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Form 10-Q Fidelity National Inform For: Mar 31

May 4, 2016 11:28 AM EDT

 
 
 
 
 
 
 
 
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________
Form 10-Q
_______________________________________________
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the quarterly period ended March 31, 2016
Or
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the transition period from                      to
Commission File No. 001-16427
_______________________________________________
Fidelity National Information Services, Inc.
(Exact name of registrant as specified in its charter)
Georgia
 
37-1490331
(State or other jurisdiction
 
(I.R.S. Employer Identification No.)
of incorporation or organization)
 
 
 
 
 
601 Riverside Avenue
 
 
Jacksonville, Florida
 
32204
(Address of principal executive offices)
 
(Zip Code)
(904) 438-6000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company)
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES o NO x
As of April 30, 2016, 326,453,930 shares of the Registrant’s Common Stock were outstanding.
 
 
 
 
 
 
 
 
 
 



FORM 10-Q
QUARTERLY REPORT
Quarter Ended March 31, 2016
INDEX
 
Page
 
 
 
 EX-31.1
 
 EX-31.2
 
 EX-32.1
 
 EX-32.2
 
 EX-101 INSTANCE DOCUMENT
 
 EX-101 SCHEMA DOCUMENT
 
 EX-101 CALCULATION LINKBASE DOCUMENT
 
 EX-101 DEFINITION LINKBASE DOCUMENT
 
 EX-101 LABELS LINKBASE DOCUMENT
 
 EX-101 PRESENTATION LINKBASE DOCUMENT
 


1




FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions, except per share amounts)
(Unaudited)
 
March 31, 2016
 
December 31, 2015
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
702

 
$
682

Settlement deposits
299

 
371

Trade receivables, net of allowance for doubtful accounts of $21 and $16 as of
March 31, 2016 and December 31, 2015, respectively
1,727

 
1,731

Settlement receivables
291

 
162

Other receivables
178

 
197

Prepaid expenses and other current assets
290

 
266

Deferred income taxes
142

 
100

Total current assets
3,629

 
3,509

Property and equipment, net
611

 
611

Goodwill
14,576

 
14,745

Intangible assets, net
5,387

 
5,159

Computer software, net
1,608

 
1,584

Deferred contract costs, net
264

 
253

Other noncurrent assets
355

 
339

Total assets
$
26,430

 
$
26,200

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued liabilities
$
1,194

 
$
1,196

Settlement payables
574

 
538

Deferred revenues
790

 
615

Current portion of long-term debt
764

 
15

Total current liabilities
3,322

 
2,364

Long-term debt, excluding current portion
10,533

 
11,429

Deferred income taxes
2,743

 
2,658

Deferred revenues
19

 
30

Other long-term liabilities
324

 
312

Total liabilities
16,941

 
16,793

Equity:
 
 
 
FIS stockholders’ equity:
 
 
 
Preferred stock, $0.01 par value, 200 shares authorized, none issued and outstanding as of March 31, 2016 and December 31, 2015

 

Common stock, $0.01 par value, 600 shares authorized, 430 shares issued as of March 31, 2016 and December 31, 2015, respectively
4

 
4

Additional paid in capital
10,239

 
10,210

Retained earnings
3,043

 
3,073

Accumulated other comprehensive earnings (loss)
(232
)
 
(279
)
Treasury stock, 105 and 106 shares as of March 31, 2016 and December 31, 2015, respectively, at cost
(3,661
)
 
(3,687
)
Total FIS stockholders’ equity
9,393

 
9,321

Noncontrolling interest
96

 
86

Total equity
9,489

 
9,407

Total liabilities and equity
$
26,430

 
$
26,200

See accompanying notes to unaudited condensed consolidated financial statements.

2


FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(In millions, except per share data)
(Unaudited)

 
Three months ended
March 31,
 
2016
 
2015
Processing and services revenues
$
2,181

 
$
1,555

Cost of revenues
1,553

 
1,070

Gross profit
628

 
485

Selling, general, and administrative expenses
444

 
270

Operating income
184

 
215

Other income (expense):
 
 
 
Interest expense, net
(93
)
 
(37
)
Other income (expense), net
(1
)
 
(2
)
Total other income (expense), net
(94
)
 
(39
)
Earnings from continuing operations before income taxes
90

 
176

Provision for income taxes
31

 
58

Earnings from continuing operations, net of tax
59

 
118

Earnings (loss) from discontinued operations, net of tax

 
(3
)
Net earnings
59

 
115

Net earnings attributable to noncontrolling interest
(4
)
 
(4
)
Net earnings attributable to FIS common stockholders
$
55

 
$
111

Net earnings per share — basic from continuing operations attributable to FIS common stockholders
$
0.17

 
$
0.40

Net earnings (loss) per share — basic from discontinued operations attributable to FIS common stockholders

 
(0.01
)
Net earnings per share — basic attributable to FIS common stockholders *
$
0.17

 
$
0.39

Weighted average shares outstanding — basic
324

 
283

Net earnings per share — diluted from continuing operations attributable to FIS common stockholders
$
0.17

 
$
0.40

Net earnings (loss) per share — diluted from discontinued operations attributable to FIS common stockholders

 
(0.01
)
Net earnings per share — diluted attributable to FIS common stockholders *
$
0.17

 
$
0.39

Weighted average shares outstanding — diluted
327

 
287

Cash dividends paid per share
$
0.26

 
$
0.26

Amounts attributable to FIS common stockholders:
 
 
 
Earnings from continuing operations, net of tax
$
55

 
$
114

Earnings (loss) from discontinued operations, net of tax

 
(3
)
Net earnings attributable to FIS common stockholders
$
55

 
$
111

* Amounts may not sum due to rounding.
See accompanying notes to unaudited condensed consolidated financial statements.

