Delaware | 001-11073 | 47-0731996 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
225 LIBERTY STREET 29th FLOOR NEW YORK, NEW YORK | 10281 |
(Address of Principal Executive Offices) | (Zip Code) |
Item | 9.01 Financial Statements and Exhibits. |
(d) | The following is a list of the Exhibits filed or furnished with this report. |
Exhibit Number | Description of Exhibit |
Press Release issued by FDC on February 12, 2018 | |
• | Q4 consolidated revenue of $3,150 million, up 7%; Full year consolidated revenue of $12,052 million, up 4% |
• | Q4 total segment revenue of $1,949 million, up 7%, or up 4% on an organic constant currency basis(a); Full year total segment revenue of $7,428 million, up 4% on both a reported and organic constant currency basis |
• | Q4 net income of $948 million, improved $756 million, diluted EPS of $1.00; Full year net income of $1,465 million, improved $1,045 million, diluted EPS of $1.56 |
• | Q4 adjusted net income of $416 million, adjusted diluted EPS of $0.44, up 13%; Full year adjusted net income of $1,425 million, adjusted diluted EPS of $1.52, up 15% |
• | Q4 total segment EBITDA of $848 million, up 10%, or up 8% on an organic constant currency basis; Full year total segment EBITDA of $3,072 million, up 6% on both a reported and organic constant currency basis |
• | Q4 cash flow from operations of $465 million, free cash flow of $280 million; Full year cash flow from operations of $2,047 million, free cash flow of $1,359 million |
• | 2018 guidance provided |
(a) | Organic constant currency growth (“Organic CC growth”) is defined as reported growth adjusted for the following: (1) excludes the impacts of year-over-year currency rate changes in the current period; (2) excludes the results of significant divestitures (including the impact of our Digital Banking Joint Venture) in the prior year period; and (3) includes the results of significant acquisitions in the prior year period. |
• | Total segment revenue: 5% to 7% (range includes a net benefit attributable to the full year impact of previously announced major acquisitions and dispositions of approximately 2 percentage points) |
• | Total segment EBITDA: 7% to 9% (range includes a net benefit attributable to the full year impact of previously announced major acquisitions and dispositions of approximately 1.5 percentage points) |
• | Adjusted diluted EPS: $1.35 to $1.40 |
• | Effective tax rate: 27% to 29% |
• | Free cash flow: $1.4 billion+ |
Peter Poillon Investor Relations First Data 212-266-3565 Peter.Poillon@firstdata.com | Liidia Liuksila Public Relations First Data 212-515-0174 Liidia.Liuksila@firstdata.com |
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||||||||
2017 | 2016 | % Change | Constant Currency % Change | 2017 | 2016 | % Change | Constant Currency % Change | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||
Transaction and processing service fees (a) | $ | 1,775 | $ | 1,647 | 8 | % | 7 | % | $ | 6,757 | $ | 6,600 | 2 | % | 2 | % | |||||||||||
Product sales and other (a) | 356 | 346 | 3 | % | 2 | % | 1,372 | 1,239 | 11 | % | 11 | % | |||||||||||||||
Total revenues (excluding reimbursable items) | 2,131 | 1,993 | 7 | % | 6 | % | 8,129 | 7,839 | 4 | % | 4 | % | |||||||||||||||
Reimbursable debit network fees, postage, and other | 1,019 | 950 | 7 | % | 7 | % | 3,923 | 3,745 | 5 | % | 5 | % | |||||||||||||||
Total revenues | 3,150 | 2,943 | 7 | % | 6 | % | 12,052 | 11,584 | 4 | % | 4 | % | |||||||||||||||
Expenses: | |||||||||||||||||||||||||||
Cost of services (exclusive of items shown below) | 674 | 715 | (6 | )% | (7 | )% | 2,763 | 2,855 | (3 | )% | (3 | )% | |||||||||||||||
