DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION | 3 Months Ended |
Mar. 31, 2016shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | Vantiv, Inc. |
Entity Central Index Key | 1,533,932 |
Document Type | 10-Q |
Document Period End Date | Mar. 31, 2016 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q1 |
Class A Common Stock | |
Entity Information | |
Entity Common Stock, Shares Outstanding (in shares) | 156,335,853 |
Class B Common Stock | |
Entity Information | |
Entity Common Stock, Shares Outstanding (in shares) | 35,042,826 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenue: | ||
External customers | $ 797,571 | $ 686,376 |
Related party revenues | 21,052 | 19,235 |
Total revenue | 818,623 | 705,611 |
Network fees and other costs | 387,413 | 331,146 |
Sales and marketing | 135,638 | 116,055 |
Other operating costs | 73,703 | 68,739 |
General and administrative | 43,984 | 47,843 |
Depreciation and amortization | 68,230 | 67,802 |
Income from operations | 109,655 | 74,026 |
Interest expense—net | (27,729) | (26,011) |
Non-operating income (expense) | (5,652) | (8,766) |
Income before applicable income taxes | 76,274 | 39,249 |
Income tax expense | 23,826 | 12,253 |
Net income | 52,448 | 26,996 |
Less: Net income attributable to non-controlling interests | (12,710) | (8,007) |
Net income attributable to Vantiv, Inc. | $ 39,738 | $ 18,989 |
Class A Common Stock | ||
Net income per share attributable to Vantiv, Inc. Class A common stock: | ||
Basic (in dollars per share) | $ 0.26 | $ 0.13 |
Diluted (in dollars per share) | $ 0.25 | $ 0.13 |
Shares used in computing net income per share of Class A common stock: | ||
Basic (in shares) | 155,397,360 | 144,530,704 |
Diluted (in shares) | 196,777,827 | 200,715,138 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 52,448 | $ 26,996 |
Other comprehensive income, net of tax: | ||
Gain (loss) on cash flow hedges and other | (8,111) | (7,370) |
Comprehensive income | 44,337 | 19,626 |
Less: Comprehensive income attributable to non-controlling interests | (10,559) | (5,632) |
Comprehensive income attributable to Vantiv, Inc. | $ 33,778 | $ 13,994 |
CONSOLIDATED STATEMENTS OF FINA
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 82,554 | $ 197,096 |
Accounts receivable—net | 710,167 | 680,033 |
Related party receivable | 4,061 | 3,999 |
Settlement assets | 132,784 | 143,563 |
Prepaid expenses | 39,641 | 31,147 |
Other | 69,493 | 61,661 |
Total current assets | 1,038,700 | 1,117,499 |
Customer incentives | 61,762 | 57,984 |
Property, equipment and software—net | 313,874 | 308,009 |
Intangible assets—net | 813,222 | 863,066 |
Goodwill | 3,366,528 | 3,366,528 |
Deferred taxes | 723,787 | 731,622 |
Other assets | 37,866 | 20,718 |
Total assets | 6,355,739 | 6,465,426 |
Current liabilities: | ||
Accounts payable and accrued expenses | 345,720 | 364,878 |
Related party payable | 5,218 | 4,698 |
Settlement obligations | 604,466 | 677,502 |
Current portion of note payable to related party | 10,353 | 10,353 |
Current portion of note payable | 95,648 | 106,148 |
Current portion of tax receivable agreement obligations to related parties | 35,660 | 31,232 |
Current portion of tax receivable agreement obligations | 61,887 | 64,227 |
Deferred income | 19,096 | 14,470 |
Current maturities of capital lease obligations | 7,916 | 7,931 |
Other | 18,651 | 13,940 |
Total current liabilities | 1,204,615 | 1,295,379 |
Long-term liabilities: | ||
Note payable to related party | 178,581 | 181,169 |
Note payable | 2,737,523 | 2,762,469 |
Tax receivable agreement obligations to related parties | 766,168 | 801,829 |
Tax receivable agreement obligations | 112,731 | 126,980 |
Capital lease obligations | 19,674 | 21,801 |
Deferred taxes | 21,359 | 15,836 |
Other | 36,435 | 34,897 |
Total long-term liabilities | 3,872,471 | 3,944,981 |
Total liabilities | $ 5,077,086 | $ 5,240,360 |
Commitments and contingencies (See Note 6 - Commitments, Contingencies and Guarantees) | ||
Equity: | ||
Preferred stock, $0.00001 par value; 10,000,000 shares authorized; no shares issued and outstanding | $ 0 | $ 0 |
Paid-in capital | 570,689 | 553,145 |
Retained earnings | 516,042 | 476,304 |
Accumulated other comprehensive loss | (15,164) | (9,204) |
Treasury stock, at cost; 2,699,015 shares at March 31, 2016 and 2,593,242 shares at December 31, 2015 | (73,063) | (67,458) |
Total Vantiv, Inc. equity | 998,505 | 952,788 |
Non-controlling interests | 280,148 | 272,278 |
Total equity | 1,278,653 | 1,225,066 |
Total liabilities and equity | 6,355,739 | 6,465,426 |
Class A Common Stock | ||
Equity: | ||
Class A common stock, $0.00001 par value; 890,000,000 shares authorized; 156,335,853 shares outstanding at March 31, 2016; 155,488,326 shares outstanding at December 31, 2015, Class B common stock, no par value; 100,000,000 shares authorized; 35,042,826 shares issued and outstanding at March 31, 2016 and December 31, 2015 | 1 | 1 |
Class B Common Stock | ||
Equity: | ||
Class A common stock, $0.00001 par value; 890,000,000 shares authorized; 156,335,853 shares outstanding at March 31, 2016; 155,488,326 shares outstanding at December 31, 2015, Class B common stock, no par value; 100,000,000 shares authorized; 35,042,826 shares issued and outstanding at March 31, 2016 and December 31, 2015 | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF FIN5
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Treasury stock, shares (in shares) | 2,699,015 | 2,593,242 |
Class A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | 890,000,000 | 890,000,000 |
Common stock, shares outstanding (in shares) | 156,335,853 | 155,488,326 |
Class B Common Stock | ||
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 35,042,826 | 35,042,826 |
Common stock, shares outstanding (in shares) | 35,042,826 | 35,042,826 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Operating Activities: | ||
Net income | $ 52,448 | $ 26,996 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 68,230 | 67,802 |
Amortization of customer incentives | 7,177 | 3,872 |
Amortization and write-off of debt issuance costs | 1,591 | 3,606 |
Share-based compensation expense | 8,352 | 11,623 |
Excess tax benefit from share-based compensation | (6,940) | (11,594) |
Tax receivable agreements non-cash items | 5,652 | 7,009 |
Change in operating assets and liabilities: | ||
Accounts receivable and related party receivable | (30,196) | 40,577 |
Net settlement assets and obligations | (62,257) | (24,443) |
Customer incentives | (15,602) | (5,651) |
Prepaid and other assets | (9,675) | (4,644) |
Accounts payable and accrued expenses | 6,163 | (17,569) |
Payable to related party | 520 | 649 |
Other liabilities | 3,820 | 3,608 |
Net cash provided by operating activities | 29,283 | 101,841 |
Investing Activities: | ||
Purchases of property and equipment | (27,883) | (15,669) |
Acquisition of customer portfolios and related assets and other | (76) | (1,425) |
Purchase of derivative instruments | (21,523) | 0 |
Net cash used in investing activities | (49,482) | (17,094) |
Financing Activities: | ||
Borrowings on revolving credit facility | 765,000 | 0 |
Repayment of revolving credit facility | (765,000) | 0 |
Repayment of debt and capital lease obligations | (41,767) | (230,823) |
Proceeds from exercise of Class A common stock options | 3,795 | 6,030 |
Repurchase of Class A common stock (to satisfy tax withholding obligations) | (5,605) | (15,618) |
Payments under tax receivable agreements | (53,474) | (22,805) |
Excess tax benefit from share-based compensation | 6,940 | 11,594 |
Distributions to non-controlling interests | (4,220) | (2,528) |
Other | (12) | 0 |
Decrease in cash overdraft | 0 | (2,627) |
Net cash used in financing activities | (94,343) | (256,777) |
Net decrease in cash and cash equivalents | (114,542) | (172,030) |
Cash and cash equivalents—Beginning of period | 197,096 | 411,568 |
Cash and cash equivalents—End of period | 82,554 | 239,538 |
Cash Payments: | ||
Interest | 25,931 | 24,548 |
Taxes | $ 13,170 | $ 4,561 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Total | Treasury Stock | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Non-Controlling Interests | Class A Common Stock | Class A Common StockCommon Stock | Class B Common Stock | Class B Common StockCommon Stock |
Balance at Dec. 31, 2014 | $ 1,300,586 | $ (50,931) | $ 629,353 | $ 328,358 | $ (3,768) | $ 397,573 | $ 1 | $ 0 | ||
Balance (in shares) at Dec. 31, 2014 | 2,174,000 | 145,455,000 | 43,043,000 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net income | 26,996 | 18,989 | 8,007 | |||||||
Issuance of Class A common stock under employee stock plans, net of forfeitures, value | 6,030 | 6,030 | ||||||||
Issuance of Class A common stock under employee stock plans, net of forfeitures (in shares) | 895,000 | |||||||||
Tax benefit from employee share-based compensation | 11,594 | 11,594 | ||||||||
Repurchase of Class A common stock (to satisfy tax withholding obligation), value | (15,618) | $ (15,618) | ||||||||
Repurchase of Class A common stock (to satisfy tax withholding obligation) (in shares) | 395,000 | 395,000 | ||||||||
Unrealized loss on hedging activities and other, net of tax | (7,370) | (4,995) | (2,375) | |||||||
Distribution to non-controlling interests | (2,528) | (2,528) | ||||||||
Share-based compensation | 11,623 | 8,975 | 2,648 | |||||||
Reallocation of non-controlling interests of Vantiv Holding due to change in ownership | 2,732 | (2,732) | ||||||||
Balance (in shares) at Mar. 31, 2015 | 2,569,000 | 145,955,000 | 43,000,000 | 43,043,000 | ||||||
Balance at Mar. 31, 2015 | 1,331,313 | $ (66,549) | 658,684 | 347,347 | (8,763) | 400,593 | $ 1 | $ 0 | ||
Balance at Dec. 31, 2015 | 1,225,066 | $ (67,458) | 553,145 | 476,304 | (9,204) | 272,278 | $ 1 | $ 0 | ||
Balance (in shares) at Dec. 31, 2015 | 2,593,000 | 155,488,326 | 155,488,000 | 35,042,826 | 35,043,000 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net income | 52,448 | 39,738 | 12,710 | |||||||
Issuance of Class A common stock under employee stock plans, net of forfeitures, value | 3,795 | 3,795 | ||||||||
Issuance of Class A common stock under employee stock plans, net of forfeitures (in shares) | 954,000 | |||||||||
Tax benefit from employee share-based compensation | 6,940 | 6,940 | ||||||||
Repurchase of Class A common stock (to satisfy tax withholding obligation), value | (5,605) | $ (5,605) | ||||||||
Repurchase of Class A common stock (to satisfy tax withholding obligation) (in shares) | 106,000 | 106,000 | ||||||||
Unrealized loss on hedging activities and other, net of tax | (8,111) | (5,960) | (2,151) | |||||||
Distribution to non-controlling interests | (4,220) | (4,220) | ||||||||
Share-based compensation | 8,352 | 6,821 | 1,531 | |||||||
Other | (12) | (12) | ||||||||
Balance (in shares) at Mar. 31, 2016 | 2,699,000 | 156,335,853 | 156,336,000 | 35,042,826 | 35,043,000 | |||||
Balance at Mar. 31, 2016 | $ 1,278,653 | $ (73,063) | $ 570,689 | $ 516,042 | $ (15,164) | $ 280,148 | $ 1 | $ 0 |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Vantiv, Inc., a Delaware corporation, is a holding company that conducts its operations through its majority-owned subsidiary, Vantiv Holding, LLC (“Vantiv Holding”). Vantiv, Inc. and Vantiv Holding are referred to collectively as the “Company,” “Vantiv,” “we,” “us” or “our,” unless the context requires otherwise. The Company provides electronic payment processing services to merchants and financial institutions throughout the United States of America. The Company markets its services through diverse distribution channels, including national, regional and mid-market sales teams, third-party reseller clients and a telesales operation. The Company also has relationships with a broad range of referral partners that include merchant banks, independent software vendors (“ISVs”), value-added resellers (“VARs”), payment facilitators, independent sales organizations (“ISOs”) and trade associations, as well as arrangements with core processors. Segments The Company’s segments consist of the Merchant Services segment and the Financial Institution Services segment. The Company’s Chief Executive Officer (“CEO”), who is the chief operating decision maker (“CODM”), evaluates the performance and allocates resources based on the operating results of each segment. Below is a summary of each segment: • Merchant Services —Provides merchant acquiring and payment processing services to large national merchants, regional and small-to-mid sized businesses. Merchant services are sold to small to large businesses through diverse distribution channels. Merchant Services includes all aspects of card processing including authorization and settlement, customer service, chargeback and retrieval processing and interchange management. • Financial Institution Services —Provides card issuer processing, payment network processing, fraud protection, card production, prepaid program management, automated teller machine (“ATM”) driving and network gateway and switching services that utilize the Company’s proprietary Jeanie debit payment network to a diverse set of financial institutions, including regional banks, community banks, credit unions and regional personal identification number (“PIN”) networks. Financial Institution Services also provides statement production, collections and inbound/outbound call centers for credit transactions, and other services such as credit card portfolio analytics, program strategy and support, fraud and security management and chargeback and dispute services. Basis of Presentation and Consolidation The accompanying consolidated financial statements include those of Vantiv, Inc. and all subsidiaries thereof, including its majority-owned subsidiary, Vantiv Holding, LLC. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and should be read in connection with the Company's 2015 audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K. The accompanying consolidated financial statements are unaudited; however, in the opinion of management they include all normal and recurring adjustments necessary for a fair presentation of the Company's financial position, results of operations and cash flows for the periods presented. Results of operations reported for interim periods are not necessarily indicative of results for the entire year. All intercompany balances and transactions have been eliminated. As of March 31, 2016 , Vantiv, Inc. and Fifth Third Bank (“Fifth Third”) owned interests in Vantiv Holding of 81.69% and 18.31% , respectively (see Note 5 - Controlling and Non-controlling Interests for changes in non-controlling interests). The Company accounts for non-controlling interests in accordance with Accounting Standards Codification (“ASC”) 810, Consolidation . Non-controlling interests primarily represent Fifth Third’s minority share of net income or loss of and equity in Vantiv Holding. Net income attributable to non-controlling interests does not include expenses incurred directly by Vantiv, Inc., including income tax expense attributable to Vantiv, Inc. All of the Company’s non-controlling interests are presented after Vantiv Holding income tax expense in the accompanying consolidated statements of income as “Net income attributable to non-controlling interests.” Non-controlling interests are presented as a component of equity in the accompanying consolidated statements of financial position. Share Repurchase Program In February 2014, our board of directors authorized a program to repurchase up to $300 million of our Class A common stock. We have approximately $75 million of share repurchase authority remaining as of March 31, 2016 under this authorization. Purchases under the repurchase program are allowed from time to time in the open market, in privately negotiated transactions, or otherwise. The manner, timing, and amount of any purchases are determined by management based on an evaluation of market conditions, stock price, and other factors. The share repurchase program has no expiration date and the Company may discontinue purchases at any time that management determines additional purchases are not warranted. Sponsorship In order to provide electronic payment processing services, Visa, MasterCard and other payment networks require sponsorship of non-financial institutions by a member clearing bank. In June 2009, the Company entered into a ten -year agreement with Fifth Third (the “Sponsoring Member”), to provide sponsorship services to the Company. The Company also has agreements with certain other banks that provide sponsorship into the card networks. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES | Revenue Recognition The Company has contractual agreements with its clients that set forth the general terms and conditions of the relationship including line item pricing, payment terms and contract duration. Revenues are recognized as earned (i.e., for transaction based fees, when the underlying transaction is processed) in conjunction with ASC 605, Revenue Recognition . ASC 605, Revenue Recognition , establishes guidance as to when revenue is realized or realizable and earned by using the following criteria: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller’s price is fixed or determinable; and (4) collectibility is reasonably assured. The Company follows guidance provided in ASC 605-45, Principal Agent Considerations, which states that the determination of whether a company should recognize revenue based on the gross amount billed to a customer or the net amount retained is a matter of judgment that depends on the facts and circumstances of the arrangement and that certain factors should be considered in the evaluation. The Company recognizes processing revenues net of interchange fees, which are assessed to the Company’s merchant customers on all processed transactions. Interchange rates are not controlled by the Company, which effectively acts as a clearing house collecting and remitting interchange fee settlement on behalf of issuing banks, debit networks, credit card associations and its processing customers. All other revenue is reported on a gross basis, as the Company contracts directly with the end customer, assumes the risk of loss and has pricing flexibility. The Company generates revenue primarily by processing electronic payment transactions. Set forth below is a description of the Company’s revenue by segment. Merchant Services The Company’s Merchant Services segment revenue is primarily derived from processing credit and debit card transactions. Merchant Services revenue is primarily comprised of fees charged to businesses, net of interchange fees, for payment processing services, including authorization, capture, clearing, settlement and information reporting of electronic transactions. The fees charged consist of either a percentage of the dollar volume of the transaction or a fixed fee, or both, and are recognized at the time of the transaction. Merchant Services revenue also includes a number of revenue items that are incurred by the Company and are reimbursable as the costs are passed through to and paid by the Company’s clients. These items primarily consist of Visa, MasterCard and other payment network fees. In addition, for sales through ISOs and certain other referral sources in which the Company is the primary party to the contract with the merchant, the Company records the full amount of the fees collected from the merchant as revenue. Merchant Services segment revenue also includes revenue from ancillary services such as fraud management, equipment sales and terminal rent. Merchant Services revenue is recognized as services are performed. Financial Institution Services The Company’s Financial Institution Services segment revenue is primarily derived from debit, credit and ATM card transaction processing, ATM driving and support, and PIN debit processing services. Financial Institution Services revenue associated with processing transactions includes per transaction and account related fees, card production fees and fees generated from the Company’s Jeanie network. Financial Institution Services revenue related to card transaction processing is recognized when consumers use their client-issued cards to make purchases. Financial Institution Services also generates revenue through other services, including statement production, collections and inbound/outbound call centers for credit transactions and other services such as credit card portfolio analytics, program strategy and support, fraud and security management and chargeback and dispute services. Financial Institution Services revenue is recognized as services are performed. Financial Institution Services provides certain services to Fifth Third. Revenues related to these services are included in the accompanying statements of income as related party revenues. Expenses Set forth below is a brief description of the components of the Company’s expenses: • Network fees and other costs primarily consist of pass through expenses incurred by the Company in connection with providing processing services to its clients, including Visa and MasterCard network association fees, payment network fees, third party processing fees, telecommunication charges, postage and card production costs. • Sales and marketing expense primarily consists of salaries and benefits paid to sales personnel, sales management and other sales and marketing personnel, residual payments made to ISOs and referral partners, and advertising and promotional costs. • Other operating costs primarily consist of salaries and benefits paid to operational and IT personnel, costs associated with operating the Company’s technology platform and data centers, information technology costs for processing transactions, product development costs, software consulting fees and maintenance costs. • General and administrative expenses primarily consist of salaries and benefits paid to executive management and administrative employees, including finance, human resources, product development, legal and risk management, share-based compensation costs, equipment and occupancy costs and consulting costs. • Non-operating expense during the three months ended March 31, 2016 primarily relates to the change in fair value of a tax receivable agreement (“TRA”) (see Note 7 - Fair Value Measurements). Non-operating expense during the three months ended March 31, 2015 primarily consists of the change in fair value of a tax receivable agreement (see Note 7 - Fair Value Measurements) and the write-off of deferred financing fees and original issue discount (“OID”) associated with an early principal payment on the term B loan in January 2015 (see Note 3 - Long-Term Debt). Share-Based Compensation The Company expenses employee share-based payments under ASC 718, Compensation—Stock Compensation , which requires compensation cost for the grant-date fair value of share-based payments to be recognized over the requisite service period. The Company estimates the grant date fair value of the share-based awards issued in the form of options using the Black-Scholes option pricing model. The fair value of restricted stock awards and performance awards is measured based on the market price of the Company’s stock on the grant date. For the three months ended March 31, 2016 and 2015 total share-based compensation expense was $8.4 million and $11.6 million , respectively. In 2016 the Company began offering an Employee Stock Purchase Plan (“ESPP”). The ESPP has 2.5 million shares of common stock reserved for issuance. Full-time and benefits-eligible part-time employees who have completed at least one year of service are eligible to participate. Temporary, seasonal and employees subject to Section 16 reporting are excluded. Shares may be purchased at 85% of the market value at the end of the offering period through accumulation of payroll deductions. The ESPP provides for six month offerings commencing on January 1 and July 1 of each year with purchases on June 30 and December 31 of each year. The expense related to the ESPP’s 15% discount is included in total share based compensation expense above. Earnings Per Share Basic earnings per share is computed by dividing net income attributable to Vantiv, Inc. by the weighted average shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to Vantiv, Inc., adjusted as necessary for the impact of potentially dilutive securities, by the weighted-average shares outstanding during the period and the impact of securities that would have a dilutive effect on earnings per share. See Note 8 - Net Income Per Share for further discussion. Dividend Restrictions The Company does not intend to pay cash dividends on its Class A common stock in the foreseeable future. Vantiv, Inc. is a holding company that does not conduct any business operations of its own. As a result, Vantiv, Inc.’s ability to pay cash dividends on its common stock, if any, is dependent upon cash dividends and distributions and other transfers from Vantiv Holding, which are subject to certain Fifth Third consent rights in the Amended and Restated Vantiv Holding Limited Liability Company Agreement. These consent rights require the approval of Fifth Third for certain significant matters, including the payment of all distributions by Vantiv Holding other than certain permitted distributions, which relate primarily to the payment of tax distributions and tax-related obligations. The amounts available to Vantiv, Inc. to pay cash dividends are also subject to the covenants and distribution restrictions in its subsidiaries’ loan agreements. As a result of the restrictions on distributions from Vantiv Holding and its subsidiaries, essentially all of the Company's consolidated net assets are held at the subsidiary level and are restricted as of March 31, 2016 . Income Taxes Vantiv, Inc. is taxed as a C corporation for U.S. income tax purposes and is therefore subject to both federal and state taxation at a corporate level. Income taxes are computed in accordance with ASC 740, Income Taxes , and reflect the net tax effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and the corresponding income tax amounts. The Company has deferred tax assets and liabilities and maintains valuation allowances where it is more likely than not that all or a portion of deferred tax assets will not be realized. To the extent the Company determines that it will not realize the benefit of some or all of its deferred tax assets, such deferred tax assets will be adjusted through the Company’s provision for income taxes in the period in which this determination is made. As of March 31, 2016 and December 31, 2015 , the Company had recorded no valuation allowances against deferred tax assets. The Company's consolidated interim effective tax rate is based upon expected annual income from operations, statutory tax rates and tax laws in the various jurisdictions in which the Company operates. Significant or unusual items, including adjustments to accruals for tax uncertainties, are recognized in the quarter in which the related event occurs. The Company's effective tax rates were 31.2% for the three months ended March 31, 2016 and 2015 . The effective tax rate for each period reflects the impact of the Company's non-controlling interests. Cash and Cash Equivalents Cash on hand and investments with original maturities of three months or less (that are readily convertible to cash) are considered to be cash equivalents. Cash equivalents consist primarily of overnight EuroDollar sweep accounts which are maintained at reputable financial institutions with high credit quality and therefore are considered to bear minimal credit risk. Accounts Receivable—net Accounts receivable primarily represent processing revenues earned but not collected. For a majority of its customers, the Company has the authority to debit the client’s bank accounts through the Federal Reserve’s Automated Clearing House; as such, collectibility is reasonably assured. The Company records a reserve for doubtful accounts when it is probable that the accounts receivable will not be collected. The Company reviews historical loss experience and the financial position of its customers when estimating the allowance. As of March 31, 2016 and December 31, 2015 , the allowance for doubtful accounts was not material to the Company’s statements of financial position. Customer Incentives Customer incentives represent signing bonuses paid to customers. Customer incentives are paid in connection with the acquisition or renewal of customer contracts, and are therefore deferred and amortized using the straight-line method based on the contractual agreement. Related amortization is recorded as contra-revenue. Property, Equipment and Software—net Property, equipment and software consists of the Company’s facilities, furniture and equipment, software, land and leasehold improvements. These assets are depreciated on a straight-line basis over their respective useful lives, which are 15 to 40 years for the Company’s facilities and related improvements, 2 to 10 years for furniture and equipment, 3 to 8 years for software and 3 to 10 years for leasehold improvements or the lesser of the estimated useful life of the improvement or the term of lease. Also included in property, equipment and software is work in progress consisting of costs associated with software developed for internal use which has not yet been placed in service. Accumulated depreciation as of March 31, 2016 and December 31, 2015 was $258.7 million and $240.3 million , respectively. The Company capitalizes certain costs related to computer software developed for internal use and amortizes such costs on a straight-line basis over an estimated useful life of 5 to 8 years. Research and development costs incurred prior to establishing technological feasibility are charged to operations as such costs are incurred. Once technological feasibility has been established, costs are capitalized until the software is placed in service. Goodwill and Intangible Assets In accordance with ASC 350, Intangibles—Goodwill and Other , the Company tests goodwill for impairment for each reporting unit on an annual basis, or when events occur or circumstances indicate the fair value of a reporting unit is below its carrying value. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that fair value of the goodwill within the reporting unit is less than its carrying value. The Company performed its most recent annual goodwill impairment test for all reporting units as of July 31, 2015 using market data and discounted cash flow analyses. Based on this analysis, it was determined that the fair value of all reporting units were substantially in excess of the carrying value. There have been no other events or changes in circumstances subsequent to the testing date that would indicate impairment of these reporting units as of March 31, 2016 . Intangible assets consist of acquired customer relationships, trade names and customer portfolios and related assets that are amortized over their estimated useful lives. The Company reviews finite lived intangible assets for possible impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. As of March 31, 2016 , there have been no such events or circumstances that would indicate potential impairment of finite lived intangible assets. Settlement Assets and Obligations Settlement assets and obligations result from Financial Institution Services when funds are transferred from or received by the Company prior to receiving or paying funds to a different entity. This timing difference results in a settlement asset or obligation. The amounts are generally collected or paid the following business day. The settlement assets and obligations recorded by Merchant Services represent intermediary balances due to differences between the amount the Sponsoring Member receives from the card associations and the amount funded to the merchants. Such differences arise from timing differences, interchange expenses, merchant reserves and exception items. In addition, certain card associations limit the Company from accessing or controlling merchant settlement funds and, instead, require that these funds be controlled by the Sponsoring Member. The Company follows a net settlement process whereby, if the settlement received from the card associations precedes the funding obligation to the merchant, the Company temporarily records a corresponding liability. Conversely, if the funding obligation to the merchant precedes the settlement from the card associations, the amount of the net receivable position is recorded by the Company, or in some cases, the Sponsoring Member may cover the position with its own funds in which case a receivable position is not recorded by the Company. Derivatives The Company accounts for derivatives in accordance with ASC 815, Derivatives and Hedging . This guidance establishes accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. All derivatives, whether designated in hedging relationships or not, are required to be recorded on the statement of financial position at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and the hedged item will be recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portion of the change in the fair value of the derivative will be recorded in accumulated other comprehensive income (loss) (“AOCI”) and will be recognized in the statement of income when the hedged item affects earnings. The Company does not enter into derivative financial instruments for speculative purposes. Tax Receivable Agreements As of March 31, 2016, the Company is party to several TRAs in which the Company agrees to make payments to various parties of 85% of the federal, state, local and foreign income tax benefits realized by the Company as a result of certain tax deductions. Payments under the TRAs will be based on the tax reporting positions of the Company and are only required to the extent the Company realizes cash savings as a result of the underlying tax attributes. The cash savings realized by the Company are computed by comparing the actual income tax liability of the Company to the amount of such taxes the Company would have been required to pay had there been no deductions related to the tax attributes discussed below. The Company will retain the benefit of the remaining 15% of the cash savings associated with the TRAs. The Company has entered into the following three TRAs: • TRAs with investors prior to the Company’s initial public offering (“IPO”) for its use of net operating losses (“NOLs”) and other tax attributes existing at the IPO date, all of which is currently held by Fifth Third. • A TRA with Fifth Third in which the Company realizes tax deductions as a result of the increases in tax basis from the purchase of Vantiv Holding units or from the exchange of Vantiv Holding units for cash or shares of Class A common stock, as well as the tax benefits attributable to payments made under such TRAs. • A TRA with Mercury Payment Systems, LLC (“Mercury”) shareholders as part of the acquisition of Mercury as a result of the increase in tax basis of the assets of Mercury resulting from the acquisition and the use of the net operating losses and other tax attributes of Mercury that were acquired as part of the acquisition. Obligations recorded pursuant to the TRAs are based on estimates of future taxable income and future tax rates. On an annual basis, the Company evaluates the assumptions underlying the TRA obligations. During 2015, the Company entered into a Repurchase Addendum to Tax Receivable Agreement (the “TRA Addendum”) with each of the pre-acquisition owners of Mercury ("Mercury TRA Holders"). The Mercury TRA Addendum contains the following provisions to acquire a significant portion of the Mercury TRA: • Beginning December 1st of each of 2015, 2016, 2017, and 2018, and ending June 30th of 2016, 2017, 2018, and 2019, respectively, the Company is granted call options (collectively, the "Call Options") pursuant to which certain additional obligations of the Company under the Mercury TRA would be terminated in consideration for cash payments of $41.4 million , $38.1 million , $38.0 million , and $43.0 million , respectively. • In the unlikely event the Company does not exercise the relevant Call Option, the Mercury TRA Holders are granted put options beginning July 10th and ending July 25th of each of 2016, 2017, 2018, and 2019, respectively (collectively, the "Put Options"), pursuant to which certain additional obligations of the Company would be terminated in consideration for cash payments with similar amounts to the Call Options. Except to the extent the Company’s obligations under the Mercury TRA have been terminated and settled in full in accordance with the terms of the Mercury TRA Addendum, the Mercury TRA will remain in effect, and the parties thereto will continue to have all rights and obligations thereunder. All TRA obligations are recorded based on the full and undiscounted amount of the expected future payments, except for the Mercury TRA which represents contingent consideration relating to an acquired business, and is recorded at fair value for financial reporting purposes (see Note 7 - Fair Value Measurements). The timing and/or amount of aggregate payments due under the TRAs may vary based on a number of factors, including the amount and timing of the taxable income the Company generates in the future and the tax rate then applicable, the use of loss carryovers and amortizable basis. Payments under the TRAs, if necessary, are required to be made no later than January 5 th of the second year immediately following the taxable year in which the obligation occurred. The Company made payments under the TRA obligations of approximately $53.5 million and $22.8 million in January 2016 and January 2015, respectively. The term of the TRAs will continue until all such tax benefits have been utilized or expired, unless the Company exercises its right to terminate the TRA for an amount based on the agreed payments remaining to be made under the agreement. New Accounting Pronouncements In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, Compensation- Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The update simplifies several aspects of the accounting for share-based payment award transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The update is effective for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted in any interim or annual period. The Company is currently evaluating the impact of the adoption of this update on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU amends the existing guidance by recognizing all leases, including operating leases, with a term longer than 12 months on the balance sheet and disclosing key information about the lease arrangements. The effective date of this update is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The update requires modified retrospective transition, which requires application of the ASU at the beginning of the earliest comparative period presented in the year of adoption. The Company is currently evaluating the impact of the adoption of this principle on the Company’s consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The update simplifies the presentation of deferred income taxes by requiring that deferred tax liabilities and assets be classified as noncurrent in the balance sheet. The update is effective for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years. The guidance may be adopted prospectively or retrospectively and early adoption is permitted. As of December 31, 2015, the Company elected to early adopt this ASU on a prospective basis and therefore, prior years were not retrospectively adjusted. In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This standard was clarified in August 2015 with the issuance of ASU 2015-15. The update requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. Amortization of the costs will continue to be reported as interest expense. These updates require retrospective application and represent a change in accounting principle. The change in accounting principle, resulting from the Company's adoption of this ASU in December 2015, has been implemented and the results are not material to the Company's consolidated statement of financial position. In May 2014, the FASB issued ASU 2014-09, "Revenue From Contracts With Customers." The ASU supersedes the revenue recognition requirements in ASC 605, Revenue Recognition . The new standard provides a five-step analysis of transactions to determine when and how revenue is recognized, based upon the core principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also requires additional disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard, as amended, is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The amendment allows companies to use either a full retrospective or a modified retrospective approach to adopt this ASU. The Company is currently evaluating which transition approach to use and assessing the impact of the adoption of this principle on the Company’s consolidated financial statements. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | INTANGIBLE ASSETS As of March 31, 2016 and December 31, 2015 , the Company’s finite lived intangible assets consisted of the following (in thousands): March 31, 2016 December 31, 2015 Customer relationship intangible assets $ 1,596,581 $ 1,596,581 Trade name 21,733 21,733 Customer portfolios and related assets 129,665 129,734 Patents 511 366 1,748,490 1,748,414 Less accumulated amortization on: Customer relationship intangible assets 862,000 821,580 Trade name 16,693 14,350 Customer portfolios and related assets 56,575 49,418 935,268 885,348 $ 813,222 $ 863,066 Amortization expense on intangible assets for the three months ended March 31, 2016 and 2015 was $49.9 million and $49.2 million , respectively. The estimated amortization expense of intangible assets for the remainder of 2016 and the next five years is as follows (in thousands): Nine months ending December 31, 2016 $ 142,335 2017 171,361 2018 161,922 2019 153,530 2020 81,470 2021 36,595 |
LONG-TERM DEBT
LONG-TERM DEBT | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT As of March 31, 2016 and December 31, 2015 , the Company’s long-term debt consisted of the following (in thousands): March 31, December 31, Term A loan, maturing on June 13, 2019 (1) $ 1,870,625 $ 1,896,250 Term B loan, maturing on June 13, 2021 (2) 1,165,000 1,179,000 Leasehold mortgage, expiring on August 10, 2021 (3) 10,131 10,131 Less: Current portion of note payable and current portion of note payable to related party (106,001 ) (116,501 ) Less: Original issue discount (5,711 ) (6,024 ) Less: Debt issuance costs (17,940 ) (19,218 ) Note payable and note payable to related party $ 2,916,104 $ 2,943,638 (1) Interest at a variable base rate ( LIBOR ) plus a spread rate (200 basis points) (total rate of 2.40% at March 31, 2016) and amortizing on a basis of 1.25% per quarter during each of the first twelve quarters (September 2014 through June 2017), 1.875% per quarter during the next four quarters (September 2017 through June 2018) and 2.50% during the next three quarters (September 2018 through March 2019) with a balloon payment due at maturity. (2) Interest at a variable base rate ( LIBOR ) with a floor of 75 basis points plus a spread rate (300 basis points) (total rate of 3.75% at March 31, 2016) and amortizing on a basis of 0.25% per quarter, with a balloon payment due at maturity. (3) Interest payable monthly at a fixed rate of 6.22% . As of March 31, 2016 , in addition to the term A loan and term B loan listed in the table above, the Company has access to a $425 million revolving credit facility under our existing amended and restated loan agreement ("Amended Loan Agreement") entered into in June 2014. The revolving credit facility matures in June 2019 and includes a $100 million swing line facility and a $40 million letter of credit facility. The commitment fee rate for the unused portion of the revolving credit facility is 0.375% per year. During the three months ended March 31, 2016 the Company periodically borrowed under its revolving credit facility and repaid the amounts prior to quarter end. There were no outstanding borrowings on the revolving credit facility at March 31, 2016 and December 31, 2015. As of March 31, 2016 and December 31, 2015 , Fifth Third held $188.9 million and $191.5 million , respectively, of the term A loans, which were presented as note payable to related party on the Company’s consolidated statements of financial position. On January 6, 2015, the Company made an early principal payment of $200 million on the term B loan. The Company expensed approximately $1.8 million in non-operating expenses related to the write-off of deferred financing fees and OID in connection with the early principal payment. Guarantees and Security The Company’s debt obligations at March 31, 2016 are unconditional and are guaranteed by Vantiv Holding and certain of Vantiv Holding’s existing and subsequently acquired or organized domestic subsidiaries. The refinanced debt and related guarantees are secured on a first-priority basis (subject to liens permitted under the Amended Loan Agreement) by substantially all the capital stock (subject to a 65% limitation on pledges of capital stock of foreign subsidiaries and domestic holding companies of foreign subsidiaries) and personal property of Vantiv Holding and any obligors as well as any real property in excess of $10 million in the aggregate held by Vantiv Holding or any obligors (other than Vantiv Holding), subject to certain exceptions. Covenants There are certain financial and non-financial covenants contained in the Amended Loan Agreement for the refinanced debt, which are tested on a quarterly basis. The financial covenants require maintenance of certain leverage and interest coverage ratios. At March 31, 2016 , the Company was in compliance with these financial covenants. |
DERIVATIVES AND HEDGING ACTIVIT
