Investment in Affiliates

12 Months Ended

Dec. 31, 2016

Equity Method Investments and Joint Ventures [Abstract]

Segment results include the Company’s proportionate share of income from affiliates, which consist of unconsolidated investments accounted for under the equity method of accounting. The most significant of these affiliates are related to the Company’s merchant bank alliance program.

A merchant alliance, as it pertains to investments accounted for under the equity method, is an agreement between the Company and a financial institution that combines the processing capabilities and management expertise of the Company with the visibility and distribution channel of the bank. The alliance acquires credit and debit card transactions from merchants. The Company provides processing and other services to the alliance and charges fees to the alliance primarily based on contractual pricing. These fees have been separately identified on the face of the consolidated statements of operations.

As of December 31, 2016, there were ten affiliates accounted for under the equity method of accounting, comprised of five merchant alliances and five strategic investments in companies in related markets. During the year, the Company sold one of its merchant alliance investments and added one new merchant alliance and one new strategic investment.

The Wells Fargo alliance met the Significant Subsidiary test provided in Regulations S-X Rule 1-02 (w) in that the Company's equity earnings of this alliance exceeded 20% of the Company's consolidated income from continuing operations before income taxes for the year ended December 31, 2016.

A summary of financial information for the merchant alliances and other affiliates accounted for under the equity method of accounting is presented below.



	As of December 31,
(in millions)	2016		2015
Total current assets	$	4,070	$	3,002
Total long-term assets	84		55
Total assets	$	4,154	$	3,057

Total current liabilities	$	3,994	$	2,925
Total long-term liabilities	9		16
Total liabilities	$	4,003	$	2,941

The primary components of assets and liabilities are settlement-related accounts similar to those described in note 11 "Settlement Assets and Obligations" of these consolidated financial statements.



	Year ended December 31,
(in millions)	2016		2015		2014
Net operating revenues	$	1,434	$	1,424	$	1,357
Operating expenses	666		666		638
Operating income	$	768	$	758	$	719
Net income	$	749	$	744	$	696
FDC equity earnings	260		239		220

The formation of a merchant alliance accounted for under the equity method of accounting generally involves the Company and/or a financial institution contributing merchant contracts to the alliance and a cash payment from one owner to the other to achieve the desired ownership percentages. The asset amounts reflected above are owned by the alliances and other equity method investees and do not include any of such payments made by the Company. The amount by which the total of the Company’s investments in affiliates exceeded its proportionate share of the investees’ net assets was approximately $1.0 billion and $1.0 billion as of December 31, 2016 and 2015, respectively.

The non-goodwill portion of this amount is considered an identifiable intangible asset that is amortized. The estimated future amortization expense for these intangible assets as of December 31, 2016 is as follows:



Year ended December 31, (in millions)	Amount
2017	$	43
2018	29
2019	4
Thereafter	—

These amounts assume that these alliances continue as they currently exist. Much of the difference between the Company's proportionate share of the investees’ net income and the Company's equity earnings noted above relates to this amortization.