DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - USD ($) $ in Billions | 12 Months Ended | |
Dec. 31, 2016 | Jun. 30, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Vantiv, Inc. | |
Entity Central Index Key | 1,533,932 | |
Document Type | 10-K | |
Document Period End Date | Dec. 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 | FY | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Public Float | $ 8.8 | |
Class A Common Stock | ||
Entity Information | ||
Entity Common Stock, Shares Outstanding (in shares) | 161,134,831 | |
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 | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue: | |||
External customers | $ 3,504,129 | $ 3,079,506 | $ 2,496,899 |
Related party revenues | 74,862 | 80,432 | 80,304 |
Total revenue | 3,578,991 | 3,159,938 | 2,577,203 |
Network fees and other costs | 1,674,230 | 1,478,202 | 1,174,665 |
Sales and marketing | 582,251 | 503,949 | 396,353 |
Other operating costs | 294,235 | 284,066 | 242,439 |
General and administrative | 189,707 | 182,369 | 173,986 |
Depreciation and amortization | 270,054 | 276,942 | 275,069 |
Income from operations | 568,514 | 434,410 | 314,691 |
Interest expense—net | (109,534) | (105,736) | (79,701) |
Non-operating income (expense) | (36,256) | (31,268) | 177 |
Income before applicable income taxes | 422,724 | 297,406 | 235,167 |
Income tax expense | 141,853 | 88,177 | 66,177 |
Net income | 280,871 | 209,229 | 168,990 |
Less: Net income attributable to non-controlling interests | (67,663) | (61,283) | (43,698) |
Net income attributable to Vantiv, Inc. | $ 213,208 | $ 147,946 | $ 125,292 |
Class A Common Stock | |||
Net income per share attributable to Vantiv, Inc. Class A common stock: | |||
Basic (in dollars per share) | $ 1.37 | $ 1.02 | $ 0.88 |
Diluted (in dollars per share) | $ 1.32 | $ 0.95 | $ 0.75 |
Shares used in computing net income per share of Class A common stock: | |||
Basic (in shares) | 156,043,636 | 145,044,577 | 141,936,933 |
Diluted (in shares) | 162,115,549 | 200,934,442 | 199,170,813 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 280,871 | $ 209,229 | $ 168,990 |
Other comprehensive income (loss), net of tax: | |||
Gain (loss) on cash flow hedges and other | 4,053 | (8,209) | (6,172) |
Comprehensive income | 284,924 | 201,020 | 162,818 |
Less: Comprehensive income attributable to non-controlling interests | (68,709) | (58,510) | (41,558) |
Comprehensive income attributable to Vantiv, Inc. | $ 216,215 | $ 142,510 | $ 121,260 |
CONSOLIDATED STATEMENTS OF FINA
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 139,148 | $ 197,096 |
Accounts receivable—net | 940,052 | 680,033 |
Related party receivable | 1,751 | 3,999 |
Settlement assets | 152,490 | 143,563 |
Prepaid expenses | 39,229 | 31,147 |
Other | 15,188 | 61,661 |
Total current assets | 1,287,858 | 1,117,499 |
Customer incentives | 67,288 | 57,984 |
Property, equipment and software—net | 348,553 | 308,009 |
Intangible assets—net | 787,820 | 863,066 |
Goodwill | 3,738,589 | 3,366,528 |
Deferred taxes | 771,139 | 731,622 |
Other assets | 42,760 | 20,718 |
Total assets | 7,044,007 | 6,465,426 |
Current liabilities: | ||
Accounts payable and accrued expenses | 471,979 | 364,878 |
Related party payable | 3,623 | 4,698 |
Settlement obligations | 801,381 | 677,502 |
Current portion of note payable to related party | 7,557 | 10,353 |
Current portion of note payable | 123,562 | 106,148 |
Current portion of tax receivable agreement obligations to related parties | 191,014 | 31,232 |
Current portion of tax receivable agreement obligations | 60,400 | 64,227 |
Deferred income | 7,907 | 14,470 |
Current maturities of capital lease obligations | 7,870 | 7,931 |
Other | 13,719 | 13,940 |
Total current liabilities | 1,689,012 | 1,295,379 |
Long-term liabilities: | ||
Note payable to related party | 143,577 | 181,169 |
Note payable | 2,946,026 | 2,762,469 |
Tax receivable agreement obligations to related parties | 451,318 | 801,829 |
Tax receivable agreement obligations | 86,640 | 126,980 |
Capital lease obligations | 13,223 | 21,801 |
Deferred taxes | 62,148 | 15,836 |
Other | 44,774 | 34,897 |
Total long-term liabilities | 3,747,706 | 3,944,981 |
Total liabilities | 5,436,718 | 5,240,360 |
Commitments and contingencies (See Note 10 - 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 | 706,055 | 553,145 |
Retained earnings | 689,512 | 476,304 |
Accumulated other comprehensive loss | (6,197) | (9,204) |
Treasury stock, at cost; 2,710,195 shares at December 31, 2016 and 2,593,242 shares at December 31, 2015 | (73,706) | (67,458) |
Total Vantiv, Inc. equity | 1,315,665 | 952,788 |
Non-controlling interests | 291,624 | 272,278 |
Total equity | 1,607,289 | 1,225,066 |
Total liabilities and equity | 7,044,007 | 6,465,426 |
Class A Common Stock | ||
Equity: | ||
Class A common stock, $0.00001 par value; 890,000,000 shares authorized; 161,134,831 shares outstanding at December 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 December 31, 2016 and 2015, respectively | 1 | 1 |
Class B Common Stock | ||
Equity: | ||
Class A common stock, $0.00001 par value; 890,000,000 shares authorized; 161,134,831 shares outstanding at December 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 December 31, 2016 and 2015, respectively | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF FIN5
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) - $ / shares | Dec. 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) | 2,710,195 | 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) | 161,134,831 | 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 $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Operating Activities: | |||
Net income | $ 280,871 | $ 209,229 | $ 168,990 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization expense | 270,054 | 276,942 | 240,802 |
Write-off of intangible asset | 0 | 0 | (34,267) |
Amortization of customer incentives | 25,818 | 18,256 | 12,032 |
Amortization and write-off of debt issuance costs | 22,584 | 8,376 | 31,956 |
Share-based compensation expense | 35,871 | 30,492 | 42,171 |
Deferred taxes | 79,668 | 55,280 | 32,469 |
Excess tax benefit from share-based compensation | (12,167) | (16,707) | (13,420) |
Tax receivable agreements non-cash items | 19,527 | 28,171 | (25,838) |
Other | 467 | (945) | 0 |
Change in operating assets and liabilities: | |||
Accounts receivable and related party receivable | (212,862) | (70,194) | (94,326) |
Net settlement assets and obligations | 79,719 | 168,319 | 157,663 |
Customer incentives | (42,548) | (32,892) | (17,108) |
Prepaid and other assets | 39,636 | 11,324 | (25,557) |
Accounts payable and accrued expenses | 92,749 | 57,861 | 53,172 |
Payable to related party | (1,075) | 2,663 | (433) |
Other liabilities | (9,722) | 11,703 | (3,935) |
Net cash provided by operating activities | 668,590 | 757,878 | 592,905 |
Investing Activities: | |||
Purchases of property and equipment | (118,194) | (84,730) | (103,179) |
Acquisition of customer portfolios and related assets and other | (23,627) | (41,997) | (29,596) |
Purchase of investments | 0 | 0 | (7,487) |
Purchase of derivative instruments | (21,523) | 0 | 0 |
Cash used in acquisitions, net of cash acquired | (406,777) | 0 | (1,658,694) |
Net cash used in investing activities | (570,121) | (126,727) | (1,798,956) |
Financing Activities: | |||
Proceeds from issuance of long-term debt | 3,234,375 | 0 | 3,443,000 |
Repayment of debt and capital lease obligations | (3,084,922) | (326,462) | (1,870,540) |
Borrowings on revolving credit facility | 1,250,000 | 177,000 | 0 |
Repayment of revolving credit facility | (1,250,000) | (177,000) | 0 |
Payment of debt issuance costs | (20,115) | 0 | (38,092) |
Proceeds from issuance of Class A common stock under employee stock plans | 15,389 | 13,630 | 4,492 |
Warrant termination | 0 | (200,219) | 0 |
Repurchase of Class A common stock | (81,369) | (200,406) | (59,364) |
Repurchase of Class A common stock (to satisfy tax withholding obligations) | (6,248) | (16,527) | (17,801) |
Settlement of certain tax receivable agreements | (159,274) | (94,022) | 0 |
Payments under tax receivable agreements | (53,474) | (22,805) | (8,639) |
Excess tax benefit from share-based compensation | 12,167 | 16,707 | 13,420 |
Distribution to non-controlling interests | (12,934) | (12,892) | (22,911) |
Other | (12) | 0 | 0 |
(Decrease) increase in cash overdraft | 0 | (2,627) | 2,627 |
Net cash (used in) provided by financing activities | (156,417) | (845,623) | 1,446,192 |
Net (decrease) increase in cash and cash equivalents | (57,948) | (214,472) | 240,141 |
Cash and cash equivalents—Beginning of period | 197,096 | 411,568 | 171,427 |
Cash and cash equivalents—End of period | 139,148 | 197,096 | 411,568 |
Cash Payments: | |||
Interest | 102,695 | 98,971 | 70,751 |
Taxes | 51,140 | 6,565 | 35,157 |
Non-cash Items: | |||
Issuance of tax receivable agreements to related parties | 171,162 | 376,597 | 109,400 |
Issuance of tax receivable agreement as contingent consideration | 0 | 0 | 137,860 |
Assets acquired under capital lease obligations | $ 0 | $ 0 | $ 12,997 |
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, 2013 | $ 1,176,322 | $ (33,130) | $ 597,730 | $ 203,066 | $ 264 | $ 408,391 | $ 1 | $ 0 | ||
Balance (in shares) at Dec. 31, 2013 | 1,607,000 | 141,759,000 | 48,823,000 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net income | 168,990 | 125,292 | 43,698 | |||||||
Issuance of Class A common stock, stock options exercised, value | 4,492 | 4,492 | ||||||||
Issuance of Class A common stock under employee stock plans, net of forfeitures (in shares) | 419,000 | |||||||||
Excess tax benefit from employee share-based compensation | 13,420 | 13,420 | ||||||||
Repurchase of Class A common stock (to satisfy tax withholding obligation), value | (17,801) | $ (17,801) | ||||||||
Repurchase of Class A common stock (to satisfy tax withholding obligation) (in shares) | 567,000 | 567,000 | ||||||||
Issuance of Class A common stock and cancellation of Class B common stock in connection with secondary offering (in shares) | (5,780,000) | (5,780,000) | ||||||||
Class A common stock repurchased and retired during period, value | (59,364) | (59,364) | $ (59,400) | |||||||
Class A common stock repurchased and retired during period, (in shares) | (1,900,000) | (1,936,000) | ||||||||
Issuance of tax receivable agreements | (17,400) | (17,400) | ||||||||
Gain (loss) on cash flow hedges and other | (6,172) | (4,032) | (2,140) | |||||||
Formation of joint venture | 18,839 | 18,839 | ||||||||
Distribution to non-controlling interests | (22,911) | (22,911) | ||||||||
Share-based compensation | 42,171 | 32,103 | 10,068 | |||||||
Reallocation of non-controlling interests of Vantiv Holding due to change in ownership | 58,372 | (58,372) | ||||||||
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 | 43,000,000 | 43,043,000 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net income | 209,229 | 147,946 | 61,283 | |||||||
Issuance of Class A common stock, stock options exercised, value | 13,630 | 13,630 | ||||||||
Issuance of Class A common stock under employee stock plans, net of forfeitures (in shares) | 1,523,000 | |||||||||
Excess tax benefit from employee share-based compensation | 16,707 | 16,707 | ||||||||
Repurchase of Class A common stock (to satisfy tax withholding obligation), value | (16,527) | $ (16,527) | ||||||||
Repurchase of Class A common stock (to satisfy tax withholding obligation) (in shares) | 419,000 | 419,000 | ||||||||
Warrant retirement | (144,568) | (129,173) | (15,395) | |||||||
Issuance of Class A common stock and cancellation of Class B common stock in connection with secondary offering (in shares) | (8,000,000) | (8,000,000) | ||||||||
Class A common stock repurchased and retired during period, value | (200,406) | (200,406) | ||||||||
Class A common stock repurchased and retired during period, (in shares) | (4,446,000) | |||||||||
Issuance of common shares in connection with warrant exercise | 5,375,000 | |||||||||
Exercise of warrant | (25,022) | (25,022) | ||||||||
Termination of certain tax receivable agreements | 58,191 | 58,191 | ||||||||
Issuance of tax receivable agreements | (21,167) | (21,167) | ||||||||
Gain (loss) on cash flow hedges and other | (8,209) | (5,436) | (2,773) | |||||||
Distribution to non-controlling interests | (12,892) | (12,892) | ||||||||
Share-based compensation | 30,492 | 23,588 | 6,904 | |||||||
Reallocation of non-controlling interests of Vantiv Holding due to change in ownership | 137,400 | (137,400) | ||||||||
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 | 280,871 | 213,208 | 67,663 | |||||||
Issuance of Class A common stock under employee stock plans, net of forfeitures, value | 15,389 | 15,389 | ||||||||
Issuance of Class A common stock under employee stock plans, net of forfeitures (in shares) | 1,520,000 | |||||||||
Excess tax benefit from employee share-based compensation | 12,167 | 12,167 | ||||||||
Repurchase of Class A common stock (to satisfy tax withholding obligation), value | (6,248) | $ (6,248) | ||||||||
Repurchase of Class A common stock (to satisfy tax withholding obligation) (in shares) | 117,000 | 117,000 | ||||||||
Class A common stock repurchased and retired during period, value | (81,369) | (81,369) | $ (81,400) | |||||||
Class A common stock repurchased and retired during period, (in shares) | (1,400,000) | (1,407,000) | ||||||||
Issuance of common shares in connection with warrant exercise | 5,651,000 | |||||||||
Exercise of warrant | (25,022) | (25,022) | ||||||||
Termination of certain tax receivable agreements | 130,318 | 130,318 | ||||||||
Issuance of tax receivable agreements | (4,117) | (4,117) | ||||||||
Gain (loss) on cash flow hedges and other | 4,053 | 3,007 | 1,046 | |||||||
Distribution to non-controlling interests | (12,934) | (12,934) | ||||||||
Share-based compensation | 35,871 | 29,317 | 6,554 | |||||||
Adjustments to additional paid in capital, other | (12) | (12) | ||||||||
Reallocation of non-controlling interests of Vantiv Holding due to change in ownership | 17,961 | (17,961) | ||||||||
Balance at Dec. 31, 2016 | $ 1,607,289 | $ (73,706) | $ 706,055 | $ 689,512 | $ (6,197) | $ 291,624 | $ 1 | $ 0 | ||
Balance (in shares) at Dec. 31, 2016 | 2,710,000 | 161,134,831 | 161,135,000 | 35,042,826 | 35,043,000 |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 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 and operates in two reportable segments, Merchant Services and Financial Institution Services. For more information about the Company’s segments, refer to Note 19 - Segment Information. 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. 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”). All intercompany balances and transactions have been eliminated. As of December 31, 2016 , Vantiv, Inc. and Fifth Third owned interests in Vantiv Holding of 82.14% and 17.86% , respectively (see Note 9 - 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. Non-controlling interests are presented as a component of equity in the accompanying consolidated statements of financial position. 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. The Company has an agreement with Fifth Third (the “Sponsoring Member”) to provide sponsorship services to the Company through December 31, 2024. 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. 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 referral partners 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 revenues are primarily derived from debit, credit and automated teller machine (“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 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 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 income (expense): ◦ Non-operating expense for the year ended December 31, 2016 relates to the change in fair value of the Mercury TRA entered into as part of the acquisition of Mercury (see Note 7 - Tax Receivable Agreements) and a charge related to the refinancing of the Company’s senior secured credit facilities in October 2016 (see Note 6 - Long-Term Debt). ◦ Non-operating expense for the year ended December 31, 2015 primarily relates to the change in the fair value of the Mercury TRA (see Note 7 - Tax Receivable Agreements). ◦ Non-operating income for the year ended December 31, 2014, consists of a benefit recorded as a result of a reduction in certain TRA liabilities (see Note 7 - Tax Receivable Agreements), partially offset by a charge related to the refinancing of the Company’s senior secured credit facilities in June 2014 (see Note 6 - Long-Term Debt) and the change in fair value of the Mercury TRA (see Note 7 - Tax Receivable Agreements). 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. See Note 13 - Share-Based Compensation Plans for further discussion. 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 16 - Net Income Per Share for further discussion. 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 December 31, 2016 and 2015 , the Company had recorded no valuation allowances against deferred tax assets. See Note 14 - Income Taxes for further discussion of income taxes. 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. 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 December 31, 2016 and 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. Facilities, furniture and equipment and software are depreciated on a straight-line basis over their respective useful lives. Leasehold improvements are depreciated on a straight-line basis over the lesser of the estimated useful life of the improvement or the term of the 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. 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. 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. See Note 3 - Property, Equipment and Software for additional information. 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, 2016 in accordance with ASU 2011-08, “Intangibles - Goodwill and Other (Topic 350) Testing Goodwill for Impairment,” which permits the Company to assess qualitative factors to determine whether the existence of events or circumstances leads to the determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Based on this analysis, it was determined that it is not more likely than not that the fair value of the reporting units is less than 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 December 31, 2016. Intangible assets consist of acquired customer relationships, trade names, 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 December 31, 2016, there have been no such events or circumstances that would indicate potential impairment of finite lived intangible assets. Subsequent to the Mercury acquisition in June 2014, the Company decided to phase out an existing trade name used in the ISO channel within the Merchant Services segment. As a result of this decision, the remaining useful life was changed from indefinite to definite which resulted in the Company recording a charge to amortization expense of $34.3 million during the quarter ended June 30, 2014. The remaining fair value was amortized on a straight-line basis over the remaining estimated useful life of two years from July 2014 to June 2016. 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. New Accounting Pronouncements In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . The update clarifies how cash receipts and cash payments in certain transactions are presented and classified in the statement of cash flows. The effective date of this update is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The update requires retrospective application to all periods presented but may be applied prospectively if retrospective application is impracticable. The Company is currently evaluating the impact of the adoption of this principle on the Company’s consolidated financial statements. In March 2016, the FASB issued 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 impact of adopting this standard on the Company’s consolidated financial statements is dependent upon the intrinsic value of share-based compensation awards at the time of exercise or vesting and may result in more variability in effective tax rates and net earnings and may also impact the diluted shares. The Company will adopt this ASU on January 1, 2017. 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 forming a project team to evaluate the impact of the adoption of this principle on the Company’s consolidated financial statements. The Company anticipates adopting this ASU on January 1, 2019. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. 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, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements: Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting . The change in accounting principle, resulting from the Company’s adoption of this ASU in December 2015, has been implemented and the results were 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 has formed a project team and is currently assessing the impact of the adoption of this principle on the Company’s consolidated financial statements. The Company anticipates adopting this ASU on January 1, 2018 using the modified retrospective approach. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS Acquisition of Moneris Solutions, Inc. On December 21, 2016, the Company completed the acquisition of Moneris Solutions, Inc. (“Moneris USA”) by acquiring 100% of the issued and outstanding shares. Moneris USA is a provider of payment processing solutions offering credit, debit, wireless and online payment services for merchants in virtually every industry segment. This acquisition helps to further accelerate the Company’s growth. The acquisition was accounted for as a business combination under ASC 805, Business Combinations (“ASC 805”). The purchase price was allocated to the assets acquired and the liabilities assumed based on the estimated fair value at the date of acquisition. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill, a portion of which is deductible for tax purposes. Goodwill, assigned to Merchant Services, consists primarily of the acquired workforce and growth opportunities, none of which qualify as an intangible asset. The preliminary purchase price allocation is as follows (in thousands): Cash acquired $ 22,851 Current assets 44,967 Property and equipment 22 Intangible assets 75,000 Goodwill 372,061 Current liabilities (63,322 ) Deferred tax liability (18,950 ) Non-current liabilities (3,001 ) Total purchase price $ 429,628 The above estimated fair values of assets acquired and liabilities assumed are preliminary and are based on the information that was available as of the reporting date to estimate the fair value of assets acquired and liabilities assumed. The Company believes that the information provides a reasonable basis for estimating the fair values of the acquired assets and assumed liabilities, but the potential for measurement period adjustments exists based on the Company’s continuing review of matters related to the acquisition. The Company expects to complete the purchase price allocation as soon as practicable, but no later than one year from the acquisition date. Intangible assets consist of customer relationship assets of $75 million with a weighted average estimated useful life of 5 years . The Company incurred transaction expenses of approximately $12.3 million during the year ended December 31, 2016 in conjunction with the acquisition of Moneris USA, which are included within general and administrative expenses on the accompanying consolidated statement of income. From the acquisition date of December 21, 2016 through December 31, 2016 , revenue and net income included in the accompanying statement of income for the year ended December 31, 2016 attributable to Moneris USA is not material. The pro forma results of the Company reflecting the acquisition of Moneris USA were not material to our financial results and therefore have not been presented. Acquisition of Mercury Payment Systems, LLC On June 13, 2014, the Company completed the acquisition of Mercury Payment Systems, LLC (“Mercury”), acquiring all of the outstanding voting interest. Mercury was a payment technology and service leader whose solutions are integrated into point-of-sale software applications and brought to market through dealer and developer partners. This acquisition helps to accelerate the Company’s growth in the integrated payments channel. Final measurement period adjustments were recorded in the second quarter of 2015 for the acquired assets and liabilities. The following table summarizes the purchase price consideration for Mercury (in thousands): Cash purchase price paid at closing $ 1,681,179 Fair value of contingent consideration related to a TRA 192,507 Total purchase price $ 1,873,686 The acquisition was accounted for as a business combination under ASC 805. The purchase price was allocated to the assets acquired and the liabilities assumed based on the estimated fair value at the date of acquisition. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill, a significant portion of which is deductible for tax purposes. Goodwill, assigned to Merchant Services, consists primarily of the acquired workforce and growth opportunities, none of which qualify as an intangible asset. The final purchase price allocation is as follows (in thousands): Cash acquired $ 22,485 Current assets 47,421 Property, equipment and software 32,257 Intangible assets 347,000 Goodwill 1,422,916 Deferred tax assets 43,054 Other non-current assets 767 Current and non-current liabilities (42,214 ) Total purchase price $ 1,873,686 Simultaneously and in connection with the completion of the Mercury acquisition, the Company entered into a Tax Receivable Agreement (the “Mercury TRA”) with pre-acquisition owners of Mercury (“Mercury TRA Holders”). See Note 7 - Tax Receivable Agreements for further discussion of the Mercury TRA. The Mercury TRA is considered contingent consideration under ASC 805 as it is part of the consideration payable to the former owners of Mercury. In accordance with ASC 805, the contingent consideration is initially measured at fair value at the acquisition date and recorded as a liability. The Mercury TRA liability is therefore recorded at fair value based on estimates of discounted future cash flows associated with estimated payments to the Mercury TRA Holders. The liability recorded by the Company for the Mercury TRA obligations is re-measured at fair value at each reporting date with the change in fair value recognized in earnings as a non-operating expense. Intangible assets consist of customer relationship assets of $332.0 million and a trade name of $15.0 million having weighted average estimated useful lives of 10 years and 2.5 years , respectively. The trade name was valued utilizing a relief from royalty method. The Company incurred transaction and integration expenses of approximately $17.9 million during the year ended December 31, 2014 in conjunction with the acquisition of Mercury, which are included within general and administrative expenses and other operating costs on the accompanying consolidated statement of income. From the acquisition date of June 13, 2014 through December 31, 2014, revenue included in the accompanying statement of income for the year ended December 31, 2014 attributable to Mercury was approximately $217 million . Net income for the period could not be determined due to integration activities that were implemented subsequent to the acquisition. Under the terms of the Mercury transaction agreement, the Company replaced unvested employee stock options held by certain employees of Mercury. The number of replacement stock options was based on a conversion factor into equivalent stock options of the Company on the acquisition date. The weighted average fair value of the replacement options was $32.1 million and was calculated on the acquisition date using the Black-Scholes option pricing model. The portion of the fair value of the replacement awards related to services provided prior to the acquisition of $17.7 million was part of the consideration transferred to acquire Mercury. The remaining portion of the fair value is associated with future service and will be recognized as expense over the future service period. See additional discussion in Note 13 - Share-Based Compensation Plans. The following unaudited pro forma information shows the Company’s results of operations for the year ended December 31, 2014 as if the Mercury acquisition had occurred January 1, 2013. The unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of what would have occurred if the acquisition had been made as of that date, nor is it intended to be indicative of future operating results. Year Ended December 31, 2014 (in thousands, except share data) Total revenue $ 2,737,024 Income from operations 322,746 Net income including non-controlling interests 174,797 Net income attributable to Vantiv, Inc. 129,630 Net income per share attributable to Vantiv, Inc. Class A common stock: Basic $ 0.91 Diluted $ 0.78 Shares used in computing net income per share of Class A common stock: Basic 141,936,933 Diluted 199,170,813 The unaudited pro forma results include certain pro forma adjustments that were directly attributable to the business combination as follows: • additional amortization expense that would have been recognized relating to the acquired intangible assets, • adjustment of interest expense to reflect the additional borrowings of the Company in conjunction with the acquisition and removal of Mercury historical debt, and • a reduction in non-operating expenses for acquisition-related transaction costs and debt refinancing costs incurred by the Company. |
PROPERTY, EQUIPMENT AND SOFTWAR
PROPERTY, EQUIPMENT AND SOFTWARE | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, EQUIPMENT AND SOFTWARE | PROPERTY, EQUIPMENT AND SOFTWARE A summary of the Company’s property, equipment and software is as follows (in thousands): Estimated Useful Life December 31, 2016 December 31, 2015 Land N/A $ 6,401 $ 6,401 Building and improvements 15 - 40 years 34,298 33,938 Furniture and equipment 2 - 10 years 171,104 134,191 Software 3 - 8 years 412,490 319,866 Leasehold improvements 3 - 10 years 8,846 8,885 Work in progress 25,094 45,061 Accumulated depreciation (309,680 ) (240,333 ) Property, equipment and software - net $ 348,553 $ 308,009 Depreciation and amortization expense related to property, equipment and software for the years ended December 31, 2016 , 2015 and 2014 was $70.5 million , $76.6 million and $70.0 million , respectively. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Changes in the carrying amount of goodwill, by business segment, are as follows (in thousands): Merchant Services Financial Institution Services Total Balance as of December 31, 2014 $ 2,716,516 $ 574,850 $ 3,291,366 Goodwill attributable to acquisition of Mercury (1) 75,162 — 75,162 Balance as of December 31, 2015 2,791,678 574,850 3,366,528 Goodwill attributable to acquisition of Moneris USA 372,061 — 372,061 Balance as of December 31, 2016 $ 3,163,739 $ 574,850 $ 3,738,589 (1) Amount represents adjustments to goodwill associated with the acquisition of Mercury as a result of the finalization of purchase accounting. Intangible assets consist of acquired customer relationships, trade names and customer portfolios and related assets. The useful lives of customer relationships are determined based on forecasted cash flows, which include estimates for customer attrition associated with the underlying portfolio of customers acquired. The customer relationships acquired in conjunction with acquisitions are amortized based on the pattern of cash flows expected to be realized taking into consideration expected revenues and customer attrition, which are based on historical data and the Company's estimates of future performance. These estimates result in accelerated amortization on certain acquired intangible assets. Indefinite lived trade names are reviewed for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Subsequent to the Mercury acquisition in June 2014, the Company decided to phase out an existing trade name used in the ISO channel. The trade name was originally expected to remain in use for the foreseeable future and therefore was deemed an indefinite lived intangible asset not subject to amortization. As a result of this decision, the remaining useful life was changed from indefinite to definite which resulted in the Company recording a charge to amortization expense of $34.3 million during the year ended December 31, 2014. The trade name was revalued utilizing an income approach using the relief-from-royalty method. The revised fair value of $6.7 million was subsequently amortized on a straight-line basis over the remaining estimated useful life of two years from July 2014 to June 2016. 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 December 31, 2016 and 2015 , the Company’s finite lived intangible assets consisted of the following (in thousands): December 31, 2016 December 31, 2015 Customer relationship intangible assets $ 1,671,581 $ 1,596,581 Trade name — 21,733 Customer portfolios and related assets 178,480 129,734 Patents 955 366 1,851,016 1,748,414 Less accumulated amortization on: Customer relationship intangible assets 980,595 821,580 Trade name — 14,350 Customer portfolios and related assets 82,601 49,418 1,063,196 885,348 Intangible assets, net $ 787,820 $ 863,066 Customer portfolios and related assets acquired during the years ended December 31, 2016 and 2015 have weighted-average amortization periods of 4.4 years and 4.8 years , respectively. Amortization expense on intangible assets for the years ended December 31, 2016 , 2015 and 2014 was $199.6 million , $200.4 million and $205.1 million , respectively. For the year ended December 31, 2014, intangible amortization expense included the $34.3 million charge related to the phasing out of a trade name discussed above. The estimated amortization expense of intangible assets for the next five years is as follows (in thousands): 2017 $ 208,890 2018 190,639 2019 175,623 2020 97,702 2021 49,137 |
CAPITAL LEASES
CAPITAL LEASES | 12 Months Ended |
Dec. 31, 2016 | |
Capital Leases of Lessee [Abstract] | |
CAPITAL LEASES | CAPITAL LEASES The Company has various lease agreements for equipment that are classified as capital leases. The cost and accumulated depreciation of equipment under capital leases included in the accompanying statements of financial position within property and equipment were $36.6 million and $12.7 million , respectively, as of December 31, 2016 and $36.6 million and $4.4 million , respectively, as of December 31, 2015 . Depreciation expense associated with capital leases for the years ended December 31, 2016 , 2015 , and 2014 was $8.3 million , $7.8 million and $6.0 million , respectively. The future minimum lease payments required under capital leases and the present value of net minimum lease payments as of December 31, 2016 are as follows (in thousands): Amount 2017 $ 8,221 2018 8,969 2019 4,484 Total minimum lease payments 21,674 Less: Amount representing interest (581 ) Present value of minimum lease payments 21,093 Less: Current maturities of capital lease obligations (7,870 ) Long-term capital lease obligations $ 13,223 |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT As of December 31, 2016 and 2015 , the Company’s long-term debt consisted of the following (in thousands): December 31, December 31, Term A loan, maturing in October 2021 (1) $ 2,469,375 $ — Term B loan, maturing in October 2023 (2) 765,000 — Term A loan, maturing on June 13, 2019 (3) — 1,896,250 Term B loan, maturing on June 13, 2021 (4) — 1,179,000 Leasehold mortgage, expiring on August 10, 2021 (5) 10,131 10,131 Less: Current portion of note payable and current portion of note payable to related party (131,119 ) (116,501 ) Less: Original issue discount (3,631 ) (6,024 ) Less: Debt issuance costs (20,153 ) (19,218 ) Note payable and note payable to related party $ 3,089,603 $ 2,943,638 (1) Interest at a variable base rate ( LIBOR ) plus a spread rate (200 basis points) (total rate of 2.70% at December 31, 2016 ) and amortizing on a basis of 1.25% per quarter during each of the first twelve quarters (March 2017 through December 2019), 1.875% per quarter during the next four quarters (March 2020 through December 2020) and 2.50% during the next three quarters (March 2021 through September 2021) 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 (250 basis points) (total rate of 3.25% at December 31, 2016) and amortizing on a basis of 0.25% per quarter, with a balloon payment due at maturity. (3) Interest at a variable base rate ( LIBOR ) plus a spread rat e (200 basis points) (total rate of 2.33% at December 31, 2015). (4) 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 December 31, 2015). (5) Interest payable monthly at a fixed rate of 6.22% . 2016 Debt Refinancing On October 14, 2016, Vantiv, LLC completed a debt refinancing by entering into a second amended and restated loan agreement (“Second Amended Loan Agreement”). The Second Amended Loan Agreement provides for senior secured credit facilities comprised of a $2.5 billion term A loan, a $765.0 million term B loan and a $650.0 million revolving credit facility. The prior revolving credit facility was also terminated. The maturity date and debt service requirements relating to the new term A and term B loans are listed in the table above. The new revolving credit facility matures in October 2021 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 was 0.375% based on the Company’s leverage ratio at December 31, 2016. During the year ended December 31, 2016, the Company periodically borrowed under its revolving credit facility and repaid the amounts prior to year end. There were no outstanding borrowings on the revolving credit facility at December 31, 2016. As of December 31, 2016 , Fifth Third held $151.1 million of the term A loans, which is presented as note payable to related party on the consolidated statements of financial position. As a result of the Company's 2016 debt refinancing, the Company expensed approximately $16.6 million , which consisted primarily of the write-offs of unamortized deferred financing fees and original issue discount (“OID”) associated with the component of the refinancing accounted for as a debt extinguishment and certain third party costs incurred in connection with the refinancing. Amounts expensed in connection with the refinancing are recorded as a component of non-operating expenses in the accompanying consolidated statement of income for the year ended December 31, 2016. 2014 Debt Refinancing On June 13, 2014, Vantiv, LLC completed a debt refinancing by entering into an amended and restated loan agreement (“Amended Loan Agreement”). The Amended Loan Agreement provided for senior secured credit facilities comprised of a $2.05 billion term A loan, a $1.4 billion term B loan and a $425 million revolving credit facility. Proceeds from the refinancing were primarily used to fund the Mercury acquisition and repay the prior term A loan with an outstanding balance of approximately $1.8 billion as of the date of refinancing. The related revolving credit facility was also terminated. The revolving credit facility originally matured in June 2019 and included 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 was 0.375% per year. During the year ended December 31, 2015 , the Company periodically borrowed under its revolving credit facility and repaid the amounts prior to year end. There were no outstanding borrowings on the revolving credit facility at December 31, 2015. As of December 31, 2015 , Fifth Third held $191.5 million of the term A loans, which is presented as note payable to related party on the 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. As a result of the Company's 2014 debt refinancing, the Company expensed approximately $26.5 million , which consisted primarily of the write-offs of unamortized deferred financing fees and OID associated with the component of the refinancing accounted for as a debt extinguishment and certain third party costs incurred in connection with the refinancing. Amounts expensed in connection with the refinancing are recorded as a component of non-operating expenses in the accompanying consolidated statement of income for the year ended December 31, 2014. Guarantees and Security The Company’s debt obligations at December 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 Second 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 $25 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 Second 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 December 31, 2016 , the Company was in compliance with these financial covenants. |
TAX RECEIVABLE AGREEMENTS
TAX RECEIVABLE AGREEMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Tax Receivable Agreements Disclosure [Abstract] | |
TAX RECEIVABLE AGREEMENTS | TAX RECEIVABLE AGREEMENTS As of December 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 our initial public offering (“IPO”) for its use of NPC Group, Inc. net operating losses (“NOLs”) and other tax attributes existing at the IPO date under the NPC TRA, all of which is currently held by Fifth Third. • The Fifth Third TRA in which we realize 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 shareholders (the “Mercury TRA”) 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. As a result of this process, obligations under the tax receivable agreements with Fifth Third were adjusted in 2014 to reflect the impact of tax planning strategies implemented during the year which are expected to reduce the amount of future obligations. The Company recorded a benefit of $41.3 million in non-operating income (expense) during the year ended December 31, 2014 as a result of the reduction in the TRA obligations with Fifth Third. As discussed in Note 2 - Business Combinations, the Company entered into the Mercury TRA and recorded a liability of $192.5 million for the Mercury TRA and non-operating expenses of $19.5 million , $28.9 million and $14.6 million related to the change in fair value of the Mercury TRA during the years ended December 31, 2016 , 2015 and 2014, respectively. From time to time, the Company enters into repurchase addendums providing for the early settlement of certain obligations. The following table presents the Company’s TRA settlements and the impact of these settlements on the Company’s consolidated statement of financial position (in thousands): TRA Settlement Date Cash Buyout Payment Balance Sheet Obligation Prior to Settlement Deferred Taxes and Other Net Gain Recorded in Equity Fifth Third July 2016 $ (116,294 ) $ 330,711 $ 84,099 $ 130,318 Mercury June 2016 (41,400 ) 41,400 — — Fifth Third October 2015 (48,866 ) 140,024 32,967 58,191 Mercury July 2015 (44,800 ) 44,800 — — As summarized in the table above, in July 2016, the Company entered into a purchase addendum in connection with the Company’s TRA with Fifth Third (the “Fifth Third TRA Addendum”) to terminate and settle a portion of the Company’s obligations owed to Fifth Third under the Fifth Third TRA and the NPC TRA. Under the terms of the Fifth Third TRA Addendum, the Company paid approximately $116.3 million to Fifth Third to settle approximately $330.7 million of obligations under the Fifth Third TRA, the difference of which was recorded as an addition to paid-in capital, net of deferred taxes. In addition to the July 2016 Fifth Third TRA settlement presented in the table above, the Fifth Third TRA Addendum provides that the Company may be obligated to pay up to a total of approximately $170.7 million to Fifth Third to terminate and settle certain remaining obligations under the Fifth Third TRA and the NPC TRA, totaling an estimated $394.1 million , the difference of which will be recorded as an addition to paid-in capital upon the exercise of the Call Options or Put Options discussed below. Under the terms of the Fifth Third TRA Addendum, beginning March 1, 2017, June 1, 2017, September 1, 2017, December 1, 2017, March 1, 2018, June 1, 2018, September 1, 2018 and December 1, 2018, and ending March 10, 2017, June 10, 2017, September 10, 2017, December 10, 2017, March 10, 2018, June 10, 2018, September 10, 2018 and December 10, 2018, respectively, the Company is granted call options (collectively, the “Call Options”) pursuant to which certain additional obligations of the Company under the Fifth Third TRA and the NPC TRA would be terminated and settled in consideration for cash payments of $15.1 million , $15.6 million , $16.1 million , $16.6 million , $25.6 million , $26.4 million , $27.2 million and $28.1 million , respectively. Under the terms of the Fifth Third TRA Addendum, in the unlikely event the Company does not exercise the relevant Call Option, Fifth Third is granted put options beginning March 20, 2017, June 20, 2017, September 20, 2017, December 20, 2017, March 20, 2018, June 20, 2018, September 20, 2018 and December 20, 2018, and ending March 31, 2017, June 30, 2017, September 30, 2017, December 31, 2017, March 31, 2018, June 30, 2018, September 30, 2018 and December 31, 2018, respectively (collectively, the “Put Options”), pursuant to which certain additional obligations of the Company would be terminated and settled in consideration for cash payments with similar amounts to the Call Options. The full carrying amount of the Fifth Third callable/puttable TRA obligations for the options exercisable within 12 months of the balance sheet date have been classified as current obligations in the accompanying statement of financial position ( $157.7 million ). Since Fifth Third is a significant stockholder of the Company, a special committee of the Company’s board of directors comprised of independent, disinterested directors authorized the TRA Addendum. During 2015, the Company entered into the Mercury 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. • In June 2016, the Company exercised the December 2015 Call Option and made a payment to the Mercury TRA Holders. The Company’s President, Integrated Payments, is a Mercury TRA Holder. Pursuant to the initial payment under the Mercury TRA Addendum, this individual is entitled to receive an aggregate of $0.6 million , and could receive as much as an additional $2.2 million with respect to payments made pursuant to the Mercury TRA Addendum. Except to the extent the Company’s obligations under the Mercury TRA, the Fifth Third TRA and NPC TRA have been terminated and settled in full in accordance with the terms of the Mercury TRA and Fifth Third TRA Addendums, the Mercury TRA, Fifth Third TRA and NPC 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 15 - Fair Value Measurements). The following table reflects TRA activity and balances for the years ended December 31, 2016 , 2015 and 2014 (in thousands): Balance as of December 31, 2013 2014 TRA Payment 2014 Secondary Offering Acquisition of Mercury Change in Value Balance as of December 31, 2014 TRA with Fifth Third Bank $ 559,700 $ (8,639 ) $ 109,400 $ — $ (40,399 ) $ 620,062 Mercury TRA — — — 137,860 14,560 152,420 Total $ 559,700 $ (8,639 ) $ 109,400 $ 137,860 $ (25,839 ) $ 772,482 Balance as of December 31, 2014 2015 TRA Payment 2015 TRA Settlements 2015 Secondary Offering Purchase Accounting Adjustment Change in Value Balance as of December 31, 2015 TRA with Fifth Third Bank $ 620,062 $ (22,805 ) $ (140,024 ) $ 376,597 $ — $ (769 ) $ 833,061 Mercury TRA 152,420 — (44,800 ) — 54,647 28,940 191,207 Total $ 772,482 $ (22,805 ) $ (184,824 ) $ 376,597 $ 54,647 $ 28,171 $ 1,024,268 Balance as of December 31, 2015 2016 TRA Payment 2016 TRA Settlements 2016 Secondary Offering Change in Value Balance as of December 31, 2016 TRA with Fifth Third Bank $ 833,061 $ (31,233 ) $ (330,711 ) $ 171,162 $ 53 $ 642,332 Mercury TRA 191,207 (22,241 ) (41,400 ) — 19,474 147,040 Total $ 1,024,268 $ (53,474 ) $ (372,111 ) $ 171,162 $ 19,527 $ 789,372 As a result of the secondary offerings and exchange of units of Vantiv Holding by Fifth Third Bank discussed in Note 12 - Capital Stock, the Company recorded the following (in thousands): Secondary Offerings by Year TRA Liability Deferred Tax Asset Net Equity 2016 $ 171,162 $ 175,279 $ (4,117 ) 2015 376,597 355,430 21,167 2014 109,400 92,000 17,400 The timing and/or amount of aggregate payments due under the TRAs outside of the call/put structures 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 contractually obligated payments under the TRA obligations paid in January 2014, 2015 and 2016 are in the tables above. The Company made a payment under the TRA obligations of approximately $55.7 million in January 2017. The January 2017 payment is recorded as current portion of tax receivable agreement obligations on the accompanying consolidated statement of financial position. Unless settled under the terms of the repurchase addenda, the term of the TRAs will continue until all the underlying tax benefits have been utilized or expired. |
DERIVATIVES AND HEDGING ACTIVIT
DERIVATIVES AND HEDGING ACTIVITIES | 12 Months Ended |
Dec. 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, 2016 and 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, in March 2016 the Company entered into interest rate cap agreements in exchange for an upfront premium of $21.5 million . These interest rate cap agreements cap a portion of the Company’s variable rate debt if interest rates rise above the strike rate on the contract. As of December 31, 2016 the interest rate cap agreements had a fair value of $23.2 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 15 - 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 affect 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 December 31, 2016 , the Company had a total of 10 outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk. Of the 10 outstanding interest rate swaps, 4 of them cover an exposure period from June 2016 through June 2017 and have a combined notional balance of $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 4 of the 10 outstanding interest rate swaps with notional balances ranging from $262.5 million to $250.0 million . Additionally, as of December 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 December 31, 2016 December 31, 2015 Interest rate contracts Other current assets $ 2,144 $ — Interest rate contracts Other long-term assets 21,085 — Interest rate contracts Other current liabilities 9,551 9,343 Interest rate contracts Other long-term liabilities 5,507 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 December 31, 2016 , the Company estimates that $11.2 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 years ended December 31, 2016 , 2015 and 2014 (in thousands): Year Ended December 31, 2016 2015 2014 Derivatives in cash flow hedging relationships: Amount of loss recognized in OCI (effective portion) (1) $ (6,858 ) $ (18,836 ) $ (11,240 ) Amount of loss reclassified from accumulated OCI into earnings (effective portion) (12,735 ) (6,990 ) (3,040 ) Amount of loss recognized in earnings (2) — — (1 ) (1) “OCI” represents other comprehensive income. (2) For the year ended December 31, 2014, amount represents hedge ineffectiveness. Credit Risk Related Contingent Features As of December 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 $15.9 million . 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 December 31, 2016 , the Company had not posted any collateral related to these agreements. If the Company had breached any of these provisions at December 31, 2016 , it could have been required to settle its obligations under the agreements at their termination value of $15.9 million . |
