Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 26, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | FISERV INC | |
Entity Central Index Key | 798,354 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 208,399,394 |
Consolidated Statements of Inco
Consolidated Statements of Income (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue: | ||||
Processing and services | $ 1,199 | $ 1,160 | $ 3,563 | $ 3,441 |
Product | 201 | 220 | 617 | 633 |
Total revenue | 1,400 | 1,380 | 4,180 | 4,074 |
Expenses: | ||||
Cost of processing and services | 572 | 551 | 1,715 | 1,651 |
Cost of product | 174 | 186 | 531 | 547 |
Selling, general and administrative | 284 | 274 | 837 | 806 |
Gain on sale of business | 0 | 0 | (10) | 0 |
Total expenses | 1,030 | 1,011 | 3,073 | 3,004 |
Operating income | 370 | 369 | 1,107 | 1,070 |
Interest expense | (45) | (41) | (131) | (121) |
Interest and investment income (loss), net | 0 | 0 | 2 | (7) |
Income before income taxes and income from investment in unconsolidated affiliate | 325 | 328 | 978 | 942 |
Income tax provision | (98) | (114) | (309) | (373) |
Income from investment in unconsolidated affiliate | 5 | 0 | 31 | 146 |
Net income | $ 232 | $ 214 | $ 700 | $ 715 |
Net income per share – basic (in dollars per share) | $ 1.10 | $ 0.98 | $ 3.30 | $ 3.23 |
Net income per share – diluted (in dollars per share) | $ 1.08 | $ 0.96 | $ 3.23 | $ 3.18 |
Shares used in computing net income per share: | ||||
Basic (in shares) | 210.1 | 219.2 | 212.1 | 221.6 |
Diluted (in shares) | 214.5 | 222.7 | 216.7 | 225.2 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 232 | $ 214 | $ 700 | $ 715 |
Other comprehensive income (loss): | ||||
Fair market value adjustment on cash flow hedges, net of income tax (benefit) provision of $(1) million and $1 million | (1) | 0 | 2 | 0 |
Reclassification adjustment for net realized losses on cash flow hedges included in interest expense, net of income tax provision of $1 million, $1 million, $3 million and $3 million | 2 | 2 | 5 | 5 |
Foreign currency translation | 3 | 3 | 14 | 0 |
Total other comprehensive income | 4 | 5 | 21 | 5 |
Comprehensive income | $ 236 | $ 219 | $ 721 | $ 720 |
Consolidated Statements of Com4
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Income tax (benefit) provision on fair market value adjustment on cash flow hedges | $ (1) | $ 0 | $ 1 | $ 0 |
Income tax provision on reclassification adjustment for net realized losses on cash flow hedges included in interest expense | $ 1 | $ 1 | $ 3 | $ 3 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Assets | ||
Cash and cash equivalents | $ 325 | $ 300 |
Trade accounts receivable, net | 898 | 902 |
Prepaid expenses and other current assets | 647 | 526 |
Total current assets | 1,870 | 1,728 |
Property and equipment, net | 385 | 405 |
Intangible assets, net | 1,888 | 1,833 |
Goodwill | 5,612 | 5,373 |
Other long-term assets | 444 | 404 |
Total assets | 10,199 | 9,743 |
Liabilities and Shareholders’ Equity | ||
Accounts payable and accrued expenses | 1,306 | 1,242 |
Current maturities of long-term debt | 93 | 95 |
Deferred revenue | 451 | 483 |
Total current liabilities | 1,850 | 1,820 |
Long-term debt | 5,018 | 4,467 |
Deferred income taxes | 815 | 762 |
Other long-term liabilities | 166 | 153 |
Total liabilities | 7,849 | 7,202 |
Commitments and contingencies | ||
Shareholders’ equity: | ||
Preferred stock, no par value: 25.0 million shares authorized; none issued | 0 | 0 |
Common stock, $0.01 par value: 900.0 million shares authorized; 395.7 million shares issued | 4 | 4 |
Additional paid-in capital | 1,021 | 1,020 |
Accumulated other comprehensive loss | (55) | (76) |
Retained earnings | 9,694 | 8,994 |
Treasury stock, at cost, 186.9 million and 180.2 million shares | (8,314) | (7,401) |
Total shareholders’ equity | 2,350 | 2,541 |
Total liabilities and shareholders’ equity | $ 10,199 | $ 9,743 |
Consolidated Balance Sheets (U6
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common stock, shares issued | 395,700,000 | 395,700,000 |
Treasury stock (in shares) | 186,900,000 | 180,200,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 700 | $ 715 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and other amortization | 205 | 187 |
Amortization of acquisition-related intangible assets | 117 | 119 |
Share-based compensation | 48 | 54 |
Excess tax benefits from share-based awards | 0 | (46) |
Deferred income taxes | 20 | 7 |
Income from investment in unconsolidated affiliate | (31) | (146) |
Dividends from unconsolidated affiliate | 44 | 140 |
Non-cash impairment charges | 17 | 17 |
Gain on sale of business | (10) | 0 |
Other operating activities | (4) | (2) |
Changes in assets and liabilities, net of effects from acquisitions: | ||
Trade accounts receivable | 23 | (15) |
Prepaid expenses and other assets | (60) | (40) |
Accounts payable and other liabilities | (11) | 111 |
Deferred revenue | (43) | (59) |
Net cash provided by operating activities | 1,015 | 1,042 |
Cash flows from investing activities: | ||
Capital expenditures, including capitalization of software costs | (208) | (223) |
Payments for acquisitions of businesses, net of cash acquired | (383) | (265) |
Proceeds from sale of business | 19 | 0 |
Purchases of investments | (10) | (1) |
Other investing activities | 7 | 3 |
Net cash used in investing activities | (575) | (486) |
Cash flows from financing activities: | ||
Debt proceeds | 1,946 | 1,711 |
Debt repayments | (1,410) | (1,380) |
Proceeds from issuance of treasury stock | 65 | 65 |
Purchases of treasury stock, including employee shares withheld for tax obligations | (1,016) | (970) |
Excess tax benefits from share-based awards | 0 | 46 |
Net cash used in financing activities | (415) | (528) |
Net change in cash and cash equivalents | 25 | 28 |
Cash and cash equivalents, beginning balance | 300 | 275 |
Cash and cash equivalents, ending balance | $ 325 | $ 303 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated financial statements for the three-month and nine-month periods ended September 30, 2017 and 2016 are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial statements have been included. Such adjustments consisted of normal recurring items. Interim results are not necessarily indicative of results for a full year. The consolidated financial statements and accompanying notes are presented as permitted by Form 10-Q and do not contain certain information included in the annual consolidated financial statements and accompanying notes of Fiserv, Inc. (the “Company”). These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . Principles of Consolidation The consolidated financial statements include the accounts of Fiserv, Inc. and all 100% owned subsidiaries. Investments in less than 50% owned affiliates in which the Company has significant influence but not control are accounted for using the equity method of accounting. All intercompany transactions and balances have been eliminated in consolidation. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”), which provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. Under ASU 2017-09, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the award are the same immediately before and after the award is modified. ASU 2017-09 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted in any interim period. Entities must apply the standard prospectively. The Company early adopted ASU 2017-09 effective September 30, 2017 and will apply the guidance prospectively to awards modified on or after the adoption date. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements and is not expected to have a material impact on its consolidated financial statements going forward. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which eliminates Step 2 of the goodwill impairment test that had required a hypothetical purchase price allocation. Rather, entities should apply the same impairment assessment to all reporting units and recognize an impairment loss for the amount by which a reporting unit’s carrying amount exceeds its fair value, without exceeding the total amount of goodwill allocated to that reporting unit. Entities will continue to have the option to perform a qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 will be effective prospectively for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, or those beginning after January 1, 2017 if early adopted. The Company early adopted ASU 2017-04 in the first quarter of 2017. The adoption of this ASU did not have any impact on t he Company’s consolidated financial statements and is not expected to have a material impact on its consolidated financial statements going forward. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”), which clarifies the definition of a business with the objective of adding guidance and providing a more robust framework to assist reporting organizations with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. For public entities, ASU 2017-01 is effective prospectively for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted for transactions occurring before the issuance or effective date of the standard for which financial statements have not yet been issued. The Company early adopted ASU 2017-01 in the first quarter of 2017, and the adoption did not have a material impact on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which adds or clarifies guidance on the presentation and classification of eight specific types of cash receipts and cash payments in the statement of cash flows, with the intent of reducing diversity in practice. For public entities, ASU 2016-15 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. Entities must apply the guidance retrospectively to all periods presented unless retrospective application is impracticable. The Company early adopted ASU 2016-15 in the first quarter of 2017, and the adoption did not have a material impact on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which simplifies several aspects of the accounting for share-based payment awards, including the accounting for income taxes and forfeitures, as well as classification in the statement of cash flows. The standard requires that all tax effects related to share-based payments be recorded as income tax expense or benefit in the income statement at settlement or expiration and, accordingly, excess tax benefits and tax deficiencies be presented as operating activities in the statement of cash flows. For public entities, ASU 2016-09 was effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. The recognition of all excess tax benefits and tax deficiencies in the income statement, as well as related changes to the computation of diluted earnings per share, is to be applied prospectively. The impact of this standard on the Company’s consolidated financial statements depends on the intrinsic value of share-based compensation awards at the time of exercise or vesting, may result in more variability in effective tax rates and net earnings, and may impact the dilution of common stock equivalents. The Company adopted ASU 2016-09 effective January 1, 2017. As a result of this adoption, the Company recorded excess tax benefits related to share-based compensation awards of $13 million and $44 million during the three and nine months ended September 30, 2017 , respectively, in the income tax provision, whereas such benefits were previously recognized in equity. These benefits were partially offset by an increase in the dilution of common stock equivalents for calculating diluted earnings per share. The Company elected to apply the change in presentation in the statement of cash flows prospectively, and as a result, excess tax benefits are classified as operating activities when realized through reductions to subsequent tax payments. The treatment of forfeitures did not change as the Company elected to continue its current practice of estimating expected forfeitures. Recently Issued Accounting Pronouncements In August 2017, the FASB issued ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”), which provides guidance designed to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements as well as to simplify the application of the hedge accounting guidance in current U.S. generally accepted accounting principles. For public entities, ASU 2017-12 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted in any interim period or fiscal year. For cash flow and net investment hedges existing at the date of adoption, the standard requires a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year of adoption. The amended presentation and disclosure guidance is required only prospectively. The Company is currently assessing the impact that the adoption of ASU 2017-12 will have on its consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”), which eliminates the current prohibition on immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory, with the intent of reducing complexity and diversity in practice. Under ASU 2016-16, entities must recognize the income tax consequences when the transfer occurs rather than deferring recognition. For public entities, ASU 2016-16 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted as of the beginning of a fiscal year. Entities must apply the guidance on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. In consideration of its recent acquisition activity, the Company is currently assessing the impact that the adoption of ASU 2016-16 will have on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), which prescribes an impairment model for most financial assets based on expected losses rather than incurred losses. Under this model, an estimate of expected credit losses over the contractual life of the instrument is to be recorded as of the end of a reporting period as an allowance to offset the amortized cost basis, resulting in a net presentation of the amount expected to be collected on the financial asset. For public entities, ASU 2016-13 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For most instruments, entities must apply the standard using a cumulative-effect adjustment to beginning retained earnings as of the beginning of the fiscal year of adoption. The Company is currently assessing the impact that the adoption of ASU 2016-13 will have on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which requires lessees to recognize a lease liability and a right-of-use asset for each lease with a term longer than twelve months. The recognized liability is measured at the present value of lease payments not yet paid, and the corresponding asset represents the lessee’s right to use the underlying asset over the lease term and is based on the liability, subject to certain adjustments. For income statement purposes, the standard retains the dual model with leases classified as either operating or finance. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. For public entities, ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The standard requires a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently assessing the impact that the adoption of ASU 2016-02 will have on its consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements of financial instruments. For public entities, ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted for certain provisions of the standard. Entities must apply the standard, with certain exceptions, using a cumulative-effect adjustment to beginning retained earnings as of the beginning of the fiscal year of adoption. The Company does not expect the adoption of ASU 2016-01 to have a material impact on its consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), to clarify the principles of recognizing revenue and to create common revenue recognition guidance between U.S. generally accepted accounting principles and International Financial Reporting Standards. ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised 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. This model involves a five-step process for achieving that core principle, along with comprehensive disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date , to defer the effective date of the new revenue standard for one year and permit early adoption as of the original effective date in ASU 2014-09. For public entities, the new revenue standard is effective for annual and interim periods beginning after December 15, 2017. The Company plans to adopt ASU 2014-09 on January 1, 2018. The Company has reviewed the requirements of the new revenue standard and related ASUs and continues to monitor the activity of the FASB as it relates to specific interpretive guidance. The Company is continuing to review various customer contracts and is applying the five-step model of the new revenue standard to each of its identified key revenue streams and is comparing the results to its current accounting practices. While the Company continues to further assess all potential impacts of adopting this new revenue standard on its consolidated financial statements, related disclosures, accounting policies, and necessary control, process and systems changes, it expects the new revenue standard will not have a significant impact on the accounting for stand-ready account- and transaction-based processing fees, the Company’s most significant revenue stream. Areas that the Company expects will be impacted by the new revenue standard include the accounting for costs to obtain a contract, such as the capitalization of commissions for sales personnel, which are currently expensed as incurred; the timing of revenue recognition of certain termination fees over the modified contract term, which will generally result in an acceleration of revenue as compared to the Company’s current accounting practice of recognition upon client deconversion; the deferral of professional services revenue from certain transaction processing platform enhancements that are currently recognized as performed; and the expanded qualitative and quantitative disclosures required under the new standard. Entities have the option of adopting this new guidance using either a full retrospective or a modified approach with the cumulative effect of applying the guidance recognized at the date of initial application. The Company anticipates adopting the new standard using the modified retrospective transition approach, which will result in a cumulative effect adjustment to retained earnings as of January 1, 2018. Under this method, the Company would not restate the prior consolidated financial statements presented. However, the Company will be required to provide additional disclosures in 2018 related to the amount by which each relevant 2018 financial statement line item is affected by adoption of the new standard, and an explanation of the reasons for significant changes. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company applies fair value accounting for all assets and liabilities that are recognized or disclosed at fair value in its consolidated financial statements on a recurring basis. Fair value represents the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability. The fair values of cash equivalents, trade accounts receivable, settlement assets and obligations, accounts payable, and client deposits approximate their respective carrying values due to the short period of time to maturity. The estimated fair value of total debt was $5.2 billion at September 30, 2017 and $4.7 billion at December 31, 2016 , and was based on quoted prices in active markets for the Company’s senior notes (level 1 of the fair value hierarchy) and discounted cash flows based on the Company’s current incremental borrowing rate for its term loan (level 3 of the fair value hierarchy). The fair value of the Company’s revolving credit facility borrowings approximates carrying value as the underlying interest rate is variable based on LIBOR. The estimated fair value of the contingent consideration liability of $15 million at September 30, 2017 (see Note 4) was based on the present value of a probability-weighted assessment approach derived from the likelihood of achieving the various earn-out criteria (level 3 of the fair value hierarchy) and is reported in other long-term liabilities in the consolidated balance sheet. This estimated fair value has not changed since the acquisition date. |
Acquisitions and Dispositions
Acquisitions and Dispositions | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisitions and Dispositions | Acquisitions and Dispositions Acquisitions The Company completed four acquisitions during the first nine months of 2017. The results of operations for these acquired businesses, including revenue of $16 million during the first nine months of 2017, have been included in the accompanying consolidated statements of income from the dates of acquisition. Pro forma information for the Company’s acquisitions is not provided because they did not have a material effect on the Company’s consolidated results of operations. On January 17, 2017, the Company completed its acquisition of Online Banking Solutions, Inc. (“OBS”), gaining additional cash management and digital business banking capabilities that complement and enrich the Company’s existing solutions. On July 31, 2017, the Company acquired the assets of PCLender, LLC (“PCLender”), a leader in next-generation internet-based mortgage software and mortgage lending technology solutions. The OBS and PCLender acquisitions are included in the Financial Institution Services (“Financial”) segment as their products are integrated across a number of the Company’s account processing solutions and will enable the Company’s bank and credit union clients to better serve their commercial and mortgage customers. On August 18, 2017, the Company acquired Dovetail Group Limited (“Dovetail”), a leading provider of bank payments and liquidity management solutions. On September 1, 2017, the Company completed its acquisition of Monitise plc (“Monitise”), a provider of digital solutions that enable innovative digital banking experiences for leading financial institutions worldwide. The Dovetail and Monitise acquisitions are included in the Payments and Industry Products (“Payments”) segment and are expected to further enable the Company to help financial institutions around the world transform their payments infrastructure and to expand its digital leadership, respectively. The Company acquired these four businesses for an aggregate purchase price of $383 million , net of $33 million of acquired cash, along with earn-out provisions estimated at a fair value of $15 million . As of September 30, 2017, the preliminary purchase price allocations for these acquisitions resulted in technology and customer intangible assets totaling approximately $132 million , goodwill of approximately $237 million , and other identifiable net assets of approximately $29 million . The purchase price allocation for the OBS acquisition was finalized during the second quarter of 2017 and did not materially change from the preliminary allocation. The purchase price allocations for the remaining acquisitions were based on preliminary valuations and are subject to final adjustment. The goodwill from these transactions is primarily attributed to synergies and the anticipated value created by selling the products and services that these businesses provide into the Company’s existing client base. Approximately $70 million of the goodwill is expected to be deductible for tax purposes. Disposition On May 11, 2017, the Company sold its Australian item processing business, which was reported within the Financial segment, for approximately $17 million , consisting of $19 million in cash received at closing less an estimated closing adjustment of $2 million anticipated to be finalized in the fourth quarter of 2017. The Company recognized a gain on the sale of $10 million , with the related tax expense of $5 million recorded through the income tax provision, in the consolidated statements of income for the nine months ended September 30, 2017. |