Cost of products sold | 92 | 86 | 7 | % | 7 | % | 359 | 337 | 7 | % | 7 | % | |||||||||||||||
Selling, general, and administrative | 571 | 472 | 21 | % | 20 | % | 2,178 | 2,035 | 7 | % | 7 | % | |||||||||||||||
Depreciation and amortization | 259 | 236 | 10 | % | 8 | % | 972 | 949 | 2 | % | 2 | % | |||||||||||||||
Other operating expenses | 35 | 4 | NM | NM | 143 | 61 | NM | NM | |||||||||||||||||||
Total expenses (excluding reimbursable items) | 1,631 | 1,513 | 8 | % | 7 | % | 6,415 | 6,237 | 3 | % | 3 | % | |||||||||||||||
Reimbursable debit network fees, postage, and other | 1,019 | 950 | 7 | % | 7 | % | 3,923 | 3,745 | 5 | % | 5 | % | |||||||||||||||
Total expenses | 2,650 | 2,463 | 8 | % | 7 | % | 10,338 | 9,982 | 4 | % | 4 | % | |||||||||||||||
Operating profit | 500 | 480 | 4 | % | 1,714 | 1,602 | 7 | % | |||||||||||||||||||
Interest expense, net | (231 | ) | (258 | ) | (10 | )% | (937 | ) | (1,068 | ) | (12 | )% | |||||||||||||||
Loss on debt extinguishment | (8 | ) | (12 | ) | (33 | )% | (80 | ) | (70 | ) | 14 | % | |||||||||||||||
Other income | 23 | 3 | NM | 16 | 17 | (6 | )% | ||||||||||||||||||||
Income before income taxes and equity earnings in affiliates | 284 | 213 | 33 | % | 713 | 481 | 48 | % | |||||||||||||||||||
Income tax (benefit) expense | (663 | ) | 24 | NM | (729 | ) | 81 | NM | |||||||||||||||||||
Equity earnings in affiliates | 55 | 62 | (11 | )% | 222 | 260 | (15 | )% | |||||||||||||||||||
Net income | 1,002 | 251 | 299 | % | 1,664 | 660 | 152 | % | |||||||||||||||||||
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interest | 54 | 59 | (8 | )% | 199 | 240 | (17 | )% | |||||||||||||||||||
Net income attributable to First Data Corporation | $ | 948 | $ | 192 | 394 | % | $ | 1,465 | $ | 420 | 249 | % | |||||||||||||||
Net income per share: | |||||||||||||||||||||||||||
Basic | $ | 1.03 | $ | 0.21 | 390 | % | $ | 1.60 | $ | 0.47 | 240 | % | |||||||||||||||
Diluted | $ | 1.00 | $ | 0.21 | 376 | % | $ | 1.56 | $ | 0.46 | 239 | % | |||||||||||||||
Weighted-average common shares outstanding: | |||||||||||||||||||||||||||
Basic | 918,726,777 | 905,966,452 | 915,870,759 | 901,671,872 | |||||||||||||||||||||||
Diluted | 945,035,811 | 929,375,020 | 939,767,019 | 921,001,863 | |||||||||||||||||||||||
(a) | Includes processing fees, administrative service fees, and other fees charged to merchant alliances accounted for under the equity method of $53 million and $215 million for the three and twelve months ended December 31, 2017, respectively, and $48 million and $198 million for the comparable periods in 2016. |
SELECTED CONSOLIDATED BALANCE SHEET DATA | ||||||||
As of | As of | |||||||
December 31, 2017 | December 31, 2016 | |||||||
Cash and cash equivalents | $ | 498 | $ | 385 | ||||
Settlement assets | 20,363 | 14,795 | ||||||
Total assets | 48,269 | 40,292 | ||||||
Short-term and current portion of long-term borrowings | 1,271 | 358 | ||||||
Settlement obligations | 20,363 | 14,795 | ||||||
Long-term borrowings | 17,927 | 18,131 | ||||||
Total liabilities | 42,183 | 36,088 | ||||||
Redeemable noncontrolling interest | 72 | 73 | ||||||
Total First Data Corporation stockholders' equity | 3,152 | 1,220 | ||||||
Noncontrolling interests | 2,862 | 2,911 | ||||||
Total equity | 6,014 | 4,131 | ||||||
SELECTED CONSOLIDATED CASH FLOW DATA | |||||||||||||||
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Source/(Use) of cash | |||||||||||||||
Net cash provided by operating activities (a) | $ | 465 | $ | 451 | $ | 2,047 | $ | 2,111 | |||||||
Net cash used in investing activities | (893 | ) | (49 | ) | (1,950 | ) | (387 | ) | |||||||
