Long-Term Debt | 3 Months Ended |
Mar. 31, 2014 |
Debt Disclosure [Abstract] | ' |
Long-Term Debt | ' |
Long-Term Debt |
Long-term debt as of March 31, 2014 and December 31, 2013, consisted of the following (in millions): |
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| March 31, 2014 | | December 31, 2013 | | | | | | | | | | | | | | | | |
Term Loans A-4, quarterly principal amortization (1) | 1,862.50 | | | 1,962.50 | | | | | | | | | | | | | | | | | |
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Senior Notes due 2018, interest payable semi-annually at 2.000% | 250 | | | 250 | | | | | | | | | | | | | | | | | |
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Senior Notes due 2020, interest payable semi-annually at 7.875% | 500 | | | 500 | | | | | | | | | | | | | | | | | |
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Senior Notes due 2022, interest payable semi-annually at 5.000% | 700 | | | 700 | | | | | | | | | | | | | | | | | |
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Senior Notes due 2023, interest payable semi-annually at 3.500% | 1,000.00 | | | 1,000.00 | | | | | | | | | | | | | | | | | |
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Revolving Loan (2) | 443 | | | 29 | | | | | | | | | | | | | | | | | |
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Other | 23.1 | | | 27.1 | | | | | | | | | | | | | | | | | |
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| 4,778.60 | | | 4,468.60 | | | | | | | | | | | | | | | | | |
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Current portion | (49.7 | ) | | (128.8 | ) | | | | | | | | | | | | | | | | |
Long-term debt, excluding current portion | $ | 4,728.90 | | | $ | 4,339.80 | | | | | | | | | | | | | | | | | |
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-1 | Interest on the Term Loans A-4 is generally payable at LIBOR plus an applicable margin of up to 2.00% based upon the Company's corporate credit ratings and the ratings on the FIS Credit Agreement. As of March 31, 2014, the weighted average interest rate on the Term Loans A-4 was 1.40%. | | | | | | | | | | | | | | | | | | | | | | |
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-2 | Interest on the Revolving Loan is generally payable at LIBOR plus an applicable margin of up to 2.00% plus an unused commitment fee of up to 0.35%, each based upon the Company's corporate credit ratings and the ratings on the FIS Credit Agreement. As of March 31, 2014, the applicable margin on the Revolving Loan, excluding facility fees and unused commitment fees, was 1.25%. | | | | | | | | | | | | | | | | | | | | | | |
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FIS is a party to a syndicated credit agreement (the "FIS Credit Agreement"), which as of March 31, 2014, provided total committed capital of $3,862.5 million comprised of: (1) a revolving credit facility in an aggregate maximum principal amount of $2,000.0 million maturing on March 30, 2017 (the "Revolving Loan"); and (2) term loans of $1,862.5 million maturing on March 30, 2017 (the "Term Loans A-4"). As of March 31, 2014, the outstanding principal balance of the Revolving Loan was $443.0 million, with $1,556.2 million of borrowing capacity remaining thereunder (net of $0.8 million in outstanding letters of credit issued under the Revolving Loan). |
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The obligations of FIS under the FIS Credit Agreement and under all its outstanding senior notes rank equal in priority, are unsecured and are guaranteed by substantially all of the domestic subsidiaries of FIS. The FIS Credit Agreement and the senior notes remain subject to customary covenants, including, among others, limitations on the payment of dividends by FIS, and events of default. |
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The following table summarizes the mandatory principal payments pursuant to the FIS Credit Agreement and the senior notes' indentures as of March 31, 2014 (in millions). There are no mandatory principal payments on the Revolving Loan and any balance outstanding on the Revolving Loan will be due and payable at its scheduled maturity date: |
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| Term Loan | | 2018 | | 2020 | | 2022 | | 2023 | | |
| A-4 | | Notes | | Notes | | Notes | | Notes | | Total |
2014 | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
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2015 | 100 | | | — | | | — | | | — | | | — | | | 100 | |
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2016 | 100 | | | — | | | — | | | — | | | — | | | 100 | |
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2017 | 1,662.50 | | | — | | | — | | | — | | | — | | | 1,662.50 | |
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2018 | — | | | 250 | | | — | | | — | | | — | | | 250 | |
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Thereafter | — | | | — | | | 500 | | | 700 | | | 1,000.00 | | | 2,200.00 | |
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Total | $ | 1,862.50 | | | $ | 250 | | | $ | 500 | | | $ | 700 | | | $ | 1,000.00 | | | $ | 4,312.50 | |
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Voluntary prepayment of the Term Loans is generally permitted at any time without fee upon proper notice and subject to a minimum dollar requirement. In addition to scheduled principal payments, the Term Loans are (with certain exceptions) subject to mandatory prepayment upon the occurrence of certain events. |
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FIS may redeem some or all of the 2020 Notes and the 2022 Notes on or before July 14, 2017 and May 14, 2020, respectively, at specified premiums to par, and thereafter at par, as outlined in the respective indenture agreements. FIS may also redeem the 2018 Notes and the 2023 Notes at its option in whole or in part, at any time and from time to time, at a redemption price equal to the greater of 100% of the principal amount to be redeemed and a make-whole amount calculated as described in the related indenture in each case plus accrued and unpaid interest to, but excluding, the date of redemption; provided no make-whole amount will be paid for redemptions on the 2023 Notes during the three months prior to their maturity. |
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We monitor the financial stability of our counterparties on an ongoing basis. The lender commitments under the undrawn portions of the Revolving Loan are comprised of a diversified set of financial institutions, both domestic and international. The combined commitments of our top 10 revolving lenders comprise about 58% of our Revolving Loan. The failure of any single lender to perform its obligations under the Revolving Loan would not adversely impact our ability to fund operations. If the single largest lender were to default under the terms of the FIS Credit Agreement (impacting the capacity of the Revolving Loan), the maximum loss of available capacity on the undrawn portion of the Revolving Loan, as of March 31, 2014, would be approximately $107.0 million. |