Investment in Unconsolidated Af
Investment in Unconsolidated Affiliate | 9 Months Ended |
Sep. 30, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment in Unconsolidated Affiliate | Investment in Unconsolidated Affiliate The Company owns a 49% interest in StoneRiver Group, L.P. (“StoneRiver”), which is accounted for as an equity method investment, and reports its share of StoneRiver’s net income as income from investment in unconsolidated affiliate. During the first quarter of 2017, StoneRiver recognized a gain on the sale of a business. The Company’s pre-tax share of the gain was $26 million with related tax expense of $9 million . During the first nine months of 2017, the Company received cash dividends of $44 million from StoneRiver, which were funded from recent sale transactions and recorded as reductions in the Company’s investment in StoneRiver. These dividends exceeded the Company’s investment carrying amount, resulting in the reduction of its investment balance to zero , with the excess cash dividend of $5 million recorded as income, with related tax expense of $2 million , for the three and nine months ended September 30, 2017. During the first quarter of 2016, StoneRiver recognized a gain on the sale of a business interest in which the Company’s pre-tax share of this gain was $190 million . During the first quarter of 2016, the Company also received cash dividends of $140 million from StoneRiver, which were funded from the sale transaction and recorded as reductions in the Company’s investment in StoneRiver. In conjunction with this activity, the Company evaluated its equity method investment in StoneRiver for its ability to recover the remaining carrying amount of such investment. Utilizing a discounted cash flow analysis (level 3 of the fair value hierarchy) to arrive at a measure of the investment’s fair value, the Company recognized an impairment loss of $44 million . The Company’s pre-tax share of the gain, net of the impairment loss, was $146 million , with related tax expense of $54 million . The Company’s investment in StoneRiver was $14 million at December 31, 2016 and is reported within other long-term assets in the consolidated balance sheet. The Company’s pre-tax share of net gains on sale transactions and income from excess cash dividends are reported within income from investment in unconsolidated affiliate, with the related tax expense reported within the income tax provision, in the consolidated statements of income. The dividends, in their entirety, represented returns on the Company’s investment and are reported in cash flows from operating activities. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation The Company recognized $15 million and $48 million of share-based compensation expense during the three and nine months ended September 30, 2017 , respectively, and $15 million and $54 million of share-based compensation expense during the three and nine months ended September 30, 2016 , respectively. The Company’s annual grant of share-based awards generally occurs in the first quarter. During the nine months ended September 30, 2017 and 2016 , stock options to purchase 1.3 million and 1.6 million shares, respectively, were exercised. A summary of stock option, restricted stock unit and performance share unit grant activity is as follows: Nine Months Ended 2017 2016 Shares Granted Weighted-Average Grant Date Fair Value Shares Granted Weighted-Average Grant Date Fair Value Stock options 708 $ 37.45 933 $ 31.43 Restricted stock units 302 115.31 346 97.15 Performance share units 55 113.82 150 100.68 |
Shares Used in Computing Net In
Shares Used in Computing Net Income Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Shares Used in Computing Net Income Per Share | Shares Used in Computing Net Income Per Share The computation of shares used in calculating basic and diluted net income per common share is as follows: Three Months Ended Nine Months Ended (In millions) 2017 2016 2017 2016 Weighted-average common shares outstanding used for the calculation of net income per share – basic 210.1 219.2 212.1 221.6 Common stock equivalents 4.4 3.5 4.6 3.6 Weighted-average common shares outstanding used for the calculation of net income per share – diluted 214.5 222.7 216.7 225.2 For the three months ended September 30, 2017 and 2016 , stock options for 0.7 million and 0.9 million shares, respectively, were excluded from the calculation of diluted weighted-average outstanding shares because their impact was anti-dilutive. For both the nine months ended September 30, 2017 and 2016 , stock options for 0.8 million shares were excluded from the calculation of diluted weighted-average outstanding shares because their impact was anti-dilutive. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets Intangible assets consisted of the following: (In millions) Gross Carrying Amount Accumulated Amortization Net Book Value September 30, 2017 Customer related intangible assets $ 2,253 $ 1,136 $ 1,117 Acquired software and technology 587 452 135 Trade names 117 62 55 Capitalized software development costs 714 272 442 Purchased software 248 109 139 Total $ 3,919 $ 2,031 $ 1,888 (In millions) Gross Carrying Amount Accumulated Amortization Net Book Value December 31, 2016 Customer related intangible assets $ 2,200 $ 1,043 $ 1,157 Acquired software and technology 507 432 75 Trade names 117 57 60 Capitalized software development costs 641 233 408 Purchased software 230 97 133 Total $ 3,695 $ 1,862 $ 1,833 The Company estimates that annual amortization expense with respect to acquired intangible assets recorded at September 30, 2017 , which include customer related intangible assets, acquired software and technology, and trade names, will be approximately $160 million in each of 2017 , 2018 , and 2019 , $140 million in 2020 , and $130 million in 2021 . Annual amortization expense in 2017 with respect to capitalized and purchased software is estimated to approximate $150 million . |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 9 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of the following: (In millions) September 30, December 31, Trade accounts payable $ 83 $ 110 Client deposits 466 409 Settlement obligations 345 305 Accrued compensation and benefits 163 184 Other accrued expenses 249 234 Total $ 1,306 $ 1,242 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss by component, net of income taxes, consisted of the following: (In millions) Cash Flow Hedges Foreign Currency Translation Other Total Balance at December 31, 2016 $ (24 ) $ (50 ) $ (2 ) $ (76 ) Other comprehensive income before reclassifications 2 14 — 16 Amounts reclassified from accumulated other comprehensive loss 5 — — 5 Net current-period other comprehensive income 7 14 — 21 Balance at September 30, 2017 $ (17 ) $ (36 ) $ (2 ) $ (55 ) (In millions) Cash Flow Hedges Foreign Currency Translation Other Total Balance at December 31, 2015 $ (31 ) $ (41 ) $ (2 ) $ (74 ) Amounts reclassified from accumulated other comprehensive loss 5 — — 5 Net current-period other comprehensive income 5 — — 5 Balance at September 30, 2016 $ (26 ) $ (41 ) $ (2 ) $ (69 ) Based on the amounts recorded in accumulated other comprehensive loss at September 30, 2017 , the Company estimates that it will recognize approximately $6 million in interest expense during the next twelve months related to settled interest rate hedge contracts. The Company has entered into foreign currency forward exchange contracts, which have been designated as cash flow hedges, to hedge foreign currency exposure to the Indian Rupee. As of September 30, 2017 and December 31, 2016 , the notional amount of these derivatives was approximately $139 million and $86 million , respectively, and the fair value totaling approximately $5 million and $1 million , respectively, is reported in prepaid expenses and other current assets in the consolidated balance sheet. |