Net cash provided by (used in) financing activities | 419 | (476 | ) | 9 | (1,734 | ) | |||||||||
Supplemental cash flow data | |||||||||||||||
Cash interest payments on long-term debt (b) | $ | 205 | $ | 249 | $ | 889 | $ | 1,008 |
(a) | The twelve months ended December 31, 2016 includes a $102 million reclassification related to settlement activities to conform certain domestic and international businesses to our global policies, which increased "Cash and cash equivalents" and decreased "Accounts receivable, net" in our consolidated balance sheet. |
(b) | For purposes of this schedule, cash interest payments on long-term debt excludes interest on capital leases and interest on foreign lines of credit. |
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||||||||
2017 | 2016 | % Change B/(W) | Organic CC % Change(e) B/(W) | 2017 | 2016 | % Change B/(W) | Organic CC % Change(e) B/(W) | ||||||||||||||||||||
Total segment revenue | $ | 1,949 | $ | 1,830 | 7 | % | 4 | % | $ | 7,428 | $ | 7,141 | 4 | % | 4 | % | |||||||||||
Adjustments: | |||||||||||||||||||||||||||
Non wholly owned entities (a) | 15 | 21 | (29 | )% | 64 | 80 | (20 | )% | |||||||||||||||||||
Independent Sales Organization (ISO) commission expense (b) | 167 | 142 | 18 | % | 637 | 618 | 3 | % | |||||||||||||||||||
Reimbursable debit network fees, postage, and other | 1,019 | 950 | 7 | % | 3,923 | 3,745 | 5 | % | |||||||||||||||||||
Consolidated revenue | $ | 3,150 | $ | 2,943 | 7 | % | $ | 12,052 | $ | 11,584 | 4 | % | |||||||||||||||
Segment revenue: | |||||||||||||||||||||||||||
Global Business Solutions | $ | 1,131 | $ | 1,026 | 10 | % | 4 | % | $ | 4,262 | $ | 4,063 | 5 | % | 4 | % | |||||||||||
Global Financial Solutions | 412 | 415 | (1 | )% | (1 | )% | 1,623 | 1,593 | 2 | % | 3 | % | |||||||||||||||
Network & Security Solutions | 406 | 389 | 4 | % | 6 | % | 1,543 | 1,485 | 4 | % | 4 | % | |||||||||||||||
Total segment revenue | $ | 1,949 | $ | 1,830 | 7 | % | 4 | % | $ | 7,428 | $ | 7,141 | 4 | % | 4 | % | |||||||||||
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||||||||
2017 | 2016 | % Change B/(W) | Organic CC % Change(e) B/(W) | 2017 | 2016 | % Change B/(W) | Organic CC % Change(e) B/(W) | ||||||||||||||||||||
Total segment expenses | $ | 1,101 | $ | 1,059 | (4 | )% | (1 | )% | $ | 4,356 | $ | 4,249 | (3 | )% | (2 | )% | |||||||||||
Adjustments: | |||||||||||||||||||||||||||
Non wholly owned entities (a) | 19 | 18 | (6 | )% | 69 | 70 | 1 | % | |||||||||||||||||||
Independent Sales Organization (ISO) commission expense (b) | 167 | 142 | (18 | )% | 637 | 618 | (3 | )% | |||||||||||||||||||
Reimbursable debit network fees, postage and other | 1,019 | 950 | (7 | )% | 3,923 | 3,745 | (5 | )% | |||||||||||||||||||
Depreciation and amortization | 259 | 236 | (10 | )% | 972 | 949 | (2 | )% | |||||||||||||||||||
Stock-based compensation | 62 | 49 | (27 | )% | 245 | 263 | 7 | % | |||||||||||||||||||
Other (c) | 23 | 9 | (156 | )% | 136 | 88 | (55 | )% | |||||||||||||||||||
Consolidated expenses | $ | 2,650 | $ | 2,463 | (8 | )% | $ | 10,338 | $ | 9,982 | (4 | )% | |||||||||||||||
Segment expenses: | |||||||||||||||||||||||||||
Global Business Solutions | $ | 637 | $ | 580 | (10 | )% | (3 | )% | $ | 2,438 | $ | 2,338 | (4 | )% | (3 | )% | |||||||||||
Global Financial Solutions | 228 | 242 | 6 | % | 6 | % | 937 | 947 | 1 | % | — | % | |||||||||||||||
Network & Security Solutions | 197 | 206 | 4 | % | 1 | % | 814 | 819 | 1 | % | — | % | |||||||||||||||
Corporate | 39 | 31 | (26 | )% | (26 | )% | 167 | 145 | (15 | )% | (15 | )% | |||||||||||||||
Total segment expenses | $ | 1,101 | $ | 1,059 | (4 | )% | (1 | )% | $ | 4,356 | $ | 4,249 | (3 | )% | (2 | )% | |||||||||||
