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 6, 2019 | |
• | Q4 results and 2019 guidance in line with preliminary results reported on January 16th |
• | Q4 consolidated revenue of $2,399 million, down 24%; Full year consolidated revenue of $9,498 million, down 21%, reflecting the adoption of ASC 606 |
• | Q4 total segment revenue of $2,185 million, up 3% as reported(a), up 2% on a comparable accounting basis(b), up 6% on an organic constant currency basis(c); Full year total segment revenue of $8,657 million, up 7% reported(a), up 6% on both a comparable accounting basis(b) and organic constant currency basis(c) |
• | Q4 net income attributable to First Data diluted EPS of $0.17; Full year net income attributable to First Data diluted EPS of $1.05 |
• | Q4 adjusted diluted EPS of $0.38; Full year adjusted diluted EPS of $1.41 |
• | Q4 total segment EBITDA of $855 million, up 1% as reported(a), up 2% on a comparable accounting basis(b), up 7% on an organic constant currency basis(c); Full year total segment EBITDA of $3,264 million, up 6% reported(a), up 7% on a comparable accounting basis(b), up 8% on an organic constant currency basis(c) |
• | Q4 cash flow from operations of $498 million; Full year cash flow from operations of $2,307 million |
• | Q4 free cash flow of $284 million; Full year free cash flow of $1,474 million |
(a) | GAAP growth rate -- Consolidated revenue, segment revenue and segment EBITDA reflect New Reporting Standards, including the modified retrospective application of ASC 606 (the New Revenue Standard). See Form 8-K filed on April 16, 2018, for full description of the New Reporting Standards and their impact on 2017 results. |
(b) | Non-GAAP growth rate -- Growth rate adjusted to retrospectively apply ASC 606 to the prior year period, providing a consistent basis of accounting to both periods. |
(c) | Non-GAAP growth rate -- 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 in the prior year period; (3) includes the results of significant acquisitions in the prior year period; and (4) is adjusted to retrospectively apply ASC 606 to the prior year period. |
• | Total segment revenue: organic constant currency growth of 5% to 6% |
◦ | Reported segment revenue in 2019 will be negatively impacted by $135 million from businesses that were divested in 2018 |
◦ | Reported segment revenue in 2019 is expected to be negatively impacted by approximately $110 million from adverse foreign currency movements, based on current foreign exchange projections |
• | Total segment EBITDA: organic constant currency growth of 6% to 8% |
◦ | Reported segment EBITDA in 2019 will be negatively impacted by $35 million from businesses that were divested in 2018 |
◦ | Reported segment revenue is expected to be negatively impacted by approximately $65 million from adverse foreign currency movements, based on current foreign exchange projections |
• | Adjusted diluted EPS: $1.55 - $1.58 |
• | Free cash flow: $1.5 billion+ |
Peter Poillon Investor Relations First Data 212-266-3565 Peter.Poillon@firstdata.com | Michael Schneider Corporate Communications First Data 212-515-0290 Michael.Schneider@firstdata.com |
Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenues: | ||||||||||||||||
Revenues excluding reimbursable items | $ | 2,193 | $ | 2,131 | $ | 8,679 | $ | 8,129 | ||||||||
Reimbursable items | 206 | 1,019 | 819 | 3,923 | ||||||||||||