CONTROLLING AND NON-CONTROLLING
CONTROLLING AND NON-CONTROLLING INTERESTS | 12 Months Ended |
Dec. 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. The bank partner contributed a merchant asset portfolio to the joint venture valued at $18.8 million which was recorded to non-controlling interests in the 2014 consolidated statement of equity. As of December 31, 2016 , Vantiv, Inc.’s interest in Vantiv Holding was 82.14% . Changes in units and related ownership interest in Vantiv Holding are summarized as follows: Vantiv, Inc. Fifth Third Total As of December 31, 2014 145,455,008 43,042,826 188,497,834 % of ownership 77.17 % 22.83 % Fifth Third exchange of Vantiv Holding units for shares of Class A common stock in connection with December 2015 secondary offering 8,000,000 (8,000,000 ) — Fifth Third exchange of Class C units of Vantiv Holding for shares of Class A common stock in connection with partial warrant exercise 5,374,592 — 5,374,592 Share repurchases (4,445,551 ) — (4,445,551 ) Equity plan activity (1) 1,104,277 — 1,104,277 As of December 31, 2015 155,488,326 35,042,826 190,531,152 % of ownership 81.61 % 18.39 % Fifth Third exchange of Class C units of Vantiv Holding for shares of Class A common stock in connection with remaining warrant exercise 5,651,432 — 5,651,432 Share repurchases (1,406,600 ) — (1,406,600 ) Equity plan activity (1) 1,401,673 — 1,401,673 As of December 31, 2016 161,134,831 35,042,826 196,177,657 % of ownership 82.14 % 17.86 % (1) Includes stock issued under the equity plans less Class A common stock withheld to satisfy employee tax withholding obligations upon vesting or exercise of employee equity awards and forfeitures of restricted Class A common stock awards. As a result of the changes in ownership interests in Vantiv Holding, periodic adjustments are made 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 those periods. The table below provides a reconciliation of net income attributable to non-controlling interests based on relative ownership interests as discussed above (in thousands): Year Ended December 31, 2016 2015 2014 Net income $ 280,871 $ 209,229 $ 168,990 Items not allocable to non-controlling interests: Vantiv, Inc. expenses (1) 81,059 55,111 7,725 Vantiv Holding net income $ 361,930 $ 264,340 $ 176,715 Net income attributable to non-controlling interests of Fifth Third (2) $ 65,789 $ 58,938 $ 43,022 Net income attributable to joint venture non-controlling interest (3) 1,874 2,345 676 Total net income attributable to non-controlling interests $ 67,663 $ 61,283 $ 43,698 (1) Primarily represents income tax expense related to Vantiv, Inc. and TRA related expense (credits) (see Note 7 - Tax Receivable Agreements). (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. In connection with the separation from Fifth Third, Fifth Third received a warrant that allows for the purchase of up to 20.4 million Class C Non-Voting Units of Vantiv Holding at an exercise price of $15.98 per unit. The warrant was valued at approximately $65.4 million at June 30, 2009 and was recorded as a component of non-controlling interest on the accompanying statements of financial position. On December 2, 2015, the Company entered into a warrant cancellation agreement (the "Warrant Cancellation Agreement") with Fifth Third to cancel a portion of the warrant. The Warrant Cancellation Agreement cancelled the rights under the warrant to purchase 4.8 million Class C Units of Vantiv Holding for aggregate consideration of $200 million paid by the Company to Fifth Third. Following the effectiveness of the Warrant Cancellation Agreement, Fifth Third net exercised a portion of the warrants it held to purchase 5.4 million Class C Units of Vantiv Holding. As of December 31, 2015, Fifth Third held the rights to purchase 7.8 million Class C Units of Vantiv Holding which are exchangeable for Class A common stock. The remaining warrant held by Fifth Third in the amount of $25 million was recorded as a component of non-controlling interest on the accompanying statements of financial position as of December 31, 2015. On November 28, 2016, Fifth Third net exercised the remaining warrant it held to purchase approximately 5.7 million Class C Units of Vantiv Holding. The value of the warrant exercised in the amount of $25 million was reclassified out of non-controlling interests to additional paid-in capital on the accompanying statements of financial position. |
COMMITMENTS, CONTINGENCIES AND
COMMITMENTS, CONTINGENCIES AND GUARANTEES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS, CONTINGENCIES AND GUARANTEES | COMMITMENTS, CONTINGENCIES AND GUARANTEES Leases The Company leases office space under non-cancelable operating leases that expire between March 2017 and December 2045. Future minimum commitments under these leases are as follows (in thousands): Year Ended December 31, 2017 9,704 2018 7,636 2019 5,809 2020 4,375 2021 4,048 Thereafter 13,197 Total $ 44,769 Rent expense for the years ended December 31, 2016 , 2015 and 2014 was approximately $9.4 million , $11.6 million and $9.9 million , respectively. 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. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS The Company offers a defined contribution savings plan to virtually all Company employees. The plan provides for elective, pre-tax or after tax participant contributions and Company matching contributions. Expenses associated with the defined contribution savings plan for the years ended December 31, 2016 , 2015 and 2014 were $10.1 million , $9.1 million and $7.3 million , respectively. |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
CAPITAL STOCK | CAPITAL STOCK Common Stock Under the Company’s amended and restated certificate of incorporation, the Company is authorized to issue 890,000,000 shares of Class A common stock with a par value of $0.00001 per share and 100,000,000 shares of Class B common stock with no par value per share. The Class A and Class B common stock each provide holders with one vote on all matters submitted to a vote of stockholders; however, the holders of shares of Class B common stock shall be limited to voting power, including voting power associated with any Class A common stock held, of 18.5% at any time other than in connection with a stockholder vote with respect to a change of control. Also, holders of Class B common stock do not have any of the economic rights (including rights to dividends and distributions upon liquidation) provided to the holders of Class A common stock. The holders of Class B common stock hold one share of Class B common stock for each Vantiv Holding Class B unit they hold. The Class B units of Vantiv Holding may be exchanged for shares of Class A common stock on a one -for-one basis or, at the Company’s option, for cash equal to the fair value of the shares tendered for exchange. Upon exchange of any Class B units of Vantiv Holding, an equal number of shares of Class B common stock automatically will be cancelled. The Class A common stock and Class B common stock vote together as a single class, except that the holders of Class B common stock are entitled to elect a number of the Company’s directors equal to the percentage of the voting power of all of the outstanding common stock represented by the Class B common stock but not exceeding 18.5% of the board of directors. Fifth Third holds all of the issued and outstanding Class B common stock. As of December 31, 2016 , 161,134,831 shares of Class A common stock and 35,042,826 shares of Class B common stock were issued and outstanding. Secondary Offerings In March 2014, a secondary offering took place in which Advent sold its remaining 18.8 million shares of the Company’s Class A common stock. In June 2014, a secondary offering took place in which Fifth Third sold 5.8 million shares of the Company’s Class A common stock. On December 8, 2015, subsequent to the Warrant Cancellation Agreement and the Partial Warrant Exercise on December 2, 2015 as discussed in Note 9 - Controlling and Non-Controlling Interests, a secondary offering took place in which Fifth Third sold 13.4 million shares of the Company’s Class A common stock. On November 28, 2016, subsequent to Fifth Third’s exercise of the remaining warrant, a secondary offering took place in which Fifth Third sold approximately 4.8 million shares of the Company’s Class A common stock. The Company did not receive any proceeds from the sales noted above. Share Repurchases On February 12, 2014, the Company's board of directors approved a program to repurchase up to $300 million of the Company’s Class A common stock. During the year ended December 31, 2014, approximately 1.9 million shares were repurchased under this program for approximately $59.4 million , which completed the remaining 2013 share repurchase authorization and resulted in approximately $275 million available under the February 2014 authorization. During the year ended December 31, 2015, approximately 4.4 million shares were repurchased for approximately $200 million . On October 25, 2016, the board of directors authorized a program to repurchase up to an additional $250 million of the Company's Class A common stock. In connection with Fifth Third’s net exercise of the remaining warrant discussed in Note 9 - Controlling and Non-controlling Interests, the Company repurchased approximately 850,000 shares of its Class A common stock from Fifth Third for approximately $50.8 million . During the year ended December 31, 2016, approximately $1.4 million shares were repurchased under the programs for approximately $81.4 million , which completed the repurchases under the February 2014 authorization and resulted in approximately $243 million available for repurchase under the October 2016 authorization. The repurchased shares were immediately retired. Purchases under the programs may be made from time to time in the open market, in privately negotiated transactions, or otherwise. The manner, timing and amount of any purchases will be determined by management based on an evaluation of market conditions, stock price and other factors. The Company’s share repurchase program does not obligate it to acquire any specific number or amount of shares, there is no guarantee as to the exact number or amount of shares that may be repurchased, if any, and the Company may discontinue purchases at any time that it determines additional purchases are not warranted. Preferred Stock Under the Company’s amended and restated certificate of incorporation, the Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.00001 per share. As of December 31, 2016 , there was no preferred stock outstanding. 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. The amounts available to Vantiv, Inc. to pay cash dividends are 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 December 31, 2016 . 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 years ended December 31, 2016 , 2015 and 2014 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 Year Ended December 31, 2016 Net change in fair value recorded in accumulated OCI $ (14,336 ) $ (6,858 ) $ 2,106 $ (4,752 ) $ 1,269 $ (3,483 ) $ (17,819 ) Net realized loss reclassified into earnings (a) 5,132 12,735 (3,930 ) 8,805 (2,315 ) 6,490 11,622 Other — — — — — — — Net change $ (9,204 ) $ 5,877 $ (1,824 ) $ 4,053 $ (1,046 ) $ 3,007 $ (6,197 ) Year Ended December 31, 2015 Net change in fair value recorded in accumulated OCI $ (5,288 ) $ (18,836 ) $ 5,490 $ (13,346 ) $ 4,298 $ (9,048 ) $ (14,336 ) Net realized loss reclassified into earnings (a) 1,732 6,990 (2,065 ) 4,925 (1,525 ) 3,400 5,132 Other (212 ) 212 — 212 — 212 — Net change $ (3,768 ) $ (11,634 ) $ 3,425 $ (8,209 ) $ 2,773 $ (5,436 ) $ (9,204 ) Year Ended December 31, 2014 Net change in fair value recorded in accumulated OCI $ (5 ) $ (11,240 ) $ 3,114 $ (8,126 ) $ 2,843 $ (5,283 ) $ (5,288 ) Net realized loss reclassified into earnings (a) 269 3,040 (874 ) 2,166 (703 ) 1,463 1,732 Other — (212 ) — (212 ) — (212 ) (212 ) Net change $ 264 $ (8,412 ) $ 2,240 $ (6,172 ) $ 2,140 $ (4,032 ) $ (3,768 ) (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 years ended December 31, 2016, 2015 and 2014, reflect amounts of losses reclassified from AOCI into earnings, representing the effective portion of the hedging relationships, and are recorded in interest expense-net. |
SHARE-BASED COMPENSATION PLANS
SHARE-BASED COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE-BASED COMPENSATION PLANS | SHARE-BASED COMPENSATION PLANS The company accounts for share-based compensation plans in accordance with ASC 718, Compensation - Stock Compensation , which requires compensation expense for the grant-date fair value of share-based payments to be recognized over the requisite service period. 2012 Equity Incentive Plan The 2012 Equity Incentive Plan was adopted by the Company’s board of directors in March 2012. The 2012 Equity Incentive Plan provides for grants of stock options, stock appreciation rights, restricted stock and restricted stock units, performance awards and other stock-based awards. The maximum number of shares of Class A common stock available for issuance pursuant to the 2012 Equity Incentive Plan is 35.5 million shares. Restricted Stock Awards The Company grants restricted stock awards to certain employees which vest based on the recipient’s continued employment or service to the Company (“Time Awards”). The Company also grants restricted stock awards to certain employees subject to the achievement of certain financial performance measures ("Performance Awards"). These Performance Awards typically vest on the third anniversary of the grant date. Participants have the right to earn 0% to 200% of the target number of shares of the Company’s Class A common stock, determined by the level of achievement of the financial performance measures during the performance period. The grant date fair value of the restricted stock awards is based on the quoted fair market value of our common stock on the grant date. The weighted-average grant date fair value of restricted stock awards granted during the years ended 2016 and 2015 was $50.08 and $38.10 , respectively. There were no restricted stock awards granted in 2014 . The total fair value of restricted stock awards vested was $1.2 million , $47.2 million and $53.4 million in 2016 , 2015 and 2014 , respectively. The following table presents the number and weighted-average grant date fair value of the restricted stock awards for the year ended December 31, 2016 : Restricted Class A Common Stock - Time Awards Weighted Average Grant Date Fair Value Restricted Class A Common Stock - Performance Awards Weighted Average Grant Date Fair Value Non-vested at December 31, 2015 166,454 $ 35.22 332,840 $ 37.86 Granted 24,998 50.80 241,544 50.01 Vested (24,089 ) 14.00 — — Forfeited (6,053 ) 41.42 (27,646 ) 41.95 Non-vested at December 31, 2016 161,310 $ 40.57 546,738 $ 43.02 Restricted Stock Units The Company issues restricted stock units to directors and certain employees, which typically vest on the first anniversary of the grant date (for directors) and in equal annual increments over three to four years beginning on the first anniversary of the date of grant (for employees). The grant date fair value of the restricted stock units is based on the quoted fair market value of our common stock at the award date. The weighted-average grant date fair value of restricted stock units granted during the years ended 2016 , 2015 and 2014 was $51.75 , $38.42 and $31.30 , respectively. The total fair value of restricted stock units vested was $18.3 million , $10.5 million and $5.1 million in 2016 , 2015 and 2014 , respectively. The following table presents the number and weighted-average grant date fair value of the restricted stock units for the year ended December 31, 2016 : Restricted Stock Units Weighted Average Grant Date Fair Value Non-vested at December 31, 2015 988,007 $ 31.24 Granted 420,817 51.75 Vested (344,212 ) 28.06 Forfeited (141,330 ) 36.40 Non-vested at December 31, 2016 923,282 $ 40.98 Stock Options The Company grants stock options to certain key employees. The stock options vest in 25% annual increments beginning on the first anniversary of the date of grant, subject to the participant’s continued service through each such vesting date. All stock options are nonqualified stock options and expire on the tenth anniversary of the grant date. During the year ended December 31, 2014, under the terms of the Mercury transaction agreement, the Company replaced unvested employee stock options held by certain employees of Mercury. The number of replacement stock options was based on a conversion factor into equivalent stock options of the Company on the acquisition date. The weighted average fair value of the replacement options was calculated on the acquisition date using the Black-Scholes option pricing model. The replacement stock options typically vest over four and a half years with 22.22% of the awards vesting after one year and the remainder in quarterly increments, subject to the participant’s continued service through each such vesting date. Per the applicable option agreement, if a participant is terminated without cause within the prescribed acceleration period (which range from 12 to 24 months following the acquisition), then such replacement options shall immediately become fully vested and exercisable at the time of such termination to the extent not then vested and not previously cancelled. The replacement options are nonqualified stock options and expire on the tenth anniversary of the original grant date. See Note 2 - Business Combinations for additional details. The following table summarizes stock option activity for the year ended December 31, 2016 : Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding options at December 31, 2015 2,310,243 $ 26.74 8.01 $ 47,780 Granted 695,666 50.02 Exercised (537,871 ) 21.43 18,379 Expired (9,033 ) 31.39 Forfeited (257,563 ) 33.09 Outstanding options at December 31, 2016 2,201,442 $ 35.21 7.72 $ 53,738 Options exercisable at December 31, 2016 608,076 $ 26.24 6.69 $ 20,299 For the years ended December 31, 2016 , 2015 , and 2014 the total aggregate intrinsic value of options exercised was $18.4 million , $17.5 million , and $4.4 million , respectively. The weighted-average grant date fair value was estimated by the Company using the Black-Scholes option pricing model with the assumptions below: 2014 2016 2015 Vantiv Grant Mercury Replacement Options Number of options granted 695,666 707,738 710,297 1,750,519 Weighted average exercise price $50.01 - $52.04 $37.10 $31.02 $10.18 - $29.79 Expected option life at grant (in years) 6.25 6.25 6.25 3.00 - 6.00 Expected volatility 24.77% 26.33% 25.00% 24.80% - 30.80% Expected dividend yield —% —% —% —% Risk-free interest rate 1.41% - 1.45% 1.67% 1.93% 0.93% - 1.96% Fair value $13.92 - $14.43 $11.04 $9.07 $17.75 - $22.10 The expected option life represents the period of time the stock options are expected to be outstanding and is based on the “simplified method” allowed under SEC guidance. The Company used the “simplified method” due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Since the Company’s publicly traded stock history is relatively short, expected volatility is based on the Company’s historical volatility and the historical volatility of a group of peer companies. The Company does not intend to pay cash dividends in the foreseeable future. Consequently, the Company used an expected dividend yield of zero. The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of the grant. Performance Share Units The Company issues performance share units to certain employees subject to the achievement of certain financial performance measures. These performance share units vest on the third anniversary of the grant date. Participants have the right to earn 0% to 200% of the target number of shares of the Company’s Class A common stock, determined by the level of achievement of the financial performance measures during the three year performance period. In 2015 the Company also issued performance share units to certain employees subject to the achievement of certain financial and non-financial performance measures through 2018. Additionally, associated with an acquisition in 2013, the Company issued performance share units to certain employees subject to the achievement of certain financial and non-financial performance measures through 2016. The grant date fair value of the performance share units is based on the quoted fair market value of our common stock on the grant date. For the years ended December 31, 2016 , 2015 and 2014 , the weighted-average grant date fair value of performance share units granted was $50.04 , $39.16 , and $31.02 , respectively, and the total fair value of performance share units vested was $17.1 million , $1.2 million , and $2.0 million , respectively. The following table presents the number and weighted-average grant date fair value of the performance share units for the year ended December 31, 2016 : Performance Share Units Weighted Average Grant Date Fair Value Non-vested at December 31, 2015 472,518 $ 29.73 Granted 72,813 50.04 Incremental shares upon completion of performance goals 154,024 21.95 Vested (325,459 ) 22.48 Forfeited (57,195 ) 31.73 Non-vested at December 31, 2016 316,701 $ 37.70 The share-based compensation expense related to the performance share units granted in 2014 ("2014 PSUs") was initially estimated based on target performance and was adjusted as appropriate throughout the performance period based on the shares expected to be earned at that time. The 2014 PSUs are included in the table above as non-vested at December 31, 2016 at target, or 100% . On January 30, 2017, the Compensation Committee of the Company’s Board of Directors certified the achievement of the performance goals for the 2014 PSUs, which had a performance period of January 1, 2014 to December 31, 2016, at the maximum 200% of the target number of shares ( 150,739 shares incremental to those included in the table above for the 2014 PSUs). Employee Share Purchase Plan 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. For the year ended December 31, 2016, the expense related to the ESPP’s 15% discount is included in total share-based compensation expense disclosed below. For the years ended December 31, 2016 , 2015 and 2014 , total share-based compensation expense was $35.9 million , $30.5 million and $42.2 million , respectively. Related tax benefits recorded in the accompanying consolidated statements of income totaled $10.9 million in 2016 , $8.8 million in 2015 and $12.9 million in 2014 . At December 31, 2016 , there was approximately $57.9 million of unrecognized share-based compensation expense, which is expected to be recognized over a remaining weighted-average period of approximately 2.4 years . |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES In accordance with ASC Topic 740, Income Taxes , income taxes are recognized for the amount of taxes payable for the current year and for the impact of deferred tax liabilities and assets, which represent future tax consequences of events that have been recognized differently in the financial statements than for tax purposes. Deferred tax assets and liabilities are established using the enacted statutory tax rates and are adjusted for any changes in such rates in the period of change. Vantiv, Inc. is taxed as a C Corporation, which is subject to both federal and state taxation at a corporate level. Therefore, tax expense and deferred tax assets and liabilities reflect such status. The following is a summary of applicable income taxes (in thousands): Year Ended December 31, 2016 2015 2014 Current income tax expense: U.S. income taxes $ 57,966 $ 28,586 $ 29,234 State and local income taxes 4,219 4,311 4,474 Total current tax expense 62,185 32,897 33,708 Deferred income tax expense (benefit): U.S. income taxes 70,786 55,553 36,070 State and local income taxes 8,882 (273 ) (3,601 ) Total deferred tax expense 79,668 55,280 32,469 Applicable income tax expense $ 141,853 $ 88,177 $ 66,177 A reconciliation of the U.S. income tax rate and the Company’s effective tax rate for all periods is provided below: Year Ended December 31, 2016 2015 2014 Federal statutory tax rate 35.0 % 35.0 % 35.0 % State taxes-net of federal benefit 2.8 2.7 2.6 Effect of changes in deferred tax rates 0.1 (1.9 ) (3.1 ) Non-controlling interest (4.6 ) (5.9 ) (5.6 ) Other-net 0.3 (0.3 ) (0.8 ) Effective tax rate 33.6 % 29.6 % 28.1 % Deferred income tax assets and liabilities are comprised of the following as of December 31, 2016 and 2015 (in thousands): December 31, 2016 December 31, 2015 Deferred tax assets Net operating losses $ 14,085 $ 25,569 Employee benefits 69 55 Other assets 2,236 2,316 Other accruals and reserves 89,239 79,925 Partnership basis 771,311 728,532 Deferred tax assets 876,940 836,397 Deferred tax liabilities Property and equipment (13,677 ) (9,840 ) Goodwill and intangible assets (150,687 ) (109,988 ) Deferred tax liability (164,364 ) (119,828 ) Deferred tax asset-net $ 712,576 $ 716,569 As part of the acquisitions of NPC Group, Inc. (“NPC”) and Mercury, the Company acquired federal and state tax loss carryforwards. As of December 31, 2016 , the cumulative federal and state tax loss carryforwards were approximately $38.0 million and $16.9 million , respectively. Federal tax loss carryforwards will expire in 2030 and state tax loss carryforwards will expire between 2020 and 2035. The partnership basis included in the above table is the result of a difference between the tax basis and book basis of Vantiv, Inc.’s investment in Vantiv Holding. Vantiv Holding, a partnership for tax purposes, has an Internal Revenue Code election in place to adjust the tax basis of partnership property to fair market value related to the portion of the partnership interest transferred, through an exchange of units of Vantiv Holding by its members. Included in partnership basis in the table above are deferred tax assets resulting from the increase in tax basis generated by the exchange of units of Vantiv Holding in connection with the IPO and subsequent secondary offerings. See Note 7 - Tax Receivable Agreements for discussion of deferred tax assets as a result of the secondary offerings and exchange of units of Vantiv Holding. Deferred tax assets are reviewed to determine whether the available evidence allows the Company to recognize the tax benefits. To the extent that a tax asset is not expected to be realized, the Company records a valuation allowance against the deferred tax assets. The Company has recorded no valuation allowance during the years ended December 31, 2016 or 2015 . A provision for federal, state and local income taxes has been recorded on the statements of income for the amounts of such taxes the Company is obligated to pay or amounts refundable to the Company. At December 31, 2016 and 2015 , the Company recorded an income tax receivable of approximately $8.3 million and $53.2 million , respectively, which is included in other current assets on the Company’s consolidated statements of financial position. The Company accounts for uncertainty in income taxes under ASC 740, Income Taxes . As of December 31, 2016 and 2015 , the Company had no material uncertain tax positions. If a future liability does arise related to uncertainty in income taxes, the Company has elected an accounting policy to classify interest and penalties, if any, as income tax expense. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 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 December 31, 2016 and 2015 (in thousands): 2016 2015 Fair Value Measurements Using Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Interest rate contracts $ — $ 23,229 $ — $ — $ — $ — Liabilities: Interest rate contracts $ — $ 15,058 $ — $ — $ 19,228 $ — Mercury TRA — — 147,040 — — 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 Measurement , 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 December 31, 2016 and 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 8 - 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 input used in the fair value measurement of the Mercury TRA is the discount rate, which was approximately 14% as of December 31, 2016 and 2015 . Any significant increase (decrease) in this input 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 change in value of the Mercury TRA from December 31, 2015 to December 31, 2016 consists of the increase in fair value of $19.5 million and the decrease from payments of $63.6 million related to the Mercury TRA obligations and the exercised call option. The Company recorded non-operating expenses of $19.5 million and $28.9 million related to the change in fair value during the years ended December 31, 2016 and 2015 , respectively. See Note 7 - Tax Receivable Agreements for further discussion of the Mercury TRA including the roll forward of the fair value. The following table summarizes carrying amounts and estimated fair values for the Company’s financial instrument liabilities that are not reported at fair value in our consolidated statements of financial position as of December 31, 2016 and 2015 (in thousands): 2016 2015 Carrying Fair Value Carrying Fair Value Liabilities: Note payable $ 3,220,722 $ 3,250,025 $ 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 | 12 Months Ended |
Dec. 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. During the year ended December 31, 2016, approximately 35.0 million weighted-average Class B units of Vantiv Holding were excluded in computing diluted net income per share because including them would have had an antidilutive effect. As the Class B units of Vantiv Holding were not included, the numerator used in the calculation of diluted net income per share was equal to the numerator used in the calculation of basic net income per share for the year ended December 31, 2016 . The adjusted effective tax rate used in the calculation was 36.0% for the years ended December 31, 2016 and 2015 and 36.5% for the year ended December 31, 2014 . As of December 31, 2016 and 2015 there were approximately 35.0 million Class B units outstanding, respectively, and 43.0 million outstanding as of December 31, 2014. In addition to the Class B units discussed above, potentially dilutive securities during the years ended December 31, 2016 , 2015 and 2014 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 awards and ESPP purchase rights. During the year ended December 31, 2016 , 2015 and 2014 , approximately 660,204 , 472,518 and 508,097 , respectively, performance awards have been excluded as the applicable performance metrics had not been met as of the reporting dates. 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 have not been presented. The following table sets forth the computation of basic and diluted net income per share (in thousands, except share data): Year Ended December 31, 2016 2015 2014 Basic: Net income attributable to Vantiv, Inc. $ 213,208 $ 147,946 $ 125,292 Shares used in computing basic net income per share: Weighted-average Class A common shares 156,043,636 145,044,577 141,936,933 Basic net income per share $ 1.37 $ 1.02 $ 0.88 Diluted: Consolidated income before applicable income taxes $ — $ 297,406 $ 235,167 Income tax expense excluding impact of non-controlling interest — 107,066 85,836 Net income attributable to Vantiv, Inc. $ 213,208 $ 190,340 $ 149,331 Shares used in computing diluted net income per share: Weighted-average Class A common shares 156,043,636 145,044,577 141,936,933 Weighted-average Class B units of Vantiv Holding — 42,521,087 45,472,332 Warrant 4,959,501 11,866,595 10,121,483 Stock options 531,165 545,180 318,175 Restricted stock awards, restricted stock units and employee stock purchase plan 510,694 696,273 1,321,890 Performance awards 70,553 260,730 — Diluted weighted-average shares outstanding 162,115,549 200,934,442 199,170,813 Diluted net income per share $ 1.32 $ 0.95 $ 0.75 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 12 Months Ended |
Dec. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | CAPITAL STOCK Common Stock Under the Company’s amended and restated certificate of incorporation, the Company is authorized to issue 890,000,000 shares of Class A common stock with a par value of $0.00001 per share and 100,000,000 shares of Class B common stock with no par value per share. The Class A and Class B common stock each provide holders with one vote on all matters submitted to a vote of stockholders; however, the holders of shares of Class B common stock shall be limited to voting power, including voting power associated with any Class A common stock held, of 18.5% at any time other than in connection with a stockholder vote with respect to a change of control. Also, holders of Class B common stock do not have any of the economic rights (including rights to dividends and distributions upon liquidation) provided to the holders of Class A common stock. The holders of Class B common stock hold one share of Class B common stock for each Vantiv Holding Class B unit they hold. The Class B units of Vantiv Holding may be exchanged for shares of Class A common stock on a one -for-one basis or, at the Company’s option, for cash equal to the fair value of the shares tendered for exchange. Upon exchange of any Class B units of Vantiv Holding, an equal number of shares of Class B common stock automatically will be cancelled. The Class A common stock and Class B common stock vote together as a single class, except that the holders of Class B common stock are entitled to elect a number of the Company’s directors equal to the percentage of the voting power of all of the outstanding common stock represented by the Class B common stock but not exceeding 18.5% of the board of directors. Fifth Third holds all of the issued and outstanding Class B common stock. As of December 31, 2016 , 161,134,831 shares of Class A common stock and 35,042,826 shares of Class B common stock were issued and outstanding. Secondary Offerings In March 2014, a secondary offering took place in which Advent sold its remaining 18.8 million shares of the Company’s Class A common stock. In June 2014, a secondary offering took place in which Fifth Third sold 5.8 million shares of the Company’s Class A common stock. On December 8, 2015, subsequent to the Warrant Cancellation Agreement and the Partial Warrant Exercise on December 2, 2015 as discussed in Note 9 - Controlling and Non-Controlling Interests, a secondary offering took place in which Fifth Third sold 13.4 million shares of the Company’s Class A common stock. On November 28, 2016, subsequent to Fifth Third’s exercise of the remaining warrant, a secondary offering took place in which Fifth Third sold approximately 4.8 million shares of the Company’s Class A common stock. The Company did not receive any proceeds from the sales noted above. Share Repurchases On February 12, 2014, the Company's board of directors approved a program to repurchase up to $300 million of the Company’s Class A common stock. During the year ended December 31, 2014, approximately 1.9 million shares were repurchased under this program for approximately $59.4 million , which completed the remaining 2013 share repurchase authorization and resulted in approximately $275 million available under the February 2014 authorization. During the year ended December 31, 2015, approximately 4.4 million shares were repurchased for approximately $200 million . On October 25, 2016, the board of directors authorized a program to repurchase up to an additional $250 million of the Company's Class A common stock. In connection with Fifth Third’s net exercise of the remaining warrant discussed in Note 9 - Controlling and Non-controlling Interests, the Company repurchased approximately 850,000 shares of its Class A common stock from Fifth Third for approximately $50.8 million . During the year ended December 31, 2016, approximately $1.4 million shares were repurchased under the programs for approximately $81.4 million , which completed the repurchases under the February 2014 authorization and resulted in approximately $243 million available for repurchase under the October 2016 authorization. The repurchased shares were immediately retired. Purchases under the programs may be made from time to time in the open market, in privately negotiated transactions, or otherwise. The manner, timing and amount of any purchases will be determined by management based on an evaluation of market conditions, stock price and other factors. The Company’s share repurchase program does not obligate it to acquire any specific number or amount of shares, there is no guarantee as to the exact number or amount of shares that may be repurchased, if any, and the Company may discontinue purchases at any time that it determines additional purchases are not warranted. Preferred Stock Under the Company’s amended and restated certificate of incorporation, the Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.00001 per share. As of December 31, 2016 , there was no preferred stock outstanding. 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. The amounts available to Vantiv, Inc. to pay cash dividends are 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 December 31, 2016 . 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 years ended December 31, 2016 , 2015 and 2014 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 Year Ended December 31, 2016 Net change in fair value recorded in accumulated OCI $ (14,336 ) $ (6,858 ) $ 2,106 $ (4,752 ) $ 1,269 $ (3,483 ) $ (17,819 ) Net realized loss reclassified into earnings (a) 5,132 12,735 (3,930 ) 8,805 (2,315 ) 6,490 11,622 Other — — — — — — — Net change $ (9,204 ) $ 5,877 $ (1,824 ) $ 4,053 $ (1,046 ) $ 3,007 $ (6,197 ) Year Ended December 31, 2015 Net change in fair value recorded in accumulated OCI $ (5,288 ) $ (18,836 ) $ 5,490 $ (13,346 ) $ 4,298 $ (9,048 ) $ (14,336 ) Net realized loss reclassified into earnings (a) 1,732 6,990 (2,065 ) 4,925 (1,525 ) 3,400 5,132 Other (212 ) 212 — 212 — 212 — Net change $ (3,768 ) $ (11,634 ) $ 3,425 $ (8,209 ) $ 2,773 $ (5,436 ) $ (9,204 ) Year Ended December 31, 2014 Net change in fair value recorded in accumulated OCI $ (5 ) $ (11,240 ) $ 3,114 $ (8,126 ) $ 2,843 $ (5,283 ) $ (5,288 ) Net realized loss reclassified into earnings (a) 269 3,040 (874 ) 2,166 (703 ) 1,463 1,732 Other — (212 ) — (212 ) — (212 ) (212 ) Net change $ 264 $ (8,412 ) $ 2,240 $ (6,172 ) $ 2,140 $ (4,032 ) $ (3,768 ) (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 years ended December 31, 2016, 2015 and 2014, reflect amounts of losses reclassified from AOCI into earnings, representing the effective portion of the hedging relationships, and are recorded in interest expense-net. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS In connection with the Company’s separation from Fifth Third on June 30, 2009, the Company entered into various agreements which provide for services provided to or received from Fifth Third. Subsequent to the separation from Fifth Third, the Company continues to enter into various business agreements with Fifth Third. Transactions under these agreements are discussed below and throughout these notes to the accompanying consolidated financial statements. As discussed in Note 1 - Basis of Presentation and Summary of Significant Accounting Policies, Fifth Third currently holds 35,042,826 shares of Class B common stock representing 17.9% of the voting interests in Vantiv, Inc. and 35,042,826 Class B units of Vantiv Holding representing a 17.9% ownership interest in Vantiv Holding. Debt Agreements As discussed in Note 6 - Long-Term Debt, the Company had certain debt arrangements outstanding and available from Fifth Third. For the years ended December 31, 2016 , 2015 and 2014 , interest expense associated with these arrangements was $4.2 million , $4.4 million and $5.4 million , respectively, and commitment fees were $0.1 million , $0.2 million and $0.2 million , respectively. Lease Agreement The Company leases or subleases a number of office and/or data center locations with Fifth Third. Related party rent expense was approximately $3.7 million for the year ended December 31, 2016 and $3.8 million for the years ended December 31, 2015 and 2014 . Service Processing and Other Service Agreements In July 2016, the Company amended and extended its Master Services Agreement with Fifth Third (the “EFT Service Agreement”), expiring in June 2019, through December 2024. The EFT Service Agreement is exclusive and provides Fifth Third and its subsidiary depository institutions with various electronic fund transfer, or EFT, services including debit card processing and ATM terminal driving services. Revenue for the EFT Service Agreement and other services is in the related party revenues line on the Company’s consolidated statement of income. Referral Agreement In July 2016, the Company amended and extended its exclusive referral arrangement with Fifth Third, expiring in June 2019, through December 2024. Commercial and retail merchant clients of Fifth Third and its subsidiary depository institutions that request merchant (credit or debit card) acceptance services are referred exclusively to us. In return for these referrals and the resulting merchant relationships, we make ongoing incentive payments to Fifth Third. Costs associated with this agreement totaled $0.7 million , $0.3 million and $0.3 million for the years ended December 31, 2016 , 2015 and 2014 , respectively. Clearing, Settlement and Sponsorship Agreement and Treasury Management Agreement As discussed in Note 1 - Basis of Presentation and Summary of Significant Accounting Policies, Fifth Third is a member of the Visa, Mastercard and other payment network associations. Fifth Third is the Company’s primary sponsor into the respective card associations. In July 2016, the Company amended and extended its agreement with Fifth Third, expiring in June 2019, through December 2024. Fifth Third also provides access to certain cash and treasury management services to the Company. For the years ended December 31, 2016 , 2015 and 2014 , the Company paid Fifth Third approximately $2.9 million , $2.3 million and $2.8 million , respectively, for these services. As discussed in Note 1 - Basis of Presentation and Summary of Significant Accounting Policies, the Company holds certain cash and cash equivalents on deposit at Fifth Third. At December 31, 2016 and 2015 , approximately $90.5 million and $149.7 million , respectively, was held on deposit at Fifth Third. Interest income on deposits held at Fifth Third during the year ended December 31, 2014 was approximately $1.7 million . The interest income on such amounts during 2016 and 2015 was immaterial. Other Non-material Services The Company continues to receive certain other non-material services from Fifth Third. The total expense for other services provided by Fifth Third for the years ended December 31, 2016 , 2015 and 2014 was $0.3 million , $0.4 million and $0.5 million , respectively. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION The Company’s segments consist of the Merchant Services segment and the Financial Institution Services segment, which are organized by the products and services the Company provides. 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. The Company’s reportable segments are the same as the Company’s operating segments and there is no aggregation of the Company’s operating segments. 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, 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. 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. Year Ended December 31, 2016 Merchant Financial Total Total revenue $ 3,082,951 $ 496,040 $ 3,578,991 Network fees and other costs 1,537,072 137,158 1,674,230 Sales and marketing 557,942 24,309 582,251 Segment profit $ 987,937 $ 334,573 $ 1,322,510 Year Ended December 31, 2015 Merchant Financial Total Total revenue $ 2,656,906 $ 503,032 $ 3,159,938 Network fees and other costs 1,321,312 156,890 1,478,202 Sales and marketing 478,736 25,213 503,949 Segment profit $ 856,858 $ 320,929 $ 1,177,787 Year Ended December 31, 2014 Merchant Financial Total Total revenue $ 2,100,367 $ 476,836 $ 2,577,203 Network fees and other costs 1,033,801 140,864 1,174,665 Sales and marketing 367,998 28,355 396,353 Segment profit $ 698,568 $ 307,617 $ 1,006,185 A reconciliation of total segment profit to the Company’s income before applicable income taxes is as follows (in thousands): Year Ended December 31, 2016 2015 2014 Total segment profit $ 1,322,510 $ 1,177,787 $ 1,006,185 Less: Other operating costs (294,235 ) (284,066 ) (242,439 ) Less: General and administrative (189,707 ) (182,369 ) (173,986 ) Less: Depreciation and amortization (270,054 ) (276,942 ) (275,069 ) Less: Interest expense—net (109,534 ) (105,736 ) (79,701 ) Less: Non-operating income (expense) (36,256 ) (31,268 ) 177 Income before applicable income taxes $ 422,724 $ 297,406 $ 235,167 |
QUARTERLY CONSOLIDATED RESULTS
QUARTERLY CONSOLIDATED RESULTS OF OPERATIONS (UNAUDITED) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
QUARTERLY CONSOLIDATED RESULTS OF OPERATIONS (UNAUDITED) | QUARTERLY CONSOLIDATED RESULTS OF OPERATIONS (UNAUDITED) The following table sets forth our unaudited results of operations on a quarterly basis for the years ended December 31, 2016 and 2015 . Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, (dollars in thousands) Revenue $ 955,132 $ 914,019 $ 891,217 $ 818,623 $ 852,334 $ 815,998 $ 785,995 $ 705,611 Network fees and other costs 452,720 423,361 410,736 387,413 399,159 385,548 362,349 331,146 Net revenue 502,412 490,658 480,481 431,210 453,175 430,450 423,646 374,465 Sales and marketing 148,521 153,248 144,844 135,638 132,488 132,481 122,925 116,055 Other operating costs 74,771 72,162 73,599 73,703 72,213 66,563 76,551 68,739 General and administrative 55,876 40,727 49,120 43,984 45,974 41,492 47,060 47,843 Depreciation and amortization 70,504 66,086 65,234 68,230 70,843 70,638 67,659 67,802 Income from operations $ 152,740 $ 158,435 $ 147,684 $ 109,655 $ 131,657 $ 119,276 $ 109,451 $ 74,026 Net income $ 62,958 $ 87,004 $ 78,461 $ 52,448 $ 70,392 $ 59,148 $ 52,693 $ 26,996 Net income (loss) attributable to Vantiv, Inc. $ 47,847 $ 66,296 $ 59,327 $ 39,738 $ 50,929 $ 41,492 $ 36,536 $ 18,989 Net income (loss) per share attributable to Vantiv, Inc. Class A common stock: Basic $ 0.30 $ 0.43 $ 0.38 $ 0.26 $ 0.35 $ 0.29 $ 0.25 $ 0.13 Diluted $ 0.29 $ 0.41 $ 0.38 $ 0.25 $ 0.31 $ 0.27 $ 0.24 $ 0.13 Our results of operations are subject to seasonal fluctuations in our revenue as a result of consumer spending patterns. Historically our revenues have been the strongest in the fourth quarter and weakest in our first quarter. |
CONDENSED FINANCIAL INFORMATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Condensed Financial Information of Registrant | SCHEDULE I - Condensed Financial Information of Registrant Vantiv, Inc. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (PARENT COMPANY ONLY) (In thousands) Year Ended 2016 2015 2014 General and administrative $ 366 $ 745 $ 181 Loss from operations (366 ) (745 ) (181 ) Non-operating income (expense), net (58 ) (359 ) 40,399 Income (loss) before income taxes and equity in net income of subsidiaries (424 ) (1,104 ) 40,218 Income tax expense 80,635 54,007 47,943 Loss before equity in net income of subsidiaries (81,059 ) (55,111 ) (7,725 ) Equity in net income of subsidiaries 294,267 203,057 133,017 Net income attributable to Vantiv, Inc. $ 213,208 $ 147,946 $ 125,292 See Notes to Condensed Consolidated Financial Statements (Parent Company only). SCHEDULE I - Condensed Financial Information of Registrant Vantiv, Inc. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (PARENT COMPANY ONLY) (In thousands) Year Ended 2016 2015 2014 Net income attributable to Vantiv, Inc. $ 213,208 $ 147,946 $ 125,292 Other comprehensive income (loss), net of tax 3,007 (5,436 ) (4,032 ) Comprehensive income attributable to Vantiv, Inc. $ 216,215 $ 142,510 $ 121,260 See Notes to Condensed Consolidated Financial Statements (Parent Company only). SCHEDULE I - Condensed Financial Information of Registrant Vantiv, Inc. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (PARENT COMPANY ONLY) (In thousands) December 31, December 31, Assets Current assets: Tax refund receivable $ 1,452 $ 51,998 Total current assets 1,452 51,998 Investment in subsidiaries 1,260,427 1,008,907 Deferred taxes 769,365 731,258 Total assets $ 2,031,244 $ 1,792,163 Liabilities and equity Current liabilities: Accounts payable and accrued expenses $ 2,548 $ 795 Payable to subsidiaries 70,699 5,519 Current portion of tax receivable agreement obligations to related parties 191,014 31,232 Total current liabilities 264,261 37,546 Long-term liabilities: Tax receivable agreement obligations to related parties 451,318 801,829 Total long-term liabilities 451,318 801,829 Total liabilities 715,579 839,375 Equity: Total Vantiv, Inc. equity 1,315,665 952,788 Total liabilities and equity $ 2,031,244 $ 1,792,163 See Notes to Condensed Consolidated Financial Statements (Parent Company only). SCHEDULE I - Condensed Financial Information of Registrant Vantiv, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (PARENT COMPANY ONLY) (In thousands) Year Ended 2016 2015 2014 Operating Activities: Net income attributable to Vantiv, Inc. $ 213,208 $ 147,946 $ 125,292 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Equity in net income of subsidiaries (294,267 ) (203,057 ) (133,017 ) Deferred taxes 54,540 24,662 27,395 Tax receivable agreements non-cash items 53 (769 ) (40,399 ) Distributions from subsidiaries 84,844 68,892 58,551 Excess tax benefit from share-based compensation (12,167 ) (16,707 ) (13,420 ) Change in operating assets and liabilities, net 20,030 28,834 (9,151 ) Net cash provided by operating activities 66,241 49,801 15,251 Investing Activities: Proceeds from sale of Class A units in Vantiv Holding 87,617 216,933 77,165 Purchase of Class A units in Vantiv Holding (15,389 ) (13,630 ) (4,492 ) Net cash provided by investing activities 72,228 203,303 72,673 Financing Activities: Advances from subsidiaries, net 70,699 5,519 (20,032 ) Proceeds from exercise of Class A common stock options 15,389 13,630 4,492 Repurchase of Class A common stock (81,369 ) (200,406 ) (59,364 ) Repurchase of Class A common stock (to satisfy tax withholding obligations) (6,248 ) (16,527 ) (17,801 ) Settlement of certain tax receivable agreements (117,874 ) (49,222 ) — Payments under tax receivable agreements (31,233 ) (22,805 ) (8,639 ) Excess tax benefit from share-based compensation 12,167 16,707 13,420 Net cash used in financing activities (138,469 ) (253,104 ) (87,924 ) Net decrease in cash and cash equivalents — — — Cash and cash equivalents—Beginning of period — — — Cash and cash equivalents—End of period $ — $ — $ — Cash Payments: Taxes $ 6,843 $ 2,323 $ 28,583 Non-cash Items: Issuance of tax receivable agreements $ 171,162 $ 376,597 $ 109,400 See Notes to Condensed Consolidated Financial Statements (Parent Company only). SCHEDULE I - Condensed Financial Information of Registrant Vantiv, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (PARENT COMPANY ONLY) 1. BASIS OF PRESENTATION For Vantiv, Inc.’s presentation (Parent Company only), the investment in subsidiaries is accounted for using the equity method. The condensed parent company financial statements and notes should be read in conjunction with the consolidated financial statements and notes of Vantiv, Inc. appearing in this Annual Report on Form 10-K. Vantiv, Inc. is a holding company that does not conduct any business operations of its own and therefore its assets consist primarily of investments in subsidiaries. Vantiv Inc.’s cash inflows are primarily from cash dividends and distributions and other transfers from Vantiv Holding. Vantiv, Inc. may not be able to access cash generated by its subsidiaries in order to fulfill cash commitments or to pay cash dividends on its common stock. The amounts available to Vantiv, Inc. to fulfill cash commitments or to pay cash dividends are also subject to the covenants and distribution restrictions in its subsidiaries’ loan agreements. For a discussion on the tax receivable agreements, see Note 7- Tax Receivable Agreements in the consolidated financial statements and notes of Vantiv, Inc. appearing in this Annual Report on Form 10-K. |