3



FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Earnings
(In millions)
(Unaudited)

 
Three months ended March 31,
 
2016
 
2015
Net earnings
 
 
$
59

 
 
 
$
115

Other comprehensive earnings, before tax:
 
 
 
 
 
 
 
Unrealized gain (loss) on investments and derivatives
$
(6
)
 
 
 
$
(2
)
 
 
Reclassification adjustment for (gains) losses included in net earnings
2

 
 
 
1

 
 
Unrealized gain (loss) on investments and derivatives, net
(4
)
 
 
 
(1
)
 
 
Foreign currency translation adjustments
54

 
 
 
(139
)
 
 
Other comprehensive earnings (loss), before tax:
50

 
 
 
(140
)
 
 
Provision for income tax expense (benefit) related to items of other comprehensive earnings
(4
)
 
 
 
(2
)
 
 
Other comprehensive earnings (loss), net of tax
$
54

 
54

 
$
(138
)
 
(138
)
Comprehensive (loss) earnings:
 
 
113

 
 
 
(23
)
Net (earnings) loss attributable to noncontrolling interest
 
 
(4
)
 
 
 
(4
)
Other comprehensive (earnings) losses attributable to noncontrolling interest
 
 
(7
)
 
 
 
17

Comprehensive earnings (loss) attributable to FIS common stockholders
 
 
$
102

 
 
 
$
(10
)

See accompanying notes to unaudited condensed consolidated financial statements.





4


FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Condensed Consolidated Statement of Equity
Three months ended March 31, 2016
(In millions, except per share amounts)
(Unaudited)

 
 
 
 
 
Amount
 
 
 
 
 
FIS Stockholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
Number of shares
 
 
 
Additional
 
 
 
other
 
 
 
 
 
 
 
Common
 
Treasury
 
Common
 
paid in
 
Retained
 
comprehensive
 
Treasury
 
Noncontrolling
 
Total
 
shares
 
shares
 
stock
 
capital
 
earnings
 
earnings
 
stock
 
interest
 
equity
Balances, December 31, 2015
430

 
(106
)
 
$
4

 
$
10,210

 
$
3,073

 
$
(279
)
 
$
(3,687
)
 
$
86

 
$
9,407

Exercise of stock options

 
1

 

 
(9
)
 

 

 
31

 

 
22

Treasury shares held for taxes due upon exercise of stock options

 

 

 

 

 

 
(5
)
 

 
(5
)
Excess income tax benefit from exercise of stock options

 

 

 
8

 

 

 

 

 
8

Stock-based compensation

 

 

 
30

 

 

 

 

 
30

Cash dividends paid ($0.26 per share per quarter) and other distributions

 

 

 

 
(85
)
 

 

 
(1
)
 
(86
)
Net earnings

 

 

 

 
55

 

 

 
4

 
59

Other comprehensive loss, net of tax

 

 

 

 

 
47

 

 
7

 
54

Balances, March 31, 2016
430

 
(105
)
 
$
4

 
$
10,239

 
$
3,043

 
$
(232
)
 
$
(3,661
)
 
$
96

 
$
9,489

See accompanying notes to unaudited condensed consolidated financial statements.


5


FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
 
Three months ended
March 31,
 
2016
 
2015
Cash flows from operating activities:
 
 
 
Net earnings
$
59

 
$
115

Adjustment to reconcile net earnings to net cash provided by operating activities:
 
 
 
Depreciation and amortization
293

 
153

Amortization of debt issue costs
5

 
2

Stock-based compensation
30

 
19

Deferred income taxes
(64
)
 
(22
)
Excess income tax benefit from exercise of stock options
(8
)
 
(9
)
Other operating activities
(1
)
 
2

Net changes in assets and liabilities, net of effects from acquisitions and foreign currency:
 
 
 
Trade receivables
21

 
(22
)
Settlement activity
(20
)
 
(54
)
Prepaid expenses and other assets
(51
)
 
(24
)
Deferred contract costs
(17
)
 
(28
)
Deferred revenue
165

 
56

Accounts payable, accrued liabilities, and other liabilities
(27
)
 
43

Net cash provided by operating activities
385

 
231

 
 
 
 
Cash flows from investing activities:
 
 
 
Additions to property and equipment
(34
)
 
(42
)
Additions to computer software
(111
)
 
(59
)
Other investing activities, net
(1
)
 
(1
)
Net cash used in investing activities
(146
)
 
(102
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Borrowings
1,639

 
1,686

Repayment of borrowings
(1,791
)
 
(1,559
)
Excess income tax benefit from exercise of stock options
8

 
9

Proceeds from exercise of stock options
26

 
13

Treasury stock activity
(18
)
 
(156
)
Dividends paid
(85
)
 
(74
)
Other financing activities, net
(18
)
 
(17
)
Net cash used in financing activities
(239
)
 
(98
)
Effect of foreign currency exchange rate changes on cash
20

 
(35
)
Net increase (decrease) in cash and cash equivalents
20

 
(4
)
Cash and cash equivalents, beginning of period
682

 
493

Cash and cash equivalents, end of period
$
702

 
$
489

 
 
 
 
Supplemental cash flow information:
 
 
 
Cash paid for interest
$
37

 
$
25

Cash paid for income taxes
$
48

 
$
20

See accompanying notes to unaudited condensed consolidated financial statements.

6


FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


Unless stated otherwise or the context otherwise requires, all references to “FIS,” “we,” the “Company” or the “registrant” are to Fidelity National Information Services, Inc., a Georgia corporation, and its subsidiaries.

(1) Basis of Presentation

The unaudited financial information included in this report includes the accounts of FIS and its subsidiaries prepared in accordance with U.S. generally accepted accounting principles and the instructions to Form 10-Q and Article 10 of Regulation S-X. All adjustments considered necessary for a fair presentation have been included. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The preparation of these Condensed Consolidated Financial Statements (Unaudited) in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements (Unaudited) and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. Certain reclassifications have been made in the 2015 Condensed Consolidated Financial Statements (Unaudited) to conform to the classifications used in 2016.

On August 12, 2015, FIS and certain of its wholly owned subsidiaries entered into an Agreement and Plan of Merger with SunGard and SunGard Capital Corp. II (collectively “SunGard”) pursuant to which, through a series of mergers, FIS acquired SunGard (collectively the "SunGard acquisition" or the "Acquisition"). FIS completed the SunGard acquisition on November 30, 2015, (Note 4) and SunGard's results of operations and financial position are included in the consolidated financial statements from and after the date of acquisition.