Total revenues | 2,399 | 3,150 | 9,498 | 12,052 | ||||||||||||
Expenses: | ||||||||||||||||
Cost of revenues (exclusive of items shown below) | 734 | 772 | 3,005 | 3,128 | ||||||||||||
Selling, general, and administrative | 656 | 567 | 2,651 | 2,178 | ||||||||||||
Depreciation and amortization | 256 | 259 | 1,009 | 972 | ||||||||||||
Other operating expenses | 13 | 35 | 119 | 143 | ||||||||||||
Total expenses (excluding reimbursable items) | 1,659 | 1,633 | 6,784 | 6,421 | ||||||||||||
Reimbursable items | 206 | 1,019 | 819 | 3,923 | ||||||||||||
Total expenses | 1,865 | 2,652 | 7,603 | 10,344 | ||||||||||||
Operating profit | 534 | 498 | 1,895 | 1,708 | ||||||||||||
Interest expense, net | (219 | ) | (229 | ) | (917 | ) | (931 | ) | ||||||||
Loss on debt extinguishment | (150 | ) | (8 | ) | (153 | ) | (80 | ) | ||||||||
Other income | — | 23 | 201 | 16 | ||||||||||||
Income before income taxes and equity earnings in affiliates | 165 | 284 | 1,026 | 713 | ||||||||||||
Income tax expense (benefit) | 5 | (663 | ) | 49 | (729 | ) | ||||||||||
Equity earnings in affiliates | 54 | 55 | 221 | 222 | ||||||||||||
Net income | 214 | 1,002 | 1,198 | 1,664 | ||||||||||||
Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interest | 52 | 54 | 193 | 199 | ||||||||||||
Net income attributable to First Data Corporation | $ | 162 | $ | 948 | $ | 1,005 | $ | 1,465 | ||||||||
Net income attributable to First Data Corporation per share: | ||||||||||||||||
Basic | $ | 0.17 | $ | 1.03 | $ | 1.08 | $ | 1.60 | ||||||||
Diluted | $ | 0.17 | $ | 1.00 | $ | 1.05 | $ | 1.56 | ||||||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic | 933 | 919 | 929 | 916 | ||||||||||||
Diluted | 961 | 945 | 957 | 940 | ||||||||||||
SELECTED CONSOLIDATED BALANCE SHEET DATA | ||||||||
As of | As of | |||||||
12/31/2018 | 12/31/2017 | |||||||
Cash and cash equivalents | $ | 555 | $ | 498 | ||||
Settlement assets | 11,423 | 20,363 | ||||||
Total assets | 38,289 | 48,269 | ||||||
Short-term and current portion of long-term borrowings | 1,170 | 1,271 | ||||||
Settlement obligations | 11,423 | 20,363 | ||||||
Long-term borrowings | 16,429 | 17,927 | ||||||
Total liabilities | 31,250 | 42,183 | ||||||
Redeemable noncontrolling interest | 77 | 72 | ||||||
Total First Data Corporation stockholders' equity | 4,168 | 3,152 | ||||||
Noncontrolling interests | 2,794 | 2,862 | ||||||
Total equity | 6,962 | 6,014 | ||||||
SELECTED CONSOLIDATED CASH FLOW DATA | |||||||||||||||
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Source/(Use) of cash | |||||||||||||||
Net cash provided by operating activities | $ | 498 | $ | 465 | $ | 2,307 | $ | 2,047 | |||||||
Net cash used in investing activities | (157 | ) | (892 | ) | (99 | ) | (1,952 | ) | |||||||
Net cash (used in) provided by financing activities | (385 | ) | 419 | (2,124 | ) | 9 | |||||||||
Supplemental cash flow data | |||||||||||||||
Cash interest payments(a) | $ | 217 | $ | 221 | $ | 906 | $ | 889 |
(a) | For purposes of this schedule, cash interest payments excludes interest on capital leases and interest on foreign lines of credit. |
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||||
2018 | 2017 | % Change | Organic CC % Change(c) | 2018 | 2017 | % Change | Organic CC % Change(c) | ||||||||||||||||
Consolidated Revenues | $ | 2,399 | $ | 3,150 | (24)% | $ | 9,498 | $ | 12,052 | (21)% | |||||||||||||
Adjustments: | |||||||||||||||||||||||