Cash Flow Information
Cash Flow Information | 9 Months Ended |
Sep. 30, 2017 | |
Supplemental Cash Flow Elements [Abstract] | |
Cash Flow Information | Cash Flow Information Supplemental cash flow information was as follows: Nine Months Ended (In millions) 2017 2016 Interest paid $ 88 $ 79 Income taxes paid 315 306 Treasury stock purchases settled after the balance sheet date 18 18 |
Business Segment Information
Business Segment Information | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Business Segment Information | Business Segment Information The Company’s operations are comprised of the Payments segment and the Financial segment. The Payments segment primarily provides electronic bill payment and presentment services, internet and mobile banking software and services, person-to-person payment services, debit and credit card processing and services, and other electronic payments software and services. The businesses in this segment also provide card and print personalization services, investment account processing services for separately managed accounts, and fraud and risk management products and services. The Financial segment provides banks, thrifts, credit unions, and leasing and finance companies with account processing services, item processing and source capture services, loan origination and servicing products, cash management and consulting services, and other products and services that support numerous types of financial transactions. Corporate and Other primarily consists of unallocated corporate expenses including compensation costs, amortization of acquisition-related intangible assets, intercompany eliminations and other costs that are not considered when management evaluates segment performance. (In millions) Payments Financial Corporate and Other Total Three Months Ended September 30, 2017 Processing and services revenue $ 621 $ 576 $ 2 $ 1,199 Product revenue 175 43 (17 ) 201 Total revenue $ 796 $ 619 $ (15 ) $ 1,400 Operating income $ 253 $ 204 $ (87 ) $ 370 Three Months Ended September 30, 2016 Processing and services revenue $ 589 $ 570 $ 1 $ 1,160 Product revenue 183 53 (16 ) 220 Total revenue $ 772 $ 623 $ (15 ) $ 1,380 Operating income $ 241 $ 209 $ (81 ) $ 369 Nine Months Ended September 30, 2017 Processing and services revenue $ 1,818 $ 1,738 $ 7 $ 3,563 Product revenue 551 124 (58 ) 617 Total revenue $ 2,369 $ 1,862 $ (51 ) $ 4,180 Operating income $ 750 $ 614 $ (257 ) $ 1,107 Nine Months Ended September 30, 2016 Processing and services revenue $ 1,736 $ 1,701 $ 4 $ 3,441 Product revenue 548 133 (48 ) 633 Total revenue $ 2,284 $ 1,834 $ (44 ) $ 4,074 Operating income $ 703 $ 606 $ (239 ) $ 1,070 Goodwill in the Payments segment was $3.8 billion and $3.6 billion as of September 30, 2017 and December 31, 2016 , respectively. Goodwill in the Financial segment was $1.8 billion as of both September 30, 2017 and December 31, 2016 . As a result of acquisitions, goodwill increased by $167 million and $70 million in the Payments and Financial segments, respectively, during the first nine months of 2017. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation, Policy | Principles of Consolidation The consolidated financial statements include the accounts of Fiserv, Inc. and all 100% owned subsidiaries. Investments in less than 50% owned affiliates in which the Company has significant influence but not control are accounted for using the equity method of accounting. All intercompany transactions and balances have been eliminated in consolidation. |
Recently Adopted And Issued Accounting Pronouncements, Policy | Recently Adopted Accounting Pronouncements In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”), which provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. Under ASU 2017-09, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the award are the same immediately before and after the award is modified. ASU 2017-09 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted in any interim period. Entities must apply the standard prospectively. The Company early adopted ASU 2017-09 effective September 30, 2017 and will apply the guidance prospectively to awards modified on or after the adoption date. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements and is not expected to have a material impact on its consolidated financial statements going forward. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which eliminates Step 2 of the goodwill impairment test that had required a hypothetical purchase price allocation. Rather, entities should apply the same impairment assessment to all reporting units and recognize an impairment loss for the amount by which a reporting unit’s carrying amount exceeds its fair value, without exceeding the total amount of goodwill allocated to that reporting unit. Entities will continue to have the option to perform a qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 will be effective prospectively for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, or those beginning after January 1, 2017 if early adopted. The Company early adopted ASU 2017-04 in the first quarter of 2017. The adoption of this ASU did not have any impact on t he Company’s consolidated financial statements and is not expected to have a material impact on its consolidated financial statements going forward. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”), which clarifies the definition of a business with the objective of adding guidance and providing a more robust framework to assist reporting organizations with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. For public entities, ASU 2017-01 is effective prospectively for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted for transactions occurring before the issuance or effective date of the standard for which financial statements have not yet been issued. The Company early adopted ASU 2017-01 in the first quarter of 2017, and the adoption did not have a material impact on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which adds or clarifies guidance on the presentation and classification of eight specific types of cash receipts and cash payments in the statement of cash flows, with the intent of reducing diversity in practice. For public entities, ASU 2016-15 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. Entities must apply the guidance retrospectively to all periods presented unless retrospective application is impracticable. The Company early adopted ASU 2016-15 in the first quarter of 2017, and the adoption did not have a material impact on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which simplifies several aspects of the accounting for share-based payment awards, including the accounting for income taxes and forfeitures, as well as classification in the statement of cash flows. The standard requires that all tax effects related to share-based payments be recorded as income tax expense or benefit in the income statement at settlement or expiration and, accordingly, excess tax benefits and tax deficiencies be presented as operating activities in the statement of cash