We report the results of our operations in three reporting segments: Integrated Financial Solutions (“IFS”), Global Financial Solutions (“GFS”) and Corporate and Other (Note 10).
 
(2) Related Party Transactions

Brazilian Venture

The Company operates a joint venture ("Brazilian Venture") with Banco Bradesco S.A. ("Banco Bradesco"), in which we own a 51% controlling interest, to provide comprehensive, fully-outsourced transaction processing, call center, cardholder support and collection services to multiple card issuing clients in Brazil, including Banco Bradesco. The original accounting for this transaction resulted in the establishment of a contract intangible asset and a liability for amounts payable to the original partner banks upon final migration of their respective card portfolios and achieving targeted volumes (the “Brazilian Venture Notes”). The unamortized contract intangible asset balance as of March 31, 2016 was $92 million. The value of the noncontrolling interest as of March 31, 2016 was $91 million.

The Company recorded Brazilian Venture revenues of $51 million and $63 million during the three months ended March 31, 2016 and 2015, respectively, from Banco Bradesco relating to these services. Banco Bradesco Brazilian Venture revenues included $19 million of unfavorable currency impact during the three months ended March 31, 2016 resulting from a stronger U.S. Dollar in 2016 as compared to 2015.

A summary of the Company’s related party receivables and payables is as follows (in millions):

 
 
 
 
March 31,
 
December 31,
Related Party
 
Balance sheet location
 
2016
 
2015
Banco Bradesco
 
Trade receivables
 
$
59

 
$
31

Banco Bradesco
 
Accounts payable and accrued liabilities
 
10

 
9

Banco Bradesco
 
Other long-term liabilities
 
26

 
24


7

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)




(3) Net Earnings per Share
The basic weighted average shares and common stock equivalents for the three months ended March 31, 2016 and 2015 are computed using the treasury stock method.
The following table summarizes the earnings per share attributable to FIS common stockholders for the three months ended March 31, 2016 and 2015 (in millions, except per share amounts):
 
Three months ended
March 31,
 
2016
 
2015
Earnings from continuing operations attributable to FIS common stockholders, net of tax
$
55

 
$
114

Earnings (loss) from discontinued operations attributable to FIS common stockholders, net of tax

 
(3
)
Net earnings attributable to FIS common stockholders
$
55

 
$
111

Weighted average shares outstanding — basic
324

 
283

Plus: Common stock equivalent shares
3

 
4

Weighted average shares outstanding — diluted
327

 
287

Net earnings per share — basic from continuing operations attributable to FIS common stockholders
$
0.17

 
$
0.40

Net earnings (loss) per share — basic from discontinued operations attributable to FIS common stockholders

 
(0.01
)
Net earnings per share — basic attributable to FIS common stockholders *
$
0.17

 
$
0.39

Net earnings per share — diluted from continuing operations attributable to FIS common stockholders
$
0.17

 
$
0.40

Net earnings (loss) per share — diluted from discontinued operations attributable to FIS common stockholders

 
(0.01
)
Net earnings per share — diluted attributable to FIS common stockholders *
$
0.17

 
$
0.39

 
 
 
 
* Amounts may not sum due to rounding.
 
 
 
Options to purchase approximately 11 million and 5 million shares of our common stock for the three months ended March 31, 2016 and 2015, respectively, were not included in the computation of diluted earnings per share because they were anti-dilutive.

(4) Acquisitions

SunGard

FIS completed the SunGard acquisition on November 30, 2015, and SunGard's results of operations and financial position are included in the consolidated financial statements from and after the date of acquisition. The SunGard acquisition increased our existing portfolio of solutions to automate a wide range of complex business processes for financial services institutions and corporate and government treasury departments, adding trading, securities operations, administering investment portfolios, accounting for investment assets, and managing risk and compliance requirements.

Through a series of mergers, FIS acquired 100 percent of the equity of SunGard, for a total purchase price as follows (in millions):

8

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


Cash consideration, including SunGard transaction fees paid at closing
$
2,335

Value of stock and vested equity awards exchanged for FIS shares
2,697

Value of vested portion of SunGard stock awards exchanged for FIS awards
47

 
$
5,079


We recorded a preliminary allocation of the purchase price to SunGard tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of November 30, 2015. The provisional amounts for intangible assets were based on independent third-party valuations performed. Land and building valuations were based on appraisals performed by certified property appraisers. Goodwill was recorded as the residual amount by which the purchase price exceeded the provisional fair value of the net assets acquired. Our evaluations of the facts and circumstances available as of November 30, 2015 to assign fair values to other assets acquired and liabilities assumed are ongoing, as are our assessments of the economic characteristics of the acquired software and other intangibles. These evaluations may result in changes to the provisional amounts recorded. In accordance with ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, the financial statements will not be retrospectively adjusted for any measurement-period adjustments that occur in subsequent periods. Rather, we will recognize any adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment is determined. During the quarter ended March 31, 2016, adjustments were recorded to increase the fair values assigned to intangible assets, deferred taxes, other liabilities and property and equipment and to reduce the value assigned to goodwill. We are also required to record, in the same period’s financial statements in which adjustments are recorded, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of any change to the provisional amounts, calculated as if the accounting adjustment had been completed at the acquisition date. Additional depreciation and amortization of $6 million that would have been recognized in 2015 was recorded in the quarter ended March 31, 2016 related to the changes in provisional values.

The preliminary purchase price allocation, as adjusted for measurement period adjustments recorded through March 31, 2016, is as follows (in millions):

Cash
$
631

Trade and other receivables
574

Property and equipment
145

Computer software
674

Intangible assets
4,540

Other assets
68

Goodwill
5,809

Liabilities assumed and noncontrolling interest
(7,362
)
 
$
5,079


The following table summarizes the liabilities assumed in the SunGard acquisition (in millions):
Long-term debt, subsequently retired
$
4,738

Deferred income taxes
1,753

Deferred revenue
278

Other liabilities and noncontrolling interest
593

 
$
7,362


The gross contractual amount of trade and other receivables acquired was approximately $583 million. The difference between that total and the provisional amount reflected above represents our best estimate at the acquisition date of the contractual cash flows not expected to be collected. This difference was derived using SunGard's historical bad debts, sales allowances and collection trends.


