DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION | 9 Months Ended |
Sep. 30, 2018shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | Worldpay, Inc. |
Entity Central Index Key | 1,533,932 |
Document Type | 10-Q |
Document Period End Date | Sep. 30, 2018 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Document Fiscal Year Focus | 2,018 |
Document Fiscal Period Focus | Q3 |
Class A Common Stock | |
Entity Information | |
Entity Common Stock, Shares Outstanding (in shares) | 301,855,256 |
Class B Common Stock | |
Entity Information | |
Entity Common Stock, Shares Outstanding (in shares) | 10,252,826 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||||
Revenue | $ 1,017.9 | $ 1,033.7 | $ 2,875.4 | $ 2,960.6 | |||
Revenue, including Network Fees and Other Costs | 1,715.7 | 4,877.5 | |||||
Network fees and other costs(1) | [1] | 0 | [2] | 479.5 | 0 | [3] | 1,406.3 |
Sales and marketing | 295.8 | 173.8 | 845.2 | 497.1 | |||
Other operating costs | 174.8 | 79.4 | 515.4 | 234.3 | |||
General and administrative | 140.7 | 49.6 | 527.6 | 189.6 | |||
Depreciation and amortization | 328.9 | 82.5 | 824 | 237 | |||
Income from operations | 77.7 | 168.9 | 163.2 | 396.3 | |||
Interest expense—net | (75.2) | (38.5) | (230.3) | (97.4) | |||
Non-operating (expense) income | (3.5) | 21.2 | (34.1) | 13.7 | |||
(Loss) income before applicable income taxes | (1) | 151.6 | (101.2) | 312.6 | |||
Income tax (benefit) expense | (4.6) | 44.7 | (5) | 83.5 | |||
Net income (loss) | 3.6 | 106.9 | (96.2) | 229.1 | |||
Less: Net income attributable to non-controlling interests | (0.8) | (14.8) | (1.5) | (39.3) | |||
Net income (loss) attributable to Worldpay, Inc. | $ 2.8 | $ 92.1 | $ (97.7) | $ 189.8 | |||
Class A Common Stock | |||||||
Net income (loss) per share attributable to Worldpay, Inc. Class A common stock: | |||||||
Basic (in dollars per share) | $ 0.01 | $ 0.57 | $ (0.34) | $ 1.18 | |||
Diluted (in dollars per share) | $ 0.01 | $ 0.57 | $ (0.34) | $ 1.17 | |||
Shares used in computing net income (loss) per share of Class A common stock: | |||||||
Basic (in shares) | 301,240,681 | 161,465,849 | 290,385,855 | 161,205,066 | |||
Diluted (in shares) | 313,881,826 | 162,882,396 | 290,385,855 | 162,617,782 | |||
Retained Earnings | |||||||
Net income (loss) | $ (97.7) | $ 189.8 | |||||
Net income (loss) attributable to Worldpay, Inc. | $ (97.7) | ||||||
[1] | See the Revenue Recognition section within Footnote 1 - Basis of Presentation and Summary of Significant Accounting Policies to the Notes to Unaudited Consolidated Financial Statements which addresses the change in presentation. | ||||||
[2] | For the three months ended September 30, 2018 | ||||||
[3] | For the nine months ended September 30, 2018 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ 3.6 | $ 106.9 | $ (96.2) | $ 229.1 |
Other comprehensive (loss) income, net of tax: | ||||
(Loss) gain on hedging activities and foreign currency translation | (103.9) | 0.8 | (152.1) | 5.7 |
Comprehensive (loss) income | (100.3) | 107.7 | (248.3) | 234.8 |
Less: Comprehensive loss (income) attributable to non-controlling interests | 2.6 | (14.7) | 3.6 | (40.5) |
Comprehensive (loss) income attributable to Worldpay, Inc. | $ (97.7) | $ 93 | $ (244.7) | $ 194.3 |
CONSOLIDATED STATEMENTS OF FINA
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 373.7 | $ 126.5 |
Accounts receivable—net | 1,599.8 | 986.6 |
Merchant float | 1,427.9 | 0 |
Settlement assets | 3,306.8 | 142 |
Prepaid expenses | 87.3 | 33.5 |
Other | 549.3 | 84 |
Total current assets | 7,344.8 | 1,372.6 |
Customer incentives | 66.3 | 68.4 |
Property, equipment and software—net | 1,053.8 | 473.7 |
Intangible assets—net | 3,364.8 | 678.5 |
Goodwill | 14,674.8 | 4,173 |
Deferred taxes | 789.8 | 739.5 |
Proceeds from senior unsecured note | 0 | 1,135.2 |
Other assets | 67.2 | 26.1 |
Total assets | 27,361.5 | 8,667 |
Current liabilities: | ||
Accounts payable and accrued expenses | 1,169.2 | 631.9 |
Settlement obligations | 5,396.3 | 816.2 |
Current portion of notes payable | 226.5 | 107.9 |
Current portion of tax receivable agreement obligations | 109.1 | 245.5 |
Deferred income | 23.1 | 18.9 |
Current maturities of capital lease obligations | 25.2 | 8 |
Other | 609.9 | 6 |
Total current liabilities | 7,559.3 | 1,834.4 |
Long-term liabilities: | ||
Notes payable | 7,723.7 | 5,586.4 |
Tax receivable agreement obligations | 589.7 | 535 |
Capital lease obligations | 22.4 | 4.5 |
Deferred taxes | 540.3 | 65.6 |
Other | 104.6 | 40.5 |
Total long-term liabilities | 8,980.7 | 6,232 |
Total liabilities | 16,540 | 8,066.4 |
Commitments and contingencies (See Note 7 - 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 | 10,275 | 55.4 |
Retained earnings | 482.6 | 558 |
Accumulated other comprehensive (loss) income | (144.1) | 2.9 |
Treasury stock, at cost; 3,859,659 shares at September 30, 2018 and 2,861,671 shares at December 31, 2017 | (162.1) | (83.8) |
Total Worldpay, Inc. equity | 10,451.4 | 532.5 |
Non-controlling interests | 370.1 | 68.1 |
Total equity | 10,821.5 | 600.6 |
Total liabilities and equity | 27,361.5 | 8,667 |
Class A Common Stock | ||
Equity: | ||
Class A common stock, $0.00001 par value; 890,000,000 shares authorized; 301,855,256 shares outstanding at September 30, 2018; 162,595,981 shares outstanding at December 31, 2017, Class B common stock, no par value; 100,000,000 shares authorized; 10,252,826 shares issued and outstanding at September 30, 2018 and 15,252,826 shares issued and outstanding at December 31, 2017 | 0 | 0 |
Class B Common Stock | ||
Equity: | ||
Class A common stock, $0.00001 par value; 890,000,000 shares authorized; 301,855,256 shares outstanding at September 30, 2018; 162,595,981 shares outstanding at December 31, 2017, Class B common stock, no par value; 100,000,000 shares authorized; 10,252,826 shares issued and outstanding at September 30, 2018 and 15,252,826 shares issued and outstanding at December 31, 2017 | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF FI_2
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
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 |
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) | 301,855,256 | 162,595,981 |
Treasury stock, shares (in shares) | 3,859,659 | 2,861,671 |
Class B Common Stock | ||
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 10,252,826 | 15,252,826 |
Common stock, shares outstanding (in shares) | 10,252,826 | 15,252,826 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Operating Activities: | ||
Net (loss) income | $ (96.2) | $ 229.1 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 824 | 237 |
Amortization of customer incentives | 19.9 | 18.7 |
Amortization and write-off of debt issuance costs | 73.2 | 3.9 |
Realized gain on foreign currency forward | (35.9) | (24.4) |
Share-based compensation expense | 99 | 35.1 |
Deferred tax expense | (26.2) | 60 |
Tax receivable agreements non-cash items | (4.7) | (6.1) |
Other | (6.5) | 2.3 |
Change in operating assets and liabilities: | ||
Accounts receivable | (67) | 46.7 |
Net settlement assets and obligations | (366.5) | 4.3 |
Customer incentives | (19.4) | (17.7) |
Prepaid and other assets | (22.4) | (82.9) |
Accounts payable and accrued expenses | (140.8) | 22.3 |
Other liabilities | (10.9) | (17.4) |
Net cash provided by operating activities | 219.6 | 510.9 |
Investing Activities: | ||
Purchases of property and equipment | (191.9) | (81.9) |
Acquisition of customer portfolios and related assets and other | (56) | (38.2) |
Purchase of interest rate caps | (8.1) | 0 |
Proceeds from foreign currency forward | 71.5 | 0 |
Cash acquired (used) in acquisition, net of cash used | 1,396.3 | (531.5) |
Net cash provided by (used in) investing activities | 1,211.8 | (651.6) |
Financing Activities: | ||
Proceeds from issuance of long-term debt | 2,951.8 | 1,270 |
Borrowings on revolving credit facility | 3,308 | 5,405 |
Repayment of revolving credit facility | (3,533) | (5,046) |
Repayment of debt and capital lease obligations | (2,732.6) | (108) |
Payment of debt issuance costs | (91.1) | (24) |
Purchase and cancellation of Class A common stock | 0 | (1,268.1) |
Repurchase of Class A common stock (to satisfy tax withholding obligations) | (16.2) | (9.2) |
Proceeds from issuance of Class A common stock under employee stock plans | 18.2 | 10.8 |
Settlement of certain tax receivable agreements | (112.5) | (77.3) |
Payments under tax receivable agreements | (55.3) | (46.5) |
Distributions to non-controlling interests | (7.7) | (12.5) |
Net cash (used in) provided by financing activities | (270.4) | 94.2 |
Net increase (decrease) in cash and cash equivalents | 1,161 | (46.5) |
Cash and cash equivalents - Beginning of period | 1,272.2 | 139.1 |
Effect of exchange rate changes on cash | (143.5) | 0 |
Cash and cash equivalents - End of period | 2,289.7 | 92.6 |
Cash Payments: | ||
Interest | 205.1 | 94.3 |
Income taxes | $ 16.7 | $ 31.6 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Millions | 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 |
Increase (Decrease) in Stockholders' Equity | ||||||||||
Cumulative effect of accounting change | $ 0.5 | $ 1.3 | $ (0.8) | |||||||
Balance at Dec. 31, 2016 | 1,607.3 | $ (73.7) | 706.1 | 689.5 | $ (6.2) | $ 291.6 | $ 0 | $ 0 | ||
Balance (in shares) at Dec. 31, 2016 | 2,700,000 | 161,100,000 | 35,000,000 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net (loss) income | 229.1 | 189.8 | 39.3 | |||||||
Issuance of Class A common stock, stock options exercised, value | 10.8 | 10.8 | ||||||||
Issuance of Class A common stock under employee stock plans, net of forfeitures (in shares) | 1,500,000 | |||||||||
Repurchase of Class A common stock (to satisfy tax withholding obligation), value | (9.2) | $ (9.2) | ||||||||
Stock Repurchased and Retired During Period, Value | (1,270.6) | (1,009.8) | (260.8) | |||||||
Stock Repurchased and Retired During Period, Shares | (19,700,000) | |||||||||
Repurchase of Class A common stock (to satisfy tax withholding obligation) (in shares) | 100,000 | 100,000 | ||||||||
Settlement of certain tax receivable agreements | 45.4 | 45.4 | ||||||||
Issuance of tax receivable agreements | (24.4) | (24.4) | ||||||||
Unrealized loss on hedging activities and foreign currency translation, net of tax | 5.7 | 4.5 | 1.2 | |||||||
Distribution to non-controlling interests | (12.5) | (12.5) | ||||||||
Share-based compensation | 35.1 | 29.6 | 5.5 | |||||||
Reallocation of non-controlling interests of Vantiv Holding due to change in ownership | 266 | (266) | ||||||||
Balance at Sep. 30, 2017 | 617.2 | $ (82.9) | 25 | 617.7 | (1.7) | 59.1 | $ 0 | $ 0 | ||
Balance (in shares) at Sep. 30, 2017 | 2,800,000 | 162,500,000 | 15,300,000 | 15,300,000 | ||||||
Balance at Jun. 30, 2017 | (2.6) | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net (loss) income | 106.9 | |||||||||
Unrealized loss on hedging activities and foreign currency translation, net of tax | 0.8 | 0.9 | (0.1) | |||||||
Balance at Sep. 30, 2017 | 617.2 | $ (82.9) | 25 | 617.7 | (1.7) | 59.1 | $ 0 | $ 0 | ||
Balance (in shares) at Sep. 30, 2017 | 2,800,000 | 162,500,000 | 15,300,000 | 15,300,000 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Cumulative effect of accounting change | 22.3 | 0 | 22.3 | |||||||
Balance at Dec. 31, 2017 | 600.6 | $ (83.8) | 55.4 | 558 | 2.9 | 68.1 | $ 0 | $ 0 | ||
Balance (in shares) at Dec. 31, 2017 | 2,900,000 | 162,595,981 | 162,600,000 | 15,252,826 | 15,300,000 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net (loss) income | (96.2) | (97.7) | 1.5 | |||||||
Issuance of Class A common stock for acquisition, shares | 800,000 | 133,600,000 | ||||||||
Issuance of Class A common stock for acquisition, value | (10,364.8) | $ (64.6) | (10,429.4) | |||||||
Issuance of Class A common stock, stock options exercised, value | 18.2 | 18.2 | ||||||||
Issuance of Class A common stock under employee stock plans, net of forfeitures (in shares) | 900,000 | |||||||||
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures | (2.5) | (2.5) | ||||||||
Repurchase of Class A common stock (to satisfy tax withholding obligation), value | (16.2) | $ (16.2) | ||||||||
Repurchase of Class A common stock (to satisfy tax withholding obligation) (in shares) | 200,000 | 200,000 | ||||||||
Stock Issued During Period, Shares, Conversion of Convertible Securities | (5,000,000) | (5,000,000) | ||||||||
Settlement of certain tax receivable agreements | 22.7 | 22.7 | ||||||||
Issuance of tax receivable agreements | (33.9) | (33.9) | ||||||||
Unrealized loss on hedging activities and foreign currency translation, net of tax | (152.1) | (147) | (5.1) | |||||||
Distribution to non-controlling interests | (7.7) | (7.7) | ||||||||
Share-based compensation | 99 | 94.8 | 4.2 | |||||||
Reallocation of non-controlling interests of Vantiv Holding due to change in ownership | (309.1) | 309.1 | ||||||||
Balance at Sep. 30, 2018 | 10,821.5 | $ (162.1) | 10,275 | 482.6 | (144.1) | 370.1 | $ 0 | $ 0 | ||
Balance (in shares) at Sep. 30, 2018 | 3,900,000 | 301,855,256 | 301,900,000 | 10,252,826 | 10,300,000 | |||||
Balance at Jun. 30, 2018 | (43.6) | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net (loss) income | 3.6 | |||||||||
Unrealized loss on hedging activities and foreign currency translation, net of tax | (103.9) | (100.5) | (3.4) | |||||||
Balance at Sep. 30, 2018 | $ 10,821.5 | $ (162.1) | $ 10,275 | $ 482.6 | $ (144.1) | $ 370.1 | $ 0 | $ 0 | ||
Balance (in shares) at Sep. 30, 2018 | 3,900,000 | 301,855,256 | 301,900,000 | 10,252,826 | 10,300,000 |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2018 | |
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 Worldpay, Inc., formerly Vantiv, Inc., a Delaware corporation, is a holding company that conducts its operations through its majority-owned subsidiary, Worldpay Holding, LLC (“Worldpay Holding”), formerly Vantiv Holding, LLC. Worldpay, Inc. and Worldpay Holding are referred to collectively as the “Company,” “Worldpay,” “we,” “us” or “our,” unless the context requires otherwise. On January 16, 2018 , Worldpay completed the previously announced acquisition of all of the outstanding shares of Worldpay Group Limited, formerly Worldpay Group plc, a public limited company (“Legacy Worldpay”). Following the acquisition, the Vantiv, Inc. (“Legacy Vantiv”) name was changed to Worldpay, Inc. by amending its Second Amended and Restated Certificate of Incorporation. The effective date of the name change was January 16, 2018. On January 16, 2018, the Company’s Class A common stock began trading on the New York Stock Exchange under the new symbol “WP” and on the London Stock Exchange via a secondary standard listing under the symbol “WPY.” Legacy Worldpay shares were delisted from the London Stock Exchange on the same day. Worldpay is a leader in global payments providing a broad range of technology-led solutions to its clients to allow them to accept payments of almost any type, across multiple payment channels nearly anywhere in the world. The Company serves a diverse set of merchants including mobile, online and in-store, offering over 300 payment methods in 126 transaction currencies across 146 countries, while supporting various clients including large enterprises, corporates, small and medium sized businesses and eCommerce businesses. The Company operates in three reportable segments: Technology Solutions, Merchant Solutions and Issuer Solutions. For more information about the Company’s segments, refer to Note 11 - Segment Information. The Company markets its services through diverse distribution channels, including referral relationships with a broad range of partners that include merchant banks, independent software vendors (“ISVs”), value-added resellers (“VARs”), payment facilitators, independent sales organizations (“ISOs”), trade associations, and arrangements with core processors. Basis of Presentation and Consolidation The accompanying consolidated financial statements include those of Worldpay, Inc. and all subsidiaries thereof, including its majority-owned subsidiary, Worldpay 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 September 30, 2018 , Worldpay, Inc. and Fifth Third Bank (“Fifth Third”) owned interests in Worldpay Holding of 96.71% and 3.29% , respectively (see Note 6 - 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 equity in Worldpay Holding. Net income attributable to non-controlling interests does not include expenses incurred directly by Worldpay, Inc., including income tax expense attributable to Worldpay, Inc. Non-controlling interests are presented as a component of equity in the accompanying Consolidated Statements of Financial Position. Fifth Third Stock Sale In June 2018, Fifth Third exchanged 5 million Class B units in Worldpay Holding for 5 million shares of the Company’s Class A common stock and subsequently sold those 5 million shares of Worldpay, Inc. Class A common stock pursuant to Rule 144 promulgated under the Securities Act of 1933 as amended. The Company did not receive any proceeds from the sale. As a result of the June 2018 Fifth Third exchange of units of Worldpay Holding, the Company recorded an additional liability under the Fifth Third Tax Receivable Agreement (“TRA”) of $120.9 million and an additional deferred tax asset of $87.0 million associated with the increase in the tax basis. The Company recorded a corresponding reduction to paid-in-capital of $33.9 million for the difference in the TRA liability and the related deferred tax asset. Share Repurchase Program In October 2016, our board of directors authorized a program to repurchase up to $250 million of our Class A common stock. The Company has approximately $243 million of share repurchase authority remaining as of September 30, 2018 under this authorization. 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. 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 In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue From Contracts With Customers (Topic 606) (“ASC 606”). This ASU supersedes the revenue recognition requirements in Accounting Standard Codification (“ASC”) 605, Revenue Recognition (“ASC 605”). 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 ASC. The Company adopted ASC 606 on January 1, 2018, using the modified retrospective method. The new standard requires the Company to disclose the accounting policies in effect prior to January 1, 2018, as well as the policies it has applied starting January 1, 2018. Revenue is measured based on consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a service or goods to a customer. Periods prior to January 1, 2018 The Company has contractual agreements with its customers 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. ASC 605 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 followed the 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 recognized processing revenues net of interchange fees, which are assessed to its 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 was reported on a gross basis, as the Company contracts directly with the end customer, assumes the risk of loss and has pricing flexibility. Periods commencing January 1, 2018 Revenue is recognized when a customer obtains control of promised services or goods. The amount of revenue recognized reflects the consideration the Company expects to be entitled to receive in exchange for these services. The Company has contractual agreements with its customers that set forth the general terms and conditions of the relationship including line item pricing, payment terms and contract duration. Revenue is recognized when the performance obligation under the terms of the Company’s contract with its customer is satisfied. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. The Company generates revenue primarily by processing electronic payment transactions. Set forth below is a description of the Company’s revenue by segment. Technology Solutions Technology Solutions provides merchant acquiring and payment processing services to a diverse set of merchants that primarily accept payments through eCommerce and integrated payment solutions. Merchant Solutions Merchant Solutions provides merchant acquiring and payment processing services to a diverse set of merchants that primarily accept payments through an omni-channel solution including terminal based. Issuer Solutions Issuer Solutions provides card issuer processing, payment network processing, fraud protection and card production to a diverse set of financial institutions, including regional banks, community banks, credit unions and regional personal identification number (“PIN”) networks. Performance Obligations Since the majority of the Company’s revenue relates to payment processing services for its customers, the Company’s core performance obligation is to provide continuous access to the Company’s system to process as much as its customers require. The Company’s payment processing services consist of variable consideration under a stand-ready series of distinct days of service that are substantially the same with the same pattern of transfer to the customer. The Company’s revenue from products and services is recognized at a point in time or over time depending on the products or services, with the majority of the revenue recognized at a point in time. Beginning in 2018, the Company records certain fees paid to third parties, including network fees and other costs, as a reduction of revenue. These fees were previously recorded on a gross basis. This change in presentation has no impact to income from operations. Under ASC 606, revenue of $1,017.9 million and $2,875.4 million was reported for the three and nine months ended September 30, 2018 . Excluding the impact of the adoption of ASC 606, amounts recorded under ASC 605 would include $1,715.7 million and $697.8 million of revenue and network fees and other costs for the three months ended September 30, 2018 , respectively, and $4,877.5 million and $2,002.1 million of revenue and network fees and other costs for the nine months ended September 30, 2018 , respectively. The adoption of ASC 606 did not have a material impact on any other line items of the Company’s Consolidated Statements of Income, Statements of Comprehensive Income, Statements of Financial Position, Statements of Equity and Statements of Cash Flows. Disaggregation of Revenue In the following table, revenue is disaggregated by source of revenue (in millions): Three Months Ended September 30, 2018 Technology Solutions Merchant Solutions Issuer Solutions Total Major Products and Services Processing services $ 286.8 $ 397.4 $ 49.7 $ 733.9 Products and services 132.9 110.1 41.0 284.0 Total $ 419.7 $ 507.5 $ 90.7 $ 1,017.9 Three Months Ended September 30, 2017 Technology Solutions Merchant Solutions Issuer Solutions Total Major Products and Services (1) Processing services $ 275.3 $ 517.3 $ 70.1 $ 862.7 Products and services 64.6 59.4 47.0 171.0 Total $ 339.9 $ 576.7 $ 117.1 $ 1,033.7 ( 1) Revenue for the three months ended September 30, 2017 presented in the table above is prior to the Company’s adoption of ASC 606 and therefore network fees and other costs are presented separately and not netted within revenue. Nine Months Ended September 30, 2018 Technology Solutions Merchant Solutions Issuer Solutions Total Major Products and Services Processing services $ 787.8 $ 1,151.2 $ 145.2 $ 2,084.2 Products and services 369.9 308.9 112.4 791.2 Total $ 1,157.7 $ 1,460.1 $ 257.6 $ 2,875.4 Nine Months Ended September 30, 2017 Technology Solutions Merchant Solutions Issuer Solutions Total Major Products and Services (1) Processing services $ 783.0 $ 1,529.7 $ 210.5 $ 2,523.2 Products and services 136.4 166.2 134.8 437.4 Total $ 919.4 $ 1,695.9 $ 345.3 $ 2,960.6 ( 1) Revenue for the nine months ended September 30, 2017 presented in the table above is prior to the Company’s adoption of ASC 606 and therefore network fees and other costs are presented separately and not netted within revenue. Processing Services Processing services revenue is primarily derived from processing credit and debit card transactions comprised of fees charged to businesses for payment processing services. The fees charged consist of either a percentage of the dollar volume of the transaction or a fixed fee, or both. Products and Services Products and services revenue is primarily derived from ancillary services such as treasury management and foreign exchange, regulatory compliance, chargebacks and fraud services. Costs to Obtain and Fulfill a Contract ASC 606 requires capitalizing costs of obtaining a contract when those costs are incremental and expected to be recovered. Since incremental commission fees paid to sales teams as a result of obtaining contracts are recoverable, the Company recorded a $28.8 million ( $22.3 million net of deferred taxes) cumulative catch-up capitalized asset on January 1, 2018. As of September 30, 2018 , the amount capitalized as contract costs is $36.9 million , which is included in other non-current assets. In order to determine the amortization period for sales commission contract costs, the Company applied the portfolio approach for “like-kind contracts” to which sales compensation earnings can be applied and allocated incentive payments to each portfolio accordingly. The Company evaluated each individual portfolio to determine the proper length of time over which the capitalized incentive should be amortized by analyzing customer attrition rates using historical data and other metrics. The Company determined that straight-line amortization would best correspond to the transfer of services to customers since services are transferred equally over time and have limited predictable volatility. The amortization periods range from 3 to 10 years and are based on the expected life of a customer. In 2018 , the amount of amortization was $2.6 million and $7.7 million for the three and nine months ended September 30, 2018 , respectively, which is included in sales and marketing expense. There was no impairment loss in relation to the costs capitalized. The Company recognizes incremental sales commission costs of obtaining a contract as expense when the amortization period for those assets is one year or less per the practical expedient in ASC 606. These costs are included in sales and marketing expense. 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 expected life of the customer. Related amortization is recorded as contra-revenue. The Company capitalizes conversion costs associated with enabling customers to receive its processing services. As of September 30, 2018 and December 31, 2017 , the Company had $39.9 million and $21.1 million , respectively, of capitalized conversion costs included in Intangible assets - net in the Company’s Consolidated Statement of Financial Position. Amortization expense related to these costs for the three months ended September 30, 2018 and 2017 was $2.1 million and $0.6 million , respectively, and for the nine months ended September 30, 2018 and 2017 was $4.5 million and $1.7 million , respectively. Amortization of these costs is recorded in depreciation and amortization expense in the Company’s Consolidated Statements of Income. These costs are amortized over the average life of the customer. Contract Balances 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; as such, collectibility is reasonably assured. Aside from debiting a client’s bank account, the Company collects a majority of its revenue via net settlement with the remaining portion collected via billing the customer. 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 September 30, 2018 and December 31, 2017 , the allowance for doubtful accounts was not material to the Company’s statements of financial position. As of September 30, 2018 and December 31, 2017 , accounts receivable, net of allowance for doubtful accounts on the Company’s Consolidated Statement of Financial Position was $1.6 billion and $1.0 billion , respectively. Contract Liabilities Contract liabilities, which relate to advance consideration received from customers (deferred revenue) before transfer of control occurs and therefore revenue is recognized, is not material to the Company’s consolidated financial statements. Remaining Performance Obligations ASC 606 requires disclosure of the aggregate amount of the transaction price allocated to unsatisfied performance obligations; however, as permitted by ASC 606, the Company has elected to exclude from this disclosure any contracts with an original duration of one year or less and any variable consideration that meets specified criteria. As discussed above, the Company’s core performance obligation consists of variable consideration under a stand-ready series of distinct days of service. The aggregate fixed consideration portion of customer contracts with an initial contract duration greater than one year is not material. Changes in Accounting Policies As noted above, the Company adopted ASC 606, effective January 1, 2018, using the modified retrospective method, applying the standard to contracts that are not complete as of the date of initial application. Therefore, the comparative information has not been adjusted and continues to be reported under ASC 605. The details of the significant changes are set out below. Under ASC 606, the Company capitalizes commission fees as costs of obtaining a contract when they are incremental and expected to be recovered. The Company amortizes these capitalized costs consistently with the pattern of transfer of the good or service to which the asset relates. If the expected amortization period is one year or less, the commission fee is expensed when incurred. The Company previously recognized sales commission fees related to contracts as sales and marketing expenses when incurred. Except for the change in revenue recognition, the Company has consistently applied the accounting policies to all periods presented in these consolidated financial statements. 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 the Company’s clients, including Visa and Mastercard network association fees and payment network fees and only relates to the three and nine months ended September 30, 2017 . Following the Company’s adoption of ASC 606 on January 1, 2018 , network fees and other costs are presented net within revenue. • Sales and marketing expense primarily consists of salaries and benefits paid to sales personnel, sales management and other sales and marketing personnel, amortization of capitalized commission fees, 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, legal and risk management, share-based compensation costs, equipment and occupancy costs and consulting costs. The nine months ended September 30, 2018 includes a significant amount of transition, acquisition and integration costs related to the Legacy Worldpay acquisition. The nine months ended September 30, 2017 includes a charge related to a settlement agreement stemming from legacy litigation of an acquired company. • Non-operating expenses during the nine months ended September 30, 2018 primarily consist of expenses relating to the Company’s financing arrangements entered into in connection with the Legacy Worldpay acquisition, repricing of the Company’s debt in June 2018 and the change in fair value of the Mercury TRA (see Note 8 - Fair Value Measurements), partially offset by a gain on the settlement of a deal contingent forward entered into in connection with the Company’s acquisition of Legacy Worldpay. Non-operating income for the nine months ended September 30, 2017 primarily consists of an unrealized gain relating to the change in fair value of a deal contingent forward entered into in connection with the Legacy Worldpay acquisition, which was also partially offset by the change in fair value of the Mercury TRA. (see Note 8 - Fair Value Measurements). 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 shares issued as restricted stock, performance awards and under the Employee Stock Purchase Plan (“ESPP”) is measured based on the market price of the Company’s stock on the grant date. For the nine months ended September 30, 2018 and 2017 total share-based compensation expense was $99.0 million and $35.1 million , respectively. Earnings per Share Basic earnings per share is computed by dividing net income attributable to Worldpay, Inc. by the weighted average shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to Worldpay, 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 9 - Net Income Per Share for further discussion. Dividend Restrictions The Company does not intend to pay cash dividends on its Class A common stock in the foreseeable future. Worldpay, Inc. is a holding company that does not conduct any business operations of its own. As a result, Worldpay, Inc.’s ability to pay cash dividends on its common stock, if any, is dependent upon cash dividends and distributions and other transfers from Worldpay Holding. The amounts available to Worldpay, 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 Worldpay Holding and its subsidiaries, essentially all of the Company’s consolidated net assets are held at the subsidiary level and are restricted as of September 30, 2018 . Income Taxes 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 September 30, 2018 , the Company has recorded valuation allowances against deferred tax assets of $12.9 million related to foreign subsidiaries. As of December 31, 2017 , the Company recorded no valuation allowances against deferred tax assets. The Company’s consolidated interim effective tax rate is based upon expected annual income from operations, statutory tax rates and tax laws in the various jurisdictions in which the Company operates. Significant or unusual items, including adjustments to accruals for tax uncertainties, are recognized in the quarter in which the related event occurs. The Company’s effective tax rates were 4.9% and 26.7% respectively, for the nine months ended September 30, 2018 and 2017 . The 2018 effective tax rate reflects a $6.9 million charge to deferred taxes relating to changes in state tax laws. The effective rate for each period reflects the impact of the Company’s non-controlling interests not being taxed at the statutory U.S. corporate tax rates. The 2018 effective tax rate also reflects the impact of the Tax Cuts and Jobs Act (“Tax Reform”) and the impact related to the addition of international taxing jurisdictions as a result of the Legacy Worldpay acquisition. On December 22, 2017, the President of the United States signed into law Tax Reform. Tax Reform amended the Internal Revenue Code to reduce tax rates and modify policies, credits and deductions as well as reduce the corporate federal tax rate from a maximum of 35% to a flat 21% rate with an effective date of January 1, 2018. As of December 31, 2017, the Company preliminarily revalued its net deferred tax asset based on Tax Reform. As of September 30, 2018 , the Company has not adjusted this provisional amount and is continuing to gather additional information to complete its accounting for this item and expects to complete the accounting within the prescribed measurement period. 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. The Company has restricted cash held in money market accounts, which approximate fair value and are a level 1 input in the fair value hierarchy. Following the adoption of ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, the Company includes restricted cash in the cash and cash equivalents balance of the consolidated statements of cash flows. The reconciliation between the consolidated statement of financial position and the consolidated statement of cash flows is as follows (in millions): September 30, December 31, Cash and cash equivalents on consolidated statement of financial position $ 373.7 $ 126.5 Proceeds from senior unsecured notes - restricted for closing of Worldpay acquisition — 1,135.2 Other restricted cash (other current assets) 488.1 10.5 Merchant float 1,427.9 — Total cash and cash equivalents on consolidated statement of cash flows $ 2,289.7 $ 1,272.2 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, which are 15 to 40 years for the Company’s facilities and related improvements, 2 to 10 years for furniture and equipment and 3 to 8 years for software. Leasehold improvements are depreciated on a straight-line basis over the lesser of the estimated useful life of the improvement which is 3 to 10 years 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. Accumulated depreciation as of September 30, 2018 and December 31, 2017 was $503.6 million and $372.1 million , respectively. The Company capitalizes certain costs related to computer software developed for internal use and amortizes such costs on a straight-line basis over an estimated useful life of 5 to 8 years. Research and development costs incurred prior to establishing technological feasibility are charged to operations as such costs are incurred. Once technological feasibility has been established, costs are capitalized until the software is placed in service. Goodwill and Intangible Assets In accordance with ASC 350, Intangibles—Goodwill and Other , the Company tests goodwill for impairment for each reporting unit on an annual basis, or when events occur or circumstances indicate the fair value of a reporting unit is below its carrying value. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that implied 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, 2018 using market data and discounted cash flow analyses. Based on this analysis, it was determined that the fair value of all reporting units was substantially in excess of the carrying value. There have been no other events or changes in circumstances subsequent to the testing date that would indicate impairment of these reporting units as of September 30, 2018 . 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 September 30, 2018 , there have been no such events or circumstances that would indicate potential impairment of finite lived intangible assets. Merchant Float and Settlement Assets and Obligations Merchant float represents surplus cash balances the Company holds on behalf of its merchant customers when the incoming amount from the card networks precedes when the funding to customers falls due. Such funds are held in a fiduciary capacity, and are not available for the Company to use to fund its cash requirements. Settlement assets and obligations result 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. 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 |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 9 Months Ended |
Sep. 30, 2018 | |