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||||||||
2017 | 2016 | % Change B/(W) | Organic CC % Change(e) B/(W) | 2017 | 2016 | % Change B/(W) | Organic CC % Change(e) B/(W) | ||||||||||||||||||||
Total Segment EBITDA | $ | 848 | $ | 771 | 10 | % | 8 | % | $ | 3,072 | $ | 2,892 | 6 | % | 6 | % | |||||||||||
Adjustments: | |||||||||||||||||||||||||||
Non wholly owned entities (a) | 9 | 6 | 50 | % | 30 | 30 | — | % | |||||||||||||||||||
Depreciation and amortization | (259 | ) | (236 | ) | 10 | % | (972 | ) | (949 | ) | 2 | % | |||||||||||||||
Interest expense, net | (231 | ) | (258 | ) | (10 | )% | (937 | ) | (1,068 | ) | (12 | )% | |||||||||||||||
Loss on debt extinguishment | (8 | ) | (12 | ) | (33 | )% | (80 | ) | (70 | ) | 14 | % | |||||||||||||||
Other items (d) | (12 | ) | (6 | ) | 100 | % | (132 | ) | (71 | ) | 86 | % | |||||||||||||||
Income tax expense | 663 | (24 | ) | NM | 729 | (81 | ) | NM | |||||||||||||||||||
Stock-based compensation | (62 | ) | (49 | ) | 27 | % | (245 | ) | (263 | ) | (7 | )% | |||||||||||||||
Net income (loss) attributable to First Data Corporation | $ | 948 | $ | 192 | 394 | % | $ | 1,465 | $ | 420 | 249 | % | |||||||||||||||
Segment EBITDA: | |||||||||||||||||||||||||||
Global Business Solutions | $ | 494 | $ | 446 | 11 | % | 7 | % | $ | 1,824 | $ | 1,725 | 6 | % | 5 | % | |||||||||||
Global Financial Solutions | 184 | 173 | 6 | % | 6 | % | 686 | 646 | 6 | % | 8 | % | |||||||||||||||
Network & Security Solutions | 209 | 183 | 14 | % | 14 | % | 729 | 666 | 9 | % | 9 | % | |||||||||||||||
Corporate | (39 | ) | (31 | ) | (26 | )% | (26 | )% | (167 | ) | (145 | ) | (15 | )% | (15 | )% | |||||||||||
Total Segment EBITDA | $ | 848 | $ | 771 | 10 | % | 8 | % | $ | 3,072 | $ | 2,892 | 6 | % | 6 | % |
(a) | Net adjustment to reflect our proportionate share of the results of our investments in businesses accounted for under the equity method and consolidated subsidiaries with noncontrolling ownership interests. Segment revenue for our significant affiliates is reflected based on our proportionate share of the results of our investments in businesses accounted for under the equity method and consolidated subsidiaries with noncontrolling ownership interests. For other affiliates, we include equity earnings in affiliates, excluding amortization expense, in segment revenue. In addition, our segment measures reflect revenue-based commission payments to Independent Sales Organizations (ISOs). |
(b) | Retail Independent Sales Organization commissions are presented within Selling, general, and administrative expense in the unaudited consolidated statements of operations but are netted in segment revenues for segment reporting. |
(c) | Includes restructuring, certain retention bonuses, non-normal course litigation and regulatory settlements, asset impairments, debt issuance costs, and acquisition integration costs. |
(d) | Items noted within (c) above and "Other income (expense)" as presented in the unaudited consolidated statements of operations, which includes divestitures, derivative gains (losses), non-operating foreign currency gains (losses) and the gain on Visa Europe share sale. |
(e) | Organic constant currency growth (“Organic CC growth”) is defined as reported growth adjusted for the following: (1) excludes the impacts of year-over-year currency rate changes in the current period; (2) excludes the results of significant divestitures (including the impact of our Digital Banking Joint Venture) in the prior year period; and (3) includes the results of significant acquisitions in the prior year period. |
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||