9

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


(5) Discontinued Operations and Other Dispositions

During the second quarter of 2015, we sold certain assets associated with our gaming industry check warranty business, resulting in a pre-tax gain of $139 million, which is included in Other income (expense), net. The sale did not meet the standard necessary to be reported as discontinued operations; therefore, the gain and related prior period earnings remain reported within earnings from continuing operations.

Certain other operations are reported as discontinued in the Condensed Consolidated Statements of Earnings (Unaudited) for the three months ended March 31, 2015, as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015 and in our 2015 Quarterly Reports on Form 10-Q.
  
(6) Condensed Consolidated Financial Statement Details
The following table shows the Company’s condensed consolidated financial statement details as of March 31, 2016 and December 31, 2015 (in millions):

 
March 31, 2016
 
December 31, 2015
 
Cost
 
Accumulated
depreciation and amortization
 
Net
 
Cost
 
Accumulated
depreciation and amortization
 
Net
Property and equipment
$
1,426

 
$
815

 
$
611

 
$
1,396

 
$
785

 
$
611

Intangible assets
$
7,335

 
$
1,948

 
$
5,387

 
$
6,963

 
$
1,804

 
$
5,159

Computer software
$
2,387

 
$
779

 
$
1,608

 
$
2,300

 
$
716

 
$
1,584

       
The Company entered into capital lease obligations of $1 million during each of the three-month periods ended March 31, 2016 and 2015, respectively. The assets are included in property and equipment and the remaining capital lease obligations are classified as long-term debt on our Condensed Consolidated Balance Sheets (Unaudited) as of March 31, 2016. Periodic payments are included in repayment of borrowings on the Condensed Consolidated Statements of Cash Flows (Unaudited).

Changes in goodwill during the three months ended March 31, 2016 are summarized as follows (in millions):
 
IFS
 
GFS
 
Corporate
and Other
 
Total
Balance, December 31, 2015
$
7,676

 
$
6,606

 
$
463

 
$
14,745

Adjustments to SunGard provisional purchase price allocation
(6
)
 
(169
)
 
(10
)
 
(185
)
Foreign currency adjustments

 
16

 

 
16

Balance, March 31, 2016
$
7,670

 
$
6,453

 
$
453

 
$
14,576


Settlement Activity

We manage certain integrated electronic payment services and programs and wealth management processes for our clients that require us to hold and manage client cash balances used to fund their daily settlement activity. Settlement deposits represent funds we hold that were drawn from our clients to facilitate settlement activities and, as of March 31, 2016 and December 31, 2015, included $125 million and $125 million, respectively, of investments with original maturities of greater than 90 days. These investments are Level 1 and Level 2 type measurements in the fair-value hierarchy. Settlement receivables represents amounts funded by us. Settlement payables consist of settlement deposits from clients, settlement payables to third parties, and outstanding checks related to our settlement activities for which the right of offset does not exist or we do not intend to exercise our right of offset. Our accounting policy for such outstanding checks is to include them in settlement payables on the Condensed Consolidated Balance Sheets (Unaudited) and operating cash flows on the Condensed Consolidated Statements of Cash Flows (Unaudited).
        
(7) Long-Term Debt
Long-term debt as of March 31, 2016 and December 31, 2015, consisted of the following (in millions):

10

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


 
March 31, 2016
 
December 31, 2015
2017 Term Loans (1)
$
750

 
$
1,300

2018 Term Loans (2)
1,500

 
1,500

Senior Notes due June 2017, interest payable semi-annually at 1.450%
300

 
300

Senior Notes due April 2018, interest payable semi-annually at 2.000%
250

 
250

Senior Notes due October 2018, interest payable semi-annually at 2.850%
750

 
750

Senior Notes due October 2020, interest payable semi-annually at 3.625%
1,750

 
1,750

Senior Notes due March 2022, interest payable semi-annually at 5.000%
700

 
700

Senior Notes due October 2022, interest payable semi-annually at 4.500%
500

 
500

Senior Notes due April 2023, interest payable semi-annually at 3.500%
1,000

 
1,000

Senior Notes due June 2024, interest payable semi-annually at 3.875%
700

 
700

Senior Notes due October 2025, interest payable semi-annually at 5.000%
1,500

 
1,500

Revolving Loan (3)
1,650

 
1,250

Other
(53
)
 
(56
)
 
11,297

 
11,444

Current portion
(764
)
 
(15
)
Long-term debt, excluding current portion
$
10,533

 
$
11,429

__________________________________________
(1)
Interest on the 2017 Term Loans is generally payable at LIBOR plus an applicable margin of up to 1.75% based upon the Company's corporate credit ratings. As of March 31, 2016, the weighted average interest rate on the 2017 Term Loans was 1.69%.
(2)
Interest on the 2018 Term Loans is generally payable at LIBOR plus an applicable margin of up to 1.75% based upon the Company's corporate credit ratings. As of March 31, 2016, the weighted average interest rate on the 2018 Term Loans was 1.69%.
(3)
Interest on the Revolving Loan is generally payable at LIBOR plus an applicable margin of up to 1.75% plus an unused commitment fee of up to 0.25%, each based upon the Company's corporate credit ratings. As of March 31, 2016, the applicable margin on the Revolving Loan, excluding facility fees and unused commitment fees, was 1.25%.

FIS is a party to a syndicated credit agreement (the "Credit Agreement"), which as of March 31, 2016, provided total committed capital of $3,750 million comprised of: (1) a revolving credit facility in an aggregate maximum principal amount of $3,000 million maturing on December 18, 2019 (the "Revolving Loan"); and (2) term loans of $750 million maturing on March 30, 2017 (the "2017 Term Loans"). FIS is also a party to a syndicated term loan agreement (the "Term Loan Agreement" and together with the Credit Agreement the "FIS Credit Agreements"), which as of March 31, 2016 provided term loans of $1,500 million maturing on November 30, 2018 (the "2018 Term Loans"). As of March 31, 2016, the outstanding principal balance of the Revolving Loan was $1,650 million, with $1,342 million of borrowing capacity remaining thereunder (net of $8 million in outstanding letters of credit issued under the Revolving Loan).