Business Acquisition | |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS Acquisition of Legacy Worldpay On January 16, 2018, the Company completed the acquisition of Legacy Worldpay by acquiring 100% of the issued and outstanding shares (the “acquisition”). The approximately $11.9 billion purchase price consisted of Legacy Worldpay shareholders receiving a $1.5 billion cash payment and 133.6 million shares of the Company’s Class A common stock. The acquisition-date fair value of the 133.6 million shares of the Company’s Class A common stock issued was $10.4 billion and was determined based on the share price of $77.60 per share, the opening price of the Company’s Class A common stock on the New York Stock Exchange on January 16, 2018 since the acquisition closed before the market opened on January 16, 2018. The acquisition creates a leading global payments technology company that is uniquely positioned to address clients’ needs with innovative and strategic capabilities. 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, none of which is deductible for tax purposes. Goodwill, assigned to Technology Solutions, Merchant and Issuer Solutions, 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 millions): Cash acquired $ 576.3 Current assets (1) 4,139.3 Property, equipment and software 561.1 Intangible assets 3,380.1 Goodwill 10,572.8 Other non-current assets 75.6 Current liabilities (2) (4,532.1 ) Long-term debt (3) (2,304.7 ) Deferred tax liability (549.8 ) Non-current liabilities (43.1 ) Total purchase price $ 11,875.5 (1) Includes $1,947.6 million of merchant float and $511.1 million of other restricted cash. (2) Includes $118.6 million of dividend payable to reflect the special dividend granted to the shareholders of Legacy Worldpay. (3) Includes $1,649.9 million of debt which was paid off subsequent to the completion of acquisition. 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 primarily consist of customer relationship assets, software and a trade name with weighted average estimated useful lives of 6.7 years , 6.5 years and 10 years , respectively. For the nine months ended September 30, 2018 , the Company incurred transaction expenses of approximately $120.7 million in conjunction with the acquisition of Legacy Worldpay. All transaction costs incurred for the nine months ended September 30, 2018 are included in general and administrative expenses on the accompanying consolidated statement of income. Under the terms of the Legacy Worldpay transaction agreement, the Company replaced equity awards held by certain employees of Legacy Worldpay. The fair value of the replacement awards was approximately $82.4 million . The portion of the fair value of the replacement awards related to the services provided prior to the acquisition of approximately $44.2 million was part of the consideration transferred to acquire Legacy Worldpay. The remaining portion of the fair value is associated with future service and will be recognized as expense over the future service period. Pro Forma Results Giving Effect to the Legacy Worldpay Acquisition The following pro forma combined financial information presents the Company’s results of operations for the three and nine months ended September 30, 2018 and 2017 , as if the acquisition had occurred on January 1, 2017 (in millions, except share amounts). Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (Actual) (Pro forma) (Pro forma) (Pro forma) Total revenue (1) $ 1,017.9 $ 1,574.2 $ 2,939.2 $ 4,524.3 Net income (loss) attributable to Worldpay, Inc. 2.8 17.7 91.8 (150.2 ) Net income (loss) per share attributable to Worldpay, Inc. Class A common stock: Basic $ 0.01 $ 0.06 $ 0.32 $ (0.51 ) Diluted $ 0.01 $ 0.06 $ 0.31 $ (0.51 ) Shares used in computing net income (loss) per share of Class A common stock: Basic 301,240,681 295,032,995 290,385,855 294,772,212 Diluted 313,881,826 296,449,542 292,594,557 294,772,212 ( 1) Revenue for the three and nine months ended September 30, 2017 presented in the table above is prior to the Company’s adoption of ASC 606 and therefore network fees and other costs are presented separately and not netted within revenue. The pro forma results include certain pro forma adjustments that were directly attributable to the acquisition as follows: • additional amortization expense that would have been recognized relating to the acquired intangible assets; and • adjustment to interest expense to reflect the additional borrowings of the Company in conjunction with the acquisition and removal of Legacy Worldpay debt. • a reduction in expenses for the three and nine months ended September 30, 2018 and a corresponding increase in the three and nine months ended September 30, 2017 for acquisition-related transaction costs and debt refinancing costs incurred by the Company. Acquisition of Paymetric Holdings, Inc. On May 25, 2017, the Company completed the acquisition of Paymetric Holdings, Inc. (“Paymetric”) by acquiring 100% of the issued and outstanding shares. Paymetric automates business-to-business payment workflows within enterprise systems and tokenizes payments data within these systems in order to enable secure storage of customer information and history. 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, of which approximately $7.8 million is deductible for tax purposes. Goodwill, assigned to Merchant Solutions, 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 millions): Cash acquired $ 11.9 Current assets 6.5 Property, equipment and software 92.1 Intangible assets 47.8 Goodwill 433.8 Other assets 0.1 Current liabilities (18.3 ) Deferred tax liability (22.0 ) Non-current liabilities (8.5 ) Total purchase price $ 543.4 Under the terms of the Paymetric transaction agreement, the Company replaced employee stock options held by certain employees of Paymetric. The number of replacement awards was based on options outstanding at the acquisition date. The fair value of the replacement awards was $8.0 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 the services provided prior to the acquisition of $5.9 million was part of the consideration transferred to acquire Paymetric. The remaining portion of the fair value is associated with future service and will be recognized as expense over the future service period. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Changes in the carrying amount of goodwill for the nine months ended September 30, 2018 are as follows (in millions): Consolidated Total Balance as of December 31, 2017 $ 4,173.0 Goodwill attributable to acquisition of Paymetric (1) (0.2 ) Goodwill attributable to acquisition of Legacy Worldpay (2) 10,486.4 Other acquisitions 15.6 Balance as of September 30, 2018 $ 14,674.8 (1) Amount represents adjustments to goodwill associated with the acquisition of Paymetric as of the finalization of purchase accounting. (2) Amount of goodwill attributable to the acquisition, including its allocation to reportable segments, is preliminary and subject to change. Includes $86.4 million of foreign currency translation movement since the acquisition date. As discussed in Note 11 - Segment Information, during the first quarter of 2018 , the Company reorganized its reportable segments. In connection with this change, the Company is in the process of finalizing its reallocation of goodwill to the new reporting units using a relative fair value approach. As of September 30, 2018 and December 31, 2017 , the Company’s finite lived intangible assets consisted of the following (in millions): September 30, 2018 December 31, 2017 Customer relationship intangible assets $ 4,600.3 $ 1,712.7 Trade name 356.9 — Customer portfolios and related assets 309.9 249.8 Patents 1.9 1.6 5,269.0 1,964.1 Less accumulated amortization on: Customer relationship intangible assets 1,705.3 1,156.4 Customer portfolios and related assets 171.9 129.2 Trade name 27.0 — 1,904.2 1,285.6 Intangible assets, net $ 3,364.8 $ 678.5 Customer portfolios and related assets acquired during the nine months ended September 30, 2018 have weighted-average amortization periods of 4.6 years . Amortization expense on intangible assets for the three months ended September 30, 2018 and 2017 was $260.5 million and $55.2 million respectively. Amortization expense on intangible assets for the nine months ended September 30, 2018 and 2017 was $627.5 million and $166.5 million respectively. The estimated amortization expense of intangible assets for the remainder of 2018 and the next five years is as follows (in millions): Three months ended December 31, 2018 $ 208.1 2019 750.4 2020 608.6 2021 500.4 2022 435.1 2023 275.9 |
LONG-TERM DEBT
LONG-TERM DEBT | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT As of September 30, 2018 and December 31, 2017 , the Company’s long-term debt consisted of the following (in millions): September 30, December 31, Term A loan, maturing in January 2023 (1) $ 3,313.6 $ 2,166.7 Term A loan, maturing in October 2021 (2) — 179.2 Term A loan, maturing in January 2023 (3) 620.7 — Term B loan, maturing in October 2023 (4) 576.9 757.4 Term B loan, maturing in August 2024 (5) 1,746.2 1,270.0 Senior Unsecured Dollar Notes, maturing in November 2025 (6) 500.0 500.0 Senior Unsecured Sterling Notes, maturing in November 2025 (7) 613.8 635.2 Senior Unsecured Euro Note, maturing in November 2022 (8) 631.0 — Leasehold mortgage, expiring on August 10, 2021 (9) 10.0 10.1 Revolving credit facility, expiring in January 2023 — 225.0 Less: Current portion of notes payable (226.5 ) (107.9 ) Less: Original issue discount (6.7 ) (3.0 ) Less: Debt issuance costs (55.3 ) (46.3 ) Notes payable $ 7,723.7 $ 5,586.4 (1) Interest at a variable base rate (LIBOR) plus a spread rate (150 basis points) (total rate of 3.63% at September 30, 2018 ) and amortizing on a basis of 1.25% per quarter during each of the first twelve quarters (June 2018 through March 2021), 1.875% per quarter during the next four quarters (June 2021 through March 2022) and 2.50% per quarter during the next three quarters (June 2022 through December 2022) with a balloon payment due at maturity. (2) Outstanding principal balance paid down using the proceeds from the GBP Term Loan A financing as part of the June 22, 2018 amendment to the Existing Loan Agreement. See below for more details. (3) £475 million principal outstanding, translated to U.S dollars at the spot rate of 1.3059 U.S. dollars per Pound Sterling at September 30, 2018 . Interest at a variable base rate (GBP LIBOR) plus a spread rate ( 150 basis points ) (total rate of 2.22% at September 30, 2018 ) and amortizing on a basis of 1.25% per quarter during each of the first twelve quarters (June 2018 through March 2021), 1.875% per quarter during the next four quarters (June 2021 through March 2022) and 2.50% per quarter during the next three quarters (June 2022 through December 2022) with a balloon payment due at maturity. (4) Interest payable at a variable base rate (LIBOR) plus a spread rate (175 basis points) (total rate of 3.88% at September 30, 2018 ) and amortizing on a basis of 0.25% per quarter, with a balloon payment due at maturity. (5) Interest payable at a variable base rate (LIBOR) plus a spread rate (175 basis points) (total rate of 3.88% at September 30, 2018 ) and amortizing on a basis of 0.25% per quarter, with a balloon payment due at maturity. (6) $500 million principal senior unsecured notes with interest payable semi-annually at a fixed rate of 4.375% and principal due upon maturity. (7) £470 million principal senior unsecured notes with interest payable semi-annually at a fixed rate of 3.875% and principal due upon maturity. The spot rate of 1.3059 U.S. dollars per Pound Sterling at September 30, 2018 was used to translate the Note to U.S. dollars. (8) €500 million principal senior unsecured note with interest payable semi-annually at a fixed rate of 3.75% and principal due upon maturity. The spot rate of 1.1617 U.S. dollars per Euro at September 30, 2018 was used to translate the Note to U.S. dollars. Includes remaining unamortized fair value premium of $50.1 million at September 30, 2018 . (9) Interest payable monthly at a fixed rate of 6.22% . 2018 Debt Activity The closing of the Legacy Worldpay acquisition on January 16, 2018 resulted in the effectiveness of several debt amendments to the Company’s loan agreement entered into prior to the closing. The resulting incremental funding and availability was as follows: • $1,605 million of additional Term A loans maturing in January 2023 • $535 million of additional Term B loans maturing in August 2024 • $600 million of additional revolving credit commitments, resulting in total available revolving credit of $1,250 million • $594.5 million backstop (expired on June 15, 2018) As a result of the closing of the Legacy Worldpay acquisition, the Company expensed approximately $56.6 million primarily consisting of the write-offs of unamortized deferred financing fees and original issue discount (“OID”) and fees related to previously committed unused backstop facilities associated with the component of the debt activity accounted for as a debt extinguishment and certain third party costs incurred in connection with the debt activity. 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 nine months ended September 30, 2018 . On June 22, 2018, the Company amended the Existing Loan Agreement by modifying certain terms of its Term A-5 Loans (January 2023 maturity date), the Term B-3 (October 2023 maturity date) and B-4 Loans (August 2024 maturity date) and Revolving Loans (January 2023 maturity date). The amendment reduced the Company’s interest rate spread on the Term B-3 and B-4 Loans by 25 basis points and changed the pricing for the Term A-5 Loans and Revolving Loans, the immediate effect of which was to lower the interest rate spread on the Term A-5 Loans and Revolving Loans by 25 basis points. Although the Company’s total borrowings did not change as a result of the refinancing, the amendment established a new class of Term A-6 Loans of approximately £488 million as a mirror tranche to the Term A-5 Loans under the same terms and pricing. The proceeds of the Term A-6 Loans were used to refinance and replace the existing Term A-3 Loans and certain Term A-5 Loans. In addition, commitments under the Company’s Term A-5 Loans increased by $100 million and the proceeds were used to reduce the existing Term B-3 Loans and Term B-4 Loans, each by $50 million . As a result of the repricing, the Company expensed approximately $11.4 million primarily consisting of the write-offs of unamortized deferred financing fees and OID, and certain third party costs incurred in connection with the repricing. Amounts expensed in connection with the repricing are recorded as a component of non-operating expenses in the accompanying consolidated statement of income for the nine months ended September 30, 2018 . Additionally, as a result of new debt being issued in connection with the Company’s acquisition of Legacy Worldpay in January 2018, and the amendment to reprice the Existing Loan Agreement in June 2018, the Company capitalized approximately $23.7 million of deferred financing costs for the nine months ended September 30, 2018 . In July 2018, the Company received the required consent from the Euro Note holders to relieve reporting requirements associated with those notes, which resulted in a payment of approximately $2.9 million , which is recorded as a component of non-operating income (expense) in the accompanying Consolidated Statement of Income for the nine months ended September 30, 2018 . 2017 Debt Activity On August 7, 2017, the Company funded the Fifth Third share purchase by amending the Second Amended Loan Agreement to permit Worldpay Holding to obtain approximately $1,270.0 million of additional seven-year term B loans. As a result of this borrowing, the Company capitalized approximately $23.1 million of deferred financing fees during the year ended December 31, 2017. In connection with the Legacy Worldpay acquisition, on December 7, 2017, the Company priced an offering of $500 million aggregate principal amount of 4.375% senior unsecured notes due 2025 and £470 million aggregate principal amount of 3.875% senior unsecured notes due 2025, listed in the table above. The spot rate of 1.3515 U.S. dollars per Pound Sterling at December 31, 2017 was used to translate the Senior Unsecured Sterling Notes to U.S. dollars. The proceeds received in the connection with the senior unsecured notes offering were held in escrow and restricted as of December 31, 2017 pending the consummation of the acquisition, which subsequently took place on January 16, 2018. Guarantees and Security The Company’s debt obligations at September 30, 2018 are unconditional and, with the exception of the Euro Note, are guaranteed by Worldpay Holding and certain of Worldpay 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 Third Amended and Restated Loan Agreement) by a lien on substantially all the tangible and intangible assets of the Company and the aforementioned subsidiaries, including 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 Worldpay Holding and any obligors under the Third Amended and Restated Loan Agreement as well as any real property in excess of $25 million in the aggregate held by Worldpay Holding or any obligors (other than Worldpay Holding), subject to certain exceptions. The Euro Note is guaranteed by Worldpay Group Limited. Additionally, the Euro Note is also guaranteed by Worldpay LLC as a result of the successful bond consent in July 2018. Covenants There are certain financial and non-financial covenants contained in the Existing 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 September 30, 2018 |
DERIVATIVES AND HEDGING ACTIVIT
DERIVATIVES AND HEDGING ACTIVITIES | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 and December 31, 2017 , the Company’s interest rate derivative instruments for this purpose consist of interest rate swaps and interest rate cap agreements. The interest rate swaps hedge the variable rate debt by effectively converting floating-rate payments to fixed-rate payments. The 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. In May 2018, the Company entered into additional interest rate cap and swap agreements and the Company paid an upfront premium of approximately $8.1 million for the interest rate caps. As of September 30, 2018 , the Company’s interest rate cap agreements, including those executed in prior years, had a fair value of $35.8 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. Additionally, during 2017 the Company entered into a deal contingent foreign currency forward contract. The foreign currency forward served as an economic hedge of the pound sterling denominated portion of the purchase price relating to the Legacy Worldpay acquisition. The foreign currency forward was not designated as a hedge for accounting purposes and, as discussed below, was settled in connection with the closing of the Legacy Worldpay acquisition. 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 8 - 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 following table presents the Company’s interest rate swaps and caps (in millions): Derivative Use of Derivative Hedge Designation Notional Value Exposure Periods Strike Rate Interest rate swap Manage fluctuations in interest rates Cash flow hedge $ 500 January 2018 to January 2019 Interest rate swap Manage fluctuations in interest rates Cash flow hedge 600 June 2018 to June 2021 Interest rate swap Manage fluctuations in interest rates Cash flow hedge 500 June 2019 to June 2021 Total $ 1,600 Interest rate cap Manage fluctuations in interest rates Cash flow hedge $ 1,000 January 2017 to January 2020 0.75 % Interest rate cap Manage fluctuations in interest rates Cash flow hedge 600 June 2018 to June 2021 2.25 % Total $ 1,600 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 millions): Consolidated Statement of September 30, 2018 December 31, 2017 Interest rate contracts Other current assets $ 20.4 $ 9.7 Interest rate contracts Other long-term assets 17.5 14.7 Interest rate contracts Other current liabilities 0.5 4.2 Interest rate contracts Other long-term liabilities — 0.2 Any ineffectiveness associated with such derivative instruments will be recorded immediately as interest expense in the accompanying consolidated statements of income. As of September 30, 2018 , the Company estimates that $10.2 million will be reclassified from accumulated other comprehensive income as a decrease to interest expense during the next 12 months. The table below presents the pre-tax effect of the Company’s interest rate contracts on the accompanying consolidated statements of comprehensive income for the three and nine months ended September 30, 2018 and 2017 (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Derivatives in cash flow hedging relationships: Amount of gain (loss) recognized in OCI (effective portion) (1) $ 4.7 $ 0.4 $ 14.2 $ 0.1 Amount of gain (loss) reclassified from accumulated OCI into earnings (effective portion) 0.3 (1.1 ) (0.1 ) (8.4 ) Amount of gain recognized in earnings (2) — — 0.1 — (1) “OCI” represents other comprehensive income. (2) For the three and nine months ended September 30, 2018 , amount represents hedge ineffectiveness. Credit Risk Related Contingent Features As of September 30, 2018 , 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 $0.6 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 September 30, 2018 , the Company had not posted any collateral related to these agreements. If the Company had breached any of these provisions at September 30, 2018 , it could have been required to settle its obligations under the agreements at their termination value of $0.6 million . Deal Contingent Forward On August 9, 2017, the Company entered into a £1,150 million notional deal contingent forward to economically hedge a portion of the purchase price relating to the Legacy Worldpay acquisition. The deal contingent forward settled upon the closing of the Legacy Worldpay acquisition in January 2018 and the Company recognized a related realized gain of approximately $69.0 million , of which approximately $35.9 million of the gain relates to the nine months ended September 30, 2018 , which is recorded in non-operating expense. Net Investment Hedges To help protect the net investment in foreign operations from adverse changes in foreign currency exchange rates, the Company uses non-derivative financial instruments, such as its foreign currency-denominated debt, as economic hedges of its net investments in its Euro and GBP functional subsidiaries (see Note 4 - Long-Term Debt for more discussion on the Company’s foreign currency-denominated debt). The Company designated a portion of its Euro denominated debt and 100% of its GBP denominated debt as net investment hedges. The effective portions of the net investment hedges are recorded in other comprehensive income. During the three and nine months ended September 30, 2018 , the Company recognized in other comprehensive income pre-tax gain of $4.3 million and $44.2 million , respectively, relating to these net investment hedges. No ineffectiveness was recorded to earnings on the net investment hedges for three and nine months ended September 30, 2018 |
CONTROLLING AND NON-CONTROLLING
CONTROLLING AND NON-CONTROLLING INTERESTS | 9 Months Ended |
Sep. 30, 2018 | |
