remaining Performance Obligations

As of June 30, 2019, approximately $20.0 billion of revenue is estimated to be recognized in the future from the Company’s remaining unfulfilled performance obligations, which are primarily comprised of recurring account- and volume-based processing services. This excludes the amount of anticipated recurring renewals not yet contractually obligated. The Company expects to recognize approximately 35% of our remaining performance obligations over the next 12 months, approximately another 25% over the next 13 to 24 months, and the balance thereafter.

(5)    Condensed Consolidated Financial Statement Details

The following table shows the Company’s Condensed Consolidated Financial Statement (Unaudited) details as of June 30, 2019 and December 31, 2018 (in millions):

 
June 30, 2019
 
December 31, 2018
 
Cost
 
Accumulated
depreciation and amortization
 
Net
 
Cost
 
Accumulated
depreciation and amortization
 
Net
Property and equipment
$
1,784

 
$
1,243

 
$
541

 
$
1,645

 
$
1,058

 
$
587

Intangible assets
$
6,157

 
$
3,294

 
$
2,863

 
$
6,122

 
$
2,990

 
$
3,132

Computer software
$
3,230

 
$
1,432

 
$
1,798

 
$
3,103

 
$
1,308

 
$
1,795


       
The Company entered into other financing obligations of $1 million and $0 million during the three months and $35 million and $0 million during the six months ended June 30, 2019 and 2018, respectively, for certain computer hardware and software. The assets are included in property and equipment and computer software and the other financing obligations are classified as long-term debt on our Condensed Consolidated Balance Sheets (Unaudited). Periodic payments are included in repayment of borrowings and other financing obligations on the Condensed Consolidated Statements of Cash Flows (Unaudited).

Changes in goodwill during the six months ended June 30, 2019 are summarized as follows (in millions):
 
 
 
 
 
Total
Balance, December 31, 2018
 
$
13,545

Foreign currency adjustments
 
(3
)
Balance, June 30, 2019
 
$
13,542



As of June 30, 2019, intangible assets, net of amortization, includes $2,779 million of customer relationships and other amortizable intangible assets, $41 million of finite-lived trademarks, as well as $43 million of non-amortizable indefinite-lived trademarks.  Amortization expense with respect to these intangible assets was $158 million and $169 million for the three months and $314 million and $336 million during the six months ended June 30, 2019 and 2018, respectively.

Settlement Activity

We manage certain integrated electronic payment services and programs and wealth management processes for our clients that require us to hold and manage client cash balances used to fund their daily settlement activity. Settlement deposits represent funds we hold that were drawn from our clients to facilitate settlement activities. Settlement receivables represent amounts funded by us. Settlement payables consist of settlement deposits from clients, settlement payables to third parties, and

12

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


outstanding checks related to our settlement activities for which the right of offset does not exist or we do not intend to exercise our right of offset. Our accounting policy for such outstanding checks is to include them in settlement payables on the Condensed Consolidated Balance Sheets (Unaudited) and operating cash flows on the Condensed Consolidated Statements of Cash Flows (Unaudited).
        
(6)    Deferred Contract Costs

Origination and fulfillment costs from contracts with customers capitalized as of June 30, 2019 and December 31, 2018 consisted of the following (in millions):
 
June 30, 2019
 
December 31, 2018
Contract costs on implementations in progress
$
103

 
$
93

Incremental contract origination costs on completed implementations, net
290

 
219

Contract fulfillment costs on completed implementations, net
168

 
163

Total deferred contract costs, net
$
561

 
$
475



Amortization of deferred contract costs on completed implementations was $44 million and $30 million during the three months and $87 million and $58 million during the six months ended June 30, 2019 and 2018, respectively, and there were no impairment losses in relation to the costs capitalized for the period presented.


13

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


(7)    Debt
Long-term debt as of June 30, 2019 and December 31, 2018, consisted of the following (in millions):
 
June 30,
 
December 31,
 
2019
 
2018
Senior Notes due October 2020, interest payable semi-annually at 3.625% ("2020 Notes")
$
1,150

 
$
1,150

Senior Euro Notes due January 2021, interest payable annually at 0.400% ("2021 Euro Notes")
569

 
572

Senior Euro Floating Rate Notes due May 2021, interest payable quarterly ("Floating Rate Notes") (1)
569

 

Senior Euro Notes due May 2021, interest payable annually at 0.125% ("May 2021 Euro Notes")
569

 

Senior Notes due August 2021, interest payable semi-annually at 2.250% ("2021 Notes")
750

 
750

Senior GBP Notes due June 2022, interest payable annually at 1.700% ("2022 GBP Notes")