The obligations of FIS under the FIS Credit Agreements and under all of its outstanding senior notes rank equal in priority and are unsecured. The FIS Credit Agreements and the senior notes remain subject to customary covenants, including, among others, limitations on the payment of dividends by FIS, and events of default.
      
The following summarizes the aggregate maturities of our debt and capital leases on stated contractual maturities, excluding unamortized non-cash bond premiums and discounts of $15 million as of March 31, 2016 (in millions).


11

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


 
 
 
 
 
Total
2016
 
$
14

2017
 
1,062

2018
 
2,502

2019
 
1,650

2020
 
1,750

Thereafter
 
4,400

Total principal payments
 
11,378

Debt issuance costs, net of accumulated amortization
 
(66
)
Total long-term debt
 
$
11,312


Voluntary prepayment of the Term Loans is generally permitted at any time without fee. There are no mandatory principal payments on the Revolving Loan and any balance outstanding on the Revolving Loan will be due and payable at its scheduled maturity date, which occurs at December 18, 2019.

We monitor the financial stability of our counterparties on an ongoing basis. The lender commitments under the undrawn portions of the Revolving Loan are comprised of a diversified set of financial institutions, both domestic and international. The failure of any single lender to perform its obligations under the Revolving Loan would not adversely impact our ability to fund operations.

The fair value of the Company’s long-term debt is estimated to be approximately $229 million higher than the carrying value as of March 31, 2016. This estimate is based on quoted prices of our senior notes and trades of our other debt in close proximity to March 31, 2016, which are considered Level 2-type measurements. This estimate is subjective in nature and involves uncertainties and significant judgment in the interpretation of current market data. Therefore, the values presented are not necessarily indicative of amounts the Company could realize or settle currently.

As of March 31, 2016, we have entered into the following interest rate swap transactions converting a portion of the interest rate exposure on our Term and Revolving Loans from variable to fixed (in millions):

Effective date
 
Termination date
 
Notional amount
 
Bank pays
variable rate of
 
FIS pays
 fixed rate of
February 2014
 
February 2017
 
$
400

 
1 Month LIBOR (1)
 
0.89
%
(2)
January 2016
 
January 2017
 
400

 
1 Month LIBOR (1)
 
0.65
%
(2)
January 2016
 
January 2018
 
500

 
1 Month LIBOR (1)
 
0.92
%
(2)
January 2016
 
January 2019
 
250

 
1 Month LIBOR (1)
 
1.18
%
(2)
February 2016
 
February 2017
 
200

 
1 Month LIBOR (1)
 
0.71
%
(2)
 
 
 
 
$
1,750

 
 
 
 
 
___________________________________
(1)
0.44% in effect as of March 31, 2016.
(2)
Does not include the applicable margin and facility fees paid to lenders on term loans and revolving loans as described above.

We have designated these interest rate swaps as cash flow hedges and, as such, they are carried on the Condensed Consolidated Balance Sheets (Unaudited) at fair value with changes in fair value included in other comprehensive earnings, net of tax.

A summary of the fair value of the Company’s interest rate derivative instruments is as follows (in millions):


12

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


 
March 31, 2016
 
December 31, 2015
 
Balance sheet location
 
Fair
value
 
Balance sheet location
 
Fair
value
Interest rate swap contracts
Other noncurrent assets
 
$

 
Other noncurrent assets
 
$
1

Interest rate swap contracts
Accounts payable and accrued liabilities
 
2

 
Accounts payable and accrued liabilities
 

Interest rate swap contracts
Other long-term liabilities
 
5

 
Other long-term liabilities
 
1


In accordance with the authoritative guidance for fair value measurements, the inputs used to determine the estimated fair value of our interest rate swaps are Level 2-type measurements. We considered our own credit risk and the credit risk of the counterparties when determining the fair value of our interest rate swaps. Adjustments are made to these amounts and to accumulated other comprehensive earnings ("AOCE") within the Condensed Consolidated Statements of Comprehensive Earnings (Unaudited) and Condensed Consolidated Statement of Equity (Unaudited) as the factors that impact fair value change, including current and projected interest rates, time to maturity and required cash transfers/settlements with our counterparties. Periodic actual and estimated settlements with counterparties are recorded to interest expense as a yield adjustment to effectively fix the otherwise variable rate interest expense associated with the Term and Revolving Loans for hedge notional amounts.

A summary of the effect of derivative instruments on the Company’s Condensed Consolidated Statements of Comprehensive Earnings (Unaudited) and recognized in AOCE for the three months ended March 31, 2016 and 2015 are as follows (in millions):

 
 
Amount of gain (loss)
recognized in AOCE on
derivatives
 
 
 
Amount of gain (loss) reclassified
from AOCE into
income
Derivatives in cash
 
Three months ended
 
Location of loss
 
Three months ended
flow hedging
 
March 31,
 
reclassified from
 
March 31,
relationships
 
2016
 
2015
 
AOCE into income
 
2016
 
2015
Interest rate derivative contracts
 
$
(9
)
 
$
(2
)
 
Interest expense
 
$
(2
)
 
$
(1
)

Approximately $2 million of the balance in AOCE as of March 31, 2016, is expected to be reclassified into income over the next twelve months.

Our existing cash flow hedges are highly effective and there was no impact on earnings due to hedge ineffectiveness. It is our practice to execute such instruments with credit-worthy banks at the time of execution and not to enter into derivative financial instruments for speculative purposes. As of March 31, 2016, we believe that our interest rate swap counterparties will be able to fulfill their obligations under our agreements, and we believe we will have debt outstanding through the various expiration dates of the swaps such that the forecasted transactions remain probable of occurring.

In September 2015, in contemplation of issuing long-term financing for the SunGard acquisition (see Note 4), the Company entered into treasury lock hedges with a total notional amount of $1 billion reducing the risk of changes in the benchmark index component of the 10-year treasury yield. The Company designated these derivatives as cash flow hedges. On October 13, 2015, in conjunction with the pricing of the $4.5 billion senior notes, the Company terminated these treasury lock contracts for a cash settlement payment of $16 million, which was recorded as a component of Other Comprehensive Earnings and will be reclassified as an adjustment to interest expense over the ten years during which the related interest payments that were hedged will be recognized in income.