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, Worldpay, Inc. owns a controlling interest in Worldpay Holding, and therefore consolidates the financial results of Worldpay Holding and its subsidiaries and records non-controlling interest for the economic interests in Worldpay Holding held by Fifth Third. The Exchange Agreement entered into prior to the Company’s initial public offering (“IPO”) provides for a 1 to 1 ratio between the units of Worldpay Holding and the common stock of Worldpay, Inc. In May 2014, the Company entered into a joint venture with a bank partner which provides customers a comprehensive suite of payment solutions. Worldpay Holding owns 51% and the bank partner owns 49% of the joint venture. The joint venture is consolidated by the Company in accordance with ASC 810, with the associated non-controlling interest included in “Net income attributable to non-controlling interests” in the consolidated statements of income. As of September 30, 2018 , Worldpay, Inc.’s interest in Worldpay Holding was 96.71% . Changes in units and related ownership interest in Worldpay Holding are summarized as follows: Worldpay, Inc. Fifth Third Total As of December 31, 2017 162,595,981 15,252,826 177,848,807 % of ownership 91.42 % 8.58 % Shares issued for acquisition, net of shares acquired 133,567,146 — 133,567,146 Fifth Third exchange of Worldpay Holding units for shares of Class A common stock 5,000,000 (5,000,000 ) — Equity plan activity (1) 692,129 — 692,129 As of September 30, 2018 301,855,256 10,252,826 312,108,082 % of ownership 96.71 % 3.29 % (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. The Company issued 134.4 million shares of Class A common stock and acquired approximately 833,000 treasury shares held in a trust for reissuance, in connection with its acquisition of 100% of the issued and outstanding shares of Legacy Worldpay on January 16, 2018. In June 2018, Fifth Third exchanged 5 million Class B units in Worldpay Holding for 5 million shares of the Company’s Class A common stock and subsequently sold those 5 million shares of Worldpay, Inc. Class A common stock pursuant to Rule 144 promulgated under the Securities Act of 1933 as amended. The Company did not receive any proceeds from the sale. As a result of the changes in ownership interests in Worldpay Holding, periodic adjustments are made in order to reflect the portion of net assets of Worldpay Holding attributable to non-controlling unit holders based on changes in the proportionate ownership interests in Worldpay 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 millions): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Net income (loss) $ 3.6 $ 106.9 $ (96.2 ) $ 229.1 Items not allocable to non-controlling interests: Worldpay, Inc. expenses (1) 2.3 14.2 52.4 25.1 Worldpay Holding net income (loss) $ 5.9 $ 121.1 $ (43.8 ) $ 254.2 Net income attributable to non-controlling interests of Fifth Third (2) $ 0.2 $ 14.1 $ — $ 37.6 Net income attributable to joint venture non-controlling interest (3) 0.6 0.7 1.5 1.7 Total net income attributable to non-controlling interests $ 0.8 $ 14.8 $ 1.5 $ 39.3 (1) Primarily represents income tax expense for the three months ended September 30, 2018 and acquisition related expenses for the nine months ended September 30, 2018 . Primarily represents income tax expense for the three and nine months ended September 30, 2017 . (2) Net income attributable to non-controlling interests of Fifth Third reflects the allocation of Worldpay Holding’s net income based on the proportionate ownership interests in Worldpay 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) |
COMMITMENTS, CONTINGENCIES AND
COMMITMENTS, CONTINGENCIES AND GUARANTEES | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS, CONTINGENCIES AND GUARANTEES | COMMITMENTS, CONTINGENCIES AND GUARANTEES 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, except as described below. Legal Settlement On April 17, 2017, the Company entered into a preliminary settlement agreement (the “Agreement”) to settle class action litigation filed by plaintiffs in the United States District Court for the Northern District of Georgia (the “Court”) under the caption Champs Sports Bar & Grill Co.et al. v. Mercury Payment Systems, LLC et al. regarding certain legacy business practices of the defendants, Mercury Payment Systems, LLC (“Mercury”) and Global Payments Direct, Inc., dating back to 2009. The Company acquired Mercury on June 13, 2014. Under the terms of the Agreement, in exchange for a release from all claims relating to such legacy business practices from the beginning of the applicable settlement class period through the date of preliminary approval of the settlement, the Company incurred a charge of $38.0 million for the nine months ended September 30, 2017 related to the settlement. Final claims data resulted in the Company recording an additional $3.5 million charge for the settlement in the fourth quarter of 2017. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 and December 31, 2017 (in millions): September 30, 2018 December 31, 2017 Fair Value Measurements Using Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Interest rate contracts $ — $ 37.9 $ — $ — $ 24.4 $ — Deal contingent foreign currency forward — — — — 33.1 — Liabilities: Interest rate contracts $ — $ 0.5 $ — $ — $ 4.4 $ — Mercury TRA — 51.6 — — 100.5 — 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 September 30, 2018 and December 31, 2017 , 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 5 - Derivatives and Hedging Activities for further discussion of the Company’s interest rate contracts. Deal Contingent Forward The Company used a foreign currency contract to manage its foreign currency exposure relating to the Worldpay transaction (see Note 5 - Derivatives and Hedging Activities). The fair value of the foreign currency forward was determined using the market standard methodology of discounting the projected settlement value of the instrument. The projected settlement value is based on the expectation of future foreign currency rates derived from observed market interest rate curves. In addition, to comply with the provisions of ASC 820, credit valuation adjustments are incorporated in the fair values to account for potential nonperformance risk. In adjusting the fair value of its foreign currency forward contract for the effect of nonperformance risk, the Company has considered any applicable credit enhancements such as collateral postings, thresholds, mutual puts, and guarantees. 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 based on estimates of discounted future cash flows associated with the estimated payments to the Mercury TRA Holders. Through 2016, the discount rate was considered a significant unobservable input used in the fair value measurement of the Mercury TRA. However, due to the passage of time, the discount rate is no longer a significant input at September 30, 2018 and December 31, 2017 . 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 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 September 30, 2018 and December 31, 2017 (in millions): September 30, 2018 December 31, 2017 Carrying Fair Value Carrying Fair Value Liabilities: Notes payable $ 7,950.2 $ 7,977.0 $ 5,694.3 $ 5,772.1 |
NET INCOME PER SHARE
NET INCOME PER SHARE | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
NET INCOME PER SHARE | NET INCOME PER SHARE Basic net income per share is calculated by dividing net income (loss) attributable to Worldpay, Inc. by the weighted-average shares of Class A common stock outstanding during the period. Diluted net income per share is calculated assuming that Worldpay Holding is a wholly-owned subsidiary of Worldpay, Inc., therefore eliminating the impact of Fifth Third’s non-controlling interest. Pursuant to the Exchange Agreement, the Class B units of Worldpay Holding (“Class B units”), which are held by Fifth Third and represent the non-controlling interest in Worldpay 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 Worldpay 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 nine months ended September 30, 2018 , approximately 13.5 million weighted average Class B units of Worldpay Holding were excluded in computing diluted net loss per share because including them would have an antidilutive effect. During the three and nine months ended September 30, 2017 , approximately 23.6 million and 31.2 million , respectively, weighted-average dilutive Class B units of Worldpay Holding were excluded in computing diluted net income per share because including them would have an antidilutive effect. As the Class B units of Worldpay Holding were not included, the numerator used in the calculation of diluted net (loss) income per share was equal to the numerator used in the calculation of basic net (loss) income per share for the nine months ended September 30, 2018 and for the three months and nine months ended September 30, 2017 . As of September 30, 2018 and 2017 , there were approximately 10.3 million and 15.3 million Class B units outstanding, respectively. In addition to the Class B units discussed above, due to the net loss for the nine months ended September 30, 2018 , approximately 2.2 million potentially dilutive securities were excluded from the denominator in computing dilutive net income per share. Potentially dilutive securities during the three months ended September 30, 2018 and the three and nine months ended September 30, 2017 included restricted stock awards, restricted stock units, stock options, performance share awards and ESPP purchase rights. 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 (loss) per share of Class B common stock have not been presented. The following table sets forth the computation of basic and diluted net income (loss) per share (in millions, except share data): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Basic: Net income (loss) attributable to Worldpay, Inc. $ 2.8 $ 92.1 $ (97.7 ) $ 189.8 Shares used in computing basic net income (loss) per share: Weighted-average Class A common shares 301,240,681 161,465,849 290,385,855 161,205,066 Basic net income (loss) per share $ 0.01 $ 0.57 $ (0.34 ) $ 1.18 Diluted: Consolidated (loss) before applicable income taxes $ (1.0 ) $ — $ — $ — Income tax benefit excluding impact of non-controlling interest (3.6 ) — — — Net income (loss) attributable to Worldpay, Inc. $ 2.6 $ 92.1 $ (97.7 ) $ 189.8 Shares used in computing diluted net income (loss) per share: Weighted-average Class A common shares 301,240,681 161,465,849 290,385,855 161,205,066 Weighted-average Class B units of Worldpay Holding 10,252,826 — — — Stock options 949,483 739,835 — 706,632 Restricted stock awards, restricted stock units and employee stock purchase plan 1,398,259 645,508 — 664,275 Performance awards 40,577 31,204 — 41,809 Diluted weighted-average shares outstanding 313,881,826 162,882,396 290,385,855 162,617,782 Diluted net income (loss) per share $ 0.01 $ 0.57 $ (0.34 ) $ 1.17 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Sep. 30, 2018 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The activity of the components of accumulated other comprehensive income (loss) (“AOCI”) related to hedging and other activities for the three and nine months ended September 30, 2018 and 2017 is presented below (in millions): Total Other Comprehensive Income (Loss) AOCI Beginning Balance Pretax Activity Tax Effect Net Activity Attributable to non-controlling interests Attributable to Worldpay, Inc. AOCI Ending Balance Three Months Ended September 30, 2018 Net change in fair value of cash flow hedge recorded in AOCI $ (7.0 ) $ 4.7 $ (1.1 ) $ 3.6 $ (0.2 ) $ 3.4 $ (3.6 ) Net realized loss on cash flow hedge reclassified into earnings (a) 17.0 (0.3 ) 0.1 (0.2 ) — (0.2 ) 16.8 Translation adjustments on net investment hedge recorded in AOCI (b) 28.9 4.3 (1.0 ) 3.3 (0.1 ) 3.2 32.1 Foreign currency translation adjustments (c) (82.5 ) (110.6 ) — (110.6 ) 3.7 (106.9 ) (189.4 ) Net change $ (43.6 ) $ (101.9 ) $ (2.0 ) $ (103.9 ) $ 3.4 $ (100.5 ) $ (144.1 ) Three Months Ended September 30, 2017 Net change in fair value recorded in accumulated OCI $ (18.0 ) $ 0.4 $ (0.2 ) $ 0.2 $ 0.2 $ 0.4 $ (17.6 ) Net realized loss reclassified into earnings (a) 15.4 1.1 (0.5 ) 0.6 (0.1 ) 0.5 15.9 Net change $ (2.6 ) $ 1.5 $ (0.7 ) $ 0.8 $ 0.1 $ 0.9 $ (1.7 ) Nine Months Ended September 30, 2018 Net change in fair value of cash flow hedge recorded in AOCI $ (13.8 ) $ 14.2 $ (3.3 ) $ 10.9 $ (0.7 ) $ 10.2 $ (3.6 ) Net realized loss on cash flow hedge reclassified into earnings (a) 16.7 0.1 — 0.1 — 0.1 16.8 Translation adjustments on net investment hedge recorded in AOCI (b) — 44.2 (10.1 ) 34.1 (2.0 ) 32.1 32.1 Foreign currency translation adjustments (c) — (197.2 ) — (197.2 ) 7.8 (189.4 ) (189.4 ) Net change $ 2.9 $ (138.7 ) $ (13.4 ) $ (152.1 ) $ 5.1 $ (147.0 ) $ (144.1 ) Nine Months Ended September 30, 2017 Net change in fair value recorded in accumulated OCI $ (17.8 ) $ 0.1 $ (0.1 ) $ — $ 0.2 $ 0.2 $ (17.6 ) Net realized loss reclassified into earnings (a) 11.6 8.4 (2.7 ) 5.7 (1.4 ) 4.3 15.9 Net change $ (6.2 ) $ 8.5 $ (2.8 ) $ 5.7 $ (1.2 ) $ 4.5 $ (1.7 ) (a) The reclassification adjustment on cash flow hedge derivatives affected the following lines in the accompanying consolidated statements of income: OCI Component Affected line in the accompanying consolidated statements of income Pretax activity (1) Interest expense-net Tax effect Income tax expense OCI attributable to non-controlling interests Net income attributable to non-controlling interests (1) The three and nine months ended September 30, 2018 and 2017 reflect amounts of losses reclassified from AOCI into earnings, representing the effective portion of the hedging relationships, and are recorded in interest expense-net. (b) See Note 5 - Derivatives and Hedging Activities for more information on net investment hedge activity. (c) |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION As a result of changes driven by the Company’s acquisition of Legacy Worldpay, the Company’s reportable segments have changed and the Company has recast the three and nine months ended September 30, 2017 segment information to align with the new reportable segments. The new segments are Technology Solutions, Merchant Solutions and Issuer Solutions, which are organized based on the Company’s solution offerings. The reorganization consisted of separating the Company’s former Merchant segment into two separate segments, Technology Solutions and Merchant Solutions, with the Company’s Financial Institutions segment renamed Issuer Solutions. The Company’s Chairman of the Board and Co-Chief Executive Officer is the chief operating decision maker (“CODM”), who 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: • Technology Solutions - Technology Solutions provides merchant acquiring and payment processing services to a diverse set of merchants that primarily accept payments through eCommerce and integrated payment solutions. • Merchant Solutions - Merchant Solutions provides merchant acquiring and payment processing services to a diverse set of merchants that primarily accept payments through an omni-channel solution including terminal based. • Issuer Solutions - Issuer Solutions provides card issuer processing, payment network processing, fraud protection and card production to a diverse set of financial institutions, including regional banks, community banks, credit unions and regional PIN networks. Segment operating results are presented below (in millions). 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 revenue less sales and marketing costs of the segment. The Company’s CODM evaluates this metric in analyzing the results of operations for each segment. Three Months Ended September 30, 2018 Technology Merchant Solutions Issuer Solutions Total Revenue $ 419.7 $ 507.5 $ 90.7 $ 1,017.9 Network fees and other costs (1) — — — — Sales and marketing 115.2 174.0 6.6 295.8 Segment profit $ 304.5 $ 333.5 $ 84.1 $ 722.1 ( 1) For the three months ended September 30, 2018 network fees and other costs are netted within revenue as the result of the Company’s adoption of ASC 606 on January 1, 2018. Three Months Ended September 30, 2017 Technology Merchant Solutions Issuer Solutions Total Revenue $ 339.9 $ 576.7 $ 117.1 $ 1,033.7 Network fees and other costs 115.2 332.6 31.7 479.5 Sales and marketing 73.6 94.4 5.8 173.8 Segment profit $ 151.1 $ 149.7 $ 79.6 $ 380.4 Nine Months Ended September 30, 2018 Technology Merchant Solutions Issuer Solutions Total Revenue $ 1,157.7 $ 1,460.1 $ 257.6 $ 2,875.4 Network fees and other costs (1) — — — — Sales and marketing 309.2 516.8 19.2 845.2 Segment profit $ 848.5 $ 943.3 $ 238.4 $ 2,030.2 ( 1) For the nine months ended September 30, 2018 network fees and other costs are netted within revenue as the result of the Company’s adoption of ASC 606 on January 1, 2018. Nine Months Ended September 30, 2017 Technology Merchant Solutions Issuer Solutions Total Revenue $ 919.4 $ 1,695.9 $ 345.3 $ 2,960.6 Network fees and other costs 335.3 976.2 94.8 1,406.3 Sales and marketing 203.3 276.3 17.5 497.1 Segment profit $ 380.8 $ 443.4 $ 233.0 $ 1,057.2 A reconciliation of total segment profit to the Company’s (loss) income before applicable income taxes is as follows (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Total segment profit $ 722.1 $ 380.4 $ 2,030.2 $ 1,057.2 Less: Other operating costs (174.8 ) (79.4 ) (515.4 ) (234.3 ) Less: General and administrative (140.7 ) (49.6 ) (527.6 ) (189.6 ) Less: Depreciation and amortization (328.9 ) (82.5 ) (824.0 ) (237.0 ) Less: Interest expense—net (75.2 ) (38.5 ) (230.3 ) (97.4 ) Less: Non-operating expense (3.5 ) 21.2 (34.1 ) 13.7 (Loss) income before applicable income taxes $ (1.0 ) $ 151.6 $ (101.2 ) $ 312.6 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying consolidated financial statements include those of Worldpay, Inc. and all subsidiaries thereof, including its majority-owned subsidiary, Worldpay 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 September 30, 2018 , Worldpay, Inc. and Fifth Third Bank (“Fifth Third”) owned interests in Worldpay Holding of 96.71% and 3.29% , respectively (see Note 6 - 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 |
Use of Estimates | Use of Estimates |