Non wholly owned entities(a) | (8 | ) | (15 | ) | (47)% | (22 | ) | (64 | ) | (66)% | |||||||||||||
Reimbursable items | (206 | ) | (1,019 | ) | (80)% | (819 | ) | (3,923 | ) | (79)% | |||||||||||||
Total Segment Revenues | $ | 2,185 | $ | 2,116 | 3% | 6% | $ | 8,657 | $ | 8,065 | 7% | 6% | |||||||||||
Segment Revenues: | |||||||||||||||||||||||
Global Business Solutions | $ | 1,421 | $ | 1,298 | 9% | 8% | $ | 5,572 | $ | 4,899 | 14% | 7% | |||||||||||
Global Financial Solutions | 375 | 412 | (9)% | 7% | 1,596 | 1,623 | (2)% | 4% | |||||||||||||||
Network & Security Solutions | 389 | 406 | (4)% | (1)% | 1,489 | 1,543 | (3)% | 2% | |||||||||||||||
Total Segment Revenues | $ | 2,185 | $ | 2,116 | 3% | 6% | $ | 8,657 | $ | 8,065 | 7% | 6% | |||||||||||
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||||
2018 | 2017 | % Change | Organic CC % Change(c) | 2018 | 2017 | % Change | Organic CC % Change(c) | ||||||||||||||||
Net income attributable to First Data Corporation | $ | 162 | $ | 948 | (83)% | $ | 1,005 | $ | 1,465 | (31)% | |||||||||||||
Adjustments: | |||||||||||||||||||||||
Non wholly owned entities(a) | (6 | ) | (9 | ) | (33)% | (35 | ) | (30 | ) | 17% | |||||||||||||
Depreciation and amortization | 256 | 259 | (1)% | 1,009 | 972 | 4% | |||||||||||||||||
Interest expense, net | 219 | 229 | (4)% | 917 | 931 | (2)% | |||||||||||||||||
Loss on debt extinguishment | 150 | 8 | NM | 153 | 80 | 91% | |||||||||||||||||
Other items(b) | 13 | 12 | 8% | (82 | ) | 132 | (162)% | ||||||||||||||||
Income tax expense (benefit) | 5 | (663 | ) | (101)% | 49 | (729 | ) | (107)% | |||||||||||||||
Stock-based compensation | 56 | 62 | (10)% | 248 | 245 | 1% | |||||||||||||||||
Total Segment EBITDA | $ | 855 | $ | 846 | 1% | 7% | $ | 3,264 | $ | 3,066 | 6% | 8% | |||||||||||
Segment EBITDA: | |||||||||||||||||||||||
Global Business Solutions | $ | 514 | $ | 494 | 4% | 8% | $ | 1,995 | $ | 1,824 | 9% | 9% | |||||||||||
Global Financial Solutions | 159 | 182 | (13)% | 2% | 662 | 680 | (3)% | 3% | |||||||||||||||
Network & Security Solutions | 215 | 209 | 3% | 3% | 778 | 729 | 7% | 7% | |||||||||||||||
Corporate | (33 | ) | (39 | ) | 15% | 15% | (171 | ) | (167 | ) | (2)% | (2)% | |||||||||||
Total Segment EBITDA | $ | 855 | $ | 846 | 1% | 7% | $ | 3,264 | $ | 3,066 | 6% | 8% | |||||||||||
(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. |
(b) | Includes restructuring, non-normal course litigation and regulatory settlements, debt issuance expenses, deal and deal integration costs, Other expense as presented in the unaudited consolidated statements of income, which includes divestitures, derivative gains (losses), non-operating foreign currency gains (losses), and other as applicable to the periods presented. |
SEGMENT REVENUE RECONCILIATION | |||||||||||||||||||
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||
2018 | 2017 | % B/(W)(b) | 2018 | 2017 | % B/(W)(b) | ||||||||||||||
Reported FDC segment revenue | $ | 2,185 | $ | 2,116 | 3% | $ | 8,657 | $ | 8,065 | 7% | |||||||||
New revenue standard adjustments (ASC 606) | — | 31 | — | 103 | |||||||||||||||
FDC segment revenue (comparable accounting) | 2,185 | 2,147 | 2% | 8,657 | 8,168 | 6% | |||||||||||||
Currency impact | 61 | — | 80 | — | |||||||||||||||
FDC CC adjusted segment revenue | 2,246 | 2,147 | 5% | 8,737 | 8,168 | 7% | |||||||||||||
Acquisitions/Divestitures(c) | — | (25 | ) | — | 104 | ||||||||||||||