(8) Commitments and Contingencies
Litigation
     In the ordinary course of business, the Company is involved in various pending and threatened litigation matters related to operations, some of which include claims for punitive or exemplary damages. The Company believes no actions, other than the

13

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


matters listed below, depart from customary litigation incidental to its business. As background to the disclosure below, please note the following:

These matters raise difficult and complicated factual and legal issues and are subject to many uncertainties and complexities.

The Company reviews all of its litigation on an on-going basis and follows the authoritative provisions for accounting for contingencies when making accrual and disclosure decisions. A liability must be accrued if (a) it is probable that a liability has been incurred and (b) the amount of loss can be reasonably estimated. If one of these criteria has not been met, disclosure is required when there is at least a reasonable possibility that a material loss may be incurred. When assessing reasonably possible and probable outcomes, the Company bases decisions on the assessment of the ultimate outcome following all appeals. Legal fees associated with defending litigation matters are expensed as incurred.

 DataTreasury Corporation v. Fidelity National Information Services, Inc. et. al.

On May 28, 2013, DataTreasury Corporation (the “Plaintiff”) filed a patent infringement lawsuit against the Company and multiple banks in the U.S. District Court for the Eastern District of Texas, Marshall Division.  Plaintiff alleges that the Company infringes the patents at issue by making, using, selling or offering to sell systems and methods for image-based check processing. The Plaintiff seeks damages, injunctive relief and attorneys' fees for the alleged infringement of two patents.  On October 25, 2013, the Company filed for covered business method ("CBM") post-grant reviews of the validity of the Plaintiff's asserted patents at the U.S. Patent and Trademark Office ("USPTO").  The Company filed a Motion to Stay the case pending the outcome of the CBM post-grant reviews. On April 29, 2014, the USPTO instituted the Company's two CBM petitions. On August 14, 2014, the Court granted the Company's Motion to Stay the litigation pending the outcome of the CBM review proceedings. On April 29, 2015, the Patent Trial and Appeal Board ("PTAB") issued final written decisions on the Company’s two CBM petitions holding that all claims of the Plaintiff’s two patents are unpatentable. The Plaintiff's request for rehearing of these decisions has been denied by PTAB. On August 27, 2015, the Plaintiff filed a notice of appeal to the U.S. Court of Appeals for the Federal Circuit of the USPTO’s Final Written Decisions. Briefing was completed on April 7, 2016 and the Parties are awaiting a date for oral argument. An estimate of a possible loss or range of possible loss, if any, for this action cannot be made at this time.

Acquired Contingencies

The Company became responsible for certain contingencies which were assumed in the SunGard acquisition. These matters include resolution of a customer claim, unclaimed property examinations, tax compliance matters, and finalizing the sale prices for two previously divested businesses. The Condensed Consolidated Balance Sheet as of March 31, 2016 includes a provisional liability totaling $153 million related to these matters, including $84 million in unrecognized tax benefits assumed. Subsequent to March 31, 2016, the provisional liability decreased to approximately $125 million. This provisional liability is subject to further change as these contingencies are finalized. Changes in this provisional liability are reflected in our purchase accounting for the Acquisition, not through our income statement. As a result of the uncertainties associated with these matters, we are unable to estimate a range of loss in excess of the aggregate amount accrued.

For approximately one week in August 2015, certain U.S. operations of a single SunGard customer were disrupted by an issue affecting its SunGard-hosted fund accounting platform that occurred following a recommended operating system update implemented by SunGard. The customer uses the platform for the processing of net asset values (NAVs) for certain mutual funds, exchange-traded funds and collective investment funds. While the incident resulted in delayed publication of certain NAVs or use of alternative NAVs, no data was lost as a result of the incident. The platform is operating as designed and we worked with our customer to resolve any known resulting matters. No other SunGard customers were disrupted.

The State of Delaware, Department of Finance, Division of Revenue (Unclaimed Property) and nine other states are currently conducting a joint examination of the books and records of certain subsidiaries acquired in the SunGard acquisition to determine compliance with the unclaimed property laws. Additionally, prior to the Acquisition, SunGard entered into voluntary disclosure agreements to address the potential unclaimed property exposure for certain entities not included in the scope of the ongoing unclaimed property examination.

Brazilian Tax Authorities Claims


14

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


In 2004, Proservvi Empreendimentos e Servicios, Ltda., the predecessor to Fidelity National Servicos de Tratamento de Documentos e Informatica Ltda. (“Servicos”), a subsidiary of Fidelity National Participacoes Ltda., our former item processing and remittance services operation in Brazil, acquired certain assets and employees and leased certain facilities from the Transpev Group (“Transpev”) in Brazil. Transpev’s remaining assets were later acquired by Prosegur, an unrelated third party. When Transpev discontinued its operations after the asset sale to Prosegur, it had unpaid federal taxes and social contributions owing to the Brazilian tax authorities. The Brazilian tax authorities brought a claim against Transpev and beginning in 2012 brought claims against Prosegur and Servicos on the grounds that Prosegur and Servicos were successors in interest to Transpev. To date, the Brazilian tax authorities filed six claims against Servicos asserting potential tax liabilities of approximately $6 million. There are potentially 30 additional claims against Transpev/Prosegur for which Servicos is named as a co-defendant or may be named, but for which Servicos has not yet been served. These additional claims amount to approximately $58 million making the total potential exposure for all 36 claims approximately $64 million. We do not believe a liability for these 36 total claims is probable or reasonably estimable and, therefore, have not recorded a liability for any of these claims.

Indemnifications and Warranties

The Company generally indemnifies its customers, subject to certain limitations and exceptions, against damages and costs resulting from claims of patent, copyright, or trademark infringement associated solely with its customers' use of the Company's software applications or services. Historically, the Company has not made any material payments under such indemnifications, but continues to monitor the conditions that are subject to the indemnifications to identify whether it is probable that a loss has occurred, and would recognize any such losses when they are estimable. In addition, the Company warrants to customers that its software operates substantially in accordance with the software specifications. Historically, no material costs have been incurred related to software warranties and no accruals for warranty costs have been made.