flows. For public entities, ASU 2016-09 was effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. The recognition of all excess tax benefits and tax deficiencies in the income statement, as well as related changes to the computation of diluted earnings per share, is to be applied prospectively. The impact of this standard on the Company’s consolidated financial statements depends on the intrinsic value of share-based compensation awards at the time of exercise or vesting, may result in more variability in effective tax rates and net earnings, and may impact the dilution of common stock equivalents. The Company adopted ASU 2016-09 effective January 1, 2017. As a result of this adoption, the Company recorded excess tax benefits related to share-based compensation awards of $13 million and $44 million during the three and nine months ended September 30, 2017 , respectively, in the income tax provision, whereas such benefits were previously recognized in equity. These benefits were partially offset by an increase in the dilution of common stock equivalents for calculating diluted earnings per share. The Company elected to apply the change in presentation in the statement of cash flows prospectively, and as a result, excess tax benefits are classified as operating activities when realized through reductions to subsequent tax payments. The treatment of forfeitures did not change as the Company elected to continue its current practice of estimating expected forfeitures. Recently Issued Accounting Pronouncements In August 2017, the FASB issued ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”), which provides guidance designed to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements as well as to simplify the application of the hedge accounting guidance in current U.S. generally accepted accounting principles. For public entities, ASU 2017-12 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted in any interim period or fiscal year. For cash flow and net investment hedges existing at the date of adoption, the standard requires a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year of adoption. The amended presentation and disclosure guidance is required only prospectively. The Company is currently assessing the impact that the adoption of ASU 2017-12 will have on its consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”), which eliminates the current prohibition on immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory, with the intent of reducing complexity and diversity in practice. Under ASU 2016-16, entities must recognize the income tax consequences when the transfer occurs rather than deferring recognition. For public entities, ASU 2016-16 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted as of the beginning of a fiscal year. Entities must apply the guidance on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. In consideration of its recent acquisition activity, the Company is currently assessing the impact that the adoption of ASU 2016-16 will have on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), which prescribes an impairment model for most financial assets based on expected losses rather than incurred losses. Under this model, an estimate of expected credit losses over the contractual life of the instrument is to be recorded as of the end of a reporting period as an allowance to offset the amortized cost basis, resulting in a net presentation of the amount expected to be collected on the financial asset. For public entities, ASU 2016-13 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For most instruments, entities must apply the standard using a cumulative-effect adjustment to beginning retained earnings as of the beginning of the fiscal year of adoption. The Company is currently assessing the impact that the adoption of ASU 2016-13 will have on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which requires lessees to recognize a lease liability and a right-of-use asset for each lease with a term longer than twelve months. The recognized liability is measured at the present value of lease payments not yet paid, and the corresponding asset represents the lessee’s right to use the underlying asset over the lease term and is based on the liability, subject to certain adjustments. For income statement purposes, the standard retains the dual model with leases classified as either operating or finance. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. For public entities, ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The standard requires a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently assessing the impact that the adoption of ASU 2016-02 will have on its consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements of financial instruments. For public entities, ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted for certain provisions of the standard. Entities must apply the standard, with certain exceptions, using a cumulative-effect adjustment to beginning retained earnings as of the beginning of the fiscal year of adoption. The Company does not expect the adoption of ASU 2016-01 to have a material impact on its consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), to clarify the principles of recognizing revenue and to create common revenue recognition guidance between U.S. generally accepted accounting principles and International Financial Reporting Standards. ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised 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. This model involves a five-step process for achieving that core principle, along with comprehensive disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date , to defer the effective date of the new revenue standard for one year and permit early adoption as of the original effective date in ASU 2014-09. For public entities, the new revenue standard is effective for annual and interim periods beginning after December 15, 2017. The Company plans to adopt ASU 2014-09 on January 1, 2018. The Company has reviewed the requirements of the new revenue standard and related ASUs and continues to monitor the activity of the FASB as it relates to specific interpretive guidance. The Company is continuing to review various customer contracts and is applying the five-step model of the new revenue standard to each of its identified key revenue streams and is comparing the results to its current accounting practices. While the Company continues to further assess all potential impacts of adopting this new revenue standard on its consolidated financial statements, related disclosures, accounting policies, and necessary control, process and systems changes, it expects the new revenue standard will not have a significant impact on the accounting for stand-ready account- and transaction-based processing fees, the Company’s most significant revenue stream. Areas that the Company expects will be impacted by the new revenue standard include the accounting for costs to obtain a contract, such as the capitalization of commissions for sales personnel, which are currently expensed as incurred; the timing of revenue recognition of certain termination fees over the modified contract term, which will generally result in an acceleration of revenue as compared to the Company’s current accounting practice of recognition upon client deconversion; the deferral of professional services revenue from certain transaction processing platform enhancements that are currently recognized as performed; and the expanded qualitative and quantitative disclosures required under the new standard. Entities have the option of adopting this new guidance using either a full retrospective or a modified approach with the cumulative effect of applying the guidance recognized at the date of initial application. The Company anticipates adopting the new standard using the modified retrospective transition approach, which will result in a cumulative effect adjustment to retained earnings as of January 1, 2018. Under this method, the Company would not restate the prior consolidated financial statements presented. However, the Company will be required to provide additional disclosures in 2018 related to the amount by which each relevant 2018 financial statement line item is affected by adoption of the new standard, and an explanation of the reasons for significant changes. |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of stock option, restricted stock unit and performance share unit activity | A summary of stock option, restricted stock unit and performance share unit grant activity is as follows: Nine Months Ended 2017 2016 Shares Granted Weighted-Average Grant Date Fair Value Shares Granted Weighted-Average Grant Date Fair Value Stock options 708 $ 37.45 933 $ 31.43 Restricted stock units 302 115.31 346 97.15 Performance share units 55 113.82 150 100.68 |