2017 | 2016 | % B/(W) | 2017 | 2016 | % B/(W) | ||||||||||||||||
Total segment revenue | $ | 1,949 | $ | 1,830 | 7 | % | $ | 7,428 | $ | 7,141 | 4 | % | |||||||||
Currency impact | (17 | ) | — | 16 | — | ||||||||||||||||
Acquisitions/Divestitures(a) | — | 34 | — | 40 | |||||||||||||||||
Organic constant currency(b) segment revenue growth | $ | 1,932 | $ | 1,864 | 4 | % | $ | 7,444 | $ | 7,181 | 4 | % | |||||||||
GBS revenue | $ | 1,131 | $ | 1,026 | 10 | % | $ | 4,262 | $ | 4,063 | 5 | % | |||||||||
Currency impact | (11 | ) | — | 2 | — | ||||||||||||||||
Acquisitions/Divestitures(a) | — | 47 | — | 53 | |||||||||||||||||
Organic constant currency(b) GBS revenue growth | $ | 1,120 | $ | 1,073 | 4 | % | $ | 4,264 | $ | 4,116 | 4 | % | |||||||||
GBS NA revenue | $ | 852 | $ | 805 | 6 | % | $ | 3,262 | $ | 3,176 | 3 | % | |||||||||
Currency impact | (1 | ) | — | (1 | ) | — | |||||||||||||||
Acquisitions/Divestitures(a) | — | 47 | — | 84 | |||||||||||||||||
Organic constant currency(b) GBS NA revenue growth | $ | 851 | $ | 852 | — | % | $ | 3,261 | $ | 3,260 | — | % | |||||||||
GBS APAC revenue | $ | 43 | $ | 34 | 26 | % | $ | 152 | $ | 159 | (4 | )% | |||||||||
Currency impact | (1 | ) | — | (3 | ) | — | |||||||||||||||
Acquisitions/Divestitures(a) | — | — | — | (31 | ) | ||||||||||||||||
Organic constant currency(b) GBS APAC revenue growth | $ | 42 | $ | 34 | 24 | % | $ | 149 | $ | 128 | 16 | % | |||||||||
GFS revenue | $ | 412 | $ | 415 | (1 | )% | $ | 1,623 | $ | 1,593 | 2 | % | |||||||||
Currency impact | (7 | ) | — | 13 | — | ||||||||||||||||
Acquisitions/Divestitures(a) | — | (6 | ) | — | (6 | ) | |||||||||||||||
Organic constant currency(b) GFS revenue growth | $ | 405 | $ | 409 | (1 | )% | $ | 1,636 | $ | 1,587 | 3 | % | |||||||||
GFS EMEA revenue | $ | 112 | $ | 109 | 3 | % | $ | 444 | $ | 433 | 3 | % | |||||||||
Currency impact | (7 | ) | — | 13 | — | ||||||||||||||||
Acquisitions/Divestitures(a) | — | (6 | ) | — | (6 | ) | |||||||||||||||
Organic constant currency(b) GFS EMEA revenue growth | $ | 105 | $ | 103 | 2 | % | $ | 457 | $ | 427 | 7 | % | |||||||||
NSS revenue | $ | 406 | $ | 389 | 4 | % | $ | 1,543 | $ | 1,485 | 4 | % | |||||||||
Acquisitions/Divestitures(a) | — | (7 | ) | — | (7 | ) | |||||||||||||||
Organic constant currency(b) NSS revenue growth | $ | 406 | $ | 382 | 6 | % | $ | 1,543 | $ | 1,478 | 4 | % | |||||||||
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||
2017 | 2016 | % B/(W) | 2017 | 2016 | % B/(W) | ||||||||||||||||
Total segment expense | $ | 1,101 | $ | 1,059 | (4 | )% | $ | 4,356 | $ | 4,249 | (3 | )% | |||||||||
Currency impact | (11 | ) | — | 3 | — | ||||||||||||||||
Acquisitions/Divestitures(a) | — | 22 | — | 22 | |||||||||||||||||
Organic constant currency(b) segment expense growth | $ | 1,090 | $ | 1,081 | (1 | )% | $ | 4,359 | $ | 4,271 | (2 | )% | |||||||||
GBS expense | $ | 637 | $ | 580 | (10 | )% | $ | 2,438 | $ | 2,338 | (4 | )% | |||||||||
Currency impact | (8 | ) | — | (4 | ) | — | |||||||||||||||
Acquisitions/Divestitures(a) | — | 33 | — | 33 | |||||||||||||||||
Organic constant currency(b) GBS expense growth | $ | 629 | $ | 613 | (3 | )% | $ | 2,434 | $ | 2,371 | (3 | )% | |||||||||
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||
2017 | 2016 | % B/(W) | 2017 | 2016 | % B/(W) | ||||||||||||||||
GFS expense | $ | 228 | $ | 242 | 6 | % | $ | 937 | $ | 947 | 1 | % | |||||||||
Currency impact | (4 | ) | — | 7 | — | ||||||||||||||||
Acquisitions/Divestitures(a) | — | (4 | ) | — | (4 | ) | |||||||||||||||
Organic constant currency(b) GFS expense growth | $ | 224 | $ | 238 | 6 | % | $ | 944 | $ | 943 | — | % | |||||||||