(9) Segment Information

In 2015, FIS finalized a reorganization and began reporting its financial performance based on three segments: Integrated Financial Solutions (“IFS”), Global Financial Solutions (“GFS”) and Corporate and Other. We re-casted all previous periods to conform to the new segment presentation. Following the November 30, 2015 Acquisition, SunGard was included within the GFS segment as its economic characteristics, international business model, and various other factors largely aligned with those of our GFS segment. As we have further integrated the businesses through March 31, 2016, we have reclassified certain SunGard businesses that are oriented more to the retail banking and payments activities of IFS into that segment (corporate liquidity and wealth management). Certain other non-strategic businesses from both SunGard (public sector and education) and legacy FIS (commercial services and check processing) have been reclassified to the Corporate and Other segment, as have SunGard administrative expenses. Prior periods have also have been reclassified to conform to the current segment presentation.
Summarized financial information for the Company’s segments is shown in the following tables.
As of and for the three months ended March 31, 2016 (in millions):

 
IFS
 
GFS
 
Corporate
and Other
 
Total
Processing and services revenues
$
1,121

 
$
990

 
$
70

 
$
2,181

Operating expenses
762

 
803

 
432

 
1,997

Operating income (loss)
$
359

 
$
187

 
$
(362
)
 
184

Other income (expense) unallocated
 
 
 
 
 
 
(94
)
Income from continuing operations before income taxes
 
 
 
 
 
 
$
90

Depreciation and amortization
$
67

 
$
64

 
$
162

 
$
293

Capital expenditures (1)
$
60

 
$
75

 
$
11

 
$
146

Total assets (2)
$
10,093

 
$
9,420

 
$
6,913

 
$
26,426

Goodwill
$
7,670

 
$
6,453

 
$
453

 
$
14,576

(1)
Capital expenditures for the three months ended March 31, 2016 includes $1 million of capital leases.
(2)
Total assets as of March 31, 2016 exclude $4 million related to discontinued operations.

15

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



As of and for the three months ended March 31, 2015 (in millions):

 
IFS
 
GFS
 
Corporate
and Other
 
Total
Processing and services revenues
$
928

 
$
512

 
$
115

 
$
1,555

Operating expenses
609

 
466

 
265

 
1,340

Operating income (loss)
$
319

 
$
46

 
$
(150
)
 
215

Other income (expense) unallocated
 
 
 
 
 
 
(39
)
Income from continuing operations before income taxes
 
 
 
 
 
 
$
176

Depreciation and amortization
$
52

 
$
35

 
$
66

 
$
153

Capital expenditures (1)
$
62

 
$
35

 
$
5

 
$
102

Total assets (2)
$
8,886

 
$
3,607

 
$
1,937

 
$
14,430

Goodwill
$
6,725

 
$
1,948

 
$
162

 
$
8,835


(1)
Capital expenditures for the three months ended March 31, 2015 include $1 million of capital leases.
(2)
Total assets as of March 31, 2015 exclude $4 million related to discontinued operations.

Integrated Financial Solutions ("IFS")

The IFS segment is focused on serving the North American regional and community bank market for transaction and account processing, payment solutions, channel solutions (including lending and wealth management solutions), digital channels, risk and compliance solutions, and services, capitalizing on the continuing trend to outsource these solutions. IFS also includes corporate liquidity and wealth management solutions acquired in the SunGard acquisition. IFS’ primary software applications function as the underlying infrastructure of a financial institution's processing environment. These applications include core bank processing software, which banks use to maintain the primary records of their customer accounts, and complementary applications and services that interact directly with the core processing applications. Clients in this segment include regional and community banks, credit unions, commercial lenders, independent community and savings institutions as well as government institutions, merchants and other commercial organizations. This market is primarily served through integrated solutions and characterized by multi-year processing contracts that generate highly recurring revenues. The predictable nature of cash flows generated from this segment provides opportunities for further investments in innovation, product integration, information and security, and compliance in a cost effective manner.

Global Financial Solutions ("GFS")

The GFS segment is focused on serving the largest financial institutions around the globe with banking and payments solutions, as well as consulting and transformation services. The GFS segment has extended its reach through the SunGard acquisition, and now also delivers a broader array of capital markets and asset management and insurance solutions and services.

GFS clients include the largest global financial institutions, including those headquartered in the United States, as well as all international financial institutions we serve as clients in more than 130 countries around the world. These institutions face unique business and regulatory challenges and account for the majority of financial institution information technology spend globally. The purchasing patterns of GFS clients vary from those of IFS clients who typically purchase solutions on an outsourced basis. GFS clients purchase our solutions and services in various ways including licensing and managing technology “in-house”, using consulting and third party service providers as well as fully outsourced end-to-end solutions. We have long-established relationships with many of these financial institutions that generate significant recurring revenue. GFS clients now also include asset managers, buy- and sell-side securities and trading firms, insurers and private equity firms due to the addition of SunGard. This segment also includes the Company's consolidated Brazilian Venture (Note 2).

Clients in Brazil, the United Kingdom, France and Germany accounted for the majority of the revenues from clients based outside of North America for all periods presented. Included in this segment are long-term assets, excluding goodwill and other

16

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


intangible assets, located outside of the United States totaling $478 million and $351 million as of March 31, 2016 and 2015, respectively. These assets are predominantly located in Brazil, India, Germany and the United Kingdom.

Corporate and Other

The Corporate and Other segment consists of corporate overhead expense, certain leveraged functions and miscellaneous expenses that are not included in the operating segments as well as certain non-strategic businesses as indicated above. The overhead and leveraged costs relate to marketing, corporate finance and accounting, human resources, legal, and amortization of acquisition-related intangibles and other costs that are not considered when management evaluates revenue generating segment performance, such as acquisition integration and severance costs. The Corporate and Other segment also includes the impact on revenue for 2016 of adjusting SunGard's deferred revenue to fair value.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless stated otherwise or the context otherwise requires, all references to “FIS,” “we,” the “Company” or the “registrant” are to Fidelity National Information Services, Inc., a Georgia corporation, and its subsidiaries.