Revenue Recognition | Revenue Recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue From Contracts With Customers (Topic 606) (“ASC 606”). This ASU supersedes the revenue recognition requirements in Accounting Standard Codification (“ASC”) 605, Revenue Recognition (“ASC 605”). 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 ASC. The Company adopted ASC 606 on January 1, 2018, using the modified retrospective method. The new standard requires the Company to disclose the accounting policies in effect prior to January 1, 2018, as well as the policies it has applied starting January 1, 2018. Revenue is measured based on consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a service or goods to a customer. Periods prior to January 1, 2018 The Company has contractual agreements with its customers 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. ASC 605 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 followed the 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 recognized processing revenues net of interchange fees, which are assessed to its 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 was reported on a gross basis, as the Company contracts directly with the end customer, assumes the risk of loss and has pricing flexibility. Periods commencing January 1, 2018 Revenue is recognized when a customer obtains control of promised services or goods. The amount of revenue recognized reflects the consideration the Company expects to be entitled to receive in exchange for these services. The Company has contractual agreements with its customers that set forth the general terms and conditions of the relationship including line item pricing, payment terms and contract duration. Revenue is recognized when the performance obligation under the terms of the Company’s contract with its customer is satisfied. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. The Company generates revenue primarily by processing electronic payment transactions. Set forth below is a description of the Company’s revenue by segment. Technology Solutions Technology Solutions provides merchant acquiring and payment processing services to a diverse set of merchants that primarily accept payments through eCommerce and integrated payment solutions. Merchant Solutions Merchant Solutions provides merchant acquiring and payment processing services to a diverse set of merchants that primarily accept payments through an omni-channel solution including terminal based. Issuer Solutions Issuer Solutions provides card issuer processing, payment network processing, fraud protection and card production to a diverse set of financial institutions, including regional banks, community banks, credit unions and regional personal identification number (“PIN”) networks. Performance Obligations Since the majority of the Company’s revenue relates to payment processing services for its customers, the Company’s core performance obligation is to provide continuous access to the Company’s system to process as much as its customers require. The Company’s payment processing services consist of variable consideration under a stand-ready series of distinct days of service that are substantially the same with the same pattern of transfer to the customer. The Company’s revenue from products and services is recognized at a point in time or over time depending on the products or services, with the majority of the revenue recognized at a point in time. Beginning in 2018, the Company records certain fees paid to third parties, including network fees and other costs, as a reduction of revenue. These fees were previously recorded on a gross basis. This change in presentation has no impact to income from operations. Under ASC 606, revenue of $1,017.9 million and $2,875.4 million was reported for the three and nine months ended September 30, 2018 . Excluding the impact of the adoption of ASC 606, amounts recorded under ASC 605 would include $1,715.7 million and $697.8 million of revenue and network fees and other costs for the three months ended September 30, 2018 , respectively, and $4,877.5 million and $2,002.1 million of revenue and network fees and other costs for the nine months ended September 30, 2018 , respectively. The adoption of ASC 606 did not have a material impact on any other line items of the Company’s Consolidated Statements of Income, Statements of Comprehensive Income, Statements of Financial Position, Statements of Equity and Statements of Cash Flows. Disaggregation of Revenue In the following table, revenue is disaggregated by source of revenue (in millions): Three Months Ended September 30, 2018 Technology Solutions Merchant Solutions Issuer Solutions Total Major Products and Services Processing services $ 286.8 $ 397.4 $ 49.7 $ 733.9 Products and services 132.9 110.1 41.0 284.0 Total $ 419.7 $ 507.5 $ 90.7 $ 1,017.9 Three Months Ended September 30, 2017 Technology Solutions Merchant Solutions Issuer Solutions Total Major Products and Services (1) Processing services $ 275.3 $ 517.3 $ 70.1 $ 862.7 Products and services 64.6 59.4 47.0 171.0 Total $ 339.9 $ 576.7 $ 117.1 $ 1,033.7 ( 1) Revenue for the three months ended September 30, 2017 presented in the table above is prior to the Company’s adoption of ASC 606 and therefore network fees and other costs are presented separately and not netted within revenue. Nine Months Ended September 30, 2018 Technology Solutions Merchant Solutions Issuer Solutions Total Major Products and Services Processing services $ 787.8 $ 1,151.2 $ 145.2 $ 2,084.2 Products and services 369.9 308.9 112.4 791.2 Total $ 1,157.7 $ 1,460.1 $ 257.6 $ 2,875.4 Nine Months Ended September 30, 2017 Technology Solutions Merchant Solutions Issuer Solutions Total Major Products and Services (1) Processing services $ 783.0 $ 1,529.7 $ 210.5 $ 2,523.2 Products and services 136.4 166.2 134.8 437.4 Total $ 919.4 $ 1,695.9 $ 345.3 $ 2,960.6 ( 1) Revenue for the nine months ended September 30, 2017 presented in the table above is prior to the Company’s adoption of ASC 606 and therefore network fees and other costs are presented separately and not netted within revenue. Processing Services Processing services revenue is primarily derived from processing credit and debit card transactions comprised of fees charged to businesses for payment processing services. The fees charged consist of either a percentage of the dollar volume of the transaction or a fixed fee, or both. Products and Services Products and services revenue is primarily derived from ancillary services such as treasury management and foreign exchange, regulatory compliance, chargebacks and fraud services. Costs to Obtain and Fulfill a Contract ASC 606 requires capitalizing costs of obtaining a contract when those costs are incremental and expected to be recovered. Since incremental commission fees paid to sales teams as a result of obtaining contracts are recoverable, the Company recorded a $28.8 million ( $22.3 million net of deferred taxes) cumulative catch-up capitalized asset on January 1, 2018. As of September 30, 2018 , the amount capitalized as contract costs is $36.9 million , which is included in other non-current assets. In order to determine the amortization period for sales commission contract costs, the Company applied the portfolio approach for “like-kind contracts” to which sales compensation earnings can be applied and allocated incentive payments to each portfolio accordingly. The Company evaluated each individual portfolio to determine the proper length of time over which the capitalized incentive should be amortized by analyzing customer attrition rates using historical data and other metrics. The Company determined that straight-line amortization would best correspond to the transfer of services to customers since services are transferred equally over time and have limited predictable volatility. The amortization periods range from 3 to 10 years and are based on the expected life of a customer. In 2018 , the amount of amortization was $2.6 million and $7.7 million for the three and nine months ended September 30, 2018 , respectively, which is included in sales and marketing expense. There was no impairment loss in relation to the costs capitalized. The Company recognizes incremental sales commission costs of obtaining a contract as expense when the amortization period for those assets is one year or less per the practical expedient in ASC 606. These costs are included in sales and marketing expense. 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 expected life of the customer. Related amortization is recorded as contra-revenue. The Company capitalizes conversion costs associated with enabling customers to receive its processing services. As of September 30, 2018 and December 31, 2017 , the Company had $39.9 million and $21.1 million , respectively, of capitalized conversion costs included in Intangible assets - net in the Company’s Consolidated Statement of Financial Position. Amortization expense related to these costs for the three months ended September 30, 2018 and 2017 was $2.1 million and $0.6 million , respectively, and for the nine months ended September 30, 2018 and 2017 was $4.5 million and $1.7 million , respectively. Amortization of these costs is recorded in depreciation and amortization expense in the Company’s Consolidated Statements of Income. These costs are amortized over the average life of the customer. Contract Balances 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; as such, collectibility is reasonably assured. Aside from debiting a client’s bank account, the Company collects a majority of its revenue via net settlement with the remaining portion collected via billing the customer. 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 September 30, 2018 and December 31, 2017 , the allowance for doubtful accounts was not material to the Company’s statements of financial position. As of September 30, 2018 and December 31, 2017 , accounts receivable, net of allowance for doubtful accounts on the Company’s Consolidated Statement of Financial Position was $1.6 billion and $1.0 billion , respectively. Contract Liabilities Contract liabilities, which relate to advance consideration received from customers (deferred revenue) before transfer of control occurs and therefore revenue is recognized, is not material to the Company’s consolidated financial statements. Remaining Performance Obligations ASC 606 requires disclosure of the aggregate amount of the transaction price allocated to unsatisfied performance obligations; however, as permitted by ASC 606, the Company has elected to exclude from this disclosure any contracts with an original duration of one year or less and any variable consideration that meets specified criteria. As discussed above, the Company’s core performance obligation consists of variable consideration under a stand-ready series of distinct days of service. The aggregate fixed consideration portion of customer contracts with an initial contract duration greater than one year is not material. Changes in Accounting Policies As noted above, the Company adopted ASC 606, effective January 1, 2018, using the modified retrospective method, applying the standard to contracts that are not complete as of the date of initial application. Therefore, the comparative information has not been adjusted and continues to be reported under ASC 605. The details of the significant changes are set out below. |
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 the Company’s clients, including Visa and Mastercard network association fees and payment network fees and only relates to the three and nine months ended September 30, 2017 . Following the Company’s adoption of ASC 606 on January 1, 2018 , network fees and other costs are presented net within revenue. • Sales and marketing expense primarily consists of salaries and benefits paid to sales personnel, sales management and other sales and marketing personnel, amortization of capitalized commission fees, 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, legal and risk management, share-based compensation costs, equipment and occupancy costs and consulting costs. The nine months ended September 30, 2018 includes a significant amount of transition, acquisition and integration costs related to the Legacy Worldpay acquisition. The nine months ended September 30, 2017 includes a charge related to a settlement agreement stemming from legacy litigation of an acquired company. • Non-operating expenses during the nine months ended September 30, 2018 primarily consist of expenses relating to the Company’s financing arrangements entered into in connection with the Legacy Worldpay acquisition, repricing of the Company’s debt in June 2018 and the change in fair value of the Mercury TRA (see Note 8 - Fair Value Measurements), partially offset by a gain on the settlement of a deal contingent forward entered into in connection with the Company’s acquisition of Legacy Worldpay. Non-operating income for the nine months ended September 30, 2017 |
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 shares issued as restricted stock, performance awards and under the Employee Stock Purchase Plan (“ESPP”) is measured based on the market price of the Company’s stock on the grant date. For the nine months ended September 30, 2018 and 2017 total share-based compensation expense was $99.0 million and $35.1 million , respectively. |
Earnings Per Share | Earnings per Share |
Income Taxes | Income Taxes 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 September 30, 2018 , the Company has recorded valuation allowances against deferred tax assets of $12.9 million related to foreign subsidiaries. As of December 31, 2017 , the Company recorded no valuation allowances against deferred tax assets. The Company’s consolidated interim effective tax rate is based upon expected annual income from operations, statutory tax rates and tax laws in the various jurisdictions in which the Company operates. Significant or unusual items, including adjustments to accruals for tax uncertainties, are recognized in the quarter in which the related event occurs. The Company’s effective tax rates were 4.9% and 26.7% respectively, for the nine months ended September 30, 2018 and 2017 . The 2018 effective tax rate reflects a $6.9 million charge to deferred taxes relating to changes in state tax laws. The effective rate for each period reflects the impact of the Company’s non-controlling interests not being taxed at the statutory U.S. corporate tax rates. The 2018 effective tax rate also reflects the impact of the Tax Cuts and Jobs Act (“Tax Reform”) and the impact related to the addition of international taxing jurisdictions as a result of the Legacy Worldpay acquisition. On December 22, 2017, the President of the United States signed into law Tax Reform. Tax Reform amended the Internal Revenue Code to reduce tax rates and modify policies, credits and deductions as well as reduce the corporate federal tax rate from a maximum of 35% to a flat 21% rate with an effective date of January 1, 2018. As of December 31, 2017, the Company preliminarily revalued its net deferred tax asset based on Tax Reform. As of September 30, 2018 , the Company has not adjusted this provisional amount and is continuing to gather additional information to complete its accounting for this item and expects to complete the accounting within the prescribed measurement period. |
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. The Company has restricted cash held in money market accounts, which approximate fair value and are a level 1 input in the fair value hierarchy. Following the adoption of ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, the Company includes restricted cash in the cash and cash equivalents balance of the consolidated statements of cash flows. The reconciliation between the consolidated statement of financial position and the consolidated statement of cash flows is as follows (in millions): September 30, December 31, Cash and cash equivalents on consolidated statement of financial position $ 373.7 $ 126.5 Proceeds from senior unsecured notes - restricted for closing of Worldpay acquisition — 1,135.2 Other restricted cash (other current assets) 488.1 10.5 Merchant float 1,427.9 — Total cash and cash equivalents on consolidated statement of cash flows $ 2,289.7 $ 1,272.2 |
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, which are 15 to 40 years for the Company’s facilities and related improvements, 2 to 10 years for furniture and equipment and 3 to 8 years for software. Leasehold improvements are depreciated on a straight-line basis over the lesser of the estimated useful life of the improvement which is 3 to 10 years 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. Accumulated depreciation as of September 30, 2018 and December 31, 2017 was $503.6 million and $372.1 million , respectively. The Company capitalizes certain costs related to computer software developed for internal use and amortizes such costs on a straight-line basis over an estimated useful life of 5 to 8 |
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 implied 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, 2018 using market data and discounted cash flow analyses. Based on this analysis, it was determined that the fair value of all reporting units was substantially in excess of the carrying value. There have been no other events or changes in circumstances subsequent to the testing date that would indicate impairment of these reporting units as of September 30, 2018 . 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 September 30, 2018 |
Settlement Assets and Obligations | Merchant Float and Settlement Assets and Obligations Merchant float represents surplus cash balances the Company holds on behalf of its merchant customers when the incoming amount from the card networks precedes when the funding to customers falls due. Such funds are held in a fiduciary capacity, and are not available for the Company to use to fund its cash requirements. |
Derivatives | Derivatives The Company accounts for derivatives in accordance with ASC 815, Derivatives and Hedging |
Foreign Currencies | Foreign Currencies The U.S. dollar is the Company’s reporting currency and functional currency of the Company’s U.S.-based businesses. The Company has operations with a local currency as their functional currency, the most significant being the British Pound. Foreign currency-denominated assets and liabilities are translated into U.S. dollars based on exchange rates prevailing at the end of the period, and revenues and expenses are translated at average exchange rates during each monthly period. The effects of foreign currency translation of assets and liabilities of those entities where the functional currency is not the U.S. dollar are included as a component of Other Comprehensive Income (Loss). Transaction gains and losses related to operating assets and liabilities denominated in a currency other than an entities functional currency are included in various line items in the Company’s Consolidated Statements of Income and were immaterial for the three and nine months ended September 30, 2018 |
Related Party Presentation | Related Party Presentation As a result of the Company closing the Legacy Worldpay acquisition on January 16, 2018, Fifth Third’s ownership percentage in Worldpay Holding decreased below 5% and Fifth Third no longer has board representation, therefore the Company no longer considers Fifth Third a related party. Related party revenue for the period of January 1, 2018 through January 15, 2018 was not material. The Fifth Third related party activity within the Consolidated Statements of Income for the three and nine months ended September 30, 2017 is as follows (in millions): Consolidated Statements of Income Location Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 Revenue $ 16.7 $ 50.1 The Fifth Third related party positions within the Consolidated Statements of Financial Position for the period ending December 31, 2017 are as follows (in millions): Consolidated Statement of Financial Position Location December 31, Assets: Accounts receivable—net $ 0.7 Liabilities: Accounts payable and accrued expenses $ 9.0 Current portion of notes payable 5.4 Current portion of tax receivable agreement obligations 190.2 Notes payable 158.4 Tax receivable agreement obligations 489.8 |
New Accounting Pronouncements | New Accounting Pronouncements In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which amends and simplifies existing guidance to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. This ASU is effective for the Company in the first quarter of fiscal 2019, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this principle on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU amends the existing guidance by recognizing all leases, including operating leases, with a term longer than 12 months on the balance sheet as right of use assets and liabilities 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 Company plans to elect the optional modified retrospective transition approach to apply the provisions of the new standard. This approach results in the recognition of lease assets and liabilities in the period of adoption without requiring the restatement of the prior period financials presented. |
Segment | As a result of changes driven by the Company’s acquisition of Legacy Worldpay, the Company’s reportable segments have changed and the Company has recast the three and nine months ended September 30, 2017 segment information to align with the new reportable segments. The new segments are Technology Solutions, Merchant Solutions and Issuer Solutions, which are organized based on the Company’s solution offerings. The reorganization consisted of separating the Company’s former Merchant segment into two separate segments, Technology Solutions and Merchant Solutions, with the Company’s Financial Institutions segment renamed Issuer Solutions. The Company’s Chairman of the Board and Co-Chief Executive Officer is the chief operating decision maker (“CODM”), who 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: • Technology Solutions - Technology Solutions provides merchant acquiring and payment processing services to a diverse set of merchants that primarily accept payments through eCommerce and integrated payment solutions. • Merchant Solutions - Merchant Solutions provides merchant acquiring and payment processing services to a diverse set of merchants that primarily accept payments through an omni-channel solution including terminal based. • Issuer Solutions - Issuer Solutions provides card issuer processing, payment network processing, fraud protection and card production to a diverse set of financial institutions, including regional banks, community banks, credit unions and regional PIN networks. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Cash Reconciliation | Following the adoption of ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, the Company includes restricted cash in the cash and cash equivalents balance of the consolidated statements of cash flows. The reconciliation between the consolidated statement of financial position and the consolidated statement of cash flows is as follows (in millions): September 30, December 31, Cash and cash equivalents on consolidated statement of financial position $ 373.7 $ 126.5 Proceeds from senior unsecured notes - restricted for closing of Worldpay acquisition — 1,135.2 Other restricted cash (other current assets) 488.1 10.5 Merchant float 1,427.9 — Total cash and cash equivalents on consolidated statement of cash flows $ 2,289.7 $ 1,272.2 |