Shares Used in Computing Net 22
Shares Used in Computing Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Computation of shares used in calculating basic and diluted net income per common share | The computation of shares used in calculating basic and diluted net income per common share is as follows: Three Months Ended Nine Months Ended (In millions) 2017 2016 2017 2016 Weighted-average common shares outstanding used for the calculation of net income per share – basic 210.1 219.2 212.1 221.6 Common stock equivalents 4.4 3.5 4.6 3.6 Weighted-average common shares outstanding used for the calculation of net income per share – diluted 214.5 222.7 216.7 225.2 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets by class | Intangible assets consisted of the following: (In millions) Gross Carrying Amount Accumulated Amortization Net Book Value September 30, 2017 Customer related intangible assets $ 2,253 $ 1,136 $ 1,117 Acquired software and technology 587 452 135 Trade names 117 62 55 Capitalized software development costs 714 272 442 Purchased software 248 109 139 Total $ 3,919 $ 2,031 $ 1,888 (In millions) Gross Carrying Amount Accumulated Amortization Net Book Value December 31, 2016 Customer related intangible assets $ 2,200 $ 1,043 $ 1,157 Acquired software and technology 507 432 75 Trade names 117 57 60 Capitalized software development costs 641 233 408 Purchased software 230 97 133 Total $ 3,695 $ 1,862 $ 1,833 |
Accounts Payable and Accrued 24
Accounts Payable and Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of accounts payable and accrued expenses | Accounts payable and accrued expenses consisted of the following: (In millions) September 30, December 31, Trade accounts payable $ 83 $ 110 Client deposits 466 409 Settlement obligations 345 305 Accrued compensation and benefits 163 184 Other accrued expenses 249 234 Total $ 1,306 $ 1,242 |
Accumulated Other Comprehensi25
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Changes in accumulated other comprehensive loss by component, net of income taxes | Changes in accumulated other comprehensive loss by component, net of income taxes, consisted of the following: (In millions) Cash Flow Hedges Foreign Currency Translation Other Total Balance at December 31, 2016 $ (24 ) $ (50 ) $ (2 ) $ (76 ) Other comprehensive income before reclassifications 2 14 — 16 Amounts reclassified from accumulated other comprehensive loss 5 — — 5 Net current-period other comprehensive income 7 14 — 21 Balance at September 30, 2017 $ (17 ) $ (36 ) $ (2 ) $ (55 ) (In millions) Cash Flow Hedges Foreign Currency Translation Other Total Balance at December 31, 2015 $ (31 ) $ (41 ) $ (2 ) $ (74 ) Amounts reclassified from accumulated other comprehensive loss 5 — — 5 Net current-period other comprehensive income 5 — — 5 Balance at September 30, 2016 $ (26 ) $ (41 ) $ (2 ) $ (69 ) |
Cash Flow Information (Tables)
Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of supplemental cash flow information | Supplemental cash flow information was as follows: Nine Months Ended (In millions) 2017 2016 Interest paid $ 88 $ 79 Income taxes paid 315 306 Treasury stock purchases settled after the balance sheet date 18 18 |
Business Segment Information (T
Business Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information | (In millions) Payments Financial Corporate and Other Total Three Months Ended September 30, 2017 Processing and services revenue $ 621 $ 576 $ 2 $ 1,199 Product revenue 175 43 (17 ) 201 Total revenue $ 796 $ 619 $ (15 ) $ 1,400 Operating income $ 253 $ 204 $ (87 ) $ 370 Three Months Ended September 30, 2016 Processing and services revenue $ 589 $ 570 $ 1 $ 1,160 Product revenue 183 53 (16 ) 220 Total revenue $ 772 $ 623 $ (15 ) $ 1,380 Operating income $ 241 $ 209 $ (81 ) $ 369 Nine Months Ended September 30, 2017 Processing and services revenue $ 1,818 $ 1,738 $ 7 $ 3,563 Product revenue 551 124 (58 ) 617 Total revenue $ 2,369 $ 1,862 $ (51 ) $ 4,180 Operating income $ 750 $ 614 $ (257 ) $ 1,107 Nine Months Ended September 30, 2016 Processing and services revenue $ 1,736 $ 1,701 $ 4 $ 3,441 Product revenue 548 133 (48 ) 633 Total revenue $ 2,284 $ 1,834 $ (44 ) $ 4,074 Operating income $ 703 $ 606 $ (239 ) $ 1,070 |
Recent Accounting Pronounceme28
Recent Accounting Pronouncements (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Income Tax Provision | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Excess tax benefits from share-based compensation awards | $ 13 | $ 44 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Business Acquisition, Contingent Consideration [Line Items] | ||
Fair value of total debt | $ 5,200 | $ 4,700 |
Contingent consideration liability, fair value | $ 15 |
Acquisitions and Dispositions (
Acquisitions and Dispositions (Details) $ in Millions | May 11, 2017USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($)acquisitions | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Business Acquisition [Line Items] | |||||
Number of acquisitions | acquisitions | 4 | ||||
Revenue of Acquiree since acquisition date | $ 16 | ||||
Payments for acquisitions of businesses | 383 | ||||
Cash acquired from acquisitions | 33 | ||||
Earn-out provisions, fair value | 15 | ||||
Recognized identifiable assets acquired, finite-lived intangibles | 132 | ||||
Goodwill | 5,612 | $ 5,373 | |||
Other identifiable net assets | 29 | ||||
Goodwill, expected to be tax deductible | 70 | ||||
Consideration from sale of business | $ 17 | ||||
Proceeds from sale of business | $ 19 | 19 | $ 0 | ||
Gain from sale of business | 10 | ||||
Tax expense from sale of business | 5 | ||||
Scenario, Forecast | |||||
Business Acquisition [Line Items] | |||||
Closing adjustment from sale of business | $ 2 | ||||
Series of Individually Immaterial Business Acquisitions [Member] | |||||
Business Acquisition [Line Items] | |||||
Goodwill | $ 237 |
Investment in Unconsolidated 31
Investment in Unconsolidated Affiliate (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Schedule of Equity Method Investments [Line Items] | |||||||
Dividends from unconsolidated affiliate | $ 44 | $ 140 | |||||
Excess cash dividend recorded as income | $ 5 | $ 0 | $ 31 | $ 146 | |||
StoneRiver Group, L.P. | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Percentage of interest owned in affiliate | 49.00% | 49.00% | |||||
Deconsolidation gain from equity method investments | $ 26 | $ 190 | |||||
Deconsolidation gain from equity method investments, tax | $ 9 | 54 | |||||
Dividends from unconsolidated affiliate | 140 | $ 44 | |||||
Investments in affiliate | $ 0 | 0 | $ 14 | ||||
Excess cash dividend recorded as income | 5 | 5 | |||||
Related tax expense, excess cash dividend | $ 2 | $ 2 | |||||
Equity method investment, other than temporary impairment | 44 | ||||||