DERIVATIVES AND HEDGING ACTIVITIES | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVES AND HEDGING ACTIVITIES | DERIVATIVES AND HEDGING ACTIVITIES Risk Management Objective of Using Derivatives The Company enters into derivative financial instruments to manage differences in the amount, timing and duration of its known or expected cash payments related to its variable-rate debt. As of December 31, 2015 , the Company’s derivative instruments consisted of interest rate swaps, which hedged the variable rate debt by converting floating-rate payments to fixed-rate payments. In addition to the interest rate swaps, during March 2016, the Company entered into interest rate cap agreements, in exchange for an upfront premium of $21.5 million , that cap a portion of the Company’s variable rate debt if interest rates rise above the strike rate on the contract. As of March 31, 2016 the interest rate agreements had a fair value of $16.9 million , classified within other current and non-current assets on the Company’s consolidated statements of financial position. The interest rate swaps and caps (collectively “interest rate contracts”) are designated as cash flow hedges for accounting purposes. Accounting for Derivative Instruments The Company recognizes derivatives in other current and non-current assets or liabilities in the accompanying consolidated statements of financial position at their fair values. Refer to Note 7 - Fair Value Measurements for a detailed discussion of the fair value of its derivatives. The Company designates its interest rate contracts as cash flow hedges of forecasted interest rate payments related to its variable-rate debt. The Company formally documents all relationships between hedging instruments and underlying hedged transactions, as well as its risk management objective and strategy for undertaking hedge transactions. This process includes linking all derivatives that are designated as cash flow hedges to forecasted transactions. A formal assessment of hedge effectiveness is performed both at inception of the hedge and on an ongoing basis to determine whether the hedge is highly effective in offsetting changes in cash flows of the underlying hedged item. Hedge effectiveness is assessed using a regression analysis. If it is determined that a derivative ceases to be highly effective during the term of the hedge, the Company will discontinue hedge accounting for such derivative. The Company’s interest rate contracts qualify for hedge accounting under ASC 815, Derivatives and Hedging . Therefore, the effective portion of changes in fair value were recorded in AOCI and will be reclassified into earnings in the same period during which the hedged transactions affected earnings. Cash Flow Hedges of Interest Rate Risk The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company uses a combination of interest rate swaps and caps as part of its interest rate risk management strategy. As of March 31, 2016 , the Company had a total of 14 outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk. Of the 14 outstanding interest rate swaps, 8 of them cover an exposure period from June 2015 through June 2017 and have a combined notional balance of $1.2 billion (amortizing to $1.1 billion ). The remaining 6 interest rate swaps cover an exposure period from January 2016 through January 2019 and have a combined notional balance of $500 million . Fifth Third is the counterparty to 5 of the 14 outstanding interest rate swaps with notional balances ranging from $293.8 million to $250.0 million . Additionally, as of March 31, 2016, the Company had a total of 6 interest rate cap agreements with a combined notional balance of $1.0 billion , cap strike rate of 0.75% , covering an exposure period from January 2017 to January 2020. The Company does not offset derivative positions in the accompanying consolidated financial statements. The table below presents the fair value of the Company’s derivative financial instruments designated as cash flow hedges included within the accompanying consolidated statements of financial position (in thousands): Consolidated Statement of March 31, 2016 December 31, 2015 Interest rate contracts Other current assets $ 212 $ — Interest rate contracts Other long-term assets 16,647 — Interest rate contracts Other current liabilities 12,965 9,343 Interest rate contracts Other long-term liabilities 13,319 9,885 Any ineffectiveness associated with such derivative instruments will be recorded immediately as interest expense in the accompanying consolidated statements of income. As of March 31, 2016 , the Company estimates that $14.5 million will be reclassified from accumulated other comprehensive income as an increase to interest expense during the next 12 months. The table below presents the pre-tax effect of the Company’s interest rate contracts on the accompanying consolidated statements of comprehensive income for the three months ended March 31, 2016 and 2015 (in thousands): Three Months Ended March 31, 2016 2015 Derivatives in cash flow hedging relationships: Amount of loss recognized in OCI (effective portion) (1) $ (14,094 ) $ (11,435 ) Amount of loss reclassified from accumulated OCI into earnings (effective portion) (2,376 ) (1,041 ) Amount of loss recognized in earnings (2) — (1 ) (1) “OCI” represents other comprehensive income. (2) Amount represents hedge ineffectiveness and is recorded as a component of interest expense-net in the accompanying consolidated statement of income. Credit Risk Related Contingent Features The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. As of March 31, 2016 , the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $27.4 million . As of March 31, 2016 , the Company had not posted any collateral related to these agreements. If the Company had breached any of these provisions at March 31, 2016 , it could have been required to settle its obligations under the agreements at their termination value of $27.4 million . |
CONTROLLING AND NON-CONTROLLING
CONTROLLING AND NON-CONTROLLING INTERESTS | 3 Months Ended |
Mar. 31, 2016 | |
Noncontrolling Interest [Abstract] | |
CONTROLLING AND NON-CONTROLLING INTERESTS | CONTROLLING AND NON-CONTROLLING INTERESTS The Company has various non-controlling interests that are accounted for in accordance with ASC 810, Consolidation (“ASC 810”) . As discussed in Note 1 - Basis of Presentation and Summary of Significant Accounting Policies, Vantiv, Inc. owns a controlling interest in Vantiv Holding, and therefore consolidates the financial results of Vantiv Holding and its subsidiaries and records non-controlling interest for the economic interests in Vantiv Holding held by Fifth Third. The Exchange Agreement entered into prior to the IPO provides for a 1 to 1 ratio between the units of Vantiv Holding and the common stock of Vantiv, Inc. In May 2014, the Company entered into a joint venture with a bank partner which provides customers a comprehensive suite of payment solutions. Vantiv Holding owns 51% and the bank partner owns 49% of the joint venture. The joint venture is consolidated by the Company in accordance with ASC 810, with the associated non-controlling interest included in “Net income attributable to non-controlling interests” in the consolidated statements of income. As of March 31, 2016 , Vantiv, Inc.’s interest in Vantiv Holding was 81.69% . Changes in units and related ownership interest in Vantiv Holding are summarized as follows: Vantiv, Inc. Fifth Third Total As of December 31, 2015 155,488,326 35,042,826 190,531,152 % of ownership 81.61 % 18.39 % Equity plan activity (1) 847,527 — 847,527 As of March 31, 2016 156,335,853 35,042,826 191,378,679 % of ownership 81.69 % 18.31 % (1) Includes stock issued under the equity plans net of Class A common stock withheld to satisfy employee tax withholding obligations upon vesting and forfeitures of restricted Class A common stock awards. As a result of the changes in ownership interests in Vantiv Holding, an adjustment of $2.7 million was recognized during the three months ended March 31, 2015 in order to reflect the portion of net assets of Vantiv Holding attributable to non-controlling unit holders based on changes in the proportionate ownership interests in Vantiv Holding during the period. The table below provides a reconciliation of net income attributable to non-controlling interests based on relative ownership interests as discussed above (in thousands): Three Months Ended March 31, 2016 2015 Net income $ 52,448 $ 26,996 Items not allocable to non-controlling interests: Vantiv, Inc. expenses (1) 13,138 7,810 Vantiv Holding net income $ 65,586 $ 34,806 Net income attributable to non-controlling interests of Fifth Third (2) $ 11,874 $ 7,903 Net income attributable to joint venture non-controlling interest (3) 836 104 Total net income attributable to non-controlling interests $ 12,710 $ 8,007 (1) Primarily represents income tax expense related to Vantiv, Inc. (2) Net income attributable to non-controlling interests of Fifth Third reflects the allocation of Vantiv Holding’s net income based on the proportionate ownership interests in Vantiv Holding held by the non-controlling unit holders. The net income attributable to non-controlling unit holders reflects the changes in ownership interests summarized in the table above. (3) Reflects net income attributable to the non-controlling interest of the joint venture. At March 31, 2016 , Fifth Third holds the rights, under a warrant, to purchase 7.8 million Class C Non-Voting Units of Vantiv Holding at an exercise price of $15.98 per unit. The warrant is currently exercisable, in whole or in part, and from time to time. The warrant expires upon the earliest to occur of June 30, 2029 or a change of control where the price paid per unit in such change of control minus the exercise price of the warrant is less than zero. The warrant is recorded as a component of the non-controlling interest on the accompanying statements of financial position. |
COMMITMENTS, CONTINGENCIES AND
COMMITMENTS, CONTINGENCIES AND GUARANTEES | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS, CONTINGENCIES AND GUARANTEES | COMMITMENTS, CONTINGENCIES AND GUARANTEES Legal Reserve From time to time, the Company is involved in various litigation matters arising in the ordinary course of its business. While it is impossible to ascertain the ultimate resolution or range of financial liability with respect to these contingent matters, management believes none of these matters, either individually or in the aggregate, would have a material effect upon the Company’s consolidated financial statements. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses the hierarchy prescribed in ASC 820, Fair Value Measurement , based upon the available inputs to the valuation and the degree to which they are observable or not observable in the market. The three levels in the hierarchy are as follows: • 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. The following table summarizes assets and liabilities measured at fair value on a recurring basis as of March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 December 31, 2015 Fair Value Measurements Using Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Interest rate contracts $ — $ 16,859 $ — $ — $ — $ — Liabilities: Interest rate contracts $ — $ 26,284 $ — $ — $ 19,228 $ — Mercury TRA — — 174,618 — — 191,207 Interest Rate Contracts The Company uses interest rate contracts to manage interest rate risk. The fair value of interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on the expectation of future interest rates (forward curves) derived from observed market interest rate curves. The fair value of the interest rate caps is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected future cash flows of each interest rate cap. This analysis reflects the contractual terms of the interest rate caps, including the period to maturity, and uses observable market inputs including interest rate curves and implied volatilities. In addition, to comply with the provisions of ASC 820, Fair Value Measurements , credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, are incorporated in the fair values to account for potential nonperformance risk. In adjusting the fair value of its interest rate contracts for the effect of nonperformance risk, the Company has considered any applicable credit enhancements such as collateral postings, thresholds, mutual puts, and guarantees. Although the Company determined that the majority of the inputs used to value its interest rate contracts fell within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its interest rate contracts utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 2016 and December 31, 2015 , the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its interest rate contracts and determined that the credit valuation adjustment was not significant to the overall valuation of its interest rate contracts. As a result, the Company classified its interest rate contract valuations in Level 2 of the fair value hierarchy. See Note 4 - Derivatives and Hedging Activities for further discussion of the Company’s interest rate contracts. Mercury TRA The Mercury TRA is considered contingent consideration as it is part of the consideration payable to the former owners of Mercury. Such contingent consideration is measured at fair value and is based on significant inputs not observable in the market, which is classified in Level 3 of the fair value hierarchy. The Mercury TRA is recorded at fair value based on estimates of discounted future cash flows associated with the estimated payments to the Mercury TRA Holders. The significant unobservable inputs used in the fair value measurement of the Mercury TRA are the discount rate, projections of taxable income and effective tax rates. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value measurement. The liability recorded is re-measured at fair value at each reporting period with the change in fair value recognized in earnings as a non-operating expense. The Company recorded non-operating expenses of $5.7 million and $7.0 million related to the change in fair value during the three months ended March 31, 2016 and 2015 , respectively. The following table summarizes carrying amounts and estimated fair values for the Company’s liabilities that are not reported at fair value in our consolidated statements of financial position as of March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 December 31, 2015 Carrying Amount Fair Value Carrying Amount Fair Value Liabilities: Note payable $ 3,022,105 $ 3,036,095 $ 3,060,139 $ 3,064,989 We consider that the carrying value of cash and cash equivalents, receivables, accounts payable and accrued expenses approximates fair value (level 1) given the short-term nature of these items. The fair value of the Company’s note payable was estimated based on rates currently available to the Company for bank loans with similar terms and maturities and is classified in Level 2 of the fair value hierarchy. |
NET INCOME PER SHARE
NET INCOME PER SHARE | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
NET INCOME PER SHARE | NET INCOME PER SHARE Basic net income per share is calculated by dividing net income attributable to Vantiv, Inc. by the weighted-average shares of Class A common stock outstanding during the period. Diluted net income per share is calculated assuming that Vantiv Holding is a wholly-owned subsidiary of Vantiv, Inc., therefore eliminating the impact of Fifth Third’s non-controlling interest. Pursuant to the Exchange Agreement, the Class B units of Vantiv Holding (“Class B units”), which are held by Fifth Third and represent the non-controlling interest in Vantiv Holding, are convertible into shares of Class A common stock on a one -for-one basis. Based on this conversion feature, diluted net income per share is calculated assuming the conversion of the Class B units on an “if-converted” basis. Due to the Company’s structure as a C corporation and Vantiv Holding’s structure as a pass-through entity for tax purposes, the numerator in the calculation of diluted net income per share is adjusted accordingly to reflect the Company’s income tax expense assuming the conversion of the Fifth Third non-controlling interest into Class A common stock. The adjusted effective tax rate used in the calculation was 36.0% for the three months ended March 31, 2016 and 2015 . As of March 31, 2016 and 2015 , there were approximately 35.0 million and 43.0 million Class B units outstanding, respectively. In addition to the Class B units discussed above, potentially dilutive securities during the three months ended March 31, 2016 and 2015 included restricted stock awards, restricted stock units, the warrant held by Fifth Third which allows for the purchase of Class C units of Vantiv Holding, stock options, performance share awards and ESPP purchase rights, all calculated based on the treasury stock method. The shares of Class B common stock do not share in the earnings or losses of the Company and are therefore not participating securities. Accordingly, basic and diluted net income per share of Class B common stock has not been presented. The following table sets forth the computation of basic and diluted net income per share (in thousands, except share data): Three Months Ended March 31, 2016 2015 Basic: Net income attributable to Vantiv, Inc. $ 39,738 $ 18,989 Shares used in computing basic net income per share: Weighted-average Class A common shares 155,397,360 144,530,704 Basic net income per share $ 0.26 $ 0.13 Diluted: Consolidated income before applicable income taxes $ 76,274 $ 39,249 Income tax expense excluding impact of non-controlling interest 27,459 14,130 Net income attributable to Vantiv, Inc. $ 48,815 $ 25,119 Shares used in computing diluted net income per share: Weighted-average Class A common shares 155,397,360 144,530,704 Weighted-average Class B units of Vantiv Holding 35,042,826 43,042,826 Warrant 5,247,189 11,377,450 Restricted stock awards and units 528,217 1,206,484 Stock options 562,235 557,674 Diluted weighted-average shares outstanding 196,777,827 200,715,138 Diluted net income per share $ 0.25 $ 0.13 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 3 Months Ended |