Disaggregation of Revenue | In the following table, revenue is disaggregated by source of revenue (in millions): Three Months Ended September 30, 2018 Technology Solutions Merchant Solutions Issuer Solutions Total Major Products and Services Processing services $ 286.8 $ 397.4 $ 49.7 $ 733.9 Products and services 132.9 110.1 41.0 284.0 Total $ 419.7 $ 507.5 $ 90.7 $ 1,017.9 Three Months Ended September 30, 2017 Technology Solutions Merchant Solutions Issuer Solutions Total Major Products and Services (1) Processing services $ 275.3 $ 517.3 $ 70.1 $ 862.7 Products and services 64.6 59.4 47.0 171.0 Total $ 339.9 $ 576.7 $ 117.1 $ 1,033.7 ( 1) Revenue for the three months ended September 30, 2017 presented in the table above is prior to the Company’s adoption of ASC 606 and therefore network fees and other costs are presented separately and not netted within revenue. Nine Months Ended September 30, 2018 Technology Solutions Merchant Solutions Issuer Solutions Total Major Products and Services Processing services $ 787.8 $ 1,151.2 $ 145.2 $ 2,084.2 Products and services 369.9 308.9 112.4 791.2 Total $ 1,157.7 $ 1,460.1 $ 257.6 $ 2,875.4 Nine Months Ended September 30, 2017 Technology Solutions Merchant Solutions Issuer Solutions Total Major Products and Services (1) Processing services $ 783.0 $ 1,529.7 $ 210.5 $ 2,523.2 Products and services 136.4 166.2 134.8 437.4 Total $ 919.4 $ 1,695.9 $ 345.3 $ 2,960.6 ( 1) Revenue for the nine months ended September 30, 2017 presented in the table above is prior to the Company’s adoption of ASC 606 and therefore network fees and other costs are presented separately and not netted within revenue. |
Schedule of Related Party Transactions | The Fifth Third related party activity within the Consolidated Statements of Income for the three and nine months ended September 30, 2017 is as follows (in millions): Consolidated Statements of Income Location Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 Revenue $ 16.7 $ 50.1 The Fifth Third related party positions within the Consolidated Statements of Financial Position for the period ending December 31, 2017 are as follows (in millions): Consolidated Statement of Financial Position Location December 31, Assets: Accounts receivable—net $ 0.7 Liabilities: Accounts payable and accrued expenses $ 9.0 Current portion of notes payable 5.4 Current portion of tax receivable agreement obligations 190.2 Notes payable 158.4 Tax receivable agreement obligations 489.8 |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Worldpay Group, PLC | |
Business Acquisition | |
Schedule of recognized identified assets acquired and liabilities assumed | The preliminary purchase price allocation is as follows (in millions): Cash acquired $ 576.3 Current assets (1) 4,139.3 Property, equipment and software 561.1 Intangible assets 3,380.1 Goodwill 10,572.8 Other non-current assets 75.6 Current liabilities (2) (4,532.1 ) Long-term debt (3) (2,304.7 ) Deferred tax liability (549.8 ) Non-current liabilities (43.1 ) Total purchase price $ 11,875.5 (1) Includes $1,947.6 million of merchant float and $511.1 million of other restricted cash. (2) Includes $118.6 million of dividend payable to reflect the special dividend granted to the shareholders of Legacy Worldpay. (3) Includes $1,649.9 million |
Worldpay Group, PLC acquisition pro forma information | The following pro forma combined financial information presents the Company’s results of operations for the three and nine months ended September 30, 2018 and 2017 , as if the acquisition had occurred on January 1, 2017 (in millions, except share amounts). Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (Actual) (Pro forma) (Pro forma) (Pro forma) Total revenue (1) $ 1,017.9 $ 1,574.2 $ 2,939.2 $ 4,524.3 Net income (loss) attributable to Worldpay, Inc. 2.8 17.7 91.8 (150.2 ) Net income (loss) per share attributable to Worldpay, Inc. Class A common stock: Basic $ 0.01 $ 0.06 $ 0.32 $ (0.51 ) Diluted $ 0.01 $ 0.06 $ 0.31 $ (0.51 ) Shares used in computing net income (loss) per share of Class A common stock: Basic 301,240,681 295,032,995 290,385,855 294,772,212 Diluted 313,881,826 296,449,542 292,594,557 294,772,212 ( 1) Revenue for the three and nine months ended September 30, 2017 |
Paymetric Holdings, Inc. | |
Business Acquisition | |
Schedule of recognized identified assets acquired and liabilities assumed | The final purchase price allocation is as follows (in millions): Cash acquired $ 11.9 Current assets 6.5 Property, equipment and software 92.1 Intangible assets 47.8 Goodwill 433.8 Other assets 0.1 Current liabilities (18.3 ) Deferred tax liability (22.0 ) Non-current liabilities (8.5 ) Total purchase price $ 543.4 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | Changes in the carrying amount of goodwill for the nine months ended September 30, 2018 are as follows (in millions): Consolidated Total Balance as of December 31, 2017 $ 4,173.0 Goodwill attributable to acquisition of Paymetric (1) (0.2 ) Goodwill attributable to acquisition of Legacy Worldpay (2) 10,486.4 Other acquisitions 15.6 Balance as of September 30, 2018 $ 14,674.8 (1) Amount represents adjustments to goodwill associated with the acquisition of Paymetric as of the finalization of purchase accounting. (2) Amount of goodwill attributable to the acquisition, including its allocation to reportable segments, is preliminary and subject to change. Includes $86.4 million |
Schedule of intangible assets | As of September 30, 2018 and December 31, 2017 , the Company’s finite lived intangible assets consisted of the following (in millions): September 30, 2018 December 31, 2017 Customer relationship intangible assets $ 4,600.3 $ 1,712.7 Trade name 356.9 — Customer portfolios and related assets 309.9 249.8 Patents 1.9 1.6 5,269.0 1,964.1 Less accumulated amortization on: Customer relationship intangible assets 1,705.3 1,156.4 Customer portfolios and related assets 171.9 129.2 Trade name 27.0 — 1,904.2 1,285.6 Intangible assets, net $ 3,364.8 $ 678.5 |
Schedule of expected amortization expense | The estimated amortization expense of intangible assets for the remainder of 2018 and the next five years is as follows (in millions): Three months ended December 31, 2018 $ 208.1 2019 750.4 2020 608.6 2021 500.4 2022 435.1 2023 275.9 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of the Company's Debt | As of September 30, 2018 and December 31, 2017 , the Company’s long-term debt consisted of the following (in millions): September 30, December 31, Term A loan, maturing in January 2023 (1) $ 3,313.6 $ 2,166.7 Term A loan, maturing in October 2021 (2) — 179.2 Term A loan, maturing in January 2023 (3) 620.7 — Term B loan, maturing in October 2023 (4) 576.9 757.4 Term B loan, maturing in August 2024 (5) 1,746.2 1,270.0 Senior Unsecured Dollar Notes, maturing in November 2025 (6) 500.0 500.0 Senior Unsecured Sterling Notes, maturing in November 2025 (7) 613.8 635.2 Senior Unsecured Euro Note, maturing in November 2022 (8) 631.0 — Leasehold mortgage, expiring on August 10, 2021 (9) 10.0 10.1 Revolving credit facility, expiring in January 2023 — 225.0 Less: Current portion of notes payable (226.5 ) (107.9 ) Less: Original issue discount (6.7 ) (3.0 ) Less: Debt issuance costs (55.3 ) (46.3 ) Notes payable $ 7,723.7 $ 5,586.4 (1) Interest at a variable base rate (LIBOR) plus a spread rate (150 basis points) (total rate of 3.63% at September 30, 2018 ) and amortizing on a basis of 1.25% per quarter during each of the first twelve quarters (June 2018 through March 2021), 1.875% per quarter during the next four quarters (June 2021 through March 2022) and 2.50% per quarter during the next three quarters (June 2022 through December 2022) with a balloon payment due at maturity. (2) Outstanding principal balance paid down using the proceeds from the GBP Term Loan A financing as part of the June 22, 2018 amendment to the Existing Loan Agreement. See below for more details. (3) £475 million principal outstanding, translated to U.S dollars at the spot rate of 1.3059 U.S. dollars per Pound Sterling at September 30, 2018 . Interest at a variable base rate (GBP LIBOR) plus a spread rate ( 150 basis points ) (total rate of 2.22% at September 30, 2018 ) and amortizing on a basis of 1.25% per quarter during each of the first twelve quarters (June 2018 through March 2021), 1.875% per quarter during the next four quarters (June 2021 through March 2022) and 2.50% per quarter during the next three quarters (June 2022 through December 2022) with a balloon payment due at maturity. (4) Interest payable at a variable base rate (LIBOR) plus a spread rate (175 basis points) (total rate of 3.88% at September 30, 2018 ) and amortizing on a basis of 0.25% per quarter, with a balloon payment due at maturity. (5) Interest payable at a variable base rate (LIBOR) plus a spread rate (175 basis points) (total rate of 3.88% at September 30, 2018 ) and amortizing on a basis of 0.25% per quarter, with a balloon payment due at maturity. (6) $500 million principal senior unsecured notes with interest payable semi-annually at a fixed rate of 4.375% and principal due upon maturity. (7) £470 million principal senior unsecured notes with interest payable semi-annually at a fixed rate of 3.875% and principal due upon maturity. The spot rate of 1.3059 U.S. dollars per Pound Sterling at September 30, 2018 was used to translate the Note to U.S. dollars. (8) €500 million principal senior unsecured note with interest payable semi-annually at a fixed rate of 3.75% and principal due upon maturity. The spot rate of 1.1617 U.S. dollars per Euro at September 30, 2018 was used to translate the Note to U.S. dollars. Includes remaining unamortized fair value premium of $50.1 million at September 30, 2018 . (9) Interest payable monthly at a fixed rate of 6.22% . |
DERIVATIVES AND HEDGING ACTIV_2
DERIVATIVES AND HEDGING ACTIVITIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The following table presents the Company’s interest rate swaps and caps (in millions): Derivative Use of Derivative Hedge Designation Notional Value Exposure Periods Strike Rate Interest rate swap Manage fluctuations in interest rates Cash flow hedge $ 500 January 2018 to January 2019 Interest rate swap Manage fluctuations in interest rates Cash flow hedge 600 June 2018 to June 2021 Interest rate swap Manage fluctuations in interest rates Cash flow hedge 500 June 2019 to June 2021 Total $ 1,600 Interest rate cap Manage fluctuations in interest rates Cash flow hedge $ 1,000 January 2017 to January 2020 0.75 % Interest rate cap Manage fluctuations in interest rates Cash flow hedge 600 June 2018 to June 2021 2.25 % Total $ 1,600 |
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 millions): Consolidated Statement of September 30, 2018 December 31, 2017 Interest rate contracts Other current assets $ 20.4 $ 9.7 Interest rate contracts Other long-term assets 17.5 14.7 Interest rate contracts Other current liabilities 0.5 4.2 Interest rate contracts Other long-term liabilities — 0.2 |
Schedule of effect of the Company's interest rate swaps on the consolidated statements of income | The table below presents the pre-tax effect of the Company’s interest rate contracts on the accompanying consolidated statements of comprehensive income for the three and nine months ended September 30, 2018 and 2017 (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Derivatives in cash flow hedging relationships: Amount of gain (loss) recognized in OCI (effective portion) (1) $ 4.7 $ 0.4 $ 14.2 $ 0.1 Amount of gain (loss) reclassified from accumulated OCI into earnings (effective portion) 0.3 (1.1 ) (0.1 ) (8.4 ) Amount of gain recognized in earnings (2) — — 0.1 — (1) “OCI” represents other comprehensive income. (2) For the three and nine months ended September 30, 2018 , amount represents hedge ineffectiveness. |
CONTROLLING AND NON-CONTROLLI_2
CONTROLLING AND NON-CONTROLLING INTERESTS IN WORLDPAY HOLDING (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Schedule of changes in units and related ownership interest | As of September 30, 2018 , Worldpay, Inc.’s interest in Worldpay Holding was 96.71% . Changes in units and related ownership interest in Worldpay Holding are summarized as follows: Worldpay, Inc. Fifth Third Total As of December 31, 2017 162,595,981 15,252,826 177,848,807 % of ownership 91.42 % 8.58 % Shares issued for acquisition, net of shares acquired 133,567,146 — 133,567,146 Fifth Third exchange of Worldpay Holding units for shares of Class A common stock 5,000,000 (5,000,000 ) — Equity plan activity (1) 692,129 — 692,129 As of September 30, 2018 301,855,256 10,252,826 312,108,082 % of ownership 96.71 % 3.29 % (1) |
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 millions): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Net income (loss) $ 3.6 $ 106.9 $ (96.2 ) $ 229.1 Items not allocable to non-controlling interests: Worldpay, Inc. expenses (1) 2.3 14.2 52.4 25.1 Worldpay Holding net income (loss) $ 5.9 $ 121.1 $ (43.8 ) $ 254.2 Net income attributable to non-controlling interests of Fifth Third (2) $ 0.2 $ 14.1 $ — $ 37.6 Net income attributable to joint venture non-controlling interest (3) 0.6 0.7 1.5 1.7 Total net income attributable to non-controlling interests $ 0.8 $ 14.8 $ 1.5 $ 39.3 (1) Primarily represents income tax expense for the three months ended September 30, 2018 and acquisition related expenses for the nine months ended September 30, 2018 . Primarily represents income tax expense for the three and nine months ended September 30, 2017 . (2) Net income attributable to non-controlling interests of Fifth Third reflects the allocation of Worldpay Holding’s net income based on the proportionate ownership interests in Worldpay 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) |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 and December 31, 2017 (in millions): September 30, 2018 December 31, 2017 Fair Value Measurements Using Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Interest rate contracts $ — $ 37.9 $ — $ — $ 24.4 $ — Deal contingent foreign currency forward — — — — 33.1 — Liabilities: Interest rate contracts $ — $ 0.5 $ — $ — $ 4.4 $ — Mercury TRA — 51.6 — — 100.5 — |
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 September 30, 2018 and December 31, 2017 (in millions): September 30, 2018 December 31, 2017 Carrying Fair Value Carrying Fair Value Liabilities: Notes payable $ 7,950.2 $ 7,977.0 $ 5,694.3 $ 5,772.1 |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 (loss) per share (in millions, except share data): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Basic: Net income (loss) attributable to Worldpay, Inc. $ 2.8 $ 92.1 $ (97.7 ) $ 189.8 Shares used in computing basic net income (loss) per share: Weighted-average Class A common shares 301,240,681 161,465,849 290,385,855 161,205,066 Basic net income (loss) per share $ 0.01 $ 0.57 $ (0.34 ) $ 1.18 Diluted: Consolidated (loss) before applicable income taxes $ (1.0 ) $ — $ — $ — Income tax benefit excluding impact of non-controlling interest (3.6 ) — — — Net income (loss) attributable to Worldpay, Inc. $ 2.6 $ 92.1 $ (97.7 ) $ 189.8 Shares used in computing diluted net income (loss) per share: Weighted-average Class A common shares 301,240,681 161,465,849 290,385,855 161,205,066 Weighted-average Class B units of Worldpay Holding 10,252,826 — — — Stock options 949,483 739,835 — 706,632 Restricted stock awards, restricted stock units and employee stock purchase plan 1,398,259 645,508 — 664,275 Performance awards 40,577 31,204 — 41,809 Diluted weighted-average shares outstanding 313,881,826 162,882,396 290,385,855 162,617,782 Diluted net income (loss) per share $ 0.01 $ 0.57 $ (0.34 ) $ 1.17 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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) (“AOCI”) related to hedging and other activities for the three and nine months ended September 30, 2018 and 2017 is presented below (in millions): Total Other Comprehensive Income (Loss) AOCI Beginning Balance Pretax Activity Tax Effect Net Activity Attributable to non-controlling interests Attributable to Worldpay, Inc. AOCI Ending Balance Three Months Ended September 30, 2018 Net change in fair value of cash flow hedge recorded in AOCI $ (7.0 ) $ 4.7 $ (1.1 ) $ 3.6 $ (0.2 ) $ 3.4 $ (3.6 ) Net realized loss on cash flow hedge reclassified into earnings (a) 17.0 (0.3 ) 0.1 (0.2 ) — (0.2 ) 16.8 Translation adjustments on net investment hedge recorded in AOCI (b) 28.9 4.3 (1.0 ) 3.3 (0.1 ) 3.2 32.1 Foreign currency translation adjustments (c) (82.5 ) (110.6 ) — (110.6 ) 3.7 (106.9 ) (189.4 ) Net change $ (43.6 ) $ (101.9 ) $ (2.0 ) $ (103.9 ) $ 3.4 $ (100.5 ) $ (144.1 ) Three Months Ended September 30, 2017 Net change in fair value recorded in accumulated OCI $ (18.0 ) $ 0.4 $ (0.2 ) $ 0.2 $ 0.2 $ 0.4 $ (17.6 ) Net realized loss reclassified into earnings (a) 15.4 1.1 (0.5 ) 0.6 (0.1 ) 0.5 15.9 Net change $ (2.6 ) $ 1.5 $ (0.7 ) $ 0.8 $ 0.1 $ 0.9 $ (1.7 ) Nine Months Ended September 30, 2018 Net change in fair value of cash flow hedge recorded in AOCI $ (13.8 ) $ 14.2 $ (3.3 ) $ 10.9 $ (0.7 ) $ 10.2 $ (3.6 ) Net realized loss on cash flow hedge reclassified into earnings (a) 16.7 0.1 — 0.1 — 0.1 16.8 Translation adjustments on net investment hedge recorded in AOCI (b) — 44.2 (10.1 ) 34.1 (2.0 ) 32.1 32.1 Foreign currency translation adjustments (c) — (197.2 ) — (197.2 ) 7.8 (189.4 ) (189.4 ) Net change $ 2.9 $ (138.7 ) $ (13.4 ) $ (152.1 ) $ 5.1 $ (147.0 ) $ (144.1 ) Nine Months Ended September 30, 2017 Net change in fair value recorded in accumulated OCI $ (17.8 ) $ 0.1 $ (0.1 ) $ — $ 0.2 $ 0.2 $ (17.6 ) Net realized loss reclassified into earnings (a) 11.6 8.4 (2.7 ) 5.7 (1.4 ) 4.3 15.9 Net change $ (6.2 ) $ 8.5 $ (2.8 ) $ 5.7 $ (1.2 ) $ 4.5 $ (1.7 ) (a) The reclassification adjustment on cash flow hedge derivatives affected the following lines in the accompanying consolidated statements of income: OCI Component Affected line in the accompanying consolidated statements of income Pretax activity (1) Interest expense-net Tax effect Income tax expense OCI attributable to non-controlling interests Net income attributable to non-controlling interests (1) The three and nine months ended September 30, 2018 and 2017 reflect amounts of losses reclassified from AOCI into earnings, representing the effective portion of the hedging relationships, and are recorded in interest expense-net. (b) See Note 5 - Derivatives and Hedging Activities for more information on net investment hedge activity. (c) |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of results of operations for each segment | Segment profit reflects revenue less sales and marketing costs of the segment. The Company’s CODM evaluates this metric in analyzing the results of operations for each segment. Three Months Ended September 30, 2018 Technology Merchant Solutions Issuer Solutions Total Revenue $ 419.7 $ 507.5 $ 90.7 $ 1,017.9 Network fees and other costs (1) — — — — Sales and marketing 115.2 174.0 6.6 295.8 Segment profit $ 304.5 $ 333.5 $ 84.1 $ 722.1 ( 1) For the three months ended September 30, 2018 network fees and other costs are netted within revenue as the result of the Company’s adoption of ASC 606 on January 1, 2018. Three Months Ended September 30, 2017 Technology Merchant Solutions Issuer Solutions Total Revenue $ 339.9 $ 576.7 $ 117.1 $ 1,033.7 Network fees and other costs 115.2 332.6 31.7 479.5 Sales and marketing 73.6 94.4 5.8 173.8 Segment profit $ 151.1 $ 149.7 $ 79.6 $ 380.4 Nine Months Ended September 30, 2018 Technology Merchant Solutions Issuer Solutions Total Revenue $ 1,157.7 $ 1,460.1 $ 257.6 $ 2,875.4 Network fees and other costs (1) — — — — Sales and marketing 309.2 516.8 19.2 845.2 Segment profit $ 848.5 $ 943.3 $ 238.4 $ 2,030.2 ( 1) For the nine months ended September 30, 2018 network fees and other costs are netted within revenue as the result of the Company’s adoption of ASC 606 on January 1, 2018. Nine Months Ended September 30, 2017 Technology Merchant Solutions Issuer Solutions Total Revenue $ 919.4 $ 1,695.9 $ 345.3 $ 2,960.6 Network fees and other costs 335.3 976.2 94.8 1,406.3 Sales and marketing 203.3 276.3 17.5 497.1 Segment profit $ 380.8 $ 443.4 $ 233.0 $ 1,057.2 |