BASIS OF PRESENTATION AND SUM29
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and 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”). All intercompany balances and transactions have been eliminated. As of December 31, 2016 , Vantiv, Inc. and Fifth Third owned interests in Vantiv Holding of 82.14% and 17.86% , respectively (see Note 9 - 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. 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 referral partners 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 revenues are primarily derived from debit, credit and automated teller machine (“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 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 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 income (expense): ◦ Non-operating expense for the year ended December 31, 2016 relates to the change in fair value of the Mercury TRA entered into as part of the acquisition of Mercury (see Note 7 - Tax Receivable Agreements) and a charge related to the refinancing of the Company’s senior secured credit facilities in October 2016 (see Note 6 - Long-Term Debt). ◦ Non-operating expense for the year ended December 31, 2015 primarily relates to the change in the fair value of the Mercury TRA (see Note 7 - Tax Receivable Agreements). ◦ Non-operating income for the year ended December 31, 2014, consists of a benefit recorded as a result of a reduction in certain TRA liabilities (see Note 7 - Tax Receivable Agreements), partially offset by a charge related to the refinancing of the Company’s senior secured credit facilities in June 2014 (see Note 6 - Long-Term Debt) and the change in fair value of the Mercury TRA (see Note 7 - Tax Receivable Agreements). |
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. See Note 13 - Share-Based Compensation Plans for further discussion. |
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 16 - 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 December 31, 2016 and 2015 , the Company had recorded no valuation allowances against deferred tax assets. See Note 14 - Income Taxes for further discussion of income taxes. |
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. |
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 December 31, 2016 and 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. Facilities, furniture and equipment and software are depreciated on a straight-line basis over their respective useful lives. Leasehold improvements are depreciated on a straight-line basis over the lesser of the estimated useful life of the improvement or the term of the 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. 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. 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. See Note 3 - Property, Equipment and Software for additional information. |
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, 2016 in accordance with ASU 2011-08, “Intangibles - Goodwill and Other (Topic 350) Testing Goodwill for Impairment,” which permits the Company to assess qualitative factors to determine whether the existence of events or circumstances leads to the determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Based on this analysis, it was determined that it is not more likely than not that the fair value of the reporting units is less than 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 December 31, 2016. Intangible assets consist of acquired customer relationships, trade names, 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 December 31, 2016, there have been no such events or circumstances that would indicate potential impairment of finite lived intangible assets. Subsequent to the Mercury acquisition in June 2014, the Company decided to phase out an existing trade name used in the ISO channel within the Merchant Services segment. As a result of this decision, the remaining useful life was changed from indefinite to definite which resulted in the Company recording a charge to amortization expense of $34.3 million during the quarter ended June 30, 2014. The remaining fair value was amortized on a straight-line basis over the remaining estimated useful life of two years from July 2014 to June 2016. |
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. |
New Accounting Pronouncements | New Accounting Pronouncements In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . The update clarifies how cash receipts and cash payments in certain transactions are presented and classified in the statement of cash flows. The effective date of this update is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The update requires retrospective application to all periods presented but may be applied prospectively if retrospective application is impracticable. The Company is currently evaluating the impact of the adoption of this principle on the Company’s consolidated financial statements. In March 2016, the FASB issued 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 impact of adopting this standard on the Company’s consolidated financial statements is dependent upon the intrinsic value of share-based compensation awards at the time of exercise or vesting and may result in more variability in effective tax rates and net earnings and may also impact the diluted shares. The Company will adopt this ASU on January 1, 2017. 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 forming a project team to evaluate the impact of the adoption of this principle on the Company’s consolidated financial statements. The Company anticipates adopting this ASU on January 1, 2019. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. 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, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements: Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting . The change in accounting principle, resulting from the Company’s adoption of this ASU in December 2015, has been implemented and the results were 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 has formed a project team and is currently assessing the impact of the adoption of this principle on the Company’s consolidated financial statements. The Company anticipates adopting this ASU on January 1, 2018 using the modified retrospective approach. |
Segment | The Company’s segments consist of the Merchant Services segment and the Financial Institution Services segment, which are organized by the products and services the Company provides. 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. The Company’s reportable segments are the same as the Company’s operating segments and there is no aggregation of the Company’s operating segments. 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, 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. |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Business Acquisition | |
Business acquisition, pro forma information | The following unaudited pro forma information shows the Company’s results of operations for the year ended December 31, 2014 as if the Mercury acquisition had occurred January 1, 2013. The unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of what would have occurred if the acquisition had been made as of that date, nor is it intended to be indicative of future operating results. Year Ended December 31, 2014 (in thousands, except share data) Total revenue $ 2,737,024 Income from operations 322,746 Net income including non-controlling interests 174,797 Net income attributable to Vantiv, Inc. 129,630 Net income per share attributable to Vantiv, Inc. Class A common stock: Basic $ 0.91 Diluted $ 0.78 Shares used in computing net income per share of Class A common stock: Basic 141,936,933 Diluted 199,170,813 |
Moneris Solutions, Inc. | |
Business Acquisition | |
Schedule of recognized identified assets acquired and liabilities assumed | The preliminary purchase price allocation is as follows (in thousands): Cash acquired $ 22,851 Current assets 44,967 Property and equipment 22 Intangible assets 75,000 Goodwill 372,061 Current liabilities (63,322 ) Deferred tax liability (18,950 ) Non-current liabilities (3,001 ) Total purchase price $ 429,628 |
Mercury Payment Systems, LLC | |
Business Acquisition | |
Schedule of business acquisitions by acquisition, contingent consideration | The following table summarizes the purchase price consideration for Mercury (in thousands): Cash purchase price paid at closing $ 1,681,179 Fair value of contingent consideration related to a TRA 192,507 Total purchase price $ 1,873,686 |
Schedule of recognized identified assets acquired and liabilities assumed | The final purchase price allocation is as follows (in thousands): Cash acquired $ 22,485 Current assets 47,421 Property, equipment and software 32,257 Intangible assets 347,000 Goodwill 1,422,916 Deferred tax assets 43,054 Other non-current assets 767 Current and non-current liabilities (42,214 ) Total purchase price $ 1,873,686 |
PROPERTY, EQUIPMENT AND SOFTW31
PROPERTY, EQUIPMENT AND SOFTWARE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Summary of the Company's property and equipment | A summary of the Company’s property, equipment and software is as follows (in thousands): Estimated Useful Life December 31, 2016 December 31, 2015 Land N/A $ 6,401 $ 6,401 Building and improvements 15 - 40 years 34,298 33,938 Furniture and equipment 2 - 10 years 171,104 134,191 Software 3 - 8 years 412,490 319,866 Leasehold improvements 3 - 10 years 8,846 8,885 Work in progress 25,094 45,061 Accumulated depreciation (309,680 ) (240,333 ) Property, equipment and software - net $ 348,553 $ 308,009 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | Changes in the carrying amount of goodwill, by business segment, are as follows (in thousands): Merchant Services Financial Institution Services Total Balance as of December 31, 2014 $ 2,716,516 $ 574,850 $ 3,291,366 Goodwill attributable to acquisition of Mercury (1) 75,162 — 75,162 Balance as of December 31, 2015 2,791,678 574,850 3,366,528 Goodwill attributable to acquisition of Moneris USA 372,061 — 372,061 Balance as of December 31, 2016 $ 3,163,739 $ 574,850 $ 3,738,589 (1) Amount represents adjustments to goodwill associated with the acquisition of Mercury as a result of the finalization of purchase accounting. |
Schedule of intangible assets | As of December 31, 2016 and 2015 , the Company’s finite lived intangible assets consisted of the following (in thousands): December 31, 2016 December 31, 2015 Customer relationship intangible assets $ 1,671,581 $ 1,596,581 Trade name — 21,733 Customer portfolios and related assets 178,480 129,734 Patents 955 366 1,851,016 1,748,414 Less accumulated amortization on: Customer relationship intangible assets 980,595 821,580 Trade name — 14,350 Customer portfolios and related assets 82,601 49,418 1,063,196 885,348 Intangible assets, net $ 787,820 $ 863,066 |
Schedule of expected amortization expense | The estimated amortization expense of intangible assets for the next five years is as follows (in thousands): 2017 $ 208,890 2018 190,639 2019 175,623 2020 97,702 2021 49,137 |
CAPITAL LEASES (Tables)
CAPITAL LEASES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Capital Leases of Lessee [Abstract] | |
Future minimum lease payments required under capital leases and the present value of net minimum lease payments | The future minimum lease payments required under capital leases and the present value of net minimum lease payments as of December 31, 2016 are as follows (in thousands): Amount 2017 $ 8,221 2018 8,969 2019 4,484 Total minimum lease payments 21,674 Less: Amount representing interest (581 ) Present value of minimum lease payments 21,093 Less: Current maturities of capital lease obligations (7,870 ) Long-term capital lease obligations $ 13,223 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of the Company's debt | As of December 31, 2016 and 2015 , the Company’s long-term debt consisted of the following (in thousands): December 31, December 31, Term A loan, maturing in October 2021 (1) $ 2,469,375 $ — Term B loan, maturing in October 2023 (2) 765,000 — Term A loan, maturing on June 13, 2019 (3) — 1,896,250 Term B loan, maturing on June 13, 2021 (4) — 1,179,000 Leasehold mortgage, expiring on August 10, 2021 (5) 10,131 10,131 Less: Current portion of note payable and current portion of note payable to related party (131,119 ) (116,501 ) Less: Original issue discount (3,631 ) (6,024 ) Less: Debt issuance costs (20,153 ) (19,218 ) Note payable and note payable to related party $ 3,089,603 $ 2,943,638 |
TAX RECEIVABLE AGREEMENTS TAX R
TAX RECEIVABLE AGREEMENTS TAX RECEIVABLE AGREEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tax Receivable Agreements Disclosure [Abstract] | |
Tax Receivable Agreement Obligation Settlements | The following table presents the Company’s TRA settlements and the impact of these settlements on the Company’s consolidated statement of financial position (in thousands): TRA Settlement Date Cash Buyout Payment Balance Sheet Obligation Prior to Settlement Deferred Taxes and Other Net Gain Recorded in Equity Fifth Third July 2016 $ (116,294 ) $ 330,711 $ 84,099 $ 130,318 Mercury June 2016 (41,400 ) 41,400 — — Fifth Third October 2015 (48,866 ) 140,024 32,967 58,191 Mercury July 2015 (44,800 ) 44,800 — — |
Schedule of the Company's Liability Pursuant to the TRAs | The following table reflects TRA activity and balances for the years ended December 31, 2016 , 2015 and 2014 (in thousands): Balance as of December 31, 2013 2014 TRA Payment 2014 Secondary Offering Acquisition of Mercury Change in Value Balance as of December 31, 2014 TRA with Fifth Third Bank $ 559,700 $ (8,639 ) $ 109,400 $ — $ (40,399 ) $ 620,062 Mercury TRA — — — 137,860 14,560 152,420 Total $ 559,700 $ (8,639 ) $ 109,400 $ 137,860 $ (25,839 ) $ 772,482 Balance as of December 31, 2014 2015 TRA Payment 2015 TRA Settlements 2015 Secondary Offering Purchase Accounting Adjustment Change in Value Balance as of December 31, 2015 TRA with Fifth Third Bank $ 620,062 $ (22,805 ) $ (140,024 ) $ 376,597 $ — $ (769 ) $ 833,061 Mercury TRA 152,420 — (44,800 ) — 54,647 28,940 191,207 Total $ 772,482 $ (22,805 ) $ (184,824 ) $ 376,597 $ 54,647 $ 28,171 $ 1,024,268 Balance as of December 31, 2015 2016 TRA Payment 2016 TRA Settlements 2016 Secondary Offering Change in Value Balance as of December 31, 2016 TRA with Fifth Third Bank $ 833,061 $ (31,233 ) $ (330,711 ) $ 171,162 $ 53 $ 642,332 Mercury TRA 191,207 (22,241 ) (41,400 ) — 19,474 147,040 Total $ 1,024,268 $ (53,474 ) $ (372,111 ) $ 171,162 $ 19,527 $ 789,372 |
Tax Receivable Agreements- Impact of Secondary Offerings | As a result of the secondary offerings and exchange of units of Vantiv Holding by Fifth Third Bank discussed in Note 12 - Capital Stock, the Company recorded the following (in thousands): Secondary Offerings by Year TRA Liability Deferred Tax Asset Net Equity 2016 $ 171,162 $ 175,279 $ (4,117 ) 2015 376,597 355,430 21,167 2014 109,400 92,000 17,400 |
DERIVATIVES AND HEDGING ACTIV36
DERIVATIVES AND HEDGING ACTIVITIES (Tables) | 12 Months Ended |
Dec. 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 December 31, 2016 December 31, 2015 Interest rate contracts Other current assets $ 2,144 $ — Interest rate contracts Other long-term assets 21,085 — Interest rate contracts Other current liabilities 9,551 9,343 Interest rate contracts Other long-term liabilities 5,507 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 years ended December 31, 2016 , 2015 and 2014 (in thousands): Year Ended December 31, 2016 2015 2014 Derivatives in cash flow hedging relationships: Amount of loss recognized in OCI (effective portion) (1) $ (6,858 ) $ (18,836 ) $ (11,240 ) Amount of loss reclassified from accumulated OCI into earnings (effective portion) (12,735 ) (6,990 ) (3,040 ) Amount of loss recognized in earnings (2) — — (1 ) (1) “OCI” represents other comprehensive income. (2) For the year ended December 31, 2014, amount represents hedge ineffectiveness. |
CONTROLLING AND NON-CONTROLLI37
CONTROLLING AND NON-CONTROLLING INTERESTS IN VANTIV HOLDING (Tables) | 12 Months Ended |
Dec. 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, 2014 145,455,008 43,042,826 188,497,834 % of ownership 77.17 % 22.83 % Fifth Third exchange of Vantiv Holding units for shares of Class A common stock in connection with December 2015 secondary offering 8,000,000 (8,000,000 ) — Fifth Third exchange of Class C units of Vantiv Holding for shares of Class A common stock in connection with partial warrant exercise 5,374,592 — 5,374,592 Share repurchases (4,445,551 ) — (4,445,551 ) Equity plan activity (1) 1,104,277 — 1,104,277 As of December 31, 2015 155,488,326 35,042,826 190,531,152 % of ownership 81.61 % 18.39 % Fifth Third exchange of Class C units of Vantiv Holding for shares of Class A common stock in connection with remaining warrant exercise 5,651,432 — 5,651,432 Share repurchases (1,406,600 ) — (1,406,600 ) Equity plan activity (1) 1,401,673 — 1,401,673 As of December 31, 2016 161,134,831 35,042,826 196,177,657 % of ownership 82.14 % 17.86 % (1) Includes stock issued under the equity plans less Class A common stock withheld to satisfy employee tax withholding obligations upon vesting or exercise of employee equity awards 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): Year Ended December 31, 2016 2015 2014 Net income $ 280,871 $ 209,229 $ 168,990 Items not allocable to non-controlling interests: Vantiv, Inc. expenses (1) 81,059 55,111 7,725 Vantiv Holding net income $ 361,930 $ 264,340 $ 176,715 Net income attributable to non-controlling interests of Fifth Third (2) $ 65,789 $ 58,938 $ 43,022 Net income attributable to joint venture non-controlling interest (3) 1,874 2,345 676 Total net income attributable to non-controlling interests $ 67,663 $ 61,283 $ 43,698 (1) Primarily represents income tax expense related to Vantiv, Inc. and TRA related expense (credits) (see Note 7 - Tax Receivable Agreements). (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. |
COMMITMENTS, CONTINGENCIES AN38
COMMITMENTS, CONTINGENCIES AND GUARANTEES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum commitments under non-cancelable operating leases | The Company leases office space under non-cancelable operating leases that expire between March 2017 and December 2045. Future minimum commitments under these leases are as follows (in thousands): Year Ended December 31, 2017 9,704 2018 7,636 2019 5,809 2020 4,375 2021 4,048 Thereafter 13,197 Total $ 44,769 |
SHARE-BASED COMPENSATION PLANS
SHARE-BASED COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Restricted Stock | The following table presents the number and weighted-average grant date fair value of the restricted stock awards for the year ended December 31, 2016 : Restricted Class A Common Stock - Time Awards Weighted Average Grant Date Fair Value Restricted Class A Common Stock - Performance Awards Weighted Average Grant Date Fair Value Non-vested at December 31, 2015 166,454 $ 35.22 332,840 $ 37.86 Granted 24,998 50.80 241,544 50.01 Vested (24,089 ) 14.00 — — Forfeited (6,053 ) 41.42 (27,646 ) 41.95 Non-vested at December 31, 2016 161,310 $ 40.57 546,738 $ 43.02 |
Schedule of Restricted Stock Units | The following table presents the number and weighted-average grant date fair value of the restricted stock units for the year ended December 31, 2016 : Restricted Stock Units Weighted Average Grant Date Fair Value Non-vested at December 31, 2015 988,007 $ 31.24 Granted 420,817 51.75 Vested (344,212 ) 28.06 Forfeited (141,330 ) 36.40 Non-vested at December 31, 2016 923,282 $ 40.98 |
Schedule of Stock Options | The following table summarizes stock option activity for the year ended December 31, 2016 : Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding options at December 31, 2015 2,310,243 $ 26.74 8.01 $ 47,780 Granted 695,666 50.02 Exercised (537,871 ) 21.43 18,379 Expired (9,033 ) 31.39 Forfeited (257,563 ) 33.09 Outstanding options at December 31, 2016 2,201,442 $ 35.21 7.72 $ 53,738 Options exercisable at December 31, 2016 608,076 $ 26.24 6.69 $ 20,299 |
Schedule of Weighted-average Assumptions Options | The weighted-average grant date fair value was estimated by the Company using the Black-Scholes option pricing model with the assumptions below: 2014 2016 2015 Vantiv Grant Mercury Replacement Options Number of options granted 695,666 707,738 710,297 1,750,519 Weighted average exercise price $50.01 - $52.04 $37.10 $31.02 $10.18 - $29.79 Expected option life at grant (in years) 6.25 6.25 6.25 3.00 - 6.00 Expected volatility 24.77% 26.33% 25.00% 24.80% - 30.80% Expected dividend yield —% —% —% —% Risk-free interest rate 1.41% - 1.45% 1.67% 1.93% 0.93% - 1.96% Fair value $13.92 - $14.43 $11.04 $9.07 $17.75 - $22.10 |
Schedule of Performance Share Units | The following table presents the number and weighted-average grant date fair value of the performance share units for the year ended December 31, 2016 : Performance Share Units Weighted Average Grant Date Fair Value Non-vested at December 31, 2015 472,518 $ 29.73 Granted 72,813 50.04 Incremental shares upon completion of performance goals 154,024 21.95 Vested (325,459 ) 22.48 Forfeited (57,195 ) 31.73 Non-vested at December 31, 2016 316,701 $ 37.70 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of summary of applicable income taxes | The following is a summary of applicable income taxes (in thousands): Year Ended December 31, 2016 2015 2014 Current income tax expense: U.S. income taxes $ 57,966 $ 28,586 $ 29,234 State and local income taxes 4,219 4,311 4,474 Total current tax expense 62,185 32,897 33,708 Deferred income tax expense (benefit): U.S. income taxes 70,786 55,553 36,070 State and local income taxes 8,882 (273 ) (3,601 ) Total deferred tax expense 79,668 55,280 32,469 Applicable income tax expense $ 141,853 $ 88,177 $ 66,177 |
Schedule of reconciliation of the U.S. income tax rate and the Company's effective tax rate | A reconciliation of the U.S. income tax rate and the Company’s effective tax rate for all periods is provided below: Year Ended December 31, 2016 2015 2014 Federal statutory tax rate 35.0 % 35.0 % 35.0 % State taxes-net of federal benefit 2.8 2.7 2.6 Effect of changes in deferred tax rates 0.1 (1.9 ) (3.1 ) Non-controlling interest (4.6 ) (5.9 ) (5.6 ) Other-net 0.3 (0.3 ) (0.8 ) Effective tax rate 33.6 % 29.6 % 28.1 % |
Schedule of deferred income tax assets and liabilities | Deferred income tax assets and liabilities are comprised of the following as of December 31, 2016 and 2015 (in thousands): December 31, 2016 December 31, 2015 Deferred tax assets Net operating losses $ 14,085 $ 25,569 Employee benefits 69 55 Other assets 2,236 2,316 Other accruals and reserves 89,239 79,925 Partnership basis 771,311 728,532 Deferred tax assets 876,940 836,397 Deferred tax liabilities Property and equipment (13,677 ) (9,840 ) Goodwill and intangible assets (150,687 ) (109,988 ) Deferred tax liability (164,364 ) (119,828 ) Deferred tax asset-net $ 712,576 $ 716,569 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 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 December 31, 2016 and 2015 (in thousands): 2016 2015 Fair Value Measurements Using Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Interest rate contracts $ — $ 23,229 $ — $ — $ — $ — Liabilities: Interest rate contracts $ — $ 15,058 $ — $ — $ 19,228 $ — Mercury TRA — — 147,040 — — 191,207 |
Schedule of carrying amounts and estimated fair values for assets and liabilities, excluding assets and liabilities measured at fair value on a recurring basis | The following table summarizes carrying amounts and estimated fair values for the Company’s financial instrument liabilities that are not reported at fair value in our consolidated statements of financial position as of December 31, 2016 and 2015 (in thousands): 2016 2015 Carrying Fair Value Carrying Fair Value Liabilities: Note payable $ 3,220,722 $ 3,250,025 $ 3,060,139 $ 3,064,989 |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 12 Months Ended |