NSS expense | $ | 197 | $ | 206 | 4 | % | $ | 814 | $ | 819 | 1 | % | |||||||||
Acquisitions/Divestitures(a) | — | (7 | ) | — | (7 | ) | |||||||||||||||
Organic constant currency(b) NSS expense growth | $ | 197 | $ | 199 | 1 | % | $ | 814 | $ | 812 | — | % | |||||||||
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||
2017 | 2016 | % B/(W) | 2017 | 2016 | % B/(W) | ||||||||||||||||
Total segment EBITDA | $ | 848 | $ | 771 | 10 | % | $ | 3,072 | $ | 2,892 | 6 | % | |||||||||
Currency impact | (5 | ) | — | 13 | — | ||||||||||||||||
Acquisitions/Divestitures(a) | — | 13 | — | 18 | |||||||||||||||||
Organic constant currency(b) Segment EBITDA growth | $ | 843 | $ | 784 | 8 | % | $ | 3,085 | $ | 2,910 | 6 | % | |||||||||
GBS EBITDA | $ | 494 | $ | 446 | 11 | % | $ | 1,824 | $ | 1,725 | 6 | % | |||||||||
Currency impact | (3 | ) | — | 6 | — | ||||||||||||||||
Acquisitions/Divestitures(a) | — | 14 | — | 20 | |||||||||||||||||
Organic constant currency(b) GBS EBITDA growth | $ | 491 | $ | 460 | 7 | % | $ | 1,830 | $ | 1,745 | 5 | % | |||||||||
GFS EBITDA | $ | 184 | $ | 173 | 6 | % | $ | 686 | $ | 646 | 6 | % | |||||||||
Currency impact | (2 | ) | — | 7 | — | ||||||||||||||||
Acquisitions/Divestitures(a) | — | (2 | ) | — | (2 | ) | |||||||||||||||
Organic constant currency(b) GFS EBITDA growth | $ | 182 | $ | 171 | 6 | % | $ | 693 | $ | 644 | 8 | % | |||||||||
NSS EBITDA | $ | 209 | $ | 183 | 14 | % | $ | 729 | $ | 666 | 9 | % | |||||||||
Acquisitions/Divestitures(a) | — | — | — | — | |||||||||||||||||
Organic constant currency(b) NSS EBITDA growth | $ | 209 | $ | 183 | 14 | % | $ | 729 | $ | 666 | 9 | % | |||||||||
(a) | “Acquisitions/Divestitures" pertains to the following 2017 activity: the acquisitions of CardConnect and BluePay in GBS North America; the formation of the Digital Banking JV in NSS (treated as a 50% Digital Banking revenue divestiture); and the divestiture of the GFS Baltics business. This line also pertains to the Australian ATM divestiture in GBS APAC in 2016. |
(b) | Organic constant currency growth (“Organic CC growth”) is defined as reported growth adjusted for the following: (1) excludes the impacts of year-over-year currency rate changes in the current period; (2) excludes the results of significant divestitures (including the impact of our Digital Banking Joint Venture) in the prior year period; and (3) includes the results of significant acquisitions in the prior year period. |
ADJUSTED NET INCOME RECONCILIATION | ||||||||||||||||||||||
Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||||||||
2017 | 2016 | % Change | 2017 | 2016 | % Change | |||||||||||||||||
Net income attributable to First Data Corporation | $ | 948 | $ | 192 | 394 | % | $ | 1,465 | $ | 420 | 249 | % | ||||||||||
Adjustments: | ||||||||||||||||||||||
Stock based compensation | 62 | 49 | 27 | % | 245 | 263 | (7 | )% | ||||||||||||||
Loss on debt extinguishment | 8 | 12 | (33 | )% | 80 | 70 | 14 | % | ||||||||||||||
Amortization of acquisition intangibles and deferred financing costs(a) | 108 | 104 | 4 | % | 403 | 422 | (5 | )% | ||||||||||||||
Loss (gain) of disposal of businesses | (18 | ) | 3 | NM | (18 | ) | 34 | NM | ||||||||||||||
Visa Europe settlement gain | — | — | NM | — | (29 | ) | NM | |||||||||||||||
Restructuring | 20 | (2 | ) | NM | 83 | 49 | 69 | % | ||||||||||||||
Intercompany foreign exchange (loss) gain | (5 | ) | 2 | NM | 1 | (19 | ) | NM | ||||||||||||||
Fees paid on debt modification | — | 11 | (100 | )% | 10 | 29 | (66 | )% | ||||||||||||||
Impairments, litigation, and other(b) | 11 | (2 | ) | NM | 24 | 11 | 118 | % | ||||||||||||||
Deal integration costs | 1 | — | NM | 27 | — | NM | ||||||||||||||||