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 (loss) income before applicable income taxes is as follows (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Total segment profit $ 722.1 $ 380.4 $ 2,030.2 $ 1,057.2 Less: Other operating costs (174.8 ) (79.4 ) (515.4 ) (234.3 ) Less: General and administrative (140.7 ) (49.6 ) (527.6 ) (189.6 ) Less: Depreciation and amortization (328.9 ) (82.5 ) (824.0 ) (237.0 ) Less: Interest expense—net (75.2 ) (38.5 ) (230.3 ) (97.4 ) Less: Non-operating expense (3.5 ) 21.2 (34.1 ) 13.7 (Loss) income before applicable income taxes $ (1.0 ) $ 151.6 $ (101.2 ) $ 312.6 |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business (Details) | Sep. 30, 2018 |
Description of Business [Abstract] | |
Number of Payment Methods | 300 |
Number of Transaction Currencies | 126 |
Number of Countries in which Entity Operates | 146 |
BASIS OF PRESENTATION AND SUM_4
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | |
Principles of consolidation | |||
Issuance of tax receivable agreements | $ 33.9 | $ 24.4 | |
Fifth Third | |||
Principles of consolidation | |||
Issuance of Tax Receivable Agreements | $ 120.9 | ||
Deferred Tax Assets due to Fifth Third Stock Sale | 87 | ||
Issuance of tax receivable agreements | $ 33.9 | ||
Class B Common Stock | |||
Principles of consolidation | |||
Fifth Third Class B Units Sale | 5 | ||
Class B Common Stock | Common Stock | |||
Principles of consolidation | |||
Fifth Third Class B Units Sale | 5 | ||
Class A Common Stock | |||
Principles of consolidation | |||
Fifth Third Class B Units Sale | 5 | ||
Class A Common Stock | Common Stock | |||
Principles of consolidation | |||
Fifth Third Class B Units Sale | 5 |
BASIS OF PRESENTATION AND SUM_5
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Share Repurchase Program (Details) - Class A Common Stock - October 2016 Authorized Share Repurchase Program - USD ($) $ in Millions | Sep. 30, 2018 | Oct. 25, 2016 |
Capital Stock | ||
Stock Repurchase Program, Authorized Amount | $ 250 | |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 243 |
BASIS OF PRESENTATION AND SUM_6
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition (Details) - USD ($) $ in Millions | Jan. 01, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Segment Reporting Information | |||||||
Revenue from Processing Service | $ 733.9 | $ 862.7 | $ 2,084.2 | $ 2,523.2 | |||
Revenue from Products and Services | 284 | 171 | 791.2 | 437.4 | |||
Revenue under ASC 606 | 1,017.9 | 1,033.7 | 2,875.4 | 2,960.6 | |||
Revenue under ASC 605 | 1,715.7 | 4,877.5 | |||||
Network fess and other costs recorded as revenue | 697.8 | 2,002.1 | |||||
Cumulative catch-up adjustment to revenue due to ASC 606 | $ 28.8 | ||||||
Cumulative effect of accounting change on equity | $ 22.3 | $ 22.3 | $ 0.5 | ||||
Capitalized contract cost | 36.9 | 36.9 | |||||
Amortization of capitalized contract cost | 2.6 | 7.7 | |||||
Conversion Costs related to Processing Service Revenue | 39.9 | 39.9 | 21.1 | ||||
Amortization of Capitalized Conversion Costs related to Processing Services | 2.1 | 0.6 | 4.5 | 1.7 | |||
Accounts receivable—net | 1,599.8 | 1,599.8 | $ 986.6 | ||||
Technology Solutions | |||||||
Segment Reporting Information | |||||||
Revenue from Processing Service | 286.8 | 275.3 | 787.8 | 783 | |||
Revenue from Products and Services | 132.9 | 64.6 | 369.9 | 136.4 | |||
Revenue under ASC 606 | 419.7 | 339.9 | 1,157.7 | 919.4 | |||
Merchant Solutions | |||||||
Segment Reporting Information | |||||||
Revenue from Processing Service | 397.4 | 517.3 | 1,151.2 | 1,529.7 | |||
Revenue from Products and Services | 110.1 | 59.4 | 308.9 | 166.2 | |||
Revenue under ASC 606 | 507.5 | 576.7 | 1,460.1 | 1,695.9 | |||
Issuer Solutions | |||||||
Segment Reporting Information | |||||||
Revenue from Processing Service | 49.7 | 70.1 | 145.2 | 210.5 | |||
Revenue from Products and Services | 41 | 47 | 112.4 | 134.8 | |||
Revenue under ASC 606 | $ 90.7 | $ 117.1 | $ 257.6 | $ 345.3 | |||
Minimum | |||||||
Segment Reporting Information | |||||||
Capitalized contract cost, amortization period | 3 years | 3 years | |||||
Maximum | |||||||
Segment Reporting Information | |||||||
Capitalized contract cost, amortization period | 10 years | 10 years |
BASIS OF PRESENTATION AND SUM_7
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Share Based Compensations (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||
Share-based compensation expense | $ 99 | $ 35.1 |
BASIS OF PRESENTATION AND SUM_8
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Income Taxes (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | |||
Valuation allowance against deferred assets | $ 12,900,000 | $ 0 | |
Effective income tax rate | 4.90% | 26.70% | |
Deferred tax related to change in state tax laws | $ 6,900,000 | ||
Corporate federal tax rate | 21.00% | 35.00% |
BASIS OF PRESENTATION AND SUM_9
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents on consolidated statements of financial position | $ 373.7 | $ 126.5 | ||
Proceeds from senior unsecured note - restricted for Legacy Worldpay acquisition | 0 | 1,135.2 | ||
Other restricted cash | 488.1 | 10.5 | ||
Merchant float | 1,427.9 | 0 | ||
Cash and cash equivalents on cash flow statement | $ 2,289.7 | $ 1,272.2 | $ 92.6 | $ 139.1 |
BASIS OF PRESENTATION AND SU_10
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Property and Equipment (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | ||
Property, equipment and Software accumulated depreciation | $ 503.6 | $ 372.1 |
Building and improvements | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 15 years | |
Building and improvements | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 40 years | |
Furniture and equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 2 years | |
Furniture and equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 10 years | |
Software | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 3 years | |
Software | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 8 years | |
Leasehold improvements | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 3 years | |
Leasehold improvements | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 10 years | |
Internally developed software costs | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 5 years | |
Internally developed software costs | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 8 years |
BASIS OF PRESENTATION AND SU_11
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Related Party Transaction (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2017 | |
Related Party Transaction | |||
Revenue from Related Parties | $ 16.7 | $ 50.1 | |
Accounts Receivable, Related Parties | $ 0.7 | ||
Related party payable | 9 | ||
Current portion of note payable to related party | 5.4 | ||
Current portion of tax receivable agreement obligations to related parties | 190.2 | ||
Notes Payable, Related Parties, Noncurrent | 158.4 | ||
Tax Receivable Agreements Obligation to Related Parties Long Term Portion | $ 489.8 |
BUSINESS COMBINATIONS Worldpay
BUSINESS COMBINATIONS Worldpay Acqisition (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 16, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | ||
Business Acquisition | ||||||||
Issuance of Class A common stock for acquisition, value | $ 10,364.8 | |||||||
Purchase Price Allocation | ||||||||
Goodwill | $ 14,674.8 | 14,674.8 | $ 4,173 | |||||
Merchant float | 1,427.9 | 1,427.9 | 0 | |||||
Other restricted cash | 488.1 | 488.1 | $ 10.5 | |||||
Worldpay Group, PLC | ||||||||
Business Acquisition | ||||||||
Percentage of voting interests acquired | 100.00% | |||||||
Total Legacy Worldpay purchase price | $ 11,900 | |||||||
Cash payments to acquire Worldpay | $ 1,500 | |||||||
Issuance of Class A common stock for acquisition, shares | 133,600,000 | |||||||
Issuance of Class A common stock for acquisition, value | $ 10,400 | |||||||
Share price of Class A common stock issued for acquisition | $ 77.60 | |||||||
Purchase Price Allocation | ||||||||
Cash acquired | $ 576.3 | |||||||
Current assets | [1] | 4,139.3 | ||||||
Property, equipment and software | 561.1 | |||||||
Intangible assets | 3,380.1 | |||||||
Goodwill | 10,572.8 | |||||||
Other assets | 75.6 | |||||||
Current liabilities | [2] | (4,532.1) | ||||||
Long-term debt | (2,304.7) | |||||||
Deferred tax liabilities | (549.8) | |||||||
Non-current liabilities | (43.1) | |||||||
Total purchase price | 11,875.5 | |||||||
Merchant float | 1,947.6 | |||||||
Other restricted cash | 511.1 | |||||||
Special dividend payable assumed in acquisition | 118.6 | |||||||
Payment of long-term debt assumed in business acquisition | 1,649.9 | |||||||
Incurred expenses from acquisition | 120.7 | |||||||
Business Acquisition, Pro Forma Information [Abstract] | ||||||||
Total revenue | 1,017.9 | [3] | $ 1,574.2 | 2,939.2 | $ 4,524.3 | |||
Net income (loss) attributable to Worldpay, Inc. | $ 2.8 | $ 17.7 | $ 91.8 | $ (150.2) | ||||
Net income (loss) per share attributable to Worldpay, Inc. Class A common stock | ||||||||
Basic | $ 0.01 | $ 0.06 | $ 0.32 | $ (0.51) | ||||
Diluted | $ 0.01 | $ 0.06 | $ 0.31 | $ (0.51) | ||||
Shares used in computing net income (loss) per share of Class A common stock | ||||||||
Basic | 301,240,681 | 295,032,995 | 290,385,855 | 294,772,212 | ||||
Diluted | 313,881,826 | 296,449,542 | 292,594,557 | 294,772,212 | ||||
Fair value of replacement awards | 82.4 | |||||||
Fair value of replacement awards related to services provided prior to the acquisition | $ 44.2 | |||||||
Customer relationships | ||||||||
Purchase Price Allocation | ||||||||
Finite-lived intangible assets acquired, weighted average useful life | 6 years 8 months 12 days | 4 years 7 months 6 days | ||||||
Software | ||||||||
Purchase Price Allocation | ||||||||
Finite-lived intangible assets acquired, weighted average useful life | 6 years 6 months | |||||||
Trade Names | ||||||||
Purchase Price Allocation | ||||||||
Finite-lived intangible assets acquired, weighted average useful life | 10 years | |||||||
[1] | Includes $1,947.6 million of merchant float and $511.1 million | |||||||
[2] | Includes $118.6 million | |||||||
[3] | Revenue for the three and nine months ended September 30, 2017 presented in the table above is prior to the Company’s adoption of ASC 606 and therefore network fees and other costs are presented separately and not netted within revenue. |
BUSINESS COMBINATIONS Paymetric
BUSINESS COMBINATIONS Paymetric Acquisition (Details) - USD ($) $ in Millions | May 25, 2017 | Sep. 30, 2018 | Dec. 31, 2017 |
Purchase Price Allocation | |||
Goodwill | $ 14,674.8 | $ 4,173 | |
Paymetric Holdings, Inc. | |||
Business Acquisition | |||
Percentage of voting interests acquired | 100.00% | ||
Goodwill deductible for tax purposes | $ 7.8 | ||
Purchase Price Allocation | |||
Cash acquired | 11.9 | ||
Current assets | 6.5 | ||
Property, equipment and software | 92.1 | ||
Intangible assets | 47.8 | ||
Goodwill | 433.8 | ||
Other assets | 0.1 | ||
Current liabilities | (18.3) | ||
Deferred tax liabilities | (22) | ||
Non-current liabilities | (8.5) | ||
Total purchase price | 543.4 | ||
Restricted Stock | Paymetric Holdings, Inc. | |||
Purchase Price Allocation | |||
Fair value of replacement awards | 8 | ||
Fair value of replacement awards related to services provided prior to the acquisition | $ 5.9 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Goodwill (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2018USD ($) | ||
Goodwill | ||
Goodwill at beginning of period | $ 4,173 | |
Goodwill attributable to acquisition | (15.6) | |
Goodwill at end of period | 14,674.8 | |
Worldpay Group, PLC | ||
Goodwill | ||
Foreign currency translation movement on Goodwill | 86.4 | |
Paymetric Holdings, Inc. | ||
Goodwill | ||
Goodwill attributable to acquisition | (0.2) | [1] |
Worldpay Holding | ||
Goodwill | ||
Goodwill attributable to acquisition | $ (10,486.4) | [2] |
[1] | Amount represents adjustments to goodwill associated with the acquisition of Paymetric as of the finalization of purchase accounting | |
[2] | Amount of goodwill attributable to the acquisition, including its allocation to reportable segments, is preliminary and subject to change. Includes $86.4 million |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Intangible Assets (Details) - USD ($) $ in Millions | Jan. 16, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 |
Finite-Lived Intangible Assets | ||||
Finite-lived intangible assets, gross | $ 5,269 | $ 1,964.1 | ||
Finite-lived intangible assets, accumulated amortization | 1,904.2 | 1,285.6 | ||
Intangible assets—net | 3,364.8 | 678.5 | ||
Amortization expense on finite lived intangible assets | 627.5 | $ 166.5 | ||
Estimate amortization expense of finite lived intangible assets for the next five years | ||||
Three months ended December 31, 2018 | 208.1 | |||
2,019 | 750.4 | |||
2,020 | 608.6 | |||
2,021 | 500.4 | |||
2,022 | 435.1 | |||
2,023 | 275.9 | |||
Customer relationships intangible assets | ||||
Finite-Lived Intangible Assets | ||||
Finite-lived intangible assets, gross | 4,600.3 | 1,712.7 | ||
Finite-lived intangible assets, accumulated amortization | $ 1,705.3 | 1,156.4 | ||
Finite-lived intangible assets acquired, weighted average useful life | 6 years 8 months 12 days | 4 years 7 months 6 days | ||
Customer Portfolios and related assets | ||||
Finite-Lived Intangible Assets | ||||
Finite-lived intangible assets, gross | $ 309.9 | 249.8 | ||
Finite-lived intangible assets, accumulated amortization | 171.9 | 129.2 | ||
Trade Names | ||||
Finite-Lived Intangible Assets | ||||
Finite-lived intangible assets, gross | 356.9 | 0 | ||
Finite-lived intangible assets, accumulated amortization | 27 | 0 | ||
Finite-lived intangible assets acquired, weighted average useful life | 10 years | |||
Patents | ||||
Finite-Lived Intangible Assets | ||||
Finite-lived intangible assets, gross | $ 1.9 | $ 1.6 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) € in Millions, £ in Millions, $ in Millions | Jun. 22, 2018GBP (£) | Jan. 16, 2018GBP (£) | Sep. 30, 2018GBP (£) | Sep. 30, 2018USD ($) | Jan. 16, 2018USD ($) | Jan. 16, 2018EUR (€) | Dec. 31, 2017USD ($) | Dec. 07, 2017GBP (£) | Dec. 07, 2017USD ($) | ||
Long-term debt | |||||||||||
Less: Current portion of note payable and current portion of note payable to related party | $ (226.5) | $ (107.9) | |||||||||
Less: Original issue discount | (6.7) | (3) | |||||||||
Less: Debt issuance costs | (55.3) | (46.3) | |||||||||
Note payable and note payable to related party | 7,723.7 | 5,586.4 | |||||||||
Term A-5 Loan, maturing in January 2023 | |||||||||||
Long-term debt | |||||||||||
Long-term debt, gross | [1] | 3,313.6 | 2,166.7 | ||||||||
Term A loan first twelve quarters amortization percentage | 1.25% | ||||||||||
Term A loan next four quarters amortization percentage | 1.875% | ||||||||||
Term A Loan following three quarters amortization percentage | 2.50% | ||||||||||
Term A-3 Loan, maturing in October 2021 | |||||||||||
Long-term debt | |||||||||||
Long-term debt, gross | [2] | 0 | 179.2 | ||||||||
Sterling Note maturing in January 2023 | |||||||||||
Long-term debt | |||||||||||
Long-term debt, gross | £ 475 | 620.7 | [3] | ||||||||
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% | ||||||||||
Face value of debt | £ | £ 488 | ||||||||||
Term B-3 loan, maturing in October 2023 | |||||||||||
Long-term debt | |||||||||||
Long-term debt, gross | [4] | 576.9 | 757.4 | ||||||||
Term B loan amortization percentage | 0.25% | ||||||||||
Term B-4 Loan, maturing in August 2024 | |||||||||||
Long-term debt | |||||||||||
Long-term debt, gross | [5] | 1,746.2 | 1,270 | ||||||||
Term B loan amortization percentage | 0.25% | ||||||||||
Senior Unsecured Dollar Note, Maturing November 2025 | |||||||||||
Long-term debt | |||||||||||
Long-term debt, gross | [6] | 500 | 500 | ||||||||
Face value of debt | $ 500 | $ 500 | |||||||||
Fixed interest rate (as a percent) | 4.375% | 4.375% | 4.375% | 4.375% | 4.375% | ||||||
Senior Unsecured Sterling Note, Maturing November 2025 | |||||||||||
Long-term debt | |||||||||||
Long-term debt, gross | [7] | $ 613.8 | $ 635.2 | ||||||||
Face value of debt | £ | £ 470 | £ 470 | |||||||||
Fixed interest rate (as a percent) | 3.875% | 3.875% | 3.875% | 3.875% | 3.875% | ||||||
Currency exchange rate | 1.3059 | 1.3059 | 1.3515 | ||||||||
Senior Unsecured Euro Note, expiring in November 2022 | |||||||||||
Long-term debt | |||||||||||
Long-term debt, gross | [8] | $ 631 | |||||||||
Face value of debt | € | € 500 | ||||||||||
Fixed interest rate (as a percent) | 3.75% | 3.75% | 3.75% | ||||||||
Currency exchange rate | 1.1617 | 1.1617 | |||||||||
Euro Bond remaining unamortized premium | $ 50.1 | ||||||||||
Mortgage | |||||||||||
Long-term debt | |||||||||||
Long-term debt, gross | [9] | $ 10 | $ 10.1 | ||||||||
Fixed interest rate (as a percent) | 6.22% | 6.22% | |||||||||
Revolving credit facility | |||||||||||
Long-term debt | |||||||||||
Long-term debt, gross | $ 0 | $ 225 | |||||||||
LIBOR | Term A-5 Loan, maturing in January 2023 | |||||||||||
Long-term debt | |||||||||||
Interest rate (as a percent) | 3.63% | 3.63% | |||||||||
Spread rate (as a percent) | 1.50% | ||||||||||
LIBOR | Sterling Note maturing in January 2023 | |||||||||||
Long-term debt | |||||||||||
Interest rate (as a percent) | 2.22% | 2.22% | |||||||||
Spread rate (as a percent) | 1.50% | ||||||||||
LIBOR | Term B-3 loan, maturing in October 2023 | |||||||||||
Long-term debt | |||||||||||
Spread rate (as a percent) | 1.75% | ||||||||||
LIBOR | Term B-4 Loan, maturing in August 2024 | |||||||||||
Long-term debt | |||||||||||
Interest rate (as a percent) | 3.88% | 3.88% | |||||||||
Spread rate (as a percent) | 1.75% | ||||||||||
[1] | Interest at a variable base rate (LIBOR) plus a spread rate (150 basis points) (total rate of 3.63% at September 30, 2018 ) and amortizing on a basis of 1.25% per quarter during each of the first twelve quarters (June 2018 through March 2021), 1.875% per quarter during the next four quarters (June 2021 through March 2022) and 2.50% | ||||||||||
[2] | Outstanding principal balance paid down using the proceeds from the GBP Term Loan A financing as part of the June 22, 2018 amendment to the Existing Loan Agreement. See below for more details. | ||||||||||
[3] | £475 million principal outstanding, translated to U.S dollars at the spot rate of 1.3059 U.S. dollars per Pound Sterling at September 30, 2018 . Interest at a variable base rate (GBP LIBOR) plus a spread rate ( 150 basis points ) (total rate of 2.22% at September 30, 2018 ) and amortizing on a basis of 1.25% per quarter during each of the first twelve quarters (June 2018 through March 2021), 1.875% per quarter during the next four quarters (June 2021 through March 2022) and 2.50% | ||||||||||
[4] | Interest payable at a variable base rate (LIBOR) plus a spread rate (175 basis points) (total rate of 3.88% at September 30, 2018 ) and amortizing on a basis of 0.25% | ||||||||||
[5] | Interest payable at a variable base rate (LIBOR) plus a spread rate (175 basis points) (total rate of 3.88% at September 30, 2018 ) and amortizing on a basis of 0.25% | ||||||||||
[6] | $500 million principal senior unsecured notes with interest payable semi-annually at a fixed rate of 4.375% | ||||||||||
[7] | £470 million principal senior unsecured notes with interest payable semi-annually at a fixed rate of 3.875% and principal due upon maturity. The spot rate of 1.3059 U.S. dollars per Pound Sterling at September 30, 2018 | ||||||||||
[8] | €500 million principal senior unsecured note with interest payable semi-annually at a fixed rate of 3.75% and principal due upon maturity. The spot rate of 1.1617 U.S. dollars per Euro at September 30, 2018 was used to translate the Note to U.S. dollars. Includes remaining unamortized fair value premium of $50.1 million at September 30, 2018 | ||||||||||
[9] | Interest payable monthly at a fixed rate of 6.22% . |
LONG-TERM DEBT (Details 2)
LONG-TERM DEBT (Details 2) £ in Millions, $ in Millions | Jun. 22, 2018USD ($) | Jan. 16, 2018USD ($) | Sep. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 22, 2018GBP (£) | Jan. 16, 2018GBP (£) | Jan. 16, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 07, 2017GBP (£) | Dec. 07, 2017USD ($) | Aug. 07, 2017USD ($) |
Long-term debt | ||||||||||||
Write off of deferred debt issuance cost | $ 56.6 | |||||||||||
Capitalized debt issuance costs due to debt refinancing | $ 23.7 | $ 23.7 | ||||||||||
Consent Payment | 2.9 | |||||||||||
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 | |||||||||||
Term A-5 Loan, maturing in January 2023 | ||||||||||||