Mar. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The activity of the components of accumulated other comprehensive income (loss) related to cash flow hedging and other activities for the three months ended March 31, 2016 , and 2015 is presented below (in thousands): Total Other Comprehensive Income (Loss) AOCI Beginning Balance Pretax Activity Tax Effect Net Activity Attributable to non-controlling interests Attributable to Vantiv, Inc. AOCI Ending Balance Three Months ended March 31, 2016 Net change in fair value recorded in accumulated OCI $ (14,336 ) $ (14,094 ) $ 4,338 $ (9,756 ) $ 2,586 $ (7,170 ) $ (21,506 ) Net realized loss reclassified into earnings (a) 5,132 2,376 (731 ) 1,645 (435 ) 1,210 6,342 Net change $ (9,204 ) $ (11,718 ) $ 3,607 $ (8,111 ) $ 2,151 $ (5,960 ) $ (15,164 ) Three Months Ended March 31, 2015 Net change in fair value recorded in accumulated OCI $ (5,288 ) $ (11,435 ) $ 3,329 $ (8,106 ) $ 2,612 $ (5,494 ) $ (10,782 ) Net realized loss reclassified into earnings (a) 1,732 1,041 (305 ) 736 (237 ) 499 2,231 Other (212 ) — — — — — (212 ) Net change $ (3,768 ) $ (10,394 ) $ 3,024 $ (7,370 ) $ 2,375 $ (4,995 ) $ (8,763 ) (a) The reclassification adjustment on cash flow hedge derivatives affected the following lines in the accompanying consolidated statements of income: OCI Component Affected line in the accompanying consolidated statements of income Pretax activity (1) Interest expense-net Tax effect Income tax expense OCI attributable to non-controlling interests Net income attributable to non-controlling interests (1) The three months ended March 31, 2016 and 2015 reflect amounts of losses reclassified from AOCI into earnings, representing the effective portion of the hedging relationships, and are recorded in interest expense-net. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION Segment operating results are presented below (in thousands). The results reflect revenues and expenses directly related to each segment. The Company does not evaluate performance or allocate resources based on segment asset data, and therefore such information is not presented. Segment profit reflects total revenue less network fees and other costs and sales and marketing costs of the segment. The Company’s CODM evaluates this metric in analyzing the results of operations for each segment. Three Months Ended March 31, 2016 Merchant Financial Total Total revenue $ 694,580 $ 124,043 $ 818,623 Network fees and other costs 353,334 34,079 387,413 Sales and marketing 129,336 6,302 135,638 Segment profit $ 211,910 $ 83,662 $ 295,572 Three Months Ended March 31, 2015 Merchant Financial Total Total revenue $ 586,712 $ 118,899 $ 705,611 Network fees and other costs 296,030 35,116 331,146 Sales and marketing 110,175 5,880 116,055 Segment profit $ 180,507 $ 77,903 $ 258,410 A reconciliation of total segment profit to the Company’s income before applicable income taxes is as follows (in thousands): Three Months Ended March 31, 2016 2015 Total segment profit $ 295,572 $ 258,410 Less: Other operating costs (73,703 ) (68,739 ) Less: General and administrative (43,984 ) (47,843 ) Less: Depreciation and amortization (68,230 ) (67,802 ) Less: Interest expense—net (27,729 ) (26,011 ) Less: Non-operating income (expense) (5,652 ) (8,766 ) Income before applicable income taxes $ 76,274 $ 39,249 * * * * * |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Segments | Segments The Company’s segments consist of the Merchant Services segment and the Financial Institution Services segment. The Company’s Chief Executive Officer (“CEO”), who is the chief operating decision maker (“CODM”), evaluates the performance and allocates resources based on the operating results of each segment. Below is a summary of each segment: • Merchant Services —Provides merchant acquiring and payment processing services to large national merchants, regional and small-to-mid sized businesses. Merchant services are sold to small to large businesses through diverse distribution channels. Merchant Services includes all aspects of card processing including authorization and settlement, customer service, chargeback and retrieval processing and interchange management. • Financial Institution Services —Provides card issuer processing, payment network processing, fraud protection, card production, prepaid program management, automated teller machine (“ATM”) driving and network gateway and switching services that utilize the Company’s proprietary Jeanie debit payment network to a diverse set of financial institutions, including regional banks, community banks, credit unions and regional personal identification number (“PIN”) networks. Financial Institution Services also provides statement production, collections and inbound/outbound call centers for credit transactions, and other services such as credit card portfolio analytics, program strategy and support, fraud and security management and chargeback and dispute services. |
Principles of Consolidation | Basis of Presentation and Consolidation The accompanying consolidated financial statements include those of Vantiv, Inc. and all subsidiaries thereof, including its majority-owned subsidiary, Vantiv Holding, LLC. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and should be read in connection with the Company's 2015 audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K. The accompanying consolidated financial statements are unaudited; however, in the opinion of management they include all normal and recurring adjustments necessary for a fair presentation of the Company's financial position, results of operations and cash flows for the periods presented. Results of operations reported for interim periods are not necessarily indicative of results for the entire year. All intercompany balances and transactions have been eliminated. As of March 31, 2016 , Vantiv, Inc. and Fifth Third Bank (“Fifth Third”) owned interests in Vantiv Holding of 81.69% and 18.31% , respectively (see Note 5 - Controlling and Non-controlling Interests for changes in non-controlling interests). The Company accounts for non-controlling interests in accordance with Accounting Standards Codification (“ASC”) 810, Consolidation . Non-controlling interests primarily represent Fifth Third’s minority share of net income or loss of and equity in Vantiv Holding. Net income attributable to non-controlling interests does not include expenses incurred directly by Vantiv, Inc., including income tax expense attributable to Vantiv, Inc. All of the Company’s non-controlling interests are presented after Vantiv Holding income tax expense in the accompanying consolidated statements of income as “Net income attributable to non-controlling interests.” Non-controlling interests are presented as a component of equity in the accompanying consolidated statements of financial position. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
Revenue Recognition | Revenue Recognition The Company has contractual agreements with its clients that set forth the general terms and conditions of the relationship including line item pricing, payment terms and contract duration. Revenues are recognized as earned (i.e., for transaction based fees, when the underlying transaction is processed) in conjunction with ASC 605, Revenue Recognition . ASC 605, Revenue Recognition , establishes guidance as to when revenue is realized or realizable and earned by using the following criteria: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller’s price is fixed or determinable; and (4) collectibility is reasonably assured. The Company follows guidance provided in ASC 605-45, Principal Agent Considerations, which states that the determination of whether a company should recognize revenue based on the gross amount billed to a customer or the net amount retained is a matter of judgment that depends on the facts and circumstances of the arrangement and that certain factors should be considered in the evaluation. The Company recognizes processing revenues net of interchange fees, which are assessed to the Company’s merchant customers on all processed transactions. Interchange rates are not controlled by the Company, which effectively acts as a clearing house collecting and remitting interchange fee settlement on behalf of issuing banks, debit networks, credit card associations and its processing customers. All other revenue is reported on a gross basis, as the Company contracts directly with the end customer, assumes the risk of loss and has pricing flexibility. The Company generates revenue primarily by processing electronic payment transactions. Set forth below is a description of the Company’s revenue by segment. Merchant Services The Company’s Merchant Services segment revenue is primarily derived from processing credit and debit card transactions. Merchant Services revenue is primarily comprised of fees charged to businesses, net of interchange fees, for payment processing services, including authorization, capture, clearing, settlement and information reporting of electronic transactions. The fees charged consist of either a percentage of the dollar volume of the transaction or a fixed fee, or both, and are recognized at the time of the transaction. Merchant Services revenue also includes a number of revenue items that are incurred by the Company and are reimbursable as the costs are passed through to and paid by the Company’s clients. These items primarily consist of Visa, MasterCard and other payment network fees. In addition, for sales through ISOs and certain other referral sources in which the Company is the primary party to the contract with the merchant, the Company records the full amount of the fees collected from the merchant as revenue. Merchant Services segment revenue also includes revenue from ancillary services such as fraud management, equipment sales and terminal rent. Merchant Services revenue is recognized as services are performed. Financial Institution Services The Company’s Financial Institution Services segment revenue is primarily derived from debit, credit and ATM card transaction processing, ATM driving and support, and PIN debit processing services. Financial Institution Services revenue associated with processing transactions includes per transaction and account related fees, card production fees and fees generated from the Company’s Jeanie network. Financial Institution Services revenue related to card transaction processing is recognized when consumers use their client-issued cards to make purchases. Financial Institution Services also generates revenue through other services, including statement production, collections and inbound/outbound call centers for credit transactions and other services such as credit card portfolio analytics, program strategy and support, fraud and security management and chargeback and dispute services. Financial Institution Services revenue is recognized as services are performed. Financial Institution Services provides certain services to Fifth Third. Revenues related to these services are included in the accompanying statements of income as related party revenues. |
Expenses | Expenses Set forth below is a brief description of the components of the Company’s expenses: • Network fees and other costs primarily consist of pass through expenses incurred by the Company in connection with providing processing services to its clients, including Visa and MasterCard network association fees, payment network fees, third party processing fees, telecommunication charges, postage and card production costs. • Sales and marketing expense primarily consists of salaries and benefits paid to sales personnel, sales management and other sales and marketing personnel, residual payments made to ISOs and referral partners, and advertising and promotional costs. • Other operating costs primarily consist of salaries and benefits paid to operational and IT personnel, costs associated with operating the Company’s technology platform and data centers, information technology costs for processing transactions, product development costs, software consulting fees and maintenance costs. • General and administrative expenses primarily consist of salaries and benefits paid to executive management and administrative employees, including finance, human resources, product development, legal and risk management, share-based compensation costs, equipment and occupancy costs and consulting costs. • Non-operating expense during the three months ended March 31, 2016 primarily relates to the change in fair value of a tax receivable agreement (“TRA”) (see Note 7 - Fair Value Measurements). Non-operating expense during the three months ended March 31, 2015 primarily consists of the change in fair value of a tax receivable agreement (see Note 7 - Fair Value Measurements) and the write-off of deferred financing fees and original issue discount (“OID”) associated with an early principal payment on the term B loan in January 2015 (see Note 3 - Long-Term Debt). |
Share-Based Compensation | Share-Based Compensation The Company expenses employee share-based payments under ASC 718, Compensation—Stock Compensation , which requires compensation cost for the grant-date fair value of share-based payments to be recognized over the requisite service period. The Company estimates the grant date fair value of the share-based awards issued in the form of options using the Black-Scholes option pricing model. The fair value of restricted stock awards and performance awards is measured based on the market price of the Company’s stock on the grant date. For the three months ended March 31, 2016 and 2015 total share-based compensation expense was $8.4 million and $11.6 million , respectively. In 2016 the Company began offering an Employee Stock Purchase Plan (“ESPP”). The ESPP has 2.5 million shares of common stock reserved for issuance. Full-time and benefits-eligible part-time employees who have completed at least one year of service are eligible to participate. Temporary, seasonal and employees subject to Section 16 reporting are excluded. Shares may be purchased at 85% of the market value at the end of the offering period through accumulation of payroll deductions. The ESPP provides for six month offerings commencing on January 1 and July 1 of each year with purchases on June 30 and December 31 of each year. The expense related to the ESPP’s 15% discount is included in total share based compensation expense above. |
Earnings Per Share | Earnings Per Share Basic earnings per share is computed by dividing net income attributable to Vantiv, Inc. by the weighted average shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to Vantiv, Inc., adjusted as necessary for the impact of potentially dilutive securities, by the weighted-average shares outstanding during the period and the impact of securities that would have a dilutive effect on earnings per share. See Note 8 - Net Income Per Share for further discussion. |
Income Taxes | Income Taxes Vantiv, Inc. is taxed as a C corporation for U.S. income tax purposes and is therefore subject to both federal and state taxation at a corporate level. Income taxes are computed in accordance with ASC 740, Income Taxes , and reflect the net tax effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and the corresponding income tax amounts. The Company has deferred tax assets and liabilities and maintains valuation allowances where it is more likely than not that all or a portion of deferred tax assets will not be realized. To the extent the Company determines that it will not realize the benefit of some or all of its deferred tax assets, such deferred tax assets will be adjusted through the Company’s provision for income taxes in the period in which this determination is made. As of March 31, 2016 and December 31, 2015 , the Company had recorded no valuation allowances against deferred tax assets. The Company's consolidated interim effective tax rate is based upon expected annual income from operations, statutory tax rates and tax laws in the various jurisdictions in which the Company operates. Significant or unusual items, including adjustments to accruals for tax uncertainties, are recognized in the quarter in which the related event occurs. The Company's effective tax rates were 31.2% for the three months ended March 31, 2016 and 2015 . The effective tax rate for each period reflects the impact of the Company's non-controlling interests. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash on hand and investments with original maturities of three months or less (that are readily convertible to cash) are considered to be cash equivalents. Cash equivalents consist primarily of overnight EuroDollar sweep accounts which are maintained at reputable financial institutions with high credit quality and therefore are considered to bear minimal credit risk. |