Dec. 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): Year Ended December 31, 2016 2015 2014 Basic: Net income attributable to Vantiv, Inc. $ 213,208 $ 147,946 $ 125,292 Shares used in computing basic net income per share: Weighted-average Class A common shares 156,043,636 145,044,577 141,936,933 Basic net income per share $ 1.37 $ 1.02 $ 0.88 Diluted: Consolidated income before applicable income taxes $ — $ 297,406 $ 235,167 Income tax expense excluding impact of non-controlling interest — 107,066 85,836 Net income attributable to Vantiv, Inc. $ 213,208 $ 190,340 $ 149,331 Shares used in computing diluted net income per share: Weighted-average Class A common shares 156,043,636 145,044,577 141,936,933 Weighted-average Class B units of Vantiv Holding — 42,521,087 45,472,332 Warrant 4,959,501 11,866,595 10,121,483 Stock options 531,165 545,180 318,175 Restricted stock awards, restricted stock units and employee stock purchase plan 510,694 696,273 1,321,890 Performance awards 70,553 260,730 — Diluted weighted-average shares outstanding 162,115,549 200,934,442 199,170,813 Diluted net income per share $ 1.32 $ 0.95 $ 0.75 |
ACCUMULATED OTHER COMPREHENSI43
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 12 Months Ended |
Dec. 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 years ended December 31, 2016 , 2015 and 2014 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 Year Ended December 31, 2016 Net change in fair value recorded in accumulated OCI $ (14,336 ) $ (6,858 ) $ 2,106 $ (4,752 ) $ 1,269 $ (3,483 ) $ (17,819 ) Net realized loss reclassified into earnings (a) 5,132 12,735 (3,930 ) 8,805 (2,315 ) 6,490 11,622 Other — — — — — — — Net change $ (9,204 ) $ 5,877 $ (1,824 ) $ 4,053 $ (1,046 ) $ 3,007 $ (6,197 ) Year Ended December 31, 2015 Net change in fair value recorded in accumulated OCI $ (5,288 ) $ (18,836 ) $ 5,490 $ (13,346 ) $ 4,298 $ (9,048 ) $ (14,336 ) Net realized loss reclassified into earnings (a) 1,732 6,990 (2,065 ) 4,925 (1,525 ) 3,400 5,132 Other (212 ) 212 — 212 — 212 — Net change $ (3,768 ) $ (11,634 ) $ 3,425 $ (8,209 ) $ 2,773 $ (5,436 ) $ (9,204 ) Year Ended December 31, 2014 Net change in fair value recorded in accumulated OCI $ (5 ) $ (11,240 ) $ 3,114 $ (8,126 ) $ 2,843 $ (5,283 ) $ (5,288 ) Net realized loss reclassified into earnings (a) 269 3,040 (874 ) 2,166 (703 ) 1,463 1,732 Other — (212 ) — (212 ) — (212 ) (212 ) Net change $ 264 $ (8,412 ) $ 2,240 $ (6,172 ) $ 2,140 $ (4,032 ) $ (3,768 ) (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 years ended December 31, 2016, 2015 and 2014, 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) | 12 Months Ended |
Dec. 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. Year Ended December 31, 2016 Merchant Financial Total Total revenue $ 3,082,951 $ 496,040 $ 3,578,991 Network fees and other costs 1,537,072 137,158 1,674,230 Sales and marketing 557,942 24,309 582,251 Segment profit $ 987,937 $ 334,573 $ 1,322,510 Year Ended December 31, 2015 Merchant Financial Total Total revenue $ 2,656,906 $ 503,032 $ 3,159,938 Network fees and other costs 1,321,312 156,890 1,478,202 Sales and marketing 478,736 25,213 503,949 Segment profit $ 856,858 $ 320,929 $ 1,177,787 Year Ended December 31, 2014 Merchant Financial Total Total revenue $ 2,100,367 $ 476,836 $ 2,577,203 Network fees and other costs 1,033,801 140,864 1,174,665 Sales and marketing 367,998 28,355 396,353 Segment profit $ 698,568 $ 307,617 $ 1,006,185 |
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): Year Ended December 31, 2016 2015 2014 Total segment profit $ 1,322,510 $ 1,177,787 $ 1,006,185 Less: Other operating costs (294,235 ) (284,066 ) (242,439 ) Less: General and administrative (189,707 ) (182,369 ) (173,986 ) Less: Depreciation and amortization (270,054 ) (276,942 ) (275,069 ) Less: Interest expense—net (109,534 ) (105,736 ) (79,701 ) Less: Non-operating income (expense) (36,256 ) (31,268 ) 177 Income before applicable income taxes $ 422,724 $ 297,406 $ 235,167 |
QUARTERLY CONSOLIDATED RESULT45
QUARTERLY CONSOLIDATED RESULTS OF OPERATIONS (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of quarterly financial information | The following table sets forth our unaudited results of operations on a quarterly basis for the years ended December 31, 2016 and 2015 . Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, (dollars in thousands) Revenue $ 955,132 $ 914,019 $ 891,217 $ 818,623 $ 852,334 $ 815,998 $ 785,995 $ 705,611 Network fees and other costs 452,720 423,361 410,736 387,413 399,159 385,548 362,349 331,146 Net revenue 502,412 490,658 480,481 431,210 453,175 430,450 423,646 374,465 Sales and marketing 148,521 153,248 144,844 135,638 132,488 132,481 122,925 116,055 Other operating costs 74,771 72,162 73,599 73,703 72,213 66,563 76,551 68,739 General and administrative 55,876 40,727 49,120 43,984 45,974 41,492 47,060 47,843 Depreciation and amortization 70,504 66,086 65,234 68,230 70,843 70,638 67,659 67,802 Income from operations $ 152,740 $ 158,435 $ 147,684 $ 109,655 $ 131,657 $ 119,276 $ 109,451 $ 74,026 Net income $ 62,958 $ 87,004 $ 78,461 $ 52,448 $ 70,392 $ 59,148 $ 52,693 $ 26,996 Net income (loss) attributable to Vantiv, Inc. $ 47,847 $ 66,296 $ 59,327 $ 39,738 $ 50,929 $ 41,492 $ 36,536 $ 18,989 Net income (loss) per share attributable to Vantiv, Inc. Class A common stock: Basic $ 0.30 $ 0.43 $ 0.38 $ 0.26 $ 0.35 $ 0.29 $ 0.25 $ 0.13 Diluted $ 0.29 $ 0.41 $ 0.38 $ 0.25 $ 0.31 $ 0.27 $ 0.24 $ 0.13 |
BASIS OF PRESENTATION AND SUM46
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation (Details) - Vantiv Holding | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Class A Unit of Vantiv Holding | Vantiv, Inc. | |||
Principles of consolidation | |||
Ownership percentage by Vantiv, Inc | 82.14% | 81.61% | 77.17% |
Class B Unit of Vantiv Holding | Fifth Third | |||
Principles of consolidation | |||
Ownership percentage by Fifth Third | 17.86% | 18.39% | 22.83% |
BASIS OF PRESENTATION AND SUM47
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Income Taxes (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Accounting Policies [Abstract] | ||
Valuation allowance against deferred assets | $ 0 | $ 0 |
BASIS OF PRESENTATION AND SUM48
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accounting Policies [Abstract] | ||||
Write-off trade name used in ISO channel | $ 34,300 | $ 0 | $ 0 | $ 34,267 |
Amortization period of trade name used in ISO Channel | 2 years |
BUSINESS COMBINATIONS Estimated
BUSINESS COMBINATIONS Estimated Fair Value of Purchase Price (Details) - USD ($) $ in Thousands | 1 Months Ended | |||
Jun. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Business Acquisition | ||||
Issuance of tax receivable agreement as contingent consideration | $ 0 | $ 0 | $ 137,860 | |
Mercury Payment Systems, LLC | ||||
Business Acquisition | ||||
Cash purchase price paid at closing | $ 1,681,179 | |||
Issuance of tax receivable agreement as contingent consideration | 192,507 | |||
Total purchase price | $ 1,873,686 |
BUSINESS COMBINATIONS (Details)
BUSINESS COMBINATIONS (Details) - USD ($) $ in Thousands | Dec. 21, 2016 | Jun. 13, 2014 | Dec. 31, 2016 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 |
Purchase Price Allocation | ||||||
Goodwill | $ 3,738,589 | $ 3,291,366 | $ 3,738,589 | $ 3,366,528 | ||
Moneris Solutions, Inc. | ||||||
Business Acquisition | ||||||
Percentage of voting interests acquired | 100.00% | |||||
Incurred expenses from acquisition | $ 12,300 | |||||
Purchase Price Allocation | ||||||
Cash acquired | $ 22,851 | |||||
Current assets | 44,967 | |||||
Property, equipment and software | 22 | |||||
Intangible assets | 75,000 | |||||
Goodwill | 372,061 | |||||
Current liabilities | (63,322) | |||||
Deferred tax liabilities | (18,950) | |||||
Current and non-current liabilities | (3,001) | |||||
Total purchase price | 429,628 | |||||
Mercury Payment Systems, LLC | ||||||
Business Acquisition | ||||||
Percentage of voting interests acquired | 100.00% | |||||
Incurred expenses from acquisition | 17,900 | |||||
Actual revenue of Mercury since acquisition date | $ 217,000 | |||||
Fair value of Mercury replacement options | $ 32,100 | |||||
Fair value of Mercury replacement options related to services provided prior to the acquisition | 17,700 | |||||
Purchase Price Allocation | ||||||
Cash acquired | 22,485 | |||||
Current assets | 47,421 | |||||
Property, equipment and software | 32,257 | |||||
Intangible assets | 347,000 | |||||
Goodwill | 1,422,916 | |||||
Deferred tax assets | 43,054 | |||||
Other non-current assets | 767 | |||||
Current and non-current liabilities | (42,214) | |||||
Total purchase price | 1,873,686 | |||||
Customer relationships intangible assets | ||||||
Business Acquisition | ||||||
Finite-lived intangible assets acquired, weighted average useful life | 4 years 4 months 8 days | 4 years 9 months 19 days | ||||
Customer relationships intangible assets | Moneris Solutions, Inc. | ||||||
Business Acquisition | ||||||
Finite-lived Intangible Assets Acquired | $ 75,000 | |||||
Finite-lived intangible assets acquired, weighted average useful life | 5 years | |||||
Customer relationships intangible assets | Mercury Payment Systems, LLC | ||||||
Business Acquisition | ||||||
Finite-lived Intangible Assets Acquired | $ 332,000 | |||||
Finite-lived intangible assets acquired, weighted average useful life | 10 years | |||||
Trade name - finite lived | Mercury Payment Systems, LLC | ||||||
Business Acquisition | ||||||
Finite-lived Intangible Assets Acquired | $ 15,000 | |||||
Finite-lived intangible assets acquired, weighted average useful life | 2 years 6 months |
BUSINESS COMBINATIONS Pro Forma
BUSINESS COMBINATIONS Pro Forma (Details) - Mercury Payment Systems, LLC $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2014USD ($)$ / sharesshares | |
Business Acquisition | |
Pro forma revenue | $ 2,737,024 |
Pro forma income from operations | 322,746 |
Pro forma net income including noncontrolling interest | 174,797 |
Pro forma net income attributable to Vantiv, Inc | $ 129,630 |
Pro Forma Net income per share attributable to Vantiv, Inc. Class A common stock | |
Pro forma earnings per share, basic | $ / shares | $ 0.91 |
Pro forma earnings per share, diluted | $ / shares | $ 0.78 |
Pro Forma Shares used in computing net income per share of Class A common stock | |
Pro forma weighted average basic shares outstanding | shares | 141,936,933 |
Pro forma weighted average diluted shares outstanding | shares | 199,170,813 |
PROPERTY, EQUIPMENT AND SOFTW52
PROPERTY, EQUIPMENT AND SOFTWARE (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment | |||
Property, equipment and software - net | $ 348,553 | $ 308,009 | |
Depreciation and amortization expense | 270,054 | 276,942 | $ 240,802 |
Land | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | 6,401 | 6,401 | |
Building and improvements | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 34,298 | 33,938 | |
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 | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 171,104 | 134,191 | |
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 | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 412,490 | 319,866 | |
Software | Minimum | |||
Property, Plant and Equipment | |||
Estimated Useful Life | 3 years | ||
Software | Maximum | |||
Property, Plant and Equipment | |||
Estimated Useful Life | 8 years | ||
Leasehold improvements | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 8,846 | 8,885 | |
Leasehold improvements | Minimum | |||
Property, Plant and Equipment | |||
Estimated Useful Life | 3 years | ||
Leasehold improvements | Maximum | |||
Property, Plant and Equipment | |||
Estimated Useful Life | 10 years | ||
Work in progress | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 25,094 | 45,061 | |
Property equipment and software | |||
Property, Plant and Equipment | |||
Accumulated depreciation | (309,680) | (240,333) | |
Property, equipment and software - net | 348,553 | 308,009 | |
Depreciation and amortization expense | $ 70,500 | $ 76,600 | $ 70,000 |
GOODWILL AND INTANGIBLE ASSET53
GOODWILL AND INTANGIBLE ASSETS - Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | |||
Goodwill | ||||
Goodwill at beginning of period | $ 3,366,528 | $ 3,291,366 | ||
Goodwill attributable to acquisition | 372,061 | 75,162 | [1] | |
Goodwill at end of period | 3,738,589 | 3,366,528 | ||
Merchant Services | ||||
Goodwill | ||||
Goodwill at beginning of period | 2,791,678 | 2,716,516 | ||
Goodwill at end of period | 3,163,739 | 2,791,678 | ||
Financial Institution Services | ||||
Goodwill | ||||
Goodwill at beginning of period | 574,850 | 574,850 | ||
Goodwill at end of period | 574,850 | 574,850 | ||
Mercury Payment Systems, LLC | Merchant Services | ||||
Goodwill | ||||
Goodwill attributable to acquisition | [1] | 75,162 | ||
Mercury Payment Systems, LLC | Financial Institution Services | ||||
Goodwill | ||||
Goodwill attributable to acquisition | [1] | $ 0 | ||
Moneris Solutions, Inc. | Merchant Services | ||||
Goodwill | ||||
Goodwill attributable to acquisition | 372,061 | |||
Moneris Solutions, Inc. | Financial Institution Services | ||||
Goodwill | ||||
Goodwill attributable to acquisition | $ 0 | |||
[1] | Amount represents adjustments to goodwill associated with the acquisition of Mercury as a result of the finalization of purchase accounting. |
GOODWILL AND INTANGIBLE ASSET54
GOODWILL AND INTANGIBLE ASSETS - Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets | ||||
Finite-lived intangible assets, gross | $ 1,851,016 | $ 1,748,414 | ||
Finite-lived intangible assets, accumulated amortization | 1,063,196 | 885,348 | ||
Intangible assets—net | 787,820 | 863,066 | ||
Amortization expense on finite lived intangible assets | 199,600 | 200,400 | $ 205,100 | |
Write-off trade name used in ISO channel | $ 34,300 | 0 | 0 | $ 34,267 |
Revised value of trade name used in ISO channel | $ 6,700 | |||
Amortization period of trade name used in ISO Channel | 2 years | |||
Estimate amortization expense of finite lived intangible assets for the next five years | ||||
2,017 | 208,890 | |||
2,018 | 190,639 | |||
2,019 | 175,623 | |||
2,020 | 97,702 | |||
2,021 | 49,137 | |||
Customer relationships intangible assets | ||||
Finite-Lived Intangible Assets | ||||
Finite-lived intangible assets, gross | 1,671,581 | 1,596,581 | ||
Finite-lived intangible assets, accumulated amortization | $ 980,595 | $ 821,580 | ||
Finite-lived intangible assets acquired, weighted average useful life | 4 years 4 months 8 days | 4 years 9 months 19 days | ||
Trade name - finite lived | ||||
Finite-Lived Intangible Assets | ||||
Finite-lived intangible assets, gross | $ 0 | $ 21,733 | ||
Finite-lived intangible assets, accumulated amortization | 0 | 14,350 | ||
Customer Portfolios and related assets | ||||
Finite-Lived Intangible Assets | ||||
Finite-lived intangible assets, gross | 178,480 | 129,734 | ||
Finite-lived intangible assets, accumulated amortization | 82,601 | 49,418 | ||
Patents | ||||
Finite-Lived Intangible Assets | ||||
Finite-lived intangible assets, gross | $ 955 | $ 366 |
CAPITAL LEASES (Details)
CAPITAL LEASES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Capital Leases of Lessee [Abstract] | |||
Cost of equipment under capital leases | $ 36,600 | $ 36,600 | |
Accumulated depreciation of equipment under capital leases | 12,700 | 4,400 | |
Depreciation expense associated with equipment under capital leases | 8,300 | 7,800 | $ 6,000 |
Future minimum lease payments required under capital leases and the present value of net minimum lease payments | |||
2,017 | 8,221 | ||
2,018 | 8,969 | ||
2,019 | 4,484 | ||
Total minimum lease payments | 21,674 | ||
Less: Amount representing interest | (581) | ||
Present value of minimum lease payments | 21,093 | ||
Less: Current maturities of capital lease obligations | (7,870) | (7,931) | |
Long-term capital lease obligations | $ 13,223 | $ 21,801 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Thousands | Oct. 14, 2016 | Jun. 13, 2014 | Dec. 31, 2016 | Dec. 31, 2015 |
Long-term debt | ||||
Note payable and note payable to related party | $ 3,089,603 | $ 2,943,638 | ||
Term loan for corporate headquarters | ||||
Long-term debt | ||||
Long-term debt, gross | $ 10,131 | 10,131 | ||
Leasehold mortgage fixed interest rate (as a percent) | 6.22% | |||
October 2016 debt refinancing | ||||
Long-term debt | ||||
Less: Current portion of note payable and current portion of note payable to related party | $ (131,119) | |||
Less: Original issue discount | (3,631) | |||
Less: Debt issuance costs | (20,153) | |||
October 2016 debt refinancing | Term A loan | ||||
Long-term debt | ||||
Long-term debt, gross | $ 2,469,375 | |||
Spread rate (as a percent) | 2.00% | |||
Variable base rate | LIBOR | |||
Interest rate (as a percent) | 2.70% | |||
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% | |||
October 2016 debt refinancing | Term B loan | ||||
Long-term debt | ||||
Long-term debt, gross | $ 765,000 | |||
Spread rate (as a percent) | 2.50% | |||
Variable base rate | LIBOR | |||
Interest rate (as a percent) | 3.25% | |||
Term B loan amortization percentage | 0.25% | |||
June 2014 debt refinancing | ||||
Long-term debt | ||||
Less: Current portion of note payable and current portion of note payable to related party | (116,501) | |||
Less: Original issue discount | (6,024) | |||
Less: Debt issuance costs | (19,218) | |||
June 2014 debt refinancing | Term A loan | ||||
Long-term debt | ||||
Long-term debt, gross | $ 1,896,250 | |||
Spread rate (as a percent) | 2.00% | |||
Variable base rate | LIBOR | |||
Interest rate (as a percent) | 2.33% | |||
June 2014 debt refinancing | Term B loan | ||||
Long-term debt | ||||
Long-term debt, gross | $ 1,179,000 | |||
Spread rate (as a percent) | 3.00% | |||
Variable base rate | LIBOR | |||
Interest rate (as a percent) | 3.75% | |||
Minimum | October 2016 debt refinancing | Term B loan | ||||
Long-term debt | ||||
Spread rate (as a percent) | 0.75% | |||
Minimum | June 2014 debt refinancing | Term B loan | ||||
Long-term debt | ||||
Spread rate (as a percent) | 0.75% |
LONG-TERM DEBT (Details 2)
LONG-TERM DEBT (Details 2) - USD ($) $ in Millions | Oct. 14, 2016 | Jan. 06, 2015 | Jun. 13, 2014 | Dec. 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 | $ 25 | ||||
October 2016 debt refinancing | |||||
Long-term debt | |||||
Unamortized deferred financing cost written off | 16.6 | ||||
June 2014 debt refinancing | |||||
Long-term debt | |||||
Unamortized deferred financing cost written off | $ 26.5 | ||||
Term A loan | October 2016 debt refinancing | |||||
Long-term debt | |||||
Face value of debt | $ 2,500 | ||||
Term A loan | October 2016 debt refinancing | Fifth Third | |||||
Long-term debt | |||||
Notes Payable, Related Parties | $ 151.1 | ||||
Term A loan | June 2014 debt refinancing | |||||
Long-term debt | |||||
Face value of debt | $ 2,050 | ||||
Term A loan | June 2014 debt refinancing | Fifth Third | |||||
Long-term debt | |||||
Notes Payable, Related Parties | $ 191.5 | ||||
Term A loan | May 2013 Debt Refinancing | |||||
Long-term debt | |||||
Repayments of Debt | 1,800 | ||||
Term B loan | October 2016 debt refinancing | |||||
Long-term debt | |||||
Face value of debt | 765 | ||||
Term B loan | June 2014 debt refinancing | |||||
Long-term debt | |||||
Face value of debt | 1,400 | ||||
Repayments of Debt | $ 200 | ||||
Unamortized deferred financing cost written off | $ 1.8 | ||||
Revolving credit facility | October 2016 debt refinancing | |||||
Long-term debt | |||||
Maximum borrowing capacity | $ 650 | ||||
Commitment fees (as a percent) | 0.375% | ||||
Revolving credit facility | June 2014 debt refinancing | |||||
Long-term debt | |||||
Maximum borrowing capacity | $ 425 | ||||
Commitment fees (as a percent) | 0.375% | ||||
Swing line credit facility | October 2016 debt refinancing | |||||
Long-term debt | |||||
Maximum borrowing capacity | $ 100 | ||||
Swing line credit facility | June 2014 debt refinancing | |||||
Long-term debt | |||||
Maximum borrowing capacity | $ 100 | ||||
Letter of credit facility | October 2016 debt refinancing | |||||
Long-term debt | |||||
Maximum borrowing capacity | $ 40 | ||||
Letter of credit facility | June 2014 debt refinancing | |||||
Long-term debt | |||||
Maximum borrowing capacity | $ 40 |
TAX RECEIVABLE AGREEMENTS (Deta
TAX RECEIVABLE AGREEMENTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Tax receivable agreement | |||
Tax Receivable Agreement Payments as a Percentage of Cash Savings in Tax | 85.00% | ||
Tax Receivable Agreement, Cash Savings Percent | 15.00% | ||
Cash payments to settle certain tax receivable agreements | $ (159,274) | $ (94,022) | $ 0 |
TRA obligations Settled under cash buyout payment | 372,111 | 184,824 | |
Net gain recorded related to TRA settlements | 130,318 | 58,191 | |
Mercury Payment Systems, LLC | |||
Tax receivable agreement | |||
Cash payments to settle certain tax receivable agreements | (41,400) | (44,800) | |
TRA obligations Settled under cash buyout payment | 41,400 | 44,800 | |
Fifth Third | |||
Tax receivable agreement | |||
Cash payments to settle certain tax receivable agreements | (116,294) | (48,866) | |
TRA obligations Settled under cash buyout payment | 330,711 | 140,024 | |
Deferred tax adjustments related to TRA obligation settlements | 84,099 | 32,967 | |
Net gain recorded related to TRA settlements | $ 130,318 | $ 58,191 |
TAX RECEIVABLE AGREEMENTS (De59
TAX RECEIVABLE AGREEMENTS (Details 2) - USD ($) $ in Thousands | 12 Months Ended | 13 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2015 | |
Tax receivable agreement | ||||
TRA obligations, beginning balance | $ 1,024,268 | $ 772,482 | $ 559,700 | |
Payments under tax receivable agreements | (53,474) | (22,805) | (8,639) | |
TRA obligations settled, balance sheet obligations prior to settlement | (372,111) | (184,824) | ||
TRA liability recorded related to secondary offerings | 171,162 | 376,597 | 109,400 | |
TRA liability recorded related to acquisitions | 54,647 | 137,860 | ||
TRAs change in value | 19,527 | 28,171 | (25,839) | |
TRA obligations, ending balance | 789,372 | 1,024,268 | 772,482 | |
Fifth Third | ||||
Tax receivable agreement | ||||
TRA obligations, beginning balance | 833,061 | 620,062 | 559,700 | |
Payments under tax receivable agreements | (31,233) | (22,805) | (8,639) | |
TRA obligations settled, balance sheet obligations prior to settlement | (330,711) | (140,024) | ||
TRA liability recorded related to secondary offerings | 171,162 | 376,597 | 109,400 | |
TRAs change in value | 53 | (769) | (40,399) | |
TRA obligations, ending balance | 642,332 | 833,061 | 620,062 | |
Mercury Payment Systems, LLC | ||||
Tax receivable agreement | ||||
TRA obligations, beginning balance | 191,207 | 152,420 | 0 | |
Payments under tax receivable agreements | (22,241) | |||
TRA obligations settled, balance sheet obligations prior to settlement | (41,400) | (44,800) | ||
TRA liability recorded related to acquisitions | 54,647 | 137,860 | $ 192,500 | |
TRAs change in value | 19,474 | 28,940 | 14,560 | |
TRA obligations, ending balance | $ 147,040 | $ 191,207 | $ 152,420 |
TAX RECEIVABLE AGREEMENTS (De60
TAX RECEIVABLE AGREEMENTS (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Tax receivable agreement | |||
TRA liability recorded related to secondary offerings | $ 171,162 | $ 376,597 | $ 109,400 |
Adjustment to additional paid in capital related to TRA | (4,117) | (21,167) | (17,400) |
Fifth Third | |||
Tax receivable agreement | |||
TRA liability recorded related to secondary offerings | 171,162 | 376,597 | 109,400 |
Fifth Third | Vantiv Holding | |||
Tax receivable agreement | |||
Deferred tax assets attributable to exchange of units of subsidiary | $ 175,279 | $ 355,430 | $ 92,000 |
TAX RECEIVABLE AGREEMENTS (De61
TAX RECEIVABLE AGREEMENTS (Details 4) - USD ($) $ in Thousands | Jul. 27, 2016 | Jan. 31, 2017 | Jul. 24, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2015 |
Tax receivable agreement | |||||||
Other non-operating income | $ 41,300 | ||||||
Mercury TRA liability recorded | $ 54,647 | 137,860 | |||||
Cash payments to settle certain tax receivable agreements | $ (159,274) | (94,022) | 0 | ||||
Tax Receivable Agreement Obligations Settled As a Result of Prepayment | 372,111 | 184,824 | |||||
Current portion of Fifth Third callable/puttable TRA Obligations | 191,014 | 31,232 | |||||
Payments under tax receivable agreements | 53,474 | 22,805 | 8,639 | ||||
TRAs change in value | 19,527 | 28,171 | (25,839) | ||||
Mercury Payment Systems, LLC | |||||||
Tax receivable agreement | |||||||
Mercury TRA liability recorded | 54,647 | 137,860 | $ 192,500 | ||||
Other nonoperating expense | 19,500 | 28,900 | 14,600 | ||||
Cash payments to settle certain tax receivable agreements | (41,400) | (44,800) | |||||
Tax Receivable Agreement Obligations Settled As a Result of Prepayment | 41,400 | 44,800 | |||||
Payments under tax receivable agreements | 22,241 | ||||||
TRAs change in value | 19,474 | 28,940 | 14,560 | ||||
Mercury Payment Systems, LLC | Minimum | President | |||||||
Tax receivable agreement | |||||||
Cash payments to settle certain tax receivable agreements | $ (600) | ||||||
Mercury Payment Systems, LLC | Maximum | President | |||||||
Tax receivable agreement | |||||||
Cash payments to settle certain tax receivable agreements | $ (2,200) | ||||||
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 | ||||||
Fifth Third | |||||||
Tax receivable agreement | |||||||
Cash payments to settle certain tax receivable agreements | (116,294) | (48,866) | |||||
Tax Receivable Agreement Obligations Settled As a Result of Prepayment | 330,711 | 140,024 | |||||
Payments under tax receivable agreements | 31,233 | 22,805 | 8,639 | ||||
TRAs change in value | 53 | $ (769) | $ (40,399) | ||||
Fifth Third | Call Option | |||||||