Long-term debt | ||||||||||||
Increase of debt due to debt repricing | 100 | |||||||||||
Term B-4 Loan, maturing in August 2024 | ||||||||||||
Long-term debt | ||||||||||||
Debt payment due to debt repricing | $ 50 | |||||||||||
Term B-3 loan, maturing in October 2023 | ||||||||||||
Long-term debt | ||||||||||||
Debt payment due to debt repricing | $ 50 | |||||||||||
Sterling Note maturing in January 2023 | ||||||||||||
Long-term debt | ||||||||||||
Face value of debt | £ | £ 488 | |||||||||||
Revolving credit facility | ||||||||||||
Long-term debt | ||||||||||||
Maximum borrowing capacity | $ 1,250 | |||||||||||
June 2018 Debt Repricing | ||||||||||||
Long-term debt | ||||||||||||
Write off of deferred debt issuance cost | $ 11.4 | |||||||||||
Debt repricing interest rate decrease | 0.25% | |||||||||||
Senior Unsecured Dollar Note, Maturing November 2025 | ||||||||||||
Long-term debt | ||||||||||||
Face value of debt | $ 500 | $ 500 | ||||||||||
Fixed interest rate (as a percent) | 4.375% | 4.375% | 4.375% | 4.375% | ||||||||
Senior Unsecured Sterling Note, Maturing November 2025 | ||||||||||||
Long-term debt | ||||||||||||
Face value of debt | £ | £ 470 | £ 470 | ||||||||||
Fixed interest rate (as a percent) | 3.875% | 3.875% | 3.875% | 3.875% | ||||||||
Currency exchange rate | 1.3059 | 1.3059 | 1.3515 | |||||||||
Incremental Amendment | Term A-5 Loan, maturing in January 2023 | ||||||||||||
Long-term debt | ||||||||||||
Face value of debt | $ 1,605 | |||||||||||
Incremental Amendment | Term B-4 Loan, maturing in August 2024 | ||||||||||||
Long-term debt | ||||||||||||
Face value of debt | 535 | |||||||||||
Incremental Amendment | Revolving credit facility | ||||||||||||
Long-term debt | ||||||||||||
Maximum borrowing capacity | 600 | |||||||||||
Incremental Amendment | Term B loan | ||||||||||||
Long-term debt | ||||||||||||
Face value of debt | $ 1,270 | |||||||||||
Capitalized debt issuance costs due to debt refinancing | $ 23.1 | |||||||||||
Backstop | Term B loan | ||||||||||||
Long-term debt | ||||||||||||
Face value of debt | $ 594.5 |
DERIVATIVES AND HEDGING ACTIV_3
DERIVATIVES AND HEDGING ACTIVITIES (Details) £ in Millions, $ in Millions | Jan. 16, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | Aug. 09, 2017GBP (£) | |
Derivatives, Fair Value | ||||||||
Purchase of interest rate caps | $ (8.1) | $ 0 | ||||||
Cash flow hedges of interest rate risk | ||||||||
Cash flow hedge loss to be reclassified within twelve months | $ 10.2 | |||||||
Derivatives in cash flow hedging relationships: | ||||||||
Amount of gain (loss) recognized in OCI (effective portion) | [1] | 4.7 | $ 0.4 | 14.2 | 0.1 | |||
Amount of gain (loss) reclassified from accumulated OCI into earnings (effective portion) | 0.3 | $ (1.1) | (0.1) | (8.4) | ||||
Interest rate cash flow hedge ineffectiveness | [2] | 0 | 0.1 | |||||
Aggregate fair value of derivatives in a net liability position | 0.6 | 0.6 | ||||||
Derivative Instruments Not Designated as Hedging Instruments [Abstract] | ||||||||
Gain on foreign currency forward | 35.9 | $ 24.4 | ||||||
Translation adjustments on net investment hedge recorded in AOCI(b) | 4.3 | 44.2 | ||||||
Other current assets | ||||||||
Fair value of interest rate contracts designated as cash flow hedges | ||||||||
Fair value of hedge assets | 20.4 | 20.4 | $ 9.7 | |||||
Other long-term assets | ||||||||
Fair value of interest rate contracts designated as cash flow hedges | ||||||||
Fair value of hedge assets | 17.5 | 17.5 | 14.7 | |||||
Other current liabilities | ||||||||
Fair value of interest rate contracts designated as cash flow hedges | ||||||||
Fair value of hedge liabilities | 0.5 | 0.5 | 4.2 | |||||
Other long-term liabilities | ||||||||
Fair value of interest rate contracts designated as cash flow hedges | ||||||||
Fair value of hedge liabilities | 0 | 0 | $ 0.2 | |||||
Interest rate swaps | ||||||||
Cash flow hedges of interest rate risk | ||||||||
Notional amount | 1,600 | 1,600 | ||||||
Interest rate swaps | January 2018 to January 2019 | ||||||||
Cash flow hedges of interest rate risk | ||||||||
Notional amount | 500 | 500 | ||||||
Interest rate swaps | June 2018 to June 2021 | ||||||||
Cash flow hedges of interest rate risk | ||||||||
Notional amount | 600 | 600 | ||||||
Interest rate swaps | June 2019 to June 2021 | ||||||||
Cash flow hedges of interest rate risk | ||||||||
Notional amount | 500 | 500 | ||||||
Interest rate cap | ||||||||
Derivatives, Fair Value | ||||||||
Purchase of interest rate caps | (8.1) | |||||||
Cash flow hedges of interest rate risk | ||||||||
Notional amount | 1,600 | 1,600 | ||||||
Fair value of interest rate contracts designated as cash flow hedges | ||||||||
Fair value of hedge assets | 35.8 | 35.8 | ||||||
Interest rate cap | June 2018 to June 2021 | ||||||||
Cash flow hedges of interest rate risk | ||||||||
Notional amount | $ 600 | $ 600 | ||||||
Interest rate cap agreement strike rate | 2.25% | 2.25% | ||||||
Interest rate cap | January 2017 to January 2020 | ||||||||
Cash flow hedges of interest rate risk | ||||||||
Notional amount | $ 1,000 | $ 1,000 | ||||||
Interest rate cap agreement strike rate | 0.75% | 0.75% | ||||||
Not designated as hedging instrument | Forward contracts | ||||||||
Cash flow hedges of interest rate risk | ||||||||
Notional amount | £ | £ 1,150 | |||||||
Derivative Instruments Not Designated as Hedging Instruments [Abstract] | ||||||||
Gain on foreign currency forward | $ 35.9 | $ 69 | ||||||
[1] | “OCI” represents other comprehensive income. | |||||||
[2] | For the three and nine months ended September 30, 2018 , amount represents hedge ineffectiveness. |
CONTROLLING AND NON-CONTROLLI_3
CONTROLLING AND NON-CONTROLLING INTERESTS OWNERSHIP INTEREST IN JOINT VENTURE (Details) | May 31, 2014 | Mar. 21, 2012 |
Joint Venture | ||
Controlling and non-controlling interest in Joint Venture | ||
Ownership percentage by Worldpay, Inc | 51.00% | |
Joint Venture | Bank Partner | ||
Controlling and non-controlling interest in Joint Venture | ||
Ownership percentage by Bank Partner | 49.00% | |
Common Stock | ||
Controlling and non-controlling interest in Joint Venture | ||
Conversion ratio for conversion of LLC units into common stock | 1 |
CONTROLLING AND NON-CONTROLLI_4
CONTROLLING AND NON-CONTROLLING INTERESTS IN WORLDPAY HOLDING (Details) - USD ($) $ in Millions | Jan. 16, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Worldpay Holding net income, Including Portion Attributable to Noncontrolling Interest [Abstract] | ||||||
Net (loss) income | $ 3.6 | $ 106.9 | $ (96.2) | $ 229.1 | ||
Items not allocable to non-controlling interests: | ||||||
Worldpay, Inc. expenses | [1] | (2.3) | (14.2) | (52.4) | (25.1) | |
Worldpay Holding net income (loss) | 5.9 | 121.1 | (43.8) | 254.2 | ||
Net Income Attributable to Noncontrolling Interest | ||||||
Net income attributable to non-controlling interests | 0.8 | 14.8 | 1.5 | 39.3 | ||
Fifth Third | ||||||
Net Income Attributable to Noncontrolling Interest | ||||||
Net income attributable to non-controlling interests | [2] | 0.2 | 14.1 | 0 | 37.6 | |
Bank Partner | ||||||
Net Income Attributable to Noncontrolling Interest | ||||||
Net income attributable to non-controlling interests | [3] | $ 0.6 | $ 0.7 | $ 1.5 | $ 1.7 | |
Worldpay Holding | ||||||
Changes in units and related ownership interest | ||||||
Balance (in shares) | 177,848,807 | |||||
Issuance of Class A common stock for acquisition, shares | 133,567,146 | |||||
Equity plan activity (in shares) | [4] | 692,129 | ||||
Balance (in shares) | 312,108,082 | 312,108,082 | ||||
Class A Unit of Worldpay Holding | Worldpay, Inc. | Worldpay Holding | ||||||
Changes in units and related ownership interest | ||||||
Balance (in shares) | 162,595,981 | |||||
Opening percentage of ownership by parent | 91.42% | |||||
Issuance of Class A common stock for acquisition, shares | 133,567,146 | |||||
Issuance of Common Stock in Connection with Sale of Class B Units | (5,000,000) | |||||
Equity plan activity (in shares) | [4] | 692,129 | ||||
Balance (in shares) | 301,855,256 | 301,855,256 | ||||
Closing percentage of ownership by parent | 96.71% | 96.71% | ||||
Issuance of Common Stock in Connection with Sale of Class B Units | (5,000,000) | |||||
Class B Unit of Worldpay Holding | Fifth Third | Worldpay Holding | ||||||
Changes in units and related ownership interest | ||||||
Balance (in shares) | 15,252,826 | |||||
Opening percentage of ownership by noncontrolling interest | 8.58% | |||||
Issuance of Common Stock in Connection with Sale of Class B Units | (5,000,000) | |||||
Balance (in shares) | 10,252,826 | 10,252,826 | ||||
Closing percentage of ownership by noncontrolling interest | 3.29% | 3.29% | ||||
Issuance of Common Stock in Connection with Sale of Class B Units | (5,000,000) | |||||
Worldpay Group, PLC | ||||||
Changes in units and related ownership interest | ||||||
Issuance of Class A common stock for acquisition, shares | 133,600,000 | |||||
Shares issued for acquisition | 134,400,000 | |||||
Treasury Stock Acquired in Business Acquisition, Shares | 833,000 | |||||
Percentage of voting interests acquired | 100.00% | |||||
[1] | Primarily represents income tax expense for the three months ended September 30, 2018 and acquisition related expenses for the nine months ended September 30, 2018 . Primarily represents income tax expense for the three and nine months ended September 30, 2017 | |||||
[2] | Net income attributable to non-controlling interests of Fifth Third reflects the allocation of Worldpay Holding’s net income based on the proportionate ownership interests in Worldpay 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 AN_2
COMMITMENTS, CONTINGENCIES AND GUARANTEES (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Litigation expense of an acquired company | $ 3.5 | $ 38 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Recurring basis - Level 2 - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Interest Rate Contract | ||
Assets: | ||
Fair value of hedge assets | $ 37.9 | $ 24.4 |
Liabilities: | ||
Fair value of hedge liabilities | 0.5 | 4.4 |
Mercury Payment Systems, LLC | ||
Liabilities: | ||
Mercury TRA | 51.6 | 100.5 |
Forward contracts | ||
Assets: | ||
Fair Value of foreign currency forward contract | $ 0 | $ 33.1 |
FAIR VALUE MEASUREMENTS (Deta_2
FAIR VALUE MEASUREMENTS (Details 2) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Carrying Amount | ||
Liabilites: | ||
Note payable | $ 7,950.2 | $ 5,694.3 |
Fair Value | ||
Liabilites: | ||
Note payable | $ 7,977 | $ 5,772.1 |
NET INCOME PER SHARE NARRATIVE
NET INCOME PER SHARE NARRATIVE (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Class A Common Stock | ||||
Earnings Per Share, Diluted | ||||
Worldpay Holding shares outstanding (in shares) | 301,855,256 | 162,595,981 | ||
Class B Common Stock | ||||
Earnings Per Share, Diluted | ||||
Weighted average Class B units excluded from computing dilutive EPS | 23,600,000 | 13,500,000 | 31,200,000 | |
Worldpay Holding shares outstanding (in shares) | 15,300,000 | 10,252,826 | 15,300,000 | 15,252,826 |
Subsidiaries | Class B Unit of Worldpay Holding | Class A Common Stock | ||||
Earnings Per Share, Diluted | ||||
Conversion ratio for conversion of Class B units into Class A common stock | 1 |
NET INCOME PER SHARE (Basic) (D
NET INCOME PER SHARE (Basic) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share, Basic | ||||
Net (loss) income attributable to Worldpay, Inc. | $ 2.8 | $ 92.1 | $ (97.7) | $ 189.8 |
Class A Common Stock | ||||
Earnings Per Share, Basic | ||||
Weighted-average Class A common shares outstanding, basic, (in shares) | 301,240,681 | 161,465,849 | 290,385,855 | 161,205,066 |
Basic net income (loss) per share (in dollars per share) | $ 0.01 | $ 0.57 | $ (0.34) | $ 1.18 |
NET INCOME PER SHARE (Dilutive)
NET INCOME PER SHARE (Dilutive) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share, Diluted | ||||
Consolidated loss before applicable income taxes | $ (1) | $ 151.6 | $ (101.2) | $ 312.6 |
Income tax benefit excluding impact of noncontrolling interest | (3.6) | |||
Net income (loss) attributable to Worldpay, Inc. | $ 2.6 | $ 92.1 | $ (97.7) | $ 189.8 |
Class A Common Stock | ||||
Shares used in computing diluted net income (loss) per share: | ||||
Weighted-average Class A common shares outstanding, basic, (in shares) | 301,240,681 | 161,465,849 | 290,385,855 | 161,205,066 |
Weighted-average Class B units of Vantiv Holding dilutive effect (in shares) | 10,252,826 | 0 | 0 | 0 |
Total diluted weighted-average shares outstanding (in shares) | 313,881,826 | 162,882,396 | 290,385,855 | 162,617,782 |
Diluted net income (loss) per share (in dollars per share) | $ 0.01 | $ 0.57 | $ (0.34) | $ 1.17 |
Class A Common Stock | Stock Option | ||||
Shares used in computing diluted net income (loss) per share: | ||||
Class A common stock equivalents included in the computation of diluted net income per share | 949,483 | 739,835 | 0 | 706,632 |
Class A Common Stock | Stock Compensation Plan | ||||
Shares used in computing diluted net income (loss) per share: | ||||
Class A common stock equivalents included in the computation of diluted net income per share | 1,398,259 | 645,508 | 0 | 664,275 |
Class A Common Stock | Performance Shares | ||||
Shares used in computing diluted net income (loss) per share: | ||||
Class A common stock equivalents included in the computation of diluted net income per share | 40,577 | 31,204 | 0 | 41,809 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | ||
Translation adjustments on net investment hedge recorded in AOCI(b) | $ 4.3 | $ 44.2 | |||||||
Net activity | 103.9 | $ (0.8) | 152.1 | $ (5.7) | |||||
AOCI beginning balance, net of tax | 2.9 | ||||||||
AOCI ending balance, net of tax | (144.1) | (144.1) | |||||||
Balance, net | 10,821.5 | 617.2 | 10,821.5 | 617.2 | $ 600.6 | $ 1,607.3 | |||
Accumulated Net Gain (Loss) from Cash Flow Hedges | |||||||||
AOCI beginning balance, net of tax | (7) | (18) | (13.8) | (17.8) | |||||
AOCI ending balance, net of tax | (3.6) | (17.6) | (3.6) | (17.6) | |||||
Accumulated Foreign Currency Adjustment Attributable to Parent | |||||||||
AOCI beginning balance, net of tax | [1] | (82.5) | 0 | ||||||
AOCI ending balance, net of tax | [1] | (189.4) | (189.4) | ||||||
AOCI Including Portion Attributable to Noncontrolling Interest | |||||||||
Net change in fair value recorded in accumulated OCI, before reclassifications, before tax | 4.7 | 0.4 | 14.2 | 0.1 | |||||
Net realized loss reclassified into earnings, before tax | [2] | (0.3) | 1.1 | 0.1 | 8.4 | ||||
Translation adjustments on net investment hedge recorded in AOCI(b) | 4.3 | 44.2 | |||||||
Foreign currency translation adjustments(c) | [1] | (110.6) | (197.2) | ||||||
Pretax activity | (101.9) | 1.5 | (138.7) | 8.5 | |||||
Net change in fair value recorded in accumulated OCI, before reclassifications, tax | (1.1) | (0.2) | (3.3) | (0.1) | |||||
Net realized loss reclassified into earnings, tax | [2] | 0.1 | (0.5) | 0 | (2.7) | ||||
Translation adjustments on net investment hedge recorded in AOCI, tax | [3] | 1 | 10.1 | ||||||
Foreign currency translation adjustments, tax | [1] | 0 | 0 | ||||||
Tax effect | (2) | (0.7) | (13.4) | (2.8) | |||||
Other comprehensive loss, unrealized gain (loss), net of tax | (3.6) | (0.2) | (10.9) | 0 | |||||
Net realized loss reclassified into earnings, net of tax | [2] | (0.2) | 0.6 | 0.1 | 5.7 | ||||
Translation adjustments on net investment hedge recorded in AOCI, net of tax | [3] | (3.3) | (34.1) | ||||||
Foreign currency translation adjustments, net of tax | [1] | (110.6) | (197.2) | ||||||
Net activity | 103.9 | (0.8) | 152.1 | (5.7) | |||||
Non-Controlling Interests | |||||||||
Other comprehensive loss, unrealized gain (loss), net of tax | (0.2) | 0.2 | (0.7) | 0.2 | |||||
Net realized loss reclassified into earnings, net of tax | [2] | 0 | 0.1 | 0 | 1.4 | ||||
Translation adjustments on net investment hedge recorded in AOCI, net of tax | [3] | (0.1) | (2) | ||||||
Foreign currency translation adjustments, net of tax | [1] | 3.7 | 7.8 | ||||||
Net activity | 3.4 | 0.1 | 5.1 | (1.2) | |||||
Balance, net | 370.1 | 59.1 | 370.1 | 59.1 | 68.1 | 291.6 | |||
AOCI Attributable to Parent | |||||||||
Other comprehensive loss, unrealized gain (loss), net of tax | (3.4) | (0.4) | (10.2) | (0.2) | |||||
Net realized loss reclassified into earnings, net of tax | [2] | (0.2) | 0.5 | 0.1 | 4.3 | ||||
Translation adjustments on net investment hedge recorded in AOCI, net of tax | [3] | 3.2 | 32.1 | ||||||
Foreign currency translation adjustments, net of tax | [1] | (106.9) | (189.4) | ||||||
Net activity | 100.5 | (0.9) | 147 | (4.5) | |||||
Balance, net | (144.1) | (1.7) | (144.1) | (1.7) | $ (43.6) | $ 2.9 | $ (2.6) | $ (6.2) | |
Accumulated Foreign Currency Adjustment on Net Investment Hedge to Parent | |||||||||
AOCI beginning balance, net of tax | [3] | 28.9 | 0 | ||||||
AOCI ending balance, net of tax | [3] | 32.1 | 32.1 | ||||||
Reclassification out of Accumulated Other Comprehensive Income | |||||||||
AOCI beginning balance, net of tax | [2] | 17 | 15.4 | 16.7 | 11.6 | ||||
AOCI ending balance, net of tax | [2] | $ 16.8 | 15.9 | $ 16.8 | 15.9 | ||||
Balance, net | $ (1.7) | $ (1.7) | |||||||
[1] | There is no tax impact on the foreign translation adjustments due to the Tax Reform impact on distributions, enacted in 2017. | ||||||||
[2] | The reclassification adjustment on cash flow hedge derivatives affected the following lines in the accompanying consolidated statements of income: OCI Component Affected line in the accompanying consolidated statements of income Pretax activity (1) Interest expense-net Tax effect Income tax expense OCI attributable to non-controlling interests Net income attributable to non-controlling interests (1) The three and nine months ended September 30, 2018 and 2017 | ||||||||
[3] | See Note 5 - Derivatives and Hedging Activities for more information on net investment hedge activity. |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||||
Result of operation for each segment | |||||||
Revenue | $ 1,017.9 | $ 1,033.7 | $ 2,875.4 | $ 2,960.6 | |||
Network fees and other costs(1) | [1] | 0 | [2] | 479.5 | 0 | [3] | 1,406.3 |
Sales and marketing | 295.8 | 173.8 | 845.2 | 497.1 | |||
Segment profit | 722.1 | 380.4 | 2,030.2 | 1,057.2 | |||
Technology Solutions | |||||||
Result of operation for each segment | |||||||
Revenue | 419.7 | 339.9 | 1,157.7 | 919.4 | |||
Merchant Solutions | |||||||
Result of operation for each segment | |||||||
Revenue | 507.5 | 576.7 | 1,460.1 | 1,695.9 | |||
Issuer Solutions | |||||||
Result of operation for each segment | |||||||
Revenue | 90.7 | 117.1 | 257.6 | 345.3 | |||
Operating Segments | Technology Solutions | |||||||
Result of operation for each segment | |||||||
Revenue | 419.7 | 339.9 | 1,157.7 | 919.4 | |||
Network fees and other costs(1) | 0 | [2] | 115.2 | 0 | [3] | 335.3 | |
Sales and marketing | 115.2 | 73.6 | 309.2 | 203.3 | |||
Segment profit | 304.5 | 151.1 | 848.5 | 380.8 | |||
Operating Segments | Merchant Solutions | |||||||
Result of operation for each segment | |||||||
Revenue | 507.5 | 576.7 | 1,460.1 | 1,695.9 | |||
Network fees and other costs(1) | 0 | [2] | 332.6 | 0 | [3] | 976.2 | |
Sales and marketing | 174 | 94.4 | 516.8 | 276.3 | |||
Segment profit | 333.5 | 149.7 | 943.3 | 443.4 | |||
Operating Segments | Issuer Solutions | |||||||
Result of operation for each segment | |||||||
Revenue | 90.7 | 117.1 | 257.6 | 345.3 | |||
Network fees and other costs(1) | 0 | [2] | 31.7 | 0 | [3] | 94.8 | |
Sales and marketing | 6.6 | 5.8 | 19.2 | 17.5 | |||
Segment profit | $ 84.1 | $ 79.6 | $ 238.4 | $ 233 | |||
[1] | See the Revenue Recognition section within Footnote 1 - Basis of Presentation and Summary of Significant Accounting Policies to the Notes to Unaudited Consolidated Financial Statements which addresses the change in presentation. | ||||||
[2] | For the three months ended September 30, 2018 | ||||||
[3] | For the nine months ended September 30, 2018 |
SEGMENT INFORMATION (Details 2)
SEGMENT INFORMATION (Details 2) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Reconciliation of total segment profit to the company's (loss) income before applicable income taxes | ||||
Total segment profit | $ 722.1 | $ 380.4 | $ 2,030.2 | $ 1,057.2 |
Less: Other operating costs | (174.8) | (79.4) | (515.4) | (234.3) |
Less: General and administrative | (140.7) | (49.6) | (527.6) | (189.6) |
Less: Depreciation and amortization | (328.9) | (82.5) | (824) | (237) |
Less: Interest expense—net | (75.2) | (38.5) | (230.3) | (97.4) |
Less: Non-operating expense | (3.5) | 21.2 | (34.1) | 13.7 |
(Loss) income before applicable income taxes | $ (1) | $ 151.6 | $ (101.2) | $ 312.6 |