Organic CC FDC segment revenue growth(a) | $ | 2,246 | $ | 2,122 | 6% | $ | 8,737 | $ | 8,272 | 6% | |||||||||
Reported GBS segment revenue | $ | 1,421 | $ | 1,298 | 9% | $ | 5,572 | $ | 4,899 | 14% | |||||||||
New revenue standard adjustments (ASC 606) | — | 46 | — | 165 | |||||||||||||||
GBS segment revenue (comparable accounting) | 1,421 | 1,344 | 6% | 5,572 | 5,064 | 10% | |||||||||||||
Currency impact | 48 | — | 73 | — | |||||||||||||||
Acquisitions/Divestitures(c) | — | 22 | — | 202 | |||||||||||||||
Organic CC GBS segment revenue growth(a) | $ | 1,469 | $ | 1,366 | 8% | $ | 5,645 | $ | 5,266 | 7% | |||||||||
Reported GBS NA segment revenue | $ | 1,102 | $ | 996 | 11% | $ | 4,329 | $ | 3,814 | 14% | |||||||||
New revenue standard adjustments (ASC 606) | — | 36 | — | 131 | |||||||||||||||
GBS NA segment revenue (comparable accounting) | 1,102 | 1,032 | 7% | 4,329 | 3,945 | 10% | |||||||||||||
Currency impact | — | — | — | — | |||||||||||||||
Acquisitions/Divestitures(c) | — | 23 | — | 203 | |||||||||||||||
Organic CC GBS NA segment revenue growth(a) | $ | 1,102 | $ | 1,055 | 5% | $ | 4,329 | $ | 4,148 | 4% | |||||||||
Reported GBS EMEA segment revenue | $ | 178 | $ | 176 | 2% | $ | 706 | $ | 639 | 10% | |||||||||
New revenue standard adjustments (ASC 606) | — | — | — | 5 | |||||||||||||||
GBS EMEA segment revenue (comparable accounting) | 178 | 176 | 2% | 706 | 644 | 10% | |||||||||||||
Currency impact | 7 | — | (26 | ) | — | ||||||||||||||
Acquisitions/Divestitures(c) | — | (1 | ) | — | (1 | ) | |||||||||||||
Organic CC GBS EMEA segment revenue growth(a) | $ | 185 | $ | 175 | 6% | $ | 680 | $ | 643 | 6% | |||||||||
Reported GBS APAC segment revenue | $ | 54 | $ | 48 | 13% | $ | 201 | $ | 173 | 16% | |||||||||
New revenue standard adjustments (ASC 606) | — | 1 | — | 2 | |||||||||||||||
GBS APAC segment revenue (comparable accounting) | 54 | 49 | 9% | 201 | 175 | 15% | |||||||||||||
Currency impact | 3 | — | 1 | — | |||||||||||||||
Acquisitions/Divestitures(c) | — | — | — | — | |||||||||||||||
Organic CC GBS APAC segment revenue growth(a) | $ | 57 | $ | 49 | 15% | $ | 202 | $ | 175 | 16% | |||||||||
Reported GBS LATAM segment revenue | $ | 87 | $ | 78 | 12% | $ | 336 | $ | 273 | 23% | |||||||||
New revenue standard adjustments (ASC 606) | — | 9 | — | 27 | |||||||||||||||
GBS LATAM segment revenue (comparable accounting) | 87 | 87 | —% | 336 | 300 | 12% | |||||||||||||
Currency impact | 38 | — | 98 | — | |||||||||||||||
Acquisitions/Divestitures(c) | — | — | — | — | |||||||||||||||
Organic CC GBS LATAM segment revenue growth(a) | $ | 125 | $ | 87 | 45% | $ | 434 | $ | 300 | 45% | |||||||||
Reported GFS segment revenue | $ | 375 | $ | 412 | (9)% | $ | 1,596 | $ | 1,623 | (2)% | |||||||||
New revenue standard adjustments (ASC 606) | — | (1 | ) | — | (7 | ) | |||||||||||||
GFS segment revenue (comparable accounting) | 375 | 411 | (8)% | 1,596 | 1,616 | (1)% | |||||||||||||
Currency impact | 13 | — | 7 | — | |||||||||||||||
Acquisitions/Divestitures(c) | — | (47 | ) | — | (77 | ) | |||||||||||||
Organic CC GFS segment revenue growth(a) | $ | 388 | $ | 364 | 7% | $ | 1,603 | $ | 1,539 | 4% | |||||||||
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||
2018 | 2017 | % B/(W)(b) | 2018 | 2017 | % B/(W)(b) | ||||||||||||||
Reported GFS NA segment revenue | $ | 226 | $ | 242 | (6)% | $ | 920 | $ | 949 | (3)% | |||||||||
New revenue standard adjustments (ASC 606) | — | — | — | (2 | ) | ||||||||||||||