Tax receivable agreement | |||||||
Cash payments to settle certain tax receivable agreements | $ (170,700) | ||||||
Tax Receivable Agreement Obligations Settled As a Result of Prepayment | 394,100 | ||||||
Q1 2017 Fifth Third TRA settlement payment under Call Options | 15,100 | ||||||
Q2 2017 Fifth Third TRA settlement payment under Call Options | 15,600 | ||||||
Q3 2017 Fifth Third TRA settlement payment under Call Options | 16,100 | ||||||
Q4 2017 Fifth Third TRA settlement payment under Call Options | 16,600 | ||||||
Q1 2018 Fifth Third TRA settlement payment under Call Options | 25,600 | ||||||
Q2 2018 Fifth Third TRA settlement payment under Call Options | 26,400 | ||||||
Q3 2018 Fifth Third TRA settlement payment under Call Options | 27,200 | ||||||
Q4 2018 Fifth Third TRA settlement payment under Call Options | $ 28,100 | ||||||
Current portion of Fifth Third callable/puttable TRA Obligations | $ 157,700 | ||||||
Subsequent Event | |||||||
Tax receivable agreement | |||||||
Payments under tax receivable agreements | $ 55,700 |
DERIVATIVES AND HEDGING ACTIV62
DERIVATIVES AND HEDGING ACTIVITIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Cash flow hedges of interest rate risk | |||||
Cash flow hedge loss to be reclassified within twelve months | $ 11,200 | ||||
Fair value of interest rate contracts designated as cash flow hedges | |||||
Upfront premium of interest rate cap agreements | 21,523 | $ 0 | $ 0 | ||
Derivatives in cash flow hedging relationships: | |||||
Amount of gain (loss) recognized in OCI (effective portion) | [1] | (6,858) | (18,836) | (11,240) | |
Amount of loss reclassified from accumulated OCI into earnings (effective portion) | (12,735) | (6,990) | (3,040) | ||
Amount of gain (loss) recognized on interest rate cash flow hedge ineffectiveness | [2] | 0 | 0 | $ (1) | |
Aggregate fair value of derivatives, net liability position | 15,900 | ||||
Other current assets | |||||
Fair value of interest rate contracts designated as cash flow hedges | |||||
Fair value of hedge assets | 2,144 | 0 | |||
Other long-term assets | |||||
Fair value of interest rate contracts designated as cash flow hedges | |||||
Fair value of hedge assets | 21,085 | 0 | |||
Other current liabilities | |||||
Fair value of interest rate contracts designated as cash flow hedges | |||||
Fair value of hedge liabilities | 9,551 | 9,343 | |||
Other long-term liabilities | |||||
Fair value of interest rate contracts designated as cash flow hedges | |||||
Fair value of hedge liabilities | $ 5,507 | $ 9,885 | |||
Interest rate cap | |||||
Cash flow hedges of interest rate risk | |||||
Number of interest rate derivatives held | 6 | ||||
Notional amount | $ 1,000,000 | ||||
Interest rate cap agreement strike rate | 0.75% | ||||
Fair value of interest rate contracts designated as cash flow hedges | |||||
Upfront premium of interest rate cap agreements | $ 21,500 | ||||
Fair value of hedge assets | $ 23,200 | ||||
Interest rate swaps | |||||
Cash flow hedges of interest rate risk | |||||
Number of interest rate derivatives held | 10 | ||||
Interest rate swaps | Covering period from June 2016 through June 2017 | |||||
Cash flow hedges of interest rate risk | |||||
Number of interest rate derivatives held | 4 | ||||
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 | 6 | ||||
Notional amount | $ 500,000 | ||||
Interest rate swaps | Fifth Third | |||||
Cash flow hedges of interest rate risk | |||||
Number of interest rate derivatives held | 4 | ||||
Interest rate swaps | Fifth Third | Maximum | |||||
Cash flow hedges of interest rate risk | |||||
Notional amount | $ 262,500 | ||||
Interest rate swaps | Fifth Third | Minimum | |||||
Cash flow hedges of interest rate risk | |||||
Notional amount | $ 250,000 | ||||
[1] | “OCI” represents other comprehensive income. | ||||
[2] | For the year ended December 31, 2014, amount represents hedge ineffectiveness. |
CONTROLLING AND NON-CONTROLLI63
CONTROLLING AND NON-CONTROLLING INTERESTS OWNERSHIP INTEREST IN JOINT VENTURE (Details) - Joint Venture $ in Millions | May 31, 2014USD ($) |
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 Bank Partner | 49.00% |
Formation of Joint Ventures | $ 18.8 |
CONTROLLING AND NON-CONTROLLI64
CONTROLLING AND NON-CONTROLLING INTERESTS IN VANTIV HOLDING (Details) $ / shares in Units, $ in Thousands | Nov. 28, 2016shares | Dec. 31, 2016USD ($)shares | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($)shares | Dec. 31, 2015USD ($)shares | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($)shares | Dec. 31, 2016USD ($)shares | Dec. 31, 2015USD ($)shares | Dec. 31, 2014USD ($)shares | Mar. 21, 2012 | Jun. 30, 2009USD ($)$ / sharesshares | |||
Changes in units and related ownership interest | |||||||||||||||||
Payments for repurchase of warrants under the Warrant Cancellation Agreement | $ | $ 0 | $ 200,219 | $ 0 | ||||||||||||||
Vantiv Holding net income, Including Portion Attributable to Noncontrolling Interest [Abstract] | |||||||||||||||||
Net income | $ | $ 62,958 | $ 87,004 | $ 78,461 | $ 52,448 | $ 70,392 | $ 59,148 | $ 52,693 | $ 26,996 | 280,871 | 209,229 | 168,990 | ||||||
Items not allocable to non-controlling interests: | |||||||||||||||||
Vantiv, Inc. expenses | $ | [1] | 81,059 | 55,111 | 7,725 | |||||||||||||
Net income attributable to Vantiv Holding | $ | 361,930 | 264,340 | 176,715 | ||||||||||||||
Net Income Attributable to Noncontrolling Interest | |||||||||||||||||
Net income attributable to non-controlling interests | $ | 67,663 | 61,283 | 43,698 | ||||||||||||||
Fifth Third | |||||||||||||||||
Net Income Attributable to Noncontrolling Interest | |||||||||||||||||
Net income attributable to non-controlling interests | $ | [2] | 65,789 | 58,938 | 43,022 | |||||||||||||
Bank Partner | |||||||||||||||||
Net Income Attributable to Noncontrolling Interest | |||||||||||||||||
Net income attributable to non-controlling interests | $ | [3] | $ 1,874 | $ 2,345 | $ 676 | |||||||||||||
Vantiv Holding | |||||||||||||||||
Changes in units and related ownership interest | |||||||||||||||||
Balance (in shares) | 190,531,152 | 188,497,834 | 190,531,152 | 188,497,834 | |||||||||||||
Issuance of Class A common stock in connection with secondary offering (in shares) | (5,651,432) | ||||||||||||||||
Issuance of common shares in connection with warrant exercise | 5,374,592 | ||||||||||||||||
Class A common stock repurchased and retired during period, (in shares) | (1,406,600) | (4,445,551) | |||||||||||||||
Equity plan activity (in shares) | 1,401,673 | [4] | 1,104,277 | [1] | |||||||||||||
Balance (in shares) | 196,177,657 | 190,531,152 | 196,177,657 | 190,531,152 | 188,497,834 | ||||||||||||
Common Stock | |||||||||||||||||
Changes in units and related ownership interest | |||||||||||||||||
Conversion ratio for conversion of LLC units into common stock | 1 | ||||||||||||||||
Class A Common Stock | |||||||||||||||||
Changes in units and related ownership interest | |||||||||||||||||
Balance (in shares) | 155,488,326 | 155,488,326 | |||||||||||||||
Class A common stock repurchased and retired during period, (in shares) | (850,000) | (1,400,000) | (1,900,000) | ||||||||||||||
Balance (in shares) | 161,134,831 | 155,488,326 | 161,134,831 | 155,488,326 | |||||||||||||
Class A Common Stock | Common Stock | |||||||||||||||||
Changes in units and related ownership interest | |||||||||||||||||
Balance (in shares) | 155,488,000 | 145,455,000 | 155,488,000 | 145,455,000 | 141,759,000 | ||||||||||||
Issuance of common shares in connection with warrant exercise | 5,651,000 | 5,375,000 | |||||||||||||||
Class A common stock repurchased and retired during period, (in shares) | (1,407,000) | (4,446,000) | (1,936,000) | ||||||||||||||
Balance (in shares) | 161,135,000 | 155,488,000 | 161,135,000 | 155,488,000 | 145,455,000 | ||||||||||||
Class B Common Stock | |||||||||||||||||
Changes in units and related ownership interest | |||||||||||||||||
Balance (in shares) | 35,042,826 | 43,000,000 | 35,042,826 | 43,000,000 | |||||||||||||
Balance (in shares) | 35,042,826 | 35,042,826 | 35,042,826 | 35,042,826 | 43,000,000 | ||||||||||||
Class B Common Stock | Common Stock | |||||||||||||||||
Changes in units and related ownership interest | |||||||||||||||||
Balance (in shares) | 35,043,000 | 43,043,000 | 35,043,000 | 43,043,000 | 48,823,000 | ||||||||||||
Balance (in shares) | 35,043,000 | 35,043,000 | 35,043,000 | 35,043,000 | 43,043,000 | ||||||||||||
Class B Common Stock | Fifth Third | |||||||||||||||||
Changes in units and related ownership interest | |||||||||||||||||
Balance (in shares) | 35,042,826 | 35,042,826 | |||||||||||||||
Class C Non-Voting Units | Warrant | |||||||||||||||||
Changes in units and related ownership interest | |||||||||||||||||
Issuance of common shares in connection with warrant exercise | 5,700,000 | 5,400,000 | |||||||||||||||
Class C Non-Voting Units | Vantiv Holding | Warrant | Fifth Third | |||||||||||||||||
Changes in units and related ownership interest | |||||||||||||||||
Warrant outstanding (in shares) | 7,800,000 | 7,800,000 | 20,400,000 | ||||||||||||||
Warrant exercise price (in dollars per share) | $ / shares | $ 15.98 | ||||||||||||||||
Carrying value of warrants outstanding | $ | $ 25,000 | $ 25,000 | |||||||||||||||
Warrant fair value | $ | $ 65,400 | ||||||||||||||||
Class C units cancelled under the Warrant Cancellation Agreement | 4,800,000 | ||||||||||||||||
Payments for repurchase of warrants under the Warrant Cancellation Agreement | $ | $ 200,000 | ||||||||||||||||
Value of warrant exercised | $ | $ 25,000 | ||||||||||||||||
Class A Unit of Vantiv Holding | Vantiv, Inc. | Vantiv Holding | |||||||||||||||||
Changes in units and related ownership interest | |||||||||||||||||
Balance (in shares) | 155,488,326 | 145,455,008 | 155,488,326 | 145,455,008 | |||||||||||||
Opening percentage of ownership by parent | 81.61% | 77.17% | 81.61% | 77.17% | |||||||||||||
Issuance of Class A common stock in connection with secondary offering (in shares) | (5,651,432) | (8,000,000) | |||||||||||||||
Issuance of common shares in connection with warrant exercise | 5,374,592 | ||||||||||||||||
Class A common stock repurchased and retired during period, (in shares) | (1,406,600) | (4,445,551) | |||||||||||||||
Equity plan activity (in shares) | 1,401,673 | [4] | 1,104,277 | [1] | |||||||||||||
Balance (in shares) | 161,134,831 | 155,488,326 | 161,134,831 | 155,488,326 | 145,455,008 | ||||||||||||
Closing percentage of ownership by parent | 82.14% | 81.61% | 82.14% | 81.61% | 77.17% | ||||||||||||
Class B Unit of Vantiv Holding | Fifth Third | Vantiv Holding | |||||||||||||||||
Changes in units and related ownership interest | |||||||||||||||||
Balance (in shares) | 35,042,826 | 43,042,826 | 35,042,826 | 43,042,826 | |||||||||||||
Opening percentage of ownership by noncontrolling interest | 18.39% | 22.83% | 18.39% | 22.83% | |||||||||||||
Issuance of Class A common stock in connection with secondary offering (in shares) | 0 | (8,000,000) | |||||||||||||||
Balance (in shares) | 35,042,826 | 35,042,826 | 35,042,826 | 35,042,826 | 43,042,826 | ||||||||||||
Closing percentage of ownership by noncontrolling interest | 17.86% | 18.39% | 17.86% | 18.39% | 22.83% | ||||||||||||
[1] | Primarily represents income tax expense related to Vantiv, Inc. and TRA related expense (credits) (see Note 7 - Tax Receivable Agreements). | ||||||||||||||||
[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 | ||||||||||||||||
[4] | Includes stock issued under the equity plans less Class A common stock withheld to satisfy employee tax withholding obligations upon vesting or exercise of employee equity awards and forfeitures of restricted Class A common stock awards. |
COMMITMENTS, CONTINGENCIES AN65
COMMITMENTS, CONTINGENCIES AND GUARANTEES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Future minimum commitments under non-cancelable operating leases | |||
2,017 | $ 9,704 | ||
2,018 | 7,636 | ||
2,019 | 5,809 | ||
2,020 | 4,375 | ||
2,021 | 4,048 | ||
Thereafter | 13,197 | ||
Total | 44,769 | ||
Rent expense | $ 9,400 | $ 11,600 | $ 9,900 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Compensation and Retirement Disclosure [Abstract] | |||
Expenses associated with the defined contribution savings plan | $ 10.1 | $ 9.1 | $ 7.3 |
CAPITAL STOCK (Details)
CAPITAL STOCK (Details) | Nov. 28, 2016USD ($)shares | Dec. 08, 2015shares | Jun. 30, 2014shares | Mar. 10, 2014shares | Dec. 31, 2016USD ($)vote$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)shares | Oct. 25, 2016USD ($) | Feb. 12, 2014USD ($) |
Common Stock | |||||||||
Number of votes per share to which holders are entitled on all matters submitted to a vote | vote | 1 | ||||||||
Class A common stock repurchased and retired during period, value | $ | $ 81,369,000 | $ 200,406,000 | $ 59,364,000 | ||||||
Preferred Stock | |||||||||
Authorized preferred stock (in shares) | 10,000,000 | 10,000,000 | |||||||
Preferred stock par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | |||||||
Preferred stock, shares outstanding (in shares) | 0 | 0 | |||||||
Class A Common Stock | |||||||||
Common Stock | |||||||||
Authorized common stock (in shares) | 890,000,000 | 890,000,000 | |||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | |||||||
Common stock, shares outstanding (in shares) | 161,134,831 | 155,488,326 | |||||||
Shares of stock sold by selling shareholders in secondary offering issued to underwriters | 4,800,000 | 13,400,000 | 5,800,000 | 18,800,000 | |||||
Class A common stock repurchased and retired during period, (in shares) | 850,000 | 1,400,000 | 1,900,000 | ||||||
Class A common stock repurchased and retired during period, value | $ | $ 50,800,000 | $ 81,400,000 | $ 59,400,000 | ||||||
Class A Common Stock | February 2014 Authorized Share Repurchase Program | |||||||||
Common Stock | |||||||||
Stock repurchase program, authorized amount | $ | $ 300,000,000 | ||||||||
Class A common stock repurchased and retired during period, (in shares) | 4,400,000 | ||||||||
Class A common stock repurchased and retired during period, value | $ | $ 200,000,000 | ||||||||
Stock repurchase program, remaining authorized repurchase amount | $ | $ 275,000,000 | ||||||||
Class A Common Stock | October 2016 Authorized Share Repurchase Program | |||||||||
Common Stock | |||||||||
Stock repurchase program, authorized amount | $ | $ 250,000,000 | ||||||||
Stock repurchase program, remaining authorized repurchase amount | $ | $ 243,000,000 | ||||||||
Class A Common Stock | Class B Unit of Vantiv Holding | Vantiv Holding | |||||||||
Common Stock | |||||||||
Conversion ratio for conversion of Class B units into Class A common stock | 1 | ||||||||
Class B Common Stock | |||||||||
Common Stock | |||||||||
Authorized common stock (in shares) | 100,000,000 | 100,000,000 | |||||||
Common stock, shares outstanding (in shares) | 35,042,826 | 35,042,826 | 43,000,000 | ||||||
Class B Common Stock | Maximum | |||||||||
Common Stock | |||||||||
Fifth Third voting power as percentage of total voting power | 18.50% | ||||||||
Vantiv Holding | |||||||||
Common Stock | |||||||||
Common stock, shares outstanding (in shares) | 196,177,657 | 190,531,152 | 188,497,834 | ||||||
Class A common stock repurchased and retired during period, (in shares) | 1,406,600 | 4,445,551 |
SHARE-BASED COMPENSATION PLAN68
SHARE-BASED COMPENSATION PLANS SHARE-BASED COMPENSATION PLANS- RESTRICTED STOCK (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Mar. 21, 2012 | |
Equity Incentive Plan 2012 | Restricted Stock | ||||
2012 Equity Incentive Plan, Weighted Average Grant Date Fair Value | ||||
Grants in period, weighted average grant date fair value | $ 50.08 | $ 38.10 | ||
2012 Equity Incentive Plan | ||||
Total vest date fair value of restricted stock awards vested | $ 1.2 | $ 47.2 | $ 53.4 | |
Time Awards | Equity Incentive Plan 2012 | Restricted Stock | ||||
2012 Equity Incentive Plan, Roll Forwards (in Shares) | ||||
Non-vested beginning of period | 166,454 | |||
Grants in period | 24,998 | |||
Vested in period | (24,089) | |||
Forfeited in period | (6,053) | |||
Non-vested end of period | 161,310 | 166,454 | ||
2012 Equity Incentive Plan, Weighted Average Grant Date Fair Value | ||||
Non-vested beginning of period, weighted average grant date fair value | $ 35.22 | |||
Grants in period, weighted average grant date fair value | 50.80 | |||
Vested in period, weighted average grant date fair value | 14 | |||
Forfeitures, weighted average grant date fair value | 41.42 | |||
Non-vested end of period, weighted average grant date fair value | $ 40.57 | $ 35.22 | ||
Performance Awards | Restricted Stock | ||||
2012 Equity Incentive Plan | ||||
Performance awards, period of participants service in years | 3 years | |||
Performance Awards | Equity Incentive Plan 2012 | Restricted Stock | ||||
2012 Equity Incentive Plan, Roll Forwards (in Shares) | ||||
Non-vested beginning of period | 332,840 | |||
Grants in period | 241,544 | |||
Vested in period | 0 | |||
Forfeited in period | (27,646) | |||
Non-vested end of period | 546,738 | 332,840 | ||
2012 Equity Incentive Plan, Weighted Average Grant Date Fair Value | ||||
Non-vested beginning of period, weighted average grant date fair value | $ 37.86 | |||
Grants in period, weighted average grant date fair value | 50.01 | |||
Vested in period, weighted average grant date fair value | 0 | |||
Forfeitures, weighted average grant date fair value | 41.95 | |||
Non-vested end of period, weighted average grant date fair value | $ 43.02 | $ 37.86 | ||
2012 Equity Incentive Plan | ||||
Performance share units minimum number of shares authorized to award | 0.00% | |||
Performance share units maximum number of shares authorized to award | 200.00% | |||
Class A Common Stock | Equity Incentive Plan 2012 | ||||
2012 Equity Incentive Plan | ||||
Maximum number of shares of Class A stock authorized under the 2012 Equity Incentive Plan | 35,500,000 |
SHARE-BASED COMPENSATION PLAN69
SHARE-BASED COMPENSATION PLANS SHARE-BASED COMPENSATION PLANS- RESTRICTED STOCK UNITS (Details) - Restricted Stock Units (RSUs) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Equity Incentive Plan 2012 | |||
2012 Equity Incentive Plan, Roll Forwards (in Shares) | |||
Non-vested beginning of period | 988,007 | ||
Grants in period | 420,817 | ||
Vested in period | (344,212) | ||
Forfeited in period | (141,330) | ||
Non-vested end of period | 923,282 | 988,007 | |
2012 Equity Incentive Plan, Weighted Average Grant Date Fair Value | |||
Non-vested beginning of period, weighted average grant date fair value | $ 31.24 | ||
Grants in period, weighted average grant date fair value | 51.75 | $ 38.42 | $ 31.30 |
Vested in period, weighted average grant date fair value | 28.06 | ||
Forfeitures, weighted average grant date fair value | 36.40 | ||
Non-vested end of period, weighted average grant date fair value | $ 40.98 | $ 31.24 | |
2012 Equity Incentive Plan | |||
Total vest date fair value of restricted stock units vested | $ 18.3 | $ 10.5 | $ 5.1 |
Board of Directors | |||
2012 Equity Incentive Plan | |||
Restricted stock units vesting period | 1 year | ||
Minimum | Active Employees | |||
2012 Equity Incentive Plan | |||
Restricted stock units vesting period | 3 years | ||
Maximum | Active Employees | |||
2012 Equity Incentive Plan | |||
Restricted stock units vesting period | 4 years |
SHARE-BASED COMPENSATION PLAN70
SHARE-BASED COMPENSATION PLANS SHARE-BASED COMPENSATION PLANS- STOCK OPTIONS (Details) - Stock Option - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
2012 Equity Incentive Plan, Options, Roll Forwards (in Shares) | |||
Options outstanding beginning of period | 2,310,243 | ||
Options, grants in period | 695,666 | ||
Options, exercises in period | (537,871) | ||
Options, expirations in period | (9,033) | ||
Options, forfeitures in period | (257,563) | ||
Options outstanding end of period | 2,201,442 | 2,310,243 | |
Options exercisable end of period | 608,076 | ||
2012 Equity Incentive Plan, Options, Weighted Average Exercise Price[Abstract] | |||
Weighted average exercise price at December 31, 2015 | $ 26.74 | ||
Weighted average exercise price of options granted | 50.02 | ||
Options, exercises in period, weighted average exercise price | 21.43 | ||
Options, expirations in period, weighted average exercise price | 31.39 | ||
Options, forfeitures in period, weighted average exercise price | 33.09 | ||
Weighted average exercise price at December 31, 2016 | 35.21 | $ 26.74 | |
Options exercisable end of period, weighted average exercise price | $ 26.24 | ||
Weighted average remaining contractual term of options outstanding in years | 7 years 8 months 21 days | 8 years 4 days | |
Weighted average remaining contractual term of options exercisable in years | 6 years 8 months 10 days | ||
Intrinsic value of options outstanding | $ 53,738 | $ 47,780 | |
Intrinsic value of options exercised in period | 18,379 | $ 17,500 | $ 4,400 |
Intrinsic value of options exercisable end of period | $ 20,299 | ||
Options Pricing Model Assumptions | |||
Options, grants in period | 695,666 | ||
Weighted average exercise price of options granted | $ 50.02 | ||
Options expiration period in years | 10 years | ||
Mercury Payment Systems, LLC 2010 Unit Incentive Plan | |||
2012 Equity Incentive Plan, Options, Roll Forwards (in Shares) | |||
Options, grants in period | 1,750,519 | ||
Options Pricing Model Assumptions | |||
Options, grants in period | 1,750,519 | ||
Expected dividend yield | 0.00% | ||
Mercury replacement options vesting period | 4 years 6 months | ||
Equity Incentive Plan 2012 | |||
2012 Equity Incentive Plan, Options, Roll Forwards (in Shares) | |||
Options, grants in period | 695,666 | 707,738 | 710,297 |
2012 Equity Incentive Plan, Options, Weighted Average Exercise Price[Abstract] | |||
Weighted average exercise price of options granted | $ 37.10 | $ 31.02 | |
Options Pricing Model Assumptions | |||
Options, grants in period | 695,666 | 707,738 | 710,297 |
Weighted average exercise price of options granted | $ 37.10 | $ 31.02 | |
Expected option life at grant (in years) | 6 years 3 months | 6 years 3 months | 6 years 3 months |
Expected volatility | 24.77% | 26.33% | 25.00% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Risk-free interest rate | 1.67% | 1.93% | |
Fair value | $ 11.04 | $ 9.07 | |
Minimum | Mercury Payment Systems, LLC 2010 Unit Incentive Plan | |||
2012 Equity Incentive Plan, Options, Weighted Average Exercise Price[Abstract] | |||
Weighted average exercise price of options granted | 10.18 | ||
Options Pricing Model Assumptions | |||
Weighted average exercise price of options granted | $ 10.18 | ||
Expected option life at grant (in years) | 3 years | ||
Expected volatility | 24.80% | ||
Risk-free interest rate | 0.93% | ||
Fair value | $ 17.75 | ||
Prescribed acceleration period of options | 12 months | ||
Minimum | Equity Incentive Plan 2012 | |||
2012 Equity Incentive Plan, Options, Weighted Average Exercise Price[Abstract] | |||
Weighted average exercise price of options granted | $ 50.01 | ||
Options Pricing Model Assumptions | |||
Weighted average exercise price of options granted | $ 50.01 | ||
Risk-free interest rate | 1.41% | ||
Fair value | $ 13.92 | ||
Maximum | Mercury Payment Systems, LLC 2010 Unit Incentive Plan | |||
2012 Equity Incentive Plan, Options, Weighted Average Exercise Price[Abstract] | |||
Weighted average exercise price of options granted | 29.79 | ||
Options Pricing Model Assumptions | |||
Weighted average exercise price of options granted | $ 29.79 | ||
Expected option life at grant (in years) | 6 years | ||
Expected volatility | 30.80% | ||
Risk-free interest rate | 1.96% | ||
Fair value | $ 22.10 | ||
Prescribed acceleration period of options | 24 months | ||
Maximum | Equity Incentive Plan 2012 | |||
2012 Equity Incentive Plan, Options, Weighted Average Exercise Price[Abstract] | |||
Weighted average exercise price of options granted | $ 52.04 | ||
Options Pricing Model Assumptions | |||
Weighted average exercise price of options granted | $ 52.04 | ||
Risk-free interest rate | 1.45% | ||
Fair value | $ 14.43 | ||
Four annual increments | Equity Incentive Plan 2012 | |||
Options Pricing Model Assumptions | |||
Annual incremental percentage of stock options vested | 25.00% | ||
Vesting percentage after one year | Mercury Payment Systems, LLC 2010 Unit Incentive Plan | |||
Options Pricing Model Assumptions | |||
Annual incremental percentage of stock options vested | 22.22% |
SHARE-BASED COMPENSATION PLAN71
SHARE-BASED COMPENSATION PLANS SHARE-BASED COMPENSATION PLANS- PERFORMANCE SHARE UNITS (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
2012 Equity Incentive Plan | ||||
Total allocated share-based compensation Expense | $ 35.9 | $ 30.5 | $ 42.2 | |
Tax benefits related to share-based compensation | 10.9 | $ 8.8 | $ 12.9 | |
Unrecognized share-based compensation | $ 57.9 | |||
Period for recognition of unrecognized share-based compensation | 2 years 4 months 15 days | |||
Equity Incentive Plan 2012 | Performance Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period | 3 years | |||
2012 Equity Incentive Plan, Roll Forwards (in Shares) | ||||
Non-vested beginning of period | 316,701 | 472,518 | ||
Grants in period | 72,813 | |||
Incremental shares upon completion of performance goals | 154,024 | |||
Vested in period | (325,459) | |||
Forfeited in period | (57,195) | |||
Non-vested end of period | 316,701 | 472,518 | ||
2012 Equity Incentive Plan, Weighted Average Grant Date Fair Value | ||||
Non-vested beginning of period, weighted average grant date fair value | $ 37.70 | $ 29.73 | ||
Grants in period, weighted average grant date fair value | 50.04 | $ 39.16 | $ 31.02 | |