Deconsolidation gain net of impairment from equity method investments | $ 146 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 15 | $ 15 | $ 48 | $ 54 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based awards, stock options, exercised (in shares) | 1.3 | 1.6 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Stock Options (Details) - $ / shares shares in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based awards, stock options, granted (in shares) | 708 | 933 |
Share-based awards, stock options, weighted-average grant date fair value (in dollars per share) | $ 37.45 | $ 31.43 |
Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based awards, restricted stock units, granted (in shares) | 302 | 346 |
Share-based awards, restricted stock units, weighted-average grant date fair values (in dollar per share) | $ 115.31 | $ 97.15 |
Performance share units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based awards, restricted stock units, granted (in shares) | 55 | 150 |
Share-based awards, restricted stock units, weighted-average grant date fair values (in dollar per share) | $ 113.82 | $ 100.68 |
Shares Used in Computing Net 34
Shares Used in Computing Net Income Per Share - Schedule of Weighted-Average Number of Shares (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Weighted-average common shares outstanding used for the calculation of net income per share – basic | 210.1 | 219.2 | 212.1 | 221.6 |
Common stock equivalents (in shares) | 4.4 | 3.5 | 4.6 | 3.6 |
Weighted-average common shares outstanding used for the calculation of net income per share – diluted | 214.5 | 222.7 | 216.7 | 225.2 |
Shares Used in Computing Net 35
Shares Used in Computing Net Income Per Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Stock options excluded from the calculation of diluted weighted-average outstanding shares because their impact was anti-dilutive (in shares) | 0.7 | 0.9 | 0.8 | 0.8 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets by Class (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 3,919 | $ 3,695 |
Accumulated Amortization | 2,031 | 1,862 |
Net Book Value | 1,888 | 1,833 |
Customer related intangible assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2,253 | 2,200 |
Accumulated Amortization | 1,136 | 1,043 |
Net Book Value | 1,117 | 1,157 |
Acquired software and technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 587 | 507 |
Accumulated Amortization | 452 | 432 |
Net Book Value | 135 | 75 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 117 | 117 |
Accumulated Amortization | 62 | 57 |
Net Book Value | 55 | 60 |
Capitalized software development costs | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 714 | 641 |
Accumulated Amortization | 272 | 233 |
Net Book Value | 442 | 408 |
Purchased software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 248 | 230 |
Accumulated Amortization | 109 | 97 |
Net Book Value | $ 139 | $ 133 |
Intangible Assets - Narrative (
Intangible Assets - Narrative (Details) $ in Millions | Sep. 30, 2017USD ($) |
Acquired intangible assets | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated annual amortization expense in 2017 | $ 160 |
Estimated annual amortization expense in 2018 | 160 |
Estimated annual amortization expense in 2019 | 160 |
Estimated annual amortization expense in 2020 | 140 |
Estimated annual amortization expense in 2021 | 130 |
Capitalized and purchased software | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated annual amortization expense in 2017 | $ 150 |
Accounts Payable and Accrued 38
Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Trade accounts payable | $ 83 | $ 110 |
Client deposits | 466 | 409 |
Settlement obligations | 345 | 305 |
Accrued compensation and benefits | 163 | 184 |
Other accrued expenses | 249 | 234 |
Total | $ 1,306 | $ 1,242 |
Accumulated Other Comprehensi39
Accumulated Other Comprehensive Loss - Schedule of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 2,541 | |||
Total other comprehensive income | $ 4 | $ 5 | 21 | $ 5 |
Ending balance | 2,350 | 2,350 | ||
Cash Flow Hedges | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | (24) | (31) | ||
Other comprehensive income before reclassifications | 2 | |||
Amounts reclassified from accumulated other comprehensive loss | 5 | 5 | ||
Total other comprehensive income | 7 | 5 | ||
Ending balance | (17) | (26) | (17) | (26) |
Foreign Currency Translation | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | (50) | (41) | ||
Other comprehensive income before reclassifications | 14 | |||
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | ||
Total other comprehensive income | 14 | 0 | ||
Ending balance | (36) | (41) | (36) | (41) |
Other | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | (2) | (2) | ||
Other comprehensive income before reclassifications | 0 | |||
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | ||
Total other comprehensive income | 0 | 0 | ||
Ending balance | (2) | (2) | (2) | (2) |
Total | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning balance | (76) | (74) | ||
Other comprehensive income before reclassifications | 16 | |||
Amounts reclassified from accumulated other comprehensive loss | 5 | 5 | ||
Total other comprehensive income | 21 | 5 | ||
Ending balance | $ (55) | $ (69) | $ (55) | $ (69) |
Accumulated Other Comprehensi40
Accumulated Other Comprehensive Loss - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Estimated interest expense related to settled interest rate hedge contracts during the next twelve months | $ 6 | |
Foreign currency forward exchange contracts | Indian Rupee | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Notional amount of derivative | 139 | $ 86 |
Total fair value of cash flow hedge derivatives | $ 5 | $ 1 |
Cash Flow Information (Details)
Cash Flow Information (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Supplemental Cash Flow Elements [Abstract] | ||
Interest paid | $ 88 | $ 79 |
Income taxes paid | 315 | 306 |
Treasury stock purchases settled after the balance sheet date | $ 18 | $ 18 |
Business Segment Information -
Business Segment Information - Schedule of Segment Reporting Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Processing and services revenue | $ 1,199 | $ 1,160 | $ 3,563 | $ 3,441 |
Product revenue | 201 | 220 | 617 | 633 |
Total revenue | 1,400 | 1,380 | 4,180 | 4,074 |
Operating income | 370 | 369 | 1,107 | 1,070 |
Corporate and Other | ||||
Segment Reporting Information [Line Items] | ||||
Processing and services revenue | 2 | 1 | 7 | 4 |
Product revenue | (17) | (16) | (58) | (48) |
Total revenue | (15) | (15) | (51) | (44) |
Operating income | (87) | (81) | (257) | (239) |
Payments | Operating segments | ||||
Segment Reporting Information [Line Items] | ||||
Processing and services revenue | 621 | 589 | 1,818 | 1,736 |
Product revenue | 175 | 183 | 551 | 548 |
Total revenue | 796 | 772 | 2,369 | 2,284 |
Operating income | 253 | 241 | 750 | 703 |
Financial | Operating segments | ||||
Segment Reporting Information [Line Items] | ||||
Processing and services revenue | 576 | 570 | 1,738 | 1,701 |
Product revenue | 43 | 53 | 124 | 133 |
Total revenue | 619 | 623 | 1,862 | 1,834 |
Operating income | $ 204 | $ 209 | $ 614 | $ 606 |
Business Segment Information 43
Business Segment Information - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Goodwill | $ 5,612 | $ 5,373 |
Payments | ||
Segment Reporting Information [Line Items] | ||
Goodwill, increase | 167 | |
Financial | ||
Segment Reporting Information [Line Items] | ||
Goodwill, increase | 70 | |
Operating segments | Payments | ||
Segment Reporting Information [Line Items] | ||
Goodwill | 3,800 | 3,600 |
Operating segments | Financial | ||
Segment Reporting Information [Line Items] | ||
Goodwill | $ 1,800 | $ 1,800 |