GFS NA segment revenue (comparable accounting) | 226 | 242 | (6)% | 920 | 947 | (3)% | |||||||||||||
Currency impact | — | — | — | — | |||||||||||||||
Acquisitions/Divestitures(c) | — | (20 | ) | — | (31 | ) | |||||||||||||
Organic CC GFS NA segment revenue growth(a) | $ | 226 | $ | 222 | 2% | $ | 920 | $ | 916 | 1% | |||||||||
Reported GFS EMEA segment revenue | $ | 87 | $ | 112 | (22)% | $ | 430 | $ | 444 | (3)% | |||||||||
New revenue standard adjustments (ASC 606) | — | (1 | ) | — | (2 | ) | |||||||||||||
GFS EMEA segment revenue (comparable accounting) | 87 | 111 | (21)% | 430 | 442 | (2)% | |||||||||||||
Currency impact | 3 | — | (16 | ) | — | ||||||||||||||
Acquisitions/Divestitures(c) | — | (27 | ) | — | (46 | ) | |||||||||||||
Organic CC GFS EMEA segment revenue growth(a) | $ | 90 | $ | 84 | 8% | $ | 414 | $ | 396 | 5% | |||||||||
Reported GFS APAC segment revenue | $ | 29 | $ | 26 | 19% | $ | 113 | $ | 98 | 15% | |||||||||
New revenue standard adjustments (ASC 606) | — | — | — | (9 | ) | ||||||||||||||
GFS APAC segment revenue (comparable accounting) | 29 | 26 | 19% | 113 | 89 | 28% | |||||||||||||
Currency impact | 2 | — | 2 | — | |||||||||||||||
Acquisitions/Divestitures(c) | — | — | — | — | |||||||||||||||
Organic CC GFS APAC segment revenue growth(a) | $ | 31 | $ | 26 | 26% | $ | 115 | $ | 89 | 30% | |||||||||
Reported GFS LATAM segment revenue | $ | 33 | $ | 32 | 1% | $ | 133 | $ | 132 | 1% | |||||||||
New revenue standard adjustments (ASC 606) | — | — | — | 6 | |||||||||||||||
GFS LATAM segment revenue (comparable accounting) | 33 | 32 | 1% | 133 | 138 | (4)% | |||||||||||||
Currency impact | 8 | — | 21 | — | |||||||||||||||
Acquisitions/Divestitures(c) | — | — | — | — | |||||||||||||||
Organic CC GFS LATAM segment revenue growth(a) | $ | 41 | $ | 32 | 27% | $ | 154 | $ | 138 | 12% | |||||||||
Reported NSS segment revenue | $ | 389 | $ | 406 | (4)% | $ | 1,489 | $ | 1,543 | (3)% | |||||||||
New revenue standard adjustments (ASC 606) | — | (14 | ) | — | (55 | ) | |||||||||||||
NSS segment revenue (comparable accounting) | 389 | 392 | (1)% | 1,489 | 1,488 | —% | |||||||||||||
Currency impact | — | — | — | — | |||||||||||||||
Acquisitions/Divestitures(c) | — | — | — | (21 | ) | ||||||||||||||
Organic CC NSS segment revenue growth(a) | $ | 389 | $ | 392 | (1)% | $ | 1,489 | $ | 1,467 | 2% | |||||||||
SEGMENT EBITDA RECONCILIATION | |||||||||||||||||||
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||
2018 | 2017 | % B/(W)(b) | 2018 | 2017 | % B/(W)(b) | ||||||||||||||
Reported FDC segment EBITDA | $ | 855 | $ | 846 | 1% | $ | 3,264 | $ | 3,066 | 6% | |||||||||
New revenue standard adjustments (ASC 606) | — | (2 | ) | — | (15 | ) | |||||||||||||
FDC segment EBITDA (comparable accounting) | 855 | 844 | 2% | 3,264 | 3,051 | 7% | |||||||||||||
Currency impact | 36 | — | 61 | — | |||||||||||||||
FDC CC adjusted segment EBITDA | 891 | 844 | 6% | 3,325 | 3,051 | 9% | |||||||||||||
Acquisitions/Divestitures(c) | — | (7 | ) | — | 36 | ||||||||||||||
Organic CC FDC segment EBITDA growth(a) | $ | 891 | $ | 837 | 7% | $ | 3,325 | $ | 3,087 | 8% | |||||||||
Reported GBS segment EBITDA | $ | 514 | $ | 494 | 4% | $ | 1,995 | $ | 1,824 | 9% | |||||||||
New revenue standard adjustments (ASC 606) | — | (1 | ) | — | (14 | ) | |||||||||||||
GBS segment EBITDA (comparable accounting) | 514 | 493 | 4% | 1,995 | 1,810 | 10% | |||||||||||||
Currency impact | 26 | — | 48 | — | |||||||||||||||