Incremental grants in period, weighted average grant date fair value | 21.95 | |||
Vested in period, weighted average grant date fair value | 22.48 | |||
Forfeitures, weighted average grant date fair value | 31.73 | |||
Non-vested end of period, weighted average grant date fair value | $ 37.70 | $ 29.73 | ||
2012 Equity Incentive Plan | ||||
Performance share units minimum number of shares authorized to award | 0.00% | |||
Performance share units target number of shares authorized to award | 100.00% | |||
Performance share units maximum number of shares authorized to award | 200.00% | |||
Total vest date fair value of performance share units vested | $ 17.1 | $ 1.2 | $ 2 | |
Subsequent Event | Equity Incentive Plan 2012 | Performance Shares | ||||
2012 Equity Incentive Plan, Roll Forwards (in Shares) | ||||
Grants in period | 150,739 | |||
2012 Equity Incentive Plan | ||||
Performance share units maximum number of shares authorized to award | 200.00% |
SHARE-BASED COMPENSATION PLAN72
SHARE-BASED COMPENSATION PLANS SHARE BASED COMPENSATION PLANS - EMPLOYEE STOCK PURCHASE PLAN (Details) - Employee Stock Purchase Plan shares in Millions | 12 Months Ended |
Dec. 31, 2016shares | |
Share-based Compensation Arrangement by Share-based Payment Award | |
ESPP purchase period | 6 months |
Common stock reserved for issuance under ESPP | 2.5 |
ESPP purchase price of common stock, percent of fair market value | 85.00% |
ESPP discount from fair market value on purchase date | 15.00% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current income tax expense: | |||
U.S. income taxes | $ 57,966 | $ 28,586 | $ 29,234 |
State and local income taxes | 4,219 | 4,311 | 4,474 |
Total current tax expense | 62,185 | 32,897 | 33,708 |
Deferred income tax expense (benefit): | |||
U.S. income taxes | 70,786 | 55,553 | 36,070 |
State and local income taxes | 8,882 | (273) | (3,601) |
Total deferred tax expense | 79,668 | 55,280 | 32,469 |
Applicable income tax expense | $ 141,853 | $ 88,177 | $ 66,177 |
Reconciliation of the U.S. income tax rate and the Company's effective tax rate | |||
Federal statutory tax rate | 35.00% | 35.00% | 35.00% |
State taxes-net of federal benefit | 2.80% | 2.70% | 2.60% |
Effect of changes in deferred tax rates | 0.10% | (1.90%) | (3.10%) |
Non-controlling interest | (4.60%) | (5.90%) | (5.60%) |
Other-net | 0.30% | (0.30%) | (0.80%) |
Effective tax rate | 33.60% | 29.60% | 28.10% |
Deferred tax assets | |||
Net operating losses | $ 14,085 | $ 25,569 | |
Employee benefits | 69 | 55 | |
Other assets | 2,236 | 2,316 | |
Other accruals and reserves | 89,239 | 79,925 | |
Partnership basis | 771,311 | 728,532 | |
Deferred tax assets | 876,940 | 836,397 | |
Deferred tax liabilities | |||
Property and equipment | (13,677) | (9,840) | |
Goodwill and intangible assets | (150,687) | (109,988) | |
Deferred tax liability | (164,364) | (119,828) | |
Deferred tax asset-net | $ 712,576 | $ 716,569 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Operating Loss Carryforwards | ||
Valuation allowance against deferred assets | $ 0 | $ 0 |
Income tax receivable | 8,300,000 | $ 53,200,000 |
Internal Revenue Service (IRS) | ||
Operating Loss Carryforwards | ||
Tax loss carryforwards | 38,000,000 | |
State and Local Jurisdiction | ||
Operating Loss Carryforwards | ||
Tax loss carryforwards | $ 16,900,000 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Assets and liabilities measured at fair value on a recurring basis | ||||
Change in fair value of TRA | $ 19,527 | $ 28,171 | $ (25,839) | |
Liabilities: | ||||
Mercury TRA | 789,372 | 1,024,268 | 772,482 | $ 559,700 |
Recurring basis | Level 2 | Interest Rate Contract | ||||
Assets: | ||||
Fair value of hedge assets | 23,229 | |||
Liabilities: | ||||
Fair value of hedge liabilities | 15,058 | 19,228 | ||
Mercury Payment Systems, LLC | ||||
Assets and liabilities measured at fair value on a recurring basis | ||||
Change in fair value of TRA | 19,474 | 28,940 | 14,560 | |
Decrease of Mercury TRA | 63,600 | |||
Liabilities: | ||||
Mercury TRA | $ 147,040 | 191,207 | $ 152,420 | $ 0 |
Mercury Payment Systems, LLC | Recurring basis | Level 3 | ||||
Assets and liabilities measured at fair value on a recurring basis | ||||
Fair value of Mercury TRA, discount rate | 14.00% | |||
Liabilities: | ||||
Mercury TRA | $ 147,040 | $ 191,207 |
FAIR VALUE MEASUREMENTS (Deta76
FAIR VALUE MEASUREMENTS (Details 2) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Carrying Amount | ||
Liabilites: | ||
Note payable | $ 3,220,722 | $ 3,060,139 |
Fair Value | ||
Liabilites: | ||
Note payable | $ 3,250,025 | $ 3,064,989 |
NET INCOME PER SHARE NARRATIVE
NET INCOME PER SHARE NARRATIVE (Details) - shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share, Diluted | |||
Adjusted Effective Tax Rate | 36.00% | 36.00% | 36.50% |
Class A Common Stock | |||
Earnings Per Share, Diluted | |||
Vantiv Holding shares outstanding (in shares) | 161,134,831 | 155,488,326 | |
Class B Common Stock | |||
Earnings Per Share, Diluted | |||
Vantiv Holding shares outstanding (in shares) | 35,042,826 | 35,042,826 | 43,000,000 |
Subsidiaries | Class B Unit of Vantiv Holding | Class A Common Stock | |||
Earnings Per Share, Diluted | |||
Conversion ratio for conversion of Class B units into Class A common stock | 1 |
SECURITIES EXCLUDED FROM COMPUT
SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE (Details) - shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Performance Share Units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||
Number of shares attributable to conversion of performance share units into shares of Class A common stock excluded from computation of diluted EPS (in shares) | 660,204 | 472,518 | 508,097 |
Class B Unit of Vantiv Holding | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||
Number of shares attributable to conversion of performance share units into shares of Class A common stock excluded from computation of diluted EPS (in shares) | 35,000,000 |
NET INCOME PER SHARE (Basic) (D
NET INCOME PER SHARE (Basic) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share, Basic | |||||||||||
Net income attributable to Vantiv, Inc. | $ 47,847 | $ 66,296 | $ 59,327 | $ 39,738 | $ 50,929 | $ 41,492 | $ 36,536 | $ 18,989 | $ 213,208 | $ 147,946 | $ 125,292 |
Basic net income per share (in dollars per share) | $ 0.30 | $ 0.43 | $ 0.38 | $ 0.26 | $ 0.35 | $ 0.29 | $ 0.25 | $ 0.13 | |||
Class A Common Stock | |||||||||||
Earnings Per Share, Basic | |||||||||||
Weighted-average Class A common shares outstanding, basic, (in shares) | 156,043,636 | 145,044,577 | 141,936,933 | ||||||||
Basic net income per share (in dollars per share) | $ 1.37 | $ 1.02 | $ 0.88 |
NET INCOME PER SHARE (Dilutive)
NET INCOME PER SHARE (Dilutive) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Diluted: | |||||||||||
Consolidated income before applicable income taxes | $ 422,724 | $ 297,406 | $ 235,167 | ||||||||
Income tax expense excluding impact of non-controlling interest | 107,066 | 85,836 | |||||||||
Net income attributable to Vantiv, Inc. | $ 213,208 | $ 190,340 | $ 149,331 | ||||||||
Shares used in computing diluted net income per share: | |||||||||||
Diluted net income per share (in dollars per share) | $ 0.29 | $ 0.41 | $ 0.38 | $ 0.25 | $ 0.31 | $ 0.27 | $ 0.24 | $ 0.13 | |||
Class A Common Stock | |||||||||||
Shares used in computing diluted net income per share: | |||||||||||
Weighted-average Class A common shares outstanding, basic, (in shares) | 156,043,636 | 145,044,577 | 141,936,933 | ||||||||
Weighted-average Class B units of Vantiv Holding dilutive effect (in shares) | 0 | 42,521,087 | 45,472,332 | ||||||||
Warrant dilutive effect (in shares) | 4,959,501 | 11,866,595 | 10,121,483 | ||||||||
Total diluted weighted-average shares outstanding (in shares) | 162,115,549 | 200,934,442 | 199,170,813 | ||||||||
Diluted net income per share (in dollars per share) | $ 1.32 | $ 0.95 | $ 0.75 | ||||||||
Class A Common Stock | 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 | 531,165 | 545,180 | 318,175 | ||||||||
Class A Common Stock | Stock Compensation Plan | |||||||||||
Shares used in computing diluted net income per share: | |||||||||||
Class A common stock equivalents included in the computation of diluted net income per share | 510,694 | 696,273 | 1,321,890 | ||||||||
Class A Common Stock | Performance Shares | |||||||||||
Shares used in computing diluted net income per share: | |||||||||||
Class A common stock equivalents included in the computation of diluted net income per share | 70,553 | 260,730 | 0 |
ACCUMULATED OTHER COMPREHENSI81
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Net activity | $ (4,053) | $ 8,209 | $ 6,172 | ||
AOCI beginning balance, net of tax | (9,204) | ||||
AOCI ending balance, net of tax | (6,197) | (9,204) | |||
Balance, net | 1,607,289 | 1,225,066 | 1,300,586 | $ 1,176,322 | |
Accumulated Net Gain (Loss) from Cash Flow Hedges | |||||
AOCI beginning balance, net of tax | (14,336) | (5,288) | (5) | ||
AOCI ending balance, net of tax | (17,819) | (14,336) | (5,288) | ||
Accumulated Foreign Currency Adjustment Attributable to Parent | |||||
AOCI beginning balance, net of tax | 0 | (212) | 0 | ||
AOCI ending balance, net of tax | 0 | 0 | (212) | ||
AOCI Including Portion Attributable to Noncontrolling Interest | |||||
Net change in fair value recorded in accumulated OCI, before reclassifications, before tax | (6,858) | (18,836) | (11,240) | ||
Net realized loss reclassified into earnings, before tax | [1] | (12,735) | (6,990) | (3,040) | |
Other, before tax | 0 | 212 | (212) | ||
Pretax activity | 5,877 | (11,634) | (8,412) | ||
Net change in fair value recorded in accumulated OCI, before reclassifications, tax | 2,106 | 5,490 | 3,114 | ||
Net realized loss reclassified into earnings, tax | [1] | (3,930) | (2,065) | (874) | |
Other, tax | 0 | 0 | 0 | ||
Tax effect | (1,824) | 3,425 | 2,240 | ||
Other comprehensive loss, unrealized gain (loss), net of tax | 4,752 | 13,346 | 8,126 | ||
Net realized loss reclassified into earnings, net of tax | [1] | (8,805) | (4,925) | (2,166) | |
other, net of tax | 0 | (212) | 212 | ||
Net activity | (4,053) | 8,209 | 6,172 | ||
Non-Controlling Interests | |||||
Other comprehensive loss, unrealized gain (loss), net of tax | 1,269 | 4,298 | 2,843 | ||
Net realized loss reclassified into earnings, net of tax | [1] | (2,315) | (1,525) | (703) | |
other, net of tax | 0 | 0 | 0 | ||
Net activity | (1,046) | 2,773 | 2,140 | ||
Balance, net | 291,624 | 272,278 | 397,573 | 408,391 | |
AOCI Attributable to Parent | |||||
Other comprehensive loss, unrealized gain (loss), net of tax | 3,483 | 9,048 | 5,283 | ||
Net realized loss reclassified into earnings, net of tax | [1] | (6,490) | (3,400) | (1,463) | |
other, net of tax | 0 | (212) | 212 | ||
Net activity | (3,007) | 5,436 | 4,032 | ||
Balance, net | (6,197) | (9,204) | (3,768) | $ 264 | |
Reclassification out of Accumulated Other Comprehensive Income | |||||
AOCI beginning balance, net of tax | [1] | 5,132 | 1,732 | 269 | |
AOCI ending balance, net of tax | [1] | $ 11,622 | $ 5,132 | $ 1,732 | |
[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 years ended December 31, 2016, 2015 and 2014, reflect amounts of losses reclassified from AOCI into earnings, representing the effective portion of the hedging relationships, and are recorded in interest expense-net. |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Vantiv Holding | |||
Related Party Transaction | |||
Common stock, shares outstanding (in shares) | 196,177,657 | 190,531,152 | 188,497,834 |
Fifth Third | |||
Related Party Transaction | |||
Interest expense associated with related party debt | $ 4.2 | $ 4.4 | $ 5.4 |
Commitment fees associated with related party debt | 0.1 | 0.2 | 0.2 |
Deposits held at Fifth Third | 90.5 | 149.7 | |
Interest income on deposit held with Fifth Third | 1.7 | ||
Fifth Third | Rent Expense | |||
Related Party Transaction | |||
Cost of services received from Fifth Third | 3.7 | 3.8 | 3.8 |
Fifth Third | Referral Cost | |||
Related Party Transaction | |||
Cost of services received from Fifth Third | 0.7 | 0.3 | 0.3 |
Fifth Third | Clearing Settlement and Sponsorship Cost and Treasury Management Cost | |||
Related Party Transaction | |||
Cost of services received from Fifth Third | 2.9 | 2.3 | 2.8 |
Fifth Third | Other Services Cost | |||
Related Party Transaction | |||
Cost of services received from Fifth Third | $ 0.3 | $ 0.4 | $ 0.5 |
Class B Unit of Vantiv Holding | Fifth Third | Vantiv Holding | |||
Related Party Transaction | |||
Common stock, shares outstanding (in shares) | 35,042,826 | 35,042,826 | 43,042,826 |
Ownership percentage by Fifth Third | 17.86% | 18.39% | 22.83% |
Class B Common Stock | |||
Related Party Transaction | |||
Common stock, shares outstanding (in shares) | 35,042,826 | 35,042,826 | 43,000,000 |
Class B Common Stock | Fifth Third | |||
Related Party Transaction | |||
Common stock, shares outstanding (in shares) | 35,042,826 | ||
Fifth Third voting power as percentage of total voting power | 17.90% |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Result of operation for each segment | |||||||||||
Total revenue | $ 955,132 | $ 914,019 | $ 891,217 | $ 818,623 | $ 852,334 | $ 815,998 | $ 785,995 | $ 705,611 | $ 3,578,991 | $ 3,159,938 | $ 2,577,203 |
Network fees and other costs | 452,720 | 423,361 | 410,736 | 387,413 | 399,159 | 385,548 | 362,349 | 331,146 | 1,674,230 | 1,478,202 | 1,174,665 |
Sales and marketing | $ 148,521 | $ 153,248 | $ 144,844 | $ 135,638 | $ 132,488 | $ 132,481 | $ 122,925 | $ 116,055 | 582,251 | 503,949 | 396,353 |
Segment profit | 1,322,510 | 1,177,787 | 1,006,185 | ||||||||
Operating Segments | Merchant Services | |||||||||||
Result of operation for each segment | |||||||||||
Total revenue | 3,082,951 | 2,656,906 | 2,100,367 | ||||||||
Network fees and other costs | 1,537,072 | 1,321,312 | 1,033,801 | ||||||||
Sales and marketing | 557,942 | 478,736 | 367,998 | ||||||||
Segment profit | 987,937 | 856,858 | 698,568 | ||||||||
Operating Segments | Financial Institution Services | |||||||||||
Result of operation for each segment | |||||||||||
Total revenue | 496,040 | 503,032 | 476,836 | ||||||||
Network fees and other costs | 137,158 | 156,890 | 140,864 | ||||||||
Sales and marketing | 24,309 | 25,213 | 28,355 | ||||||||
Segment profit | $ 334,573 | $ 320,929 | $ 307,617 |
SEGMENT INFORMATION (Details 2)
SEGMENT INFORMATION (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of total segment profit to the company's (loss) income before applicable income taxes | |||||||||||
Total segment profit | $ 1,322,510 | $ 1,177,787 | $ 1,006,185 | ||||||||
Less: Other operating costs | $ (74,771) | $ (72,162) | $ (73,599) | $ (73,703) | $ (72,213) | $ (66,563) | $ (76,551) | $ (68,739) | (294,235) | (284,066) | (242,439) |
Less: General and administrative | (55,876) | (40,727) | (49,120) | (43,984) | (45,974) | (41,492) | (47,060) | (47,843) | (189,707) | (182,369) | (173,986) |
Less: Depreciation and amortization | $ (70,504) | $ (66,086) | $ (65,234) | $ (68,230) | $ (70,843) | $ (70,638) | $ (67,659) | $ (67,802) | (270,054) | (276,942) | (275,069) |
Less: Interest expense—net | (109,534) | (105,736) | (79,701) | ||||||||
Less: Non-operating income (expense) | (36,256) | (31,268) | 177 | ||||||||
Income before applicable income taxes | $ 422,724 | $ 297,406 | $ 235,167 |
QUARTERLY CONSOLIDATED RESULT85
QUARTERLY CONSOLIDATED RESULTS OF OPERATIONS (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenue | $ 955,132 | $ 914,019 | $ 891,217 | $ 818,623 | $ 852,334 | $ 815,998 | $ 785,995 | $ 705,611 | $ 3,578,991 | $ 3,159,938 | $ 2,577,203 |
Network fees and other costs | 452,720 | 423,361 | 410,736 | 387,413 | 399,159 | 385,548 | 362,349 | 331,146 | 1,674,230 | 1,478,202 | 1,174,665 |
Net revenue | 502,412 | 490,658 | 480,481 | 431,210 | 453,175 | 430,450 | 423,646 | 374,465 | |||
Sales and marketing | 148,521 | 153,248 | 144,844 | 135,638 | 132,488 | 132,481 | 122,925 | 116,055 | 582,251 | 503,949 | 396,353 |
Other operating costs | 74,771 | 72,162 | 73,599 | 73,703 | 72,213 | 66,563 | 76,551 | 68,739 | 294,235 | 284,066 | 242,439 |
General and administrative | 55,876 | 40,727 | 49,120 | 43,984 | 45,974 | 41,492 | 47,060 | 47,843 | 189,707 | 182,369 | 173,986 |
Depreciation and amortization | 70,504 | 66,086 | 65,234 | 68,230 | 70,843 | 70,638 | 67,659 | 67,802 | 270,054 | 276,942 | 275,069 |
Income from operations | 152,740 | 158,435 | 147,684 | 109,655 | 131,657 | 119,276 | 109,451 | 74,026 | 568,514 | 434,410 | 314,691 |
Net income | 62,958 | 87,004 | 78,461 | 52,448 | 70,392 | 59,148 | 52,693 | 26,996 | 280,871 | 209,229 | 168,990 |
Net income (loss) attributable to Vantiv, Inc. | $ 47,847 | $ 66,296 | $ 59,327 | $ 39,738 | $ 50,929 | $ 41,492 | $ 36,536 | $ 18,989 | $ 213,208 | $ 147,946 | $ 125,292 |
Net income per share attributable to Vantiv, Inc. Class A common stock: | |||||||||||
Basic (in dollars per share) | $ 0.30 | $ 0.43 | $ 0.38 | $ 0.26 | $ 0.35 | $ 0.29 | $ 0.25 | $ 0.13 | |||
Diluted (in dollars per share) | $ 0.29 | $ 0.41 | $ 0.38 | $ 0.25 | $ 0.31 | $ 0.27 | $ 0.24 | $ 0.13 |
CONDENSED FINANCIAL INFORMATI86
CONDENSED FINANCIAL INFORMATION OF REGISTRANT Condensed Consolidated Statement of Income (Parent Company Only) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Condensed Income Statements, Captions | |||||||||||
General and administrative | $ 55,876 | $ 40,727 | $ 49,120 | $ 43,984 | $ 45,974 | $ 41,492 | $ 47,060 | $ 47,843 | $ 189,707 | $ 182,369 | $ 173,986 |
Income (loss) from operations | 152,740 | 158,435 | 147,684 | 109,655 | 131,657 | 119,276 | 109,451 | 74,026 | 568,514 | 434,410 | 314,691 |
Non-operating income (expense) | (36,256) | (31,268) | 177 | ||||||||
Income before applicable income taxes | 422,724 | 297,406 | 235,167 | ||||||||
Income tax expense | 141,853 | 88,177 | 66,177 | ||||||||
Loss before equity in net income of subsidiaries | 62,958 | 87,004 | 78,461 | 52,448 | 70,392 | 59,148 | 52,693 | 26,996 | 280,871 | 209,229 | 168,990 |
Net income attributable to Vantiv, Inc. | $ 47,847 | $ 66,296 | $ 59,327 | $ 39,738 | $ 50,929 | $ 41,492 | $ 36,536 | $ 18,989 | 213,208 | 147,946 | 125,292 |
Vantiv, Inc. | |||||||||||
Condensed Income Statements, Captions | |||||||||||
General and administrative | 366 | 745 | 181 | ||||||||
Income (loss) from operations | (366) | (745) | (181) | ||||||||
Non-operating income (expense) | (58) | (359) | 40,399 | ||||||||
Income before applicable income taxes | (424) | (1,104) | 40,218 | ||||||||
Income tax expense | 80,635 | 54,007 | 47,943 | ||||||||
Loss before equity in net income of subsidiaries | (81,059) | (55,111) | (7,725) | ||||||||
Equity in net income of subsidiaries | 294,267 | 203,057 | 133,017 | ||||||||
Net income attributable to Vantiv, Inc. | $ 213,208 | $ 147,946 | $ 125,292 |
CONDENSED FINANCIAL INFORMATI87
CONDENSED FINANCIAL INFORMATION OF REGISTRANT Condensed Consolidated Statements of Comprehensive Income (Parent Company Only) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Condensed Financial Statements, Captions | |||||||||||
Net income attributable to Vantiv, Inc. | $ 47,847 | $ 66,296 | $ 59,327 | $ 39,738 | $ 50,929 | $ 41,492 | $ 36,536 | $ 18,989 | $ 213,208 | $ 147,946 | $ 125,292 |
Gain (loss) on cash flow hedges and other | 4,053 | (8,209) | (6,172) | ||||||||
Comprehensive income attributable to Vantiv, Inc. | 216,215 | 142,510 | 121,260 | ||||||||
Vantiv, Inc. | |||||||||||
Condensed Financial Statements, Captions | |||||||||||
Net income attributable to Vantiv, Inc. | 213,208 | 147,946 | 125,292 | ||||||||
Gain (loss) on cash flow hedges and other | 3,007 | (5,436) | (4,032) | ||||||||
Comprehensive income attributable to Vantiv, Inc. | $ 216,215 | $ 142,510 | $ 121,260 |
CONDENSED FINANCIAL INFORMATI88
CONDENSED FINANCIAL INFORMATION OF REGISTRANT Condensed Consolidated Statements of Financial Position (Parent Company Only) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Total current assets | $ 1,287,858 | $ 1,117,499 |
Deferred taxes | 771,139 | 731,622 |
Total assets | 7,044,007 | 6,465,426 |
Current liabilities: | ||
Accounts payable and accrued expenses | 471,979 | 364,878 |
Related party payable | 3,623 | 4,698 |
Current portion of tax receivable agreement obligations to related parties | 191,014 | 31,232 |
Total current liabilities | 1,689,012 | 1,295,379 |
Long-term liabilities: | ||
Tax receivable agreement obligations to related parties | 451,318 | 801,829 |
Total long-term liabilities | 3,747,706 | 3,944,981 |
Total liabilities | 5,436,718 | 5,240,360 |
Equity: | ||
Total Vantiv, Inc. equity | 1,315,665 | 952,788 |
Total liabilities and equity | 7,044,007 | 6,465,426 |
Vantiv, Inc. | ||
Current assets: | ||
Taxes refund receivable | 1,452 | 51,998 |
Total current assets | 1,452 | 51,998 |
Investment in subsidiaries | 1,260,427 | 1,008,907 |
Deferred taxes | 769,365 | 731,258 |
Total assets | 2,031,244 | 1,792,163 |
Current liabilities: | ||
Accounts payable and accrued expenses | 2,548 | 795 |
Related party payable | 70,699 | 5,519 |
Current portion of tax receivable agreement obligations to related parties | 191,014 | 31,232 |
Total current liabilities | 264,261 | 37,546 |
Long-term liabilities: | ||
Tax receivable agreement obligations to related parties | 451,318 | 801,829 |
Total long-term liabilities | 451,318 | 801,829 |
Total liabilities | 715,579 | 839,375 |
Equity: | ||
Total Vantiv, Inc. equity | 1,315,665 | 952,788 |
Total liabilities and equity | $ 2,031,244 | $ 1,792,163 |
CONDENSED FINANCIAL INFORMATI89
CONDENSED FINANCIAL INFORMATION OF REGISTRANT Condensed Consolidated Statements of Cash Flows (Parent Company Only) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating Activities: | |||||||||||
Net income attributable to Vantiv, Inc. | $ 47,847 | $ 66,296 | $ 59,327 | $ 39,738 | $ 50,929 | $ 41,492 | $ 36,536 | $ 18,989 | $ 213,208 | $ 147,946 | $ 125,292 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
Deferred taxes | 79,668 | 55,280 | 32,469 | ||||||||
Tax receivable agreements non-cash items | 19,527 | 28,171 | (25,838) | ||||||||
Excess tax benefit from share-based compensation | (12,167) | (16,707) | (13,420) | ||||||||
Net cash provided by operating activities | 668,590 | 757,878 | 592,905 | ||||||||
Investing Activities: | |||||||||||
Net cash used in investing activities | (570,121) | (126,727) | (1,798,956) | ||||||||
Financing Activities: | |||||||||||
Advances from subsidiaries, net | (12) | 0 | 0 | ||||||||
Repurchase of Class A common stock | (81,369) | (200,406) | (59,364) | ||||||||
Repurchase of Class A common stock (to satisfy tax withholding obligations) | (6,248) | (16,527) | (17,801) | ||||||||
Settlement of certain tax receivable agreements | (159,274) | (94,022) | 0 | ||||||||
Payments under tax receivable agreements | (53,474) | (22,805) | (8,639) | ||||||||
Excess tax benefit from share-based compensation | 12,167 | 16,707 | 13,420 | ||||||||
Net cash (used in) provided by financing activities | (156,417) | (845,623) | 1,446,192 | ||||||||
Net (decrease) increase in cash and cash equivalents | (57,948) | (214,472) | 240,141 | ||||||||
Cash and cash equivalents—Beginning of period | 197,096 | 411,568 | 197,096 | 411,568 | 171,427 | ||||||
Cash and cash equivalents—End of period | 139,148 | 197,096 | 139,148 | 197,096 | 411,568 | ||||||
Cash Payments: | |||||||||||
Taxes | 51,140 | 6,565 | 35,157 | ||||||||
Non-cash Items: | |||||||||||
Issuance of tax receivable agreements to related parties | 171,162 | 376,597 | 109,400 | ||||||||
Vantiv, Inc. | |||||||||||
Operating Activities: | |||||||||||
Net income attributable to Vantiv, Inc. | 213,208 | 147,946 | 125,292 | ||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
Equity in net income of subsidiaries | (294,267) | (203,057) | (133,017) | ||||||||
Deferred taxes | 54,540 | 24,662 | 27,395 | ||||||||
Tax receivable agreements non-cash items | 53 | (769) | (40,399) | ||||||||
Distributions from subsidiaries | 84,844 | 68,892 | 58,551 | ||||||||
Excess tax benefit from share-based compensation | (12,167) | (16,707) | (13,420) | ||||||||
Change in operating assets and liabilities, net | 20,030 | 28,834 | (9,151) | ||||||||
Net cash provided by operating activities | 66,241 | 49,801 | 15,251 | ||||||||
Investing Activities: | |||||||||||
Proceeds from sale of Class A units in Vantiv Holding | 87,617 | 216,933 | 77,165 | ||||||||
Purchase of Class A units in Vantiv Holding | (15,389) | (13,630) | (4,492) | ||||||||
Net cash used in investing activities | 72,228 | 203,303 | 72,673 | ||||||||
Financing Activities: | |||||||||||
Advances from subsidiaries, net | 70,699 | 5,519 | (20,032) | ||||||||
Proceeds from issuance of Class A common stock under employee stock plans | 15,389 | 13,630 | 4,492 | ||||||||
Repurchase of Class A common stock | (81,369) | (200,406) | (59,364) | ||||||||
Repurchase of Class A common stock (to satisfy tax withholding obligations) | (6,248) | (16,527) | (17,801) | ||||||||
Settlement of certain tax receivable agreements | (117,874) | (49,222) | 0 | ||||||||
Payments under tax receivable agreements | (31,233) | (22,805) | (8,639) | ||||||||
Excess tax benefit from share-based compensation | 12,167 | 16,707 | 13,420 | ||||||||
Net cash (used in) provided by financing activities | (138,469) | (253,104) | (87,924) | ||||||||
Net (decrease) increase in cash and cash equivalents | 0 | 0 | 0 | ||||||||
Cash and cash equivalents—Beginning of period | $ 0 | $ 0 | 0 | 0 | 0 | ||||||
Cash and cash equivalents—End of period | $ 0 | $ 0 | 0 | 0 | 0 | ||||||
Cash Payments: | |||||||||||
Taxes | 6,843 | 2,323 | 28,583 | ||||||||
Non-cash Items: | |||||||||||
Issuance of tax receivable agreements to related parties | $ 171,162 | $ 376,597 | $ 109,400 |