Mark-to-market adjustment for derivatives and euro-denominated debt(c) | — | — | NM | — | 5 | NM | ||||||||||||||||
Income tax on above items and discrete tax items(d) | (719 | ) | (4 | ) | NM | (895 | ) | (35 | ) | NM | ||||||||||||
Adjusted net income | $ | 416 | $ | 365 | 14 | % | $ | 1,425 | $ | 1,220 | 17 | % | ||||||||||
Adjusted net income per share: | ||||||||||||||||||||||
Basic | $ | 0.45 | $ | 0.40 | 13 | % | $ | 1.56 | $ | 1.35 | 16 | % | ||||||||||
Diluted | $ | 0.44 | $ | 0.39 | 13 | % | $ | 1.52 | $ | 1.32 | 15 | % | ||||||||||
Weighted-average common shares used to compute adjusted net income per share: | ||||||||||||||||||||||
Basic | 918,726,777 | 905,966,452 | 915,870,759 | 901,671,872 | ||||||||||||||||||
Diluted | 945,035,811 | 929,375,020 | 939,767,019 | 921,001,863 |
(a) | Represents amortization of intangibles established in connection with the 2007 Merger and acquisitions we have made since 2007, excluding the percentage of our consolidated amortization of acquisition intangibles related to non wholly owned consolidated alliances equal to the portion of such alliances owned by our alliance partners. This line also includes amortization related to deferred financing costs of $5 million and $6 million for the three months ended December 31, 2017 and 2016, respectively, and $17 million and $17 million, respectively, for the twelve months ended December 31, 2017 and 2016. |
(b) | Represents impairments, non-normal course litigation and regulatory settlements, investments gains (losses), divestitures, and other, as applicable to the periods presented. |
(c) | Represents mark-to-market activity related to our undesignated hedges. |
(d) | The tax effect of the adjustments between our GAAP and adjusted results takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s). Generally, this results in a tax impact at the U.S. effective tax rate for certain adjustments, including the majority of amortization of intangible assets, deferred financing costs, stock compensation, and loss on debt extinguishment; whereas the tax impact of other adjustments, including restructuring expense, depends on whether the amounts are deductible in the respective tax jurisdictions and the applicable effective tax rate(s) in those jurisdictions. "Income tax on above items and discrete tax items" also includes the impact of significant discrete tax items impacting Net income attributable to First Data Corporation. |
FREE CASH FLOW RECONCILIATION | |||||||||||||||||||||
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||
2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||||
Net cash provided by operating activities | $ | 465 | $ | 451 | 14 | $ | 2,047 | $ | 2,111 | (64 | ) | ||||||||||
Capital expenditures | (128 | ) | (126 | ) | (2 | ) | (518 | ) | (477 | ) | (41 | ) | |||||||||
Distribution to minority interest and other | (57 | ) | (55 | ) | (2 | ) | (170 | ) | (418 | ) | 248 | ||||||||||
Free cash flow | $ | 280 | $ | 270 | 10 | $ | 1,359 | $ | 1,216 | 143 |
NET DEBT RECONCILIATION | ||||||||
As of | As of | |||||||
December 31, 2017 | December 31, 2016 | |||||||
Total long-term borrowings | $ | 17,927 | $ | 18,131 | ||||
Total short-term and current portion of long-term borrowings | 1,271 | 358 | ||||||
Total borrowings | 19,198 | 18,489 | ||||||
Unamortized discount and unamortized deferred financing costs | 126 | 156 | ||||||
Total borrowings at par | 19,324 | 18,645 | ||||||
Less: Settlement lines of credit and other arrangements | 205 | 84 | ||||||
Gross debt | 19,119 | 18,561 | ||||||
Less: Cash and cash equivalents | 498 | 385 | ||||||
Net debt | $ | 18,621 | $ | 18,176 |