Acquisitions/Divestitures(c) | — | 8 | — | 59 | |||||||||||||||
Organic CC GBS segment EBITDA growth(a) | $ | 540 | $ | 501 | 8% | $ | 2,043 | $ | 1,869 | 9% | |||||||||
Reported GFS segment EBITDA | $ | 159 | $ | 182 | (13)% | $ | 662 | $ | 680 | (3)% | |||||||||
New revenue standard adjustments (ASC 606) | — | (1 | ) | — | (1 | ) | |||||||||||||
GFS segment EBITDA (comparable accounting) | 159 | 181 | (11)% | 662 | 679 | (2)% | |||||||||||||
Currency impact | 10 | — | 13 | — | |||||||||||||||
Acquisitions/Divestitures(c) | — | (15 | ) | — | (23 | ) | |||||||||||||
Organic CC GFS segment EBITDA growth(a) | $ | 169 | $ | 166 | 2% | $ | 675 | $ | 656 | 3% | |||||||||
Reported NSS segment EBITDA | $ | 215 | $ | 209 | 3% | $ | 778 | $ | 729 | 7% | |||||||||
New revenue standard adjustments (ASC 606) | — | — | — | — | |||||||||||||||
NSS segment EBITDA (comparable accounting) | 215 | 209 | 3% | 778 | 729 | 7% | |||||||||||||
Currency impact | — | — | — | — | |||||||||||||||
Acquisitions/Divestitures(c) | — | — | — | — | |||||||||||||||
Organic CC NSS segment EBITDA growth(a) | $ | 215 | $ | 209 | 3% | $ | 778 | $ | 729 | 7% | |||||||||
(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 in the prior year period; (3) includes the results of significant acquisitions in the prior year period; and (4) is adjusted to retrospectively apply New Reporting Standards to the prior year period. |
(b) | “B” means results in 2018 are better than results in 2017 “(W)” means results are worse. |
(c) | “Acquisitions/Divestitures" includes the following 2017 and 2018 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 divestitures of the Baltics, Greece, Central/Eastern Europe, and RemitCo businesses within GFS. |
ADJUSTED NET INCOME RECONCILIATION | |||||||||||||||||||
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | ||||||||||||||
Net income attributable to First Data Corporation | $ | 162 | $ | 948 | (83)% | $ | 1,005 | $ | 1,465 | (31)% | |||||||||
Adjustments: | |||||||||||||||||||
Stock-based compensation | 56 | 62 | (10)% | 248 | 245 | 1% | |||||||||||||
Loss on debt extinguishment | 150 | 8 | NM | 153 | 80 | 91% | |||||||||||||
Amortization of acquisition intangibles and deferred financing costs(a) | 101 | 108 | (6)% | 413 | 403 | 2% | |||||||||||||
Other(b) | 13 | 12 | 8% | (82 | ) | 127 | NM | ||||||||||||
Non wholly-owned entities | 1 | (3 | ) | (133)% | (8 | ) | — | NM | |||||||||||
Discrete tax adjustment(c) | — | 12 | (100)% | — | 11 | (100)% | |||||||||||||
Income tax on above items and discrete tax items(d)(e) | (119 | ) | (730 | ) | (84)% | (375 | ) | (906 | ) | 59% | |||||||||
Adjusted net income attributable to First Data Corporation | $ | 364 | $ | 417 | (13)% | $ | 1,354 | $ | 1,425 | (5)% | |||||||||
Adjusted net income per share: | |||||||||||||||||||
Basic | $ | 0.39 | $ | 0.45 | (13)% | $ | 1.46 | $ | 1.56 | (6)% | |||||||||
Diluted | $ | 0.38 | $ | 0.44 | (14)% | $ | 1.41 | $ | 1.52 | (7)% | |||||||||
Weighted-average common shares used to compute adjusted net income per share: | |||||||||||||||||||
Basic | 933 | 919 | 2% | 929 | 916 | 1% | |||||||||||||
Diluted | 961 | 945 | 2% | 957 | 940 | 2% |
(a) | Represents amortization of intangibles established in connection with the 2007 KKR merger and acquisitions we have made since the 2007 KKR merger, 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. |