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Debt issuance costs of $42.9 million, net of accumulated amortization, remain capitalized as of March 31, 2014, related to all of the above outstanding debt. |
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The fair value of the Company’s long-term debt is estimated to be approximately $25.6 million higher than the carrying value as of March 31, 2014. This estimate is based on quoted prices of our senior notes and trades of our other debt in close proximity to March 31, 2014, which are considered Level 2-type measurements. This estimate is subjective in nature and involves uncertainties and significant judgment in the interpretation of current market data. Therefore, the values presented are not necessarily indicative of amounts the Company could realize or settle currently. |
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As of March 31, 2014, we have entered into the following interest rate swap transactions converting a portion of the interest rate exposure on our Term and Revolving Loans from variable to fixed (in millions): |
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Effective date | | Termination date | | Notional amount | | Bank pays | | FIS pays | | | | | | | | | | | | |
variable rate of | fixed rate of | | | | | | | | | | | |
September 1, 2011 | | September 1, 2014 | | $ | 150 | | | 1 Month LIBOR (1) | | 0.74 | % | -2 | | | | | | | | | | | |
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September 1, 2011 | | September 1, 2014 | | 150 | | | 1 Month LIBOR (1) | | 0.74 | % | -2 | | | | | | | | | | | |
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September 1, 2011 | | September 1, 2014 | | 300 | | | 1 Month LIBOR (1) | | 0.72 | % | -2 | | | | | | | | | | | |
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1-Jul-12 | | 1-Jul-15 | | 300 | | | 1 Month LIBOR (1) | | 0.58 | % | -2 | | | | | | | | | | | |
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February 3, 2014 | | February 1, 2017 | | 400 | | | 1 Month LIBOR (1) | | 0.89 | % | -2 | | | | | | | | | | | |
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| | | | $ | 1,300.00 | | | | | | | | | | | | | | | | | | |
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-1 | 0.15% in effect as of March 31, 2014. | | | | | | | | | | | | | | | | | | | | | | |
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-2 | Does not include the applicable margin and facility fees paid to lenders on the Term Loans and Revolving Loan as described above. | | | | | | | | | | | | | | | | | | | | | | |
We have designated these interest rate swaps as cash flow hedges and, as such, they are carried on the Condensed Consolidated Balance Sheets (Unaudited) at fair value with changes in fair value included in other comprehensive earnings, net of tax. |
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A summary of the fair value of the Company’s derivative instruments as of March 31, 2014 and December 31, 2013, is as follows (in millions): |
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| March 31, 2014 | | December 31, 2013 | | | | | | | | | | | | |
| Balance sheet location | | Fair | | Balance sheet location | | Fair | | | | | | | | | | | | |
value | value | | | | | | | | | | | | |
Interest rate swap contracts | Accounts payable and accrued liabilities | | $ | 1.7 | | | Accounts payable and accrued liabilities | | $ | 2.5 | | | | | | | | | | | | | |
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Interest rate swap contracts | Other long-term liabilities | | $ | 2.2 | | | Other long-term liabilities | | $ | 1.9 | | | | | | | | | | | | | |
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In accordance with the authoritative guidance for fair value measurements, the inputs used to determine the estimated fair value of our interest rate swaps are Level 2-type measurements. We considered our own credit risk and the credit risk of the counterparties when determining the fair value of our interest rate swaps. Adjustments are made to these amounts and to accumulated other comprehensive earnings ("AOCE") within the Condensed Consolidated Statements of Comprehensive Earnings (Unaudited) and Condensed Consolidated Statements of Equity as the factors that impact fair value change, including current and projected interest rates, time to maturity and required cash transfers/settlements with our counterparties. Periodic actual and estimated settlements with counterparties are recorded to interest expense as a yield adjustment to effectively fix the otherwise variable rate interest expense associated with the Term and Revolving Loans for hedged notional amounts. |
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A summary of the effect of derivative instruments on the Company’s Condensed Consolidated Statements of Comprehensive Earnings (Unaudited) and recognized in AOCE for the three months ended March 31, 2014 and 2013 is as follows (in millions): |
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| | Amount of gain (loss) | | | | Amount of loss reclassified | | | | | |
recognized in AOCE on | from AOCE into | | | | | |
derivatives | income | | | | | |
Derivatives in cash | | Three months ended | | Location of loss | | Three months ended | | | | | |
flow hedging | | March 31, | | reclassified from | | March 31, | | | | | |
relationships | | 2014 | | 2013 | | AOCE into income | | 2014 | | 2013 | | | | | |
Interest rate swap contracts | | $ | (1.1 | ) | | $ | — | | | Interest expense | | $ | (1.6 | ) | | $ | (1.7 | ) | | | | | |
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Approximately $1.9 million of the balance in AOCE as of March 31, 2014, is expected to be reclassified into income over the next twelve months. |
Our existing cash flow hedges are highly effective and there was no impact on earnings due to hedge ineffectiveness. It is our practice to execute such instruments with credit-worthy banks at the time of execution and not to enter into derivative financial instruments for speculative purposes. As of March 31, 2014, we believe that our interest rate swap counterparties will be able to fulfill their obligations under our agreements and we believe we will have debt outstanding through the various expiration dates of the swaps such that the forecasted transactions remain probable of occurring. |