Accounts Receivable—net | Accounts Receivable—net Accounts receivable primarily represent processing revenues earned but not collected. For a majority of its customers, the Company has the authority to debit the client’s bank accounts through the Federal Reserve’s Automated Clearing House; as such, collectibility is reasonably assured. The Company records a reserve for doubtful accounts when it is probable that the accounts receivable will not be collected. The Company reviews historical loss experience and the financial position of its customers when estimating the allowance. As of March 31, 2016 and December 31, 2015 , the allowance for doubtful accounts was not material to the Company’s statements of financial position. |
Customer Incentives | Customer Incentives Customer incentives represent signing bonuses paid to customers. Customer incentives are paid in connection with the acquisition or renewal of customer contracts, and are therefore deferred and amortized using the straight-line method based on the contractual agreement. Related amortization is recorded as contra-revenue. |
Property and Equipment—net | Property, Equipment and Software—net Property, equipment and software consists of the Company’s facilities, furniture and equipment, software, land and leasehold improvements. These assets are depreciated on a straight-line basis over their respective useful lives, which are 15 to 40 years for the Company’s facilities and related improvements, 2 to 10 years for furniture and equipment, 3 to 8 years for software and 3 to 10 years for leasehold improvements or the lesser of the estimated useful life of the improvement or the term of lease. Also included in property, equipment and software is work in progress consisting of costs associated with software developed for internal use which has not yet been placed in service. Accumulated depreciation as of March 31, 2016 and December 31, 2015 was $258.7 million and $240.3 million , respectively. The Company capitalizes certain costs related to computer software developed for internal use and amortizes such costs on a straight-line basis over an estimated useful life of 5 to 8 years. Research and development costs incurred prior to establishing technological feasibility are charged to operations as such costs are incurred. Once technological feasibility has been established, costs are capitalized until the software is placed in service. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets In accordance with ASC 350, Intangibles—Goodwill and Other , the Company tests goodwill for impairment for each reporting unit on an annual basis, or when events occur or circumstances indicate the fair value of a reporting unit is below its carrying value. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that fair value of the goodwill within the reporting unit is less than its carrying value. The Company performed its most recent annual goodwill impairment test for all reporting units as of July 31, 2015 using market data and discounted cash flow analyses. Based on this analysis, it was determined that the fair value of all reporting units were substantially in excess of the carrying value. There have been no other events or changes in circumstances subsequent to the testing date that would indicate impairment of these reporting units as of March 31, 2016 . Intangible assets consist of acquired customer relationships, trade names and customer portfolios and related assets that are amortized over their estimated useful lives. The Company reviews finite lived intangible assets for possible impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. As of March 31, 2016 , there have been no such events or circumstances that would indicate potential impairment of finite lived intangible assets. |
Settlement Assets and Obligations | Settlement Assets and Obligations Settlement assets and obligations result from Financial Institution Services when funds are transferred from or received by the Company prior to receiving or paying funds to a different entity. This timing difference results in a settlement asset or obligation. The amounts are generally collected or paid the following business day. The settlement assets and obligations recorded by Merchant Services represent intermediary balances due to differences between the amount the Sponsoring Member receives from the card associations and the amount funded to the merchants. Such differences arise from timing differences, interchange expenses, merchant reserves and exception items. In addition, certain card associations limit the Company from accessing or controlling merchant settlement funds and, instead, require that these funds be controlled by the Sponsoring Member. The Company follows a net settlement process whereby, if the settlement received from the card associations precedes the funding obligation to the merchant, the Company temporarily records a corresponding liability. Conversely, if the funding obligation to the merchant precedes the settlement from the card associations, the amount of the net receivable position is recorded by the Company, or in some cases, the Sponsoring Member may cover the position with its own funds in which case a receivable position is not recorded by the Company. |
Derivatives | Derivatives The Company accounts for derivatives in accordance with ASC 815, Derivatives and Hedging . This guidance establishes accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. All derivatives, whether designated in hedging relationships or not, are required to be recorded on the statement of financial position at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and the hedged item will be recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portion of the change in the fair value of the derivative will be recorded in accumulated other comprehensive income (loss) (“AOCI”) and will be recognized in the statement of income when the hedged item affects earnings. The Company does not enter into derivative financial instruments for speculative purposes. |
Tax Receivable Agreements, Policy | Tax Receivable Agreements As of March 31, 2016, the Company is party to several TRAs in which the Company agrees to make payments to various parties of 85% of the federal, state, local and foreign income tax benefits realized by the Company as a result of certain tax deductions. Payments under the TRAs will be based on the tax reporting positions of the Company and are only required to the extent the Company realizes cash savings as a result of the underlying tax attributes. The cash savings realized by the Company are computed by comparing the actual income tax liability of the Company to the amount of such taxes the Company would have been required to pay had there been no deductions related to the tax attributes discussed below. The Company will retain the benefit of the remaining 15% of the cash savings associated with the TRAs. The Company has entered into the following three TRAs: • TRAs with investors prior to the Company’s initial public offering (“IPO”) for its use of net operating losses (“NOLs”) and other tax attributes existing at the IPO date, all of which is currently held by Fifth Third. • A TRA with Fifth Third in which the Company realizes tax deductions as a result of the increases in tax basis from the purchase of Vantiv Holding units or from the exchange of Vantiv Holding units for cash or shares of Class A common stock, as well as the tax benefits attributable to payments made under such TRAs. • A TRA with Mercury Payment Systems, LLC (“Mercury”) shareholders as part of the acquisition of Mercury as a result of the increase in tax basis of the assets of Mercury resulting from the acquisition and the use of the net operating losses and other tax attributes of Mercury that were acquired as part of the acquisition. Obligations recorded pursuant to the TRAs are based on estimates of future taxable income and future tax rates. On an annual basis, the Company evaluates the assumptions underlying the TRA obligations. During 2015, the Company entered into a Repurchase Addendum to Tax Receivable Agreement (the “TRA Addendum”) with each of the pre-acquisition owners of Mercury ("Mercury TRA Holders"). The Mercury TRA Addendum contains the following provisions to acquire a significant portion of the Mercury TRA: • Beginning December 1st of each of 2015, 2016, 2017, and 2018, and ending June 30th of 2016, 2017, 2018, and 2019, respectively, the Company is granted call options (collectively, the "Call Options") pursuant to which certain additional obligations of the Company under the Mercury TRA would be terminated in consideration for cash payments of $41.4 million , $38.1 million , $38.0 million , and $43.0 million , respectively. • In the unlikely event the Company does not exercise the relevant Call Option, the Mercury TRA Holders are granted put options beginning July 10th and ending July 25th of each of 2016, 2017, 2018, and 2019, respectively (collectively, the "Put Options"), pursuant to which certain additional obligations of the Company would be terminated in consideration for cash payments with similar amounts to the Call Options. Except to the extent the Company’s obligations under the Mercury TRA have been terminated and settled in full in accordance with the terms of the Mercury TRA Addendum, the Mercury TRA will remain in effect, and the parties thereto will continue to have all rights and obligations thereunder. All TRA obligations are recorded based on the full and undiscounted amount of the expected future payments, except for the Mercury TRA which represents contingent consideration relating to an acquired business, and is recorded at fair value for financial reporting purposes (see Note 7 - Fair Value Measurements). The timing and/or amount of aggregate payments due under the TRAs may vary based on a number of factors, including the amount and timing of the taxable income the Company generates in the future and the tax rate then applicable, the use of loss carryovers and amortizable basis. Payments under the TRAs, if necessary, are required to be made no later than January 5 th of the second year immediately following the taxable year in which the obligation occurred. The Company made payments under the TRA obligations of approximately $53.5 million and $22.8 million in January 2016 and January 2015, respectively. The term of the TRAs will continue until all such tax benefits have been utilized or expired, unless the Company exercises its right to terminate the TRA for an amount based on the agreed payments remaining to be made under the agreement. |
New Accounting Pronouncements | New Accounting Pronouncements In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, Compensation- Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The update simplifies several aspects of the accounting for share-based payment award transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The update is effective for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted in any interim or annual period. The Company is currently evaluating the impact of the adoption of this update on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU amends the existing guidance by recognizing all leases, including operating leases, with a term longer than 12 months on the balance sheet and disclosing key information about the lease arrangements. The effective date of this update is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The update requires modified retrospective transition, which requires application of the ASU at the beginning of the earliest comparative period presented in the year of adoption. The Company is currently evaluating the impact of the adoption of this principle on the Company’s consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The update simplifies the presentation of deferred income taxes by requiring that deferred tax liabilities and assets be classified as noncurrent in the balance sheet. The update is effective for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years. The guidance may be adopted prospectively or retrospectively and early adoption is permitted. As of December 31, 2015, the Company elected to early adopt this ASU on a prospective basis and therefore, prior years were not retrospectively adjusted. In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This standard was clarified in August 2015 with the issuance of ASU 2015-15. The update requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. Amortization of the costs will continue to be reported as interest expense. These updates require retrospective application and represent a change in accounting principle. The change in accounting principle, resulting from the Company's adoption of this ASU in December 2015, has been implemented and the results are not material to the Company's consolidated statement of financial position. In May 2014, the FASB issued ASU 2014-09, "Revenue From Contracts With Customers." The ASU supersedes the revenue recognition requirements in ASC 605, Revenue Recognition . The new standard provides a five-step analysis of transactions to determine when and how revenue is recognized, based upon the core principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also requires additional disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard, as amended, is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The amendment allows companies to use either a full retrospective or a modified retrospective approach to adopt this ASU. The Company is currently evaluating which transition approach to use and assessing the impact of the adoption of this principle on the Company’s consolidated financial statements. |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | As of March 31, 2016 and December 31, 2015 , the Company’s finite lived intangible assets consisted of the following (in thousands): March 31, 2016 December 31, 2015 Customer relationship intangible assets $ 1,596,581 $ 1,596,581 Trade name 21,733 21,733 Customer portfolios and related assets 129,665 129,734 Patents 511 366 1,748,490 1,748,414 Less accumulated amortization on: Customer relationship intangible assets 862,000 821,580 Trade name 16,693 14,350 Customer portfolios and related assets 56,575 49,418 935,268 885,348 $ 813,222 $ 863,066 |
Schedule of expected amortization expense | The estimated amortization expense of intangible assets for the remainder of 2016 and the next five years is as follows (in thousands): Nine months ending December 31, 2016 $ 142,335 2017 171,361 2018 161,922 2019 153,530 2020 81,470 2021 36,595 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of the Company's debt | As of March 31, 2016 and December 31, 2015 , the Company’s long-term debt consisted of the following (in thousands): March 31, December 31, Term A loan, maturing on June 13, 2019 (1) $ 1,870,625 $ 1,896,250 Term B loan, maturing on June 13, 2021 (2) 1,165,000 1,179,000 Leasehold mortgage, expiring on August 10, 2021 (3) 10,131 10,131 Less: Current portion of note payable and current portion of note payable to related party (106,001 ) (116,501 ) Less: Original issue discount (5,711 ) (6,024 ) Less: Debt issuance costs (17,940 ) (19,218 ) Note payable and note payable to related party $ 2,916,104 $ 2,943,638 (1) Interest at a variable base rate ( LIBOR ) plus a spread rate (200 basis points) (total rate of 2.40% at March 31, 2016) and amortizing on a basis of 1.25% per quarter during each of the first twelve quarters (September 2014 through June 2017), 1.875% per quarter during the next four quarters (September 2017 through June 2018) and 2.50% during the next three quarters (September 2018 through March 2019) with a balloon payment due at maturity. (2) Interest at a variable base rate ( LIBOR ) with a floor of 75 basis points plus a spread rate (300 basis points) (total rate of 3.75% at March 31, 2016) and amortizing on a basis of 0.25% per quarter, with a balloon payment due at maturity. (3) Interest payable monthly at a fixed rate of 6.22% . |