(b) | Other represents restructuring, net gains and losses on divestitures, deal and deal integration cost, and other items. |
(c) | Prior to January 1, 2018, we excluded the impact of all discrete tax items from Adjusted Net Income and Diluted Adjusted Net Income per Share. We will no longer exclude certain discrete items which were deemed to be recurring in nature. We retrospectively adjusted the prior period results presented in these unaudited consolidated financial statements. |
(d) | We exclude from Adjusted net income certain discrete tax item, such as tax law changes, tax impact of mergers and acquisitions, valuation allowance releases, and tax reserves related to issues that arose before KKR acquired us within a year. |
(e) | 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. |
FREE CASH FLOW RECONCILIATION | |||||||||||||||||||||||
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
Net cash provided by operating activities | $ | 498 | $ | 465 | $ | 33 | $ | 2,307 | $ | 2,047 | $ | 260 | |||||||||||
Capital expenditures | (152 | ) | (128 | ) | (24 | ) | (604 | ) | (518 | ) | (86 | ) | |||||||||||
Distribution and dividends paid to noncontrolling interests and redeemable noncontrolling interest and other | (62 | ) | (57 | ) | (5 | ) | (229 | ) | (170 | ) | (59 | ) | |||||||||||
Free cash flow | $ | 284 | $ | 280 | $ | 4 | $ | 1,474 | $ | 1,359 | $ | 115 | |||||||||||
NET DEBT RECONCILIATION | ||||||||
As of | As of | |||||||
12/31/2018 | 12/31/2017 | |||||||
Total long-term borrowings | $ | 16,429 | $ | 17,927 | ||||
Total short-term and current portion of long-term borrowings | 1,170 | 1,271 | ||||||
Total borrowings | 17,599 | 19,198 | ||||||
Unamortized discount and unamortized deferred financing costs | 94 | 126 | ||||||
Total borrowings at par | 17,693 | 19,324 | ||||||
Less: Settlement lines of credit and other arrangements | 224 | 205 | ||||||
Gross debt excluding settlement lines of credit and other arrangements | 17,469 | 19,119 | ||||||
Less: Cash and cash equivalents | 555 | 498 | ||||||
Net debt | $ | 16,914 | $ | 18,621 |
Consolidated Revenue to Total Segment Revenue | ||
FY 2019 vs. FY 2018 | ||
Consolidated revenue (at reported rates) | ~2.0-3.0% | |
Adjustments: | ||
+Non wholly owned entities | ||
+Reimbursable postage and other | ||
+Currency Impact | ||
+Divestiture Impact | ||
Total segment revenue (at constant currency) | ~5.0-6.0% |
Net Income Attributable to FDC to Total Segment EBITDA | ||
FY 2019 vs. FY 2018 | ||
Net income attributable to FDC | ~(5.0%) - (2.0%)(1) | |
Adjustments | ||
+Depreciation and amortization | ||
+Interest Expense, net | ||
+Income tax (benefit) expense | ||
+Stock Based Compensation | ||
+Other(2) | ||
+Currency Impact | ||
Memo: Total segment EBITDA (at constant currency) | ~6.0-8.0% |
Net Income Attributable to FDC to Adjusted Net Income | ||
FY 2019 | ||
Net income attributable to FDC | $0.98 - $1.01(1) | |
Adjustments (note: adjustments represent positive balances) | ||
+Stock-based compensation | ||
+Amortization of acquisition intangibles and deferred financing cost | ||
+Other(3) | ||
Adjusted Net Income | $1.55 - $1.58 |
Cash Flow From Operations to Free Cash Flow | ||
FY 2019 | ||
Cash / provided by operating activities | $2.4B+ | |
+Adjustments(4) | ||
Free cash flow | $1.5B+ |
(1) | Impacted by the non-recurrence of a significant one-time tax benefit recorded 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. |