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||
2017 | 2016 | % Change | 2017 | 2016 | % Change | ||||||||||||
GBS: | |||||||||||||||||
North America merchant transactions (a) | 12,754 | 12,004 | 6 | % | 49,248 | 46,372 | 6 | % | |||||||||
International merchant transactions (b) | 2,587 | 2,408 | 7 | % | 9,760 | 8,246 | 18 | % | |||||||||
GFS: | |||||||||||||||||
North America card accounts on file (c) | 906 | 855 | 6 | % | |||||||||||||
International card accounts on file (d) | 170 | 151 | 13 | % | |||||||||||||
NSS: | |||||||||||||||||
Network transactions (EFT and Stored Value) (e) | 6,109 | 5,543 | 10 | % | 22,114 | 20,258 | 9 | % | |||||||||
(a) | North American merchant transactions include acquired Visa and MasterCard credit and signature debit, American Express and Discover, debit, electronic benefits transactions, processed-only and gateway customer transactions at the POS. North American merchant transactions reflect 100% of alliance transactions. |
(b) | International transactions include Visa, MasterCard, and other payment network merchant acquiring transactions for clients outside the U.S. and Canada. Transactions include credit, signature debit, PIN-debit POS, POS gateway, and ATM transactions. |
(c) | North America card accounts on file reflect the total number of bankcard credit and retail credit accounts as of the end of the periods presented. |
(d) | International card accounts on file reflect the total number of bankcard and retail accounts outside the United States and Canada as of the end of the periods presented. |
(e) | Network transactions include the debit issuer processing transactions, STAR Network issuer transactions, and closed loop and open loop POS transactions. |
Consolidated Revenue to Total Segment Revenue | ||
FY 2018 vs. FY 2017 | ||
Consolidated revenue (at reported rates) | ~4-6% | |
Adjustments: | ||
+Non wholly owned entities | ||
+Reimbursable postage and other | ||
Total segment revenue (reported) | ~5-7% | |
Memo: Total segment revenue (at constant currency) | ~5-7% |
Net Income to Total Segment EBITDA | ||
FY 2018 vs. FY 2017 | ||
Net income attributable to FDC(1) | ~(40%) - (60%) | |
Adjustments | ||
+Depreciation and amortization | ||
+Interest Expense, net | ||
+Income tax expense | ||
+Stock Based Compensation | ||
+ Other(2) | ||
Total segment EBITDA (reported) | ~7-9% | |
Memo: total segment EBITDA (at constant currency) | ~7-9% |
Net Income to Adj. Net Income | ||
FY 2018 | ||
Net income attributable to FDC | $0.80-$0.85 | |
Adjustments (note: adjustments represent positive balances) | ||
+Stock-based compensation | ||
+Amortization of acquisition intangibles and deferred financing cost | ||
+Other(3) | ||
Adjusted Net Income | $1.35-$1.40 |
Cash Flow From Operations to Free Cash Flow | ||
FY 2018 | ||
Cash (used in) / provided by operating activities | $2.1B+ | |
+Adjustments(4) | ||
Free cash flow (use)/source | $1.4B+ |
(1) | Reflects a significant increase in tax expense in 2018 primarily driven by the Q4 2017 release of a valuation allowance against deferred tax assets associated with the U.S. federal NOL. The reversal of the valuation allowance resulted in a significant non-cash tax benefit in Q4 2017 and the recording of a normalized book tax rate in 2018. |
(2) | Includes non wholly owned entities adjustment, loss on debt extinguishment, as well as other items. |
(3) | Includes loss on debt extinguishment, gain/loss on divestitures, restructuring, impairment, litigation and other, as well as the impact of tax expense/(benefit) of the adjusted items. |
(4) | Includes capital expenditures and distributions to minority interest and other. |