DERIVATIVES AND HEDGING ACTIV22
DERIVATIVES AND HEDGING ACTIVITIES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair value of derivative instruments | The table below presents the fair value of the Company’s derivative financial instruments designated as cash flow hedges included within the accompanying consolidated statements of financial position (in thousands): Consolidated Statement of March 31, 2016 December 31, 2015 Interest rate contracts Other current assets $ 212 $ — Interest rate contracts Other long-term assets 16,647 — Interest rate contracts Other current liabilities 12,965 9,343 Interest rate contracts Other long-term liabilities 13,319 9,885 |
Schedule of effect of the Company's interest rate swaps on the consolidated statements of income | The table below presents the pre-tax effect of the Company’s interest rate contracts on the accompanying consolidated statements of comprehensive income for the three months ended March 31, 2016 and 2015 (in thousands): Three Months Ended March 31, 2016 2015 Derivatives in cash flow hedging relationships: Amount of loss recognized in OCI (effective portion) (1) $ (14,094 ) $ (11,435 ) Amount of loss reclassified from accumulated OCI into earnings (effective portion) (2,376 ) (1,041 ) Amount of loss recognized in earnings (2) — (1 ) (1) “OCI” represents other comprehensive income. (2) Amount represents hedge ineffectiveness and is recorded as a component of interest expense-net in the accompanying consolidated statement of income. |
CONTROLLING AND NON-CONTROLLI23
CONTROLLING AND NON-CONTROLLING INTERESTS IN VANTIV HOLDING (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Noncontrolling Interest [Abstract] | |
Schedule of changes in units and related ownership interest | Changes in units and related ownership interest in Vantiv Holding are summarized as follows: Vantiv, Inc. Fifth Third Total As of December 31, 2015 155,488,326 35,042,826 190,531,152 % of ownership 81.61 % 18.39 % Equity plan activity (1) 847,527 — 847,527 As of March 31, 2016 156,335,853 35,042,826 191,378,679 % of ownership 81.69 % 18.31 % (1) Includes stock issued under the equity plans net of Class A common stock withheld to satisfy employee tax withholding obligations upon vesting and forfeitures of restricted Class A common stock awards. |
Schedule of reconciliation of net income (loss) attributable to non-controlling interest | The table below provides a reconciliation of net income attributable to non-controlling interests based on relative ownership interests as discussed above (in thousands): Three Months Ended March 31, 2016 2015 Net income $ 52,448 $ 26,996 Items not allocable to non-controlling interests: Vantiv, Inc. expenses (1) 13,138 7,810 Vantiv Holding net income $ 65,586 $ 34,806 Net income attributable to non-controlling interests of Fifth Third (2) $ 11,874 $ 7,903 Net income attributable to joint venture non-controlling interest (3) 836 104 Total net income attributable to non-controlling interests $ 12,710 $ 8,007 (1) Primarily represents income tax expense related to Vantiv, Inc. (2) Net income attributable to non-controlling interests of Fifth Third reflects the allocation of Vantiv Holding’s net income based on the proportionate ownership interests in Vantiv Holding held by the non-controlling unit holders. The net income attributable to non-controlling unit holders reflects the changes in ownership interests summarized in the table above. (3) Reflects net income attributable to the non-controlling interest of the joint venture. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities measured at fair value on recurring basis | The following table summarizes assets and liabilities measured at fair value on a recurring basis as of March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 December 31, 2015 Fair Value Measurements Using Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Interest rate contracts $ — $ 16,859 $ — $ — $ — $ — Liabilities: Interest rate contracts $ — $ 26,284 $ — $ — $ 19,228 $ — Mercury TRA — — 174,618 — — 191,207 |
Schedule of carrying amounts and estimated fair values for the Company's liabilities | The following table summarizes carrying amounts and estimated fair values for the Company’s liabilities that are not reported at fair value in our consolidated statements of financial position as of March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 December 31, 2015 Carrying Amount Fair Value Carrying Amount Fair Value Liabilities: Note payable $ 3,022,105 $ 3,036,095 $ 3,060,139 $ 3,064,989 |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of computation of basic and diluted net income per share | The following table sets forth the computation of basic and diluted net income per share (in thousands, except share data): Three Months Ended March 31, 2016 2015 Basic: Net income attributable to Vantiv, Inc. $ 39,738 $ 18,989 Shares used in computing basic net income per share: Weighted-average Class A common shares 155,397,360 144,530,704 Basic net income per share $ 0.26 $ 0.13 Diluted: Consolidated income before applicable income taxes $ 76,274 $ 39,249 Income tax expense excluding impact of non-controlling interest 27,459 14,130 Net income attributable to Vantiv, Inc. $ 48,815 $ 25,119 Shares used in computing diluted net income per share: Weighted-average Class A common shares 155,397,360 144,530,704 Weighted-average Class B units of Vantiv Holding 35,042,826 43,042,826 Warrant 5,247,189 11,377,450 Restricted stock awards and units 528,217 1,206,484 Stock options 562,235 557,674 Diluted weighted-average shares outstanding 196,777,827 200,715,138 Diluted net income per share $ 0.25 $ 0.13 |
ACCUMULATED OTHER COMPREHENSI26
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of activity of the components of accumulated other comprehensive income (loss) | The activity of the components of accumulated other comprehensive income (loss) related to cash flow hedging and other activities for the three months ended March 31, 2016 , and 2015 is presented below (in thousands): Total Other Comprehensive Income (Loss) AOCI Beginning Balance Pretax Activity Tax Effect Net Activity Attributable to non-controlling interests Attributable to Vantiv, Inc. AOCI Ending Balance Three Months ended March 31, 2016 Net change in fair value recorded in accumulated OCI $ (14,336 ) $ (14,094 ) $ 4,338 $ (9,756 ) $ 2,586 $ (7,170 ) $ (21,506 ) Net realized loss reclassified into earnings (a) 5,132 2,376 (731 ) 1,645 (435 ) 1,210 6,342 Net change $ (9,204 ) $ (11,718 ) $ 3,607 $ (8,111 ) $ 2,151 $ (5,960 ) $ (15,164 ) Three Months Ended March 31, 2015 Net change in fair value recorded in accumulated OCI $ (5,288 ) $ (11,435 ) $ 3,329 $ (8,106 ) $ 2,612 $ (5,494 ) $ (10,782 ) Net realized loss reclassified into earnings (a) 1,732 1,041 (305 ) 736 (237 ) 499 2,231 Other (212 ) — — — — — (212 ) Net change $ (3,768 ) $ (10,394 ) $ 3,024 $ (7,370 ) $ 2,375 $ (4,995 ) $ (8,763 ) (a) The reclassification adjustment on cash flow hedge derivatives affected the following lines in the accompanying consolidated statements of income: OCI Component Affected line in the accompanying consolidated statements of income Pretax activity (1) Interest expense-net Tax effect Income tax expense OCI attributable to non-controlling interests Net income attributable to non-controlling interests (1) The three months ended March 31, 2016 and 2015 reflect amounts of losses reclassified from AOCI into earnings, representing the effective portion of the hedging relationships, and are recorded in interest expense-net. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of results of operations for each segment | Segment profit reflects total revenue less network fees and other costs and sales and marketing costs of the segment. The Company’s CODM evaluates this metric in analyzing the results of operations for each segment. Three Months Ended March 31, 2016 Merchant Financial Total Total revenue $ 694,580 $ 124,043 $ 818,623 Network fees and other costs 353,334 34,079 387,413 Sales and marketing 129,336 6,302 135,638 Segment profit $ 211,910 $ 83,662 $ 295,572 Three Months Ended March 31, 2015 Merchant Financial Total Total revenue $ 586,712 $ 118,899 $ 705,611 Network fees and other costs 296,030 35,116 331,146 Sales and marketing 110,175 5,880 116,055 Segment profit $ 180,507 $ 77,903 $ 258,410 |
Schedule of reconciliation of total segment profit to the company's income before applicable income taxes | A reconciliation of total segment profit to the Company’s income before applicable income taxes is as follows (in thousands): Three Months Ended March 31, 2016 2015 Total segment profit $ 295,572 $ 258,410 Less: Other operating costs (73,703 ) (68,739 ) Less: General and administrative (43,984 ) (47,843 ) Less: Depreciation and amortization (68,230 ) (67,802 ) Less: Interest expense—net (27,729 ) (26,011 ) Less: Non-operating income (expense) (5,652 ) (8,766 ) Income before applicable income taxes $ 76,274 $ 39,249 * * * * * |
BASIS OF PRESENTATION AND SUM28
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 1 Months Ended | ||
Jun. 30, 2009 | Mar. 31, 2016 | Dec. 31, 2015 | |
Sponsorship agreement | |||
Sponsorship agreement term | 10 years | ||
Fifth Third | Vantiv Holding | |||
Ownership Percentage of Vantiv Holding | |||
Ownership percentage by Fifth Third | 18.31% | 18.39% | |
Vantiv, Inc. | Vantiv Holding | |||
Ownership Percentage of Vantiv Holding | |||
Ownership percentage by Vantiv, Inc | 81.69% | 81.61% |
BASIS OF PRESENTATION AND SUM29
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Share Repurchase Program (Details) - Class A Common Stock - February 2014 Authorized Share Repurchase Program - USD ($) $ in Millions | Mar. 31, 2016 | Feb. 12, 2014 |
Share Repurchase Program | ||
Stock repurchase program, authorized amount | $ 300 | |
Stock repurchase program, remaining authorized repurchase amount | $ 75 |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES Share Based Compensation (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Share-based Compensation | ||
Allocated Share-based Compensation Expense | $ 8.4 | $ 11.6 |
Employee Stock Purchase Plan | ||
Share-based Compensation | ||
Common stock reserved for issuance under ESPP | 2.5 | |
ESPP, service period | 1 year | |
ESPP purchase price of common stock, percent of fair market value | 85.00% | |
ESPP offering period | 6 months | |
ESPP discount from fair market value on purchase date | 15.00% |
SUMMARY OF SIGNIFICANT ACCOUN31
SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES Income Taxes and ESPP (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | |||
Valuation allowance against deferred assets | $ 0 | ||
Effective income tax rate | 31.20% | 31.20% |
SUMMARY OF SIGNIFICANT ACCOUN32
SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES Property, Equipment and Software- net (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment | ||
Accumulated depreciation | $ 258.7 | $ 240.3 |
Building and improvements | Minimum | ||
Property, Plant and Equipment | ||
Estimated useful life | 15 years | |
Building and improvements | Maximum | ||
Property, Plant and Equipment | ||
Estimated useful life | 40 years | |
Furniture and equipment | Minimum | ||
Property, Plant and Equipment | ||
Estimated useful life | 2 years | |
Furniture and equipment | Maximum | ||
Property, Plant and Equipment | ||
Estimated useful life | 10 years | |
Software | Minimum | ||
Property, Plant and Equipment | ||
Estimated useful life | 3 years | |
Software | Maximum | ||
Property, Plant and Equipment | ||
Estimated useful life | 8 years | |
Leasehold improvements | Minimum | ||
Property, Plant and Equipment | ||
Estimated useful life | 3 years | |
Leasehold improvements | Maximum | ||
Property, Plant and Equipment | ||
Estimated useful life | 10 years | |
Software development | Minimum | ||
Property, Plant and Equipment | ||
Estimated useful life | 5 years | |
Software development | Maximum | ||
Property, Plant and Equipment | ||
Estimated useful life | 8 years |
SUMMARY OF SIGNIFICANT ACCOUN33
SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES Tax Receivable Agreements (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Tax receivable agreement | |||
Tax Receivable Agreement Payments to Pre IPO Investors of Subsidiary as Percentage of Cash Savings in Tax | 85.00% | ||
Tax Receivable Agreement, Cash Savings Percent | 15.00% | ||
Payments Under Tax Receivable Agreements | $ 53,474 | $ 22,805 | |
Mercury Payment Systems, LLC | Call Option | |||
Tax receivable agreement | |||
2016 cash payment to terminate Mercury TRA under Call Options | $ 41,400 | ||
2017 cash payment to terminate Mercury TRA under Call Options | 38,100 | ||
2018 cash payment to terminate Mercury TRA under Call Options | 38,000 | ||
2019 cash payment to terminate Mercury TRA under Call Options | $ 43,000 |
INTANGIBLE ASSETS - Intangible
INTANGIBLE ASSETS - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | $ 1,748,490 | $ 1,748,414 | |
Finite-lived intangible assets, accumulated amortization | 935,268 | 885,348 | |
Intangible assets—net | 813,222 | 863,066 | |
Amortization expense on finite lived intangible assets | 49,900 | $ 49,200 | |
Estimate amortization expense of finite lived intangible assets for the next five years | |||
Nine months ending December 31, 2016 | 142,335 | ||
2,017 | 171,361 | ||
2,018 | 161,922 | ||
2,019 | 153,530 | ||
2,020 | 81,470 | ||
2,021 | 36,595 | ||
Customer relationships intangible assets | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 1,596,581 | 1,596,581 | |
Finite-lived intangible assets, accumulated amortization | 862,000 | 821,580 | |
Trade name - finite lived | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 21,733 | 21,733 | |
Finite-lived intangible assets, accumulated amortization | 16,693 | 14,350 | |
Customer Portfolios and related assets | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 129,665 | 129,734 | |
Finite-lived intangible assets, accumulated amortization | 56,575 | 49,418 | |
Patents | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | $ 511 | $ 366 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Thousands | Jun. 13, 2014 | Mar. 31, 2016 | Dec. 31, 2015 | |
Long-term debt | ||||
Less: Current portion of note payable and current portion of note payable to related party | $ (106,001) | $ (116,501) | ||
Less: Original issue discount | (5,711) | (6,024) | ||
Less: Debt issuance cost | (17,940) | (19,218) | ||
Note payable and note payable to related party | 2,916,104 | 2,943,638 | ||
Term A loan | ||||
Long-term debt | ||||
Variable base rate | LIBOR | |||
Long-term debt, gross | [1] | $ 1,870,625 | 1,896,250 | |
Effective Interest rate (as a percent) | 2.40% | |||
Term A loan first twelve quarters amortization percentage | 1.25% | |||
Term A loan next four quarters amortization percentage | 1.875% | |||
Term A loan following three quarters amortization percentage | 2.50% | |||
Term B loan | ||||
Long-term debt | ||||
Variable base rate | LIBOR | |||
Long-term debt, gross | [2] | $ 1,165,000 | 1,179,000 | |
Effective Interest rate (as a percent) | 3.75% | |||
Term B loan amortization percentage | 0.25% | |||
Leasehold Mortgage for corporate headquarters | ||||
Long-term debt | ||||
Long-term debt, gross | [3] | $ 10,131 | $ 10,131 | |
Leasehold mortgage interest rate (as a percent) | 6.22% | |||
[1] | Interest at a variable base rate (LIBOR) plus a spread rate (200 basis points) (total rate of 2.40% at March 31, 2016) and amortizing on a basis of 1.25% per quarter during each of the first twelve quarters (September 2014 through June 2017), 1.875% per quarter during the next four quarters (September 2017 through June 2018) and 2.50% during the next three quarters (September 2018 through March 2019) with a balloon payment due at maturity. | |||
[2] | Interest at a variable base rate (LIBOR) with a floor of 75 basis points plus a spread rate (300 basis points) (total rate of 3.75% at March 31, 2016) and amortizing on a basis of 0.25% per quarter, with a balloon payment due at maturity. | |||
[3] | Interest payable monthly at a fixed rate of 6.22%. |
LONG-TERM DEBT Narrative (Deta
LONG-TERM DEBT Narrative (Details) - USD ($) $ in Millions | Jan. 06, 2015 | Jun. 13, 2014 | Mar. 31, 2016 | Dec. 31, 2015 |
Long-term debt | ||||
Percentage of capital stock of the entity's domestic and foreign subsidiaries pledged as collateral for borrowings | 65.00% | |||
Minimum aggregate value of real property held by obligors provided as security on first priority basis | $ 10 | |||
Term A loan | ||||
Long-term debt | ||||
Variable base rate | LIBOR | |||
Spread rate (as a percent) | 2.00% | |||
Term A loan | Fifth Third | ||||
Long-term debt | ||||
Notes Payable, Related Parties | $ 188.9 | $ 191.5 | ||
Term B loan | ||||
Long-term debt | ||||
Variable base rate | LIBOR | |||
Spread rate (as a percent) | 3.00% | |||
Repayments of Debt | $ 200 | |||
Unamortized deferred financing cost written off | $ 1.8 | |||
Term B loan | Minimum | ||||
Long-term debt | ||||
Spread rate (as a percent) | 0.75% | |||
Swing line credit facility | ||||
Long-term debt | ||||
Maximum borrowing capacity | $ 100 | |||
Revolving credit facility | ||||
Long-term debt | ||||
Maximum borrowing capacity | $ 425 | |||
Commitment fees (as a percent) | 0.375% | |||
Letter of credit facility | ||||
Long-term debt | ||||
Maximum borrowing capacity | $ 40 |
DERIVATIVES AND HEDGING ACTIV37
DERIVATIVES AND HEDGING ACTIVITIES (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2016USD ($)swap | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | ||
Derivatives, Fair Value | ||||
Upfront premium of interest rate cap agreements | $ 21,523 | $ 0 | ||
Cash flow hedges of interest rate risk | ||||
Cash flow hedge loss to be reclassified within twelve months | 14,500 | |||
Derivatives in cash flow hedging relationships: | ||||
Amount of loss recognized in OCI (effective portion) | [1] | (14,094) | (11,435) | |
Amount of loss reclassified from accumulated OCI into earnings (effective portion) | (2,376) | (1,041) | ||
Amount of loss recognized on interest rate cash flow hedge ineffectiveness | [2] | 0 | $ (1) | |
Aggregate fair value of derivatives, net liability position | 27,400 | |||
Other Current Assets | ||||
Fair value of interest rate swaps designated as cash flow hedges | ||||
Fair value of hedge assets | 212 | |||
Other long-term assets | ||||
Fair value of interest rate swaps designated as cash flow hedges | ||||
Fair value of hedge assets | 16,647 | |||
Other current liabilities | ||||
Fair value of interest rate swaps designated as cash flow hedges | ||||
Fair value of hedge liabilities | 12,965 | $ 9,343 | ||
Other long-term liabilities | ||||
Fair value of interest rate swaps designated as cash flow hedges | ||||
Fair value of hedge liabilities | $ 13,319 | $ 9,885 | ||
Interest rate swaps | ||||
Cash flow hedges of interest rate risk | ||||
Number of interest rate derivatives held | swap | 14 | |||
Interest rate swaps | Covering period from June 2015 through June 2017 | ||||
Cash flow hedges of interest rate risk | ||||
Number of interest rate derivatives held | swap | 8 | |||
Notional amount | $ 1,200,000 | |||
Amortized value of notional amount | $ 1,100,000 | |||
Interest rate swaps | Covering period from January 2016 through January 2019 | ||||
Cash flow hedges of interest rate risk | ||||
Number of interest rate derivatives held | swap | 6 | |||
Notional amount | $ 500,000 | |||
Interest rate swaps | Fifth Third | ||||
Cash flow hedges of interest rate risk | ||||
Number of interest rate derivatives held | swap | 5 | |||
Interest rate swaps | Fifth Third | Maximum | ||||
Cash flow hedges of interest rate risk | ||||
Notional amount | $ 293,800 | |||
Interest rate swaps | Fifth Third | Minimum | ||||
Cash flow hedges of interest rate risk | ||||
Notional amount | 250,000 | |||
Interest Rate Cap | ||||
Derivatives, Fair Value | ||||
Upfront premium of interest rate cap agreements | $ 21,500 | |||
Cash flow hedges of interest rate risk | ||||
Number of interest rate derivatives held | swap | 6 | |||
Notional amount | $ 1,000,000 | |||
Interest rate cap agreement strike rate | 0.75% | |||
Fair value of interest rate swaps designated as cash flow hedges | ||||
Fair value of hedge assets | $ 16,900 | |||
[1] | “OCI” represents other comprehensive income. | |||
[2] | mount represents hedge ineffectiveness and is recorded as a component of interest expense-net in the accompanying consolidated statement of income. |
CONTROLLING AND NON-CONTROLLI38
CONTROLLING AND NON-CONTROLLING INTERESTS OWNERSHIP INTEREST IN JOINT VENTURE (Details) - Joint Venture | May. 31, 2014 |
Controlling and non-controlling interest in Joint Venture | |
Ownership percentage by Vantiv, Inc | 51.00% |
Bank Partner | |
Controlling and non-controlling interest in Joint Venture | |
Ownership percentage by Fifth Third | 49.00% |
CONTROLLING AND NON-CONTROLLI39
CONTROLLING AND NON-CONTROLLING INTERESTS IN VANTIV HOLDING (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | |||
Jun. 30, 2009$ / shares | Mar. 31, 2016USD ($)shares | Mar. 31, 2015USD ($) | Mar. 21, 2012 | ||
Net Income (Loss) Attributable to Noncontrolling Interest [Abstract] | |||||
Net income | $ | $ 52,448 | $ 26,996 | |||
Items not allocable to non-controlling interests: | |||||
Vantiv, Inc. expenses | $ | [1] | 13,138 | 7,810 | ||
Net income attributable to Vantiv Holding | $ | 65,586 | 34,806 | |||
Net income attributable to non-controlling interests | $ | 12,710 | 8,007 | |||
Bank Partner | |||||
Items not allocable to non-controlling interests: | |||||
Net income attributable to non-controlling interests | $ | [2] | 836 | 104 | ||
Fifth Third | |||||
Items not allocable to non-controlling interests: | |||||
Net income attributable to non-controlling interests | $ | [3] | $ 11,874 | 7,903 | ||
Vantiv Holding | |||||
Changes in units and related ownership interest | |||||
Balance (in shares) | 190,531,152 | ||||
Equity plan activity (in shares) | [1] | 847,527 | |||
Balance (in shares) | 191,378,679 | ||||
Adjustment to net assets attributable to non-controlling interest as a result of change in ownership interest | $ | $ 2,700 | ||||
Common Stock | |||||
Changes in units and related ownership interest | |||||
Conversion ratio for conversion of LLC units into common stock | 1 | ||||
Vantiv, Inc. | Vantiv Holding | |||||
Changes in units and related ownership interest | |||||
Balance (in shares) | 155,488,326 | ||||
Opening percentage of ownership by parent | 81.61% | ||||
Equity plan activity (in shares) | [4] | 847,527 | |||
Balance (in shares) | 156,335,853 | ||||
Closing percentage of ownership by parent | 81.69% | ||||
Fifth Third | Vantiv Holding | |||||
Changes in units and related ownership interest | |||||
Balance (in shares) | 35,042,826 | ||||
Opening percentage of ownership by noncontrolling interest | 18.39% | ||||
Balance (in shares) | 35,042,826 | ||||
Closing percentage of ownership by noncontrolling interest | 18.31% | ||||
Class C Non-Voting Units [Member] | Vantiv Holding | Warrant [Member] | Fifth Third | |||||
Changes in units and related ownership interest | |||||
Warrants outstanding | 7,800,000 | ||||
Warrant price (in dollars per share) | $ / shares | $ 15.98 | ||||
[1] | Primarily represents income tax expense related to Vantiv, I | ||||
[2] | Reflects net income attributable to the non-controlling interest of the joint venture | ||||
[3] | Net income attributable to non-controlling interests of Fifth Third reflects the allocation of Vantiv Holding’s net income based on the proportionate ownership interests in Vantiv Holding held by the non-controlling unit holders. The net income attributable to non-controlling unit holders reflects the changes in ownership interests summarized in the table above. | ||||
[4] | Includes stock issued under the equity plans net of Class A common stock withheld to satisfy employee tax withholding obligations upon vesting and forfeitures of restricted Class A common stock awards. |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Recurring basis | Level 2 | Interest Rate Contract | |||
Assets: | |||
Fair value of hedge assets | $ 16,859 | ||
Liabilities: | |||
Fair value of hedge liabilities | 26,284 | $ 19,228 | |
Mercury Payment Systems, LLC | |||
Liabilities: | |||
TRAs change in value | 5,700 | $ 7,000 | |
Mercury Payment Systems, LLC | Recurring basis | Level 3 | |||
Liabilities: | |||
Fair value of Mercury TRA | $ 174,618 | $ 191,207 |
FAIR VALUE MEASUREMENTS FAIR VA
FAIR VALUE MEASUREMENTS FAIR VALUE OF THE COMPANY'S LIABILITIES (Details) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Carrying amount | ||
Carrying amounts and estimated fair values for the Company's liabilities | ||
Notes payable | $ 3,022,105 | $ 3,060,139 |
Fair value | ||
Carrying amounts and estimated fair values for the Company's liabilities | ||
Notes payable | $ 3,036,095 | $ 3,064,989 |
NET INCOME PER SHARE NARRATIVE
NET INCOME PER SHARE NARRATIVE (Details) - shares | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Earnings Per Share, Diluted, by Common Class, Including Two Class Method | |||
Adjusted Effective Tax Rate | 36.00% | 36.00% | |
Class A Common Stock | |||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method | |||
Common Stock, Shares, Outstanding | 156,335,853 | 155,488,326 | |
Class B Common Stock | |||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method | |||
Common Stock, Shares, Outstanding | 35,042,826 | 43,000,000 | 35,042,826 |
Subsidiaries | Capital Unit, Class B | Class A Common Stock | |||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method | |||
Conversion ratio for conversion of Class B units into Class A common stock | 1 |
NET INCOME PER SHARE (Details)
NET INCOME PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Basic: | ||
Net income attributable to Vantiv, Inc. | $ 39,738 | $ 18,989 |
Diluted: | ||
Income before applicable income taxes | 76,274 | 39,249 |
Income tax expense excluding impact of non-controlling interest | 27,459 | 14,130 |
Net income attributable to Vantiv, Inc. | $ 48,815 | $ 25,119 |
Class A Common Stock | ||
Shares used in computing basic net income per share: | ||
Weighted-average Class A common shares (in shares) | 155,397,360 | 144,530,704 |
Basic net income per share (in dollars per share) | $ 0.26 | $ 0.13 |
Shares used in computing diluted net income per share: | ||
Weighted-average Class A common shares (in shares) | 155,397,360 | 144,530,704 |
Warrant (in shares) | 5,247,189 | 11,377,450 |
Total diluted weighted-average shares outstanding (in shares) | 196,777,827 | 200,715,138 |
Diluted net income per share (in dollars per share) | $ 0.25 | $ 0.13 |
Class A Common Stock | Restricted Stock | ||
Shares used in computing diluted net income per share: | ||
Class A common stock equivalents included in the computation of diluted net income per share | 528,217 | 1,206,484 |
Class A Common Stock | Employee Stock Option | ||
Shares used in computing diluted net income per share: | ||
Class A common stock equivalents included in the computation of diluted net income per share | 562,235 | 557,674 |
Class B Common Stock | ||
Shares used in computing diluted net income per share: | ||
Weighted-average Class A common shares (in shares) | 35,042,826 | 43,042,826 |
ACCUMULATED OTHER COMPREHENSI44
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Accumulated other comprehensive income (loss), net of tax | $ (9,204) | ||
Net activity | 8,111 | $ 7,370 | |
Accumulated other comprehensive income (loss), net of tax | (15,164) | ||
Non-Controlling Interests | |||
Other comprehensive income (loss), unrealized gain (loss), net of tax | 2,586 | 2,612 | |
Net realized loss reclassified into earnings, net of tax | [1] | (435) | (237) |
other, net of tax | 0 | ||
Net activity | 2,151 | 2,375 | |
AOCI Attributable to Parent | |||
Accumulated other comprehensive income (loss), net of tax | (9,204) | (3,768) | |
Other comprehensive income (loss), unrealized gain (loss), net of tax | 7,170 | 5,494 | |
Net realized loss reclassified into earnings, net of tax | [1] | (1,210) | (499) |
other, net of tax | 0 | ||
Net activity | 5,960 | 4,995 | |
Accumulated other comprehensive income (loss), net of tax | (15,164) | (8,763) | |
Accumulated Net Gain (Loss) from Cash Flow Hedges | |||
Accumulated other comprehensive income (loss), net of tax | (14,336) | (5,288) | |
Accumulated other comprehensive income (loss), net of tax | (21,506) | (10,782) | |
AOCI Including Portion Attributable to Noncontrolling Interest | |||
Net change in fair value recorded in accumulated OCI, before reclassifications, before tax | (14,094) | (11,435) | |
Net realized loss reclassified into earnings, before tax | [1] | (2,376) | (1,041) |
Net change in fair value recorded in accumulated OCI, before reclassifications, tax | 4,338 | 3,329 | |
Net realized loss reclassified into earnings, tax | [1] | (731) | (305) |
Other comprehensive income (loss), unrealized gain (loss), net of tax | 9,756 | 8,106 | |
Net realized loss reclassified into earnings, net of tax | [1] | (1,645) | (736) |
Other, before tax | 0 | ||
Other, tax | 0 | ||
other, net of tax | 0 | ||
Pretax activity | (11,718) | (10,394) | |
Tax effect | 3,607 | 3,024 | |
Net activity | 8,111 | 7,370 | |
Reclassification out of Accumulated Other Comprehensive Income | |||
Accumulated other comprehensive income (loss), net of tax | [1] | 5,132 | 1,732 |
Accumulated other comprehensive income (loss), net of tax | [1] | $ 6,342 | 2,231 |
Accumulated Foreign Currency Adjustment Attributable to Parent | |||
Accumulated other comprehensive income (loss), net of tax | (212) | ||
Accumulated other comprehensive income (loss), net of tax | $ (212) | ||
[1] | The reclassification adjustment on cash flow hedge derivatives affected the following lines in the accompanying consolidated statements of income: OCI Component Affected line in the accompanying consolidated statements of incomePretax activity(1) Interest expense-netTax effect Income tax expenseOCI attributable to non-controlling interests Net income attributable to non-controlling interests (1) The three months ended March 31, 2016 and 2015 reflect amounts of losses reclassified from AOCI into earnings, representing the effective portion of the hedging relationships, and are recorded in interest expense-net. |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Result of operation for each segment | ||
Total revenue | $ 818,623 | $ 705,611 |
Network fees and other costs | 387,413 | 331,146 |
Sales and marketing | 135,638 | 116,055 |
Segment profit | 295,572 | 258,410 |
Operating Segments | Merchant Services | ||
Result of operation for each segment | ||
Total revenue | 694,580 | 586,712 |
Network fees and other costs | 353,334 | 296,030 |
Sales and marketing | 129,336 | 110,175 |
Segment profit | 211,910 | 180,507 |
Operating Segments | Financial Institution Services | ||
Result of operation for each segment | ||
Total revenue | 124,043 | 118,899 |
Network fees and other costs | 34,079 | 35,116 |
Sales and marketing | 6,302 | 5,880 |
Segment profit | $ 83,662 | $ 77,903 |
SEGMENT INFORMATION (Details 2)
SEGMENT INFORMATION (Details 2) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Reconciliation of total segment profit to the company's (loss) income before applicable income taxes | ||
Total segment profit | $ 295,572 | $ 258,410 |
Less: Other operating costs | (73,703) | (68,739) |
Less: General and administrative | (43,984) | (47,843) |
Less: Depreciation and amortization | (68,230) | (67,802) |
Less: Interest expense—net | (27,729) | (26,011) |
Less: Non-operating income (expense) | (5,652) | (8,766) |
Income before applicable income taxes | $ 76,274 | $ 39,249 |