The following discussion should be read in conjunction with Item 1: Condensed Consolidated Financial Statements (Unaudited) and the Notes thereto included elsewhere in this report. The statements contained in this Form 10-Q or in our other documents or in oral presentations or other statements made by our management that are not purely historical are forward-looking statements within the meaning of the U.S. federal securities laws. Statements that are not historical facts, including statements regarding our expectations, hopes, intentions, or strategies regarding the future, are forward-looking statements. These statements relate to, among other things, future events and our future results and involve a number of risks and uncertainties. Forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. Any statements that refer to beliefs, expectations, projections or other characterizations of future events or circumstances and other statements that are not historical facts are forward-looking statements. In many cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of these terms and other comparable terminology.

Actual results, performance or achievement could differ materially from those contained in these forward-looking statements. The risks and uncertainties that forward-looking statements are subject to include, without limitation:
 
the risk that acquired businesses will not be integrated successfully, or that the integration will be more costly or more time-consuming and complex than anticipated;
the risk that cost savings and other synergies anticipated to be realized from acquisitions may not be fully realized or may take longer or be more costly to realize than expected;
the risks of doing business internationally;
changes in general economic, business and political conditions, including the possibility of intensified international hostilities, acts of terrorism, and changes in either or both the United States and international lending, capital and financial markets;
the effect of legislative initiatives or proposals, statutory changes, governmental or other applicable regulations and/or changes in industry requirements, including privacy regulations;
the risks of reduction in revenue from the elimination of existing and potential customers due to consolidation in, or new laws or regulations affecting, the banking, retail and financial services industries or due to financial failures or other setbacks suffered by firms in those industries;
changes in the growth rates of the markets for our solutions;
failures to adapt solutions to changes in technology or in the marketplace;
internal or external security breaches of our systems, including those relating to unauthorized access, theft, corruption or loss of personal information and computer viruses and other malware affecting our software or platforms, and the reactions of customers, card associations, government regulators and others to any such events;
the risk that implementation of software (including software updates) for customers or at customer locations may result in the corruption or loss of data or customer information, interruption of business operations, exposure to liability claims or loss of customers;

17


the reaction of current and potential customers to communications from us or regulators regarding information security, risk management, internal audit or other matters;
competitive pressures on pricing related to our solutions including the ability to attract new, or retain existing, customers;
an operational or natural disaster at one of our major operations centers; and
other risks detailed elsewhere in this document, and in our other filings with the Securities and Exchange Commission.

Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition, results of operations and prospects. Accordingly, readers should not place undue reliance on these forward-looking statements. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Except as required by applicable law or regulation, we do not undertake (and expressly disclaim) any obligation and do not intend to publicly update or review any of these forward-looking statements, whether as a result of new information, future events or otherwise. You should carefully consider the possibility that actual results may differ materially from our forward-looking statements.
    
 Overview

FIS is a global leader in financial services technology offering a broad range of solutions in retail and enterprise banking, payments, capital markets, asset and wealth management, risk and compliance, treasury and insurance, as well as providing financial consulting and outsourcing services. With a long history deeply rooted in serving the financial services sector, FIS serves more than 20,000 institutions in over 130 countries. Headquartered in Jacksonville, Florida, FIS employs approximately 55,000 people worldwide and holds leadership positions in payment processing, financial software, capital markets and banking solutions. Through our Capco brand, we deliver a wide range of information technology consulting, advisory and transformational services to financial institutions globally. Providing software, services and outsourcing of the technology that drives financial institutions, FIS is a Fortune 500 company and is a member of Standard & Poor’s 500® Index.

We have grown organically as well as through acquisitions, which have contributed critical applications and services that complement or enhance our existing offerings, diversifying our revenues by customer, geography and service offering. The completion of the SunGard acquisition on November 30, 2015 increased our existing portfolio to include solutions that automate a wide range of complex business processes for financial services institutions and corporate and government treasury departments.

In 2015, FIS finalized a reorganization and began reporting its financial performance based on three segments: Integrated Financial Solutions (“IFS”), Global Financial Solutions (“GFS”) and Corporate and Other. We re-casted all previous periods to conform to the new segment presentation. Following the November 30, 2015 Acquisition, SunGard was included within the GFS segment as its economic characteristics, international business model, and various other factors largely aligned with those of our GFS segment. As we have further integrated the businesses through March 31, 2016, we have reclassified certain SunGard businesses that are oriented more to the retail banking and payments activities of IFS into that segment (corporate liquidity and wealth management). Certain other non-strategic businesses from both SunGard (public sector and education) and legacy FIS (commercial services and check processing) have been reclassified to the Corporate and Other segment, as have SunGard administrative expenses. Prior periods also have been reclassified to conform to the current segment presentation. A description of these segments is included in Note 9 of the Notes to Condensed Consolidated Financial Statements (Unaudited). Revenues by segment and the results of operations of our segments are discussed below in Segment Results of Operations.
Business Trends and Conditions

Our revenue is primarily derived from a combination of recurring technology and processing services, consulting and professional services and software license fees. The majority of our revenue has historically been recurring, and has been provided under multi-year contracts that contribute relative stability to our revenue stream. These services, in general, are considered critical to our clients' operations. A significant portion of these recurring revenues is derived from transaction processing fees that fluctuate with the level of deposit accounts and card transactions, among other variable measures, associated with consumer and commercial activity. Consulting and professional services revenues are typically non-recurring, and sales of software licenses are less predictable, a portion of which can be regarded as discretionary spending by our clients. In the second half of 2015 and first quarter of 2016, we experienced the macroeconomic challenges related to the slow down of the global economy. That trend impacts us predominantly in the amount our clients spend with us for professional services. We expect this trend to continue through at least the first half of 2016.


18


The SunGard acquisition broadened our solution portfolio, enabling us to expand beyond our traditional banking and payments markets into the institutional and wholesale side of financial institutions as well as other buy-side organizations. It significantly expanded our existing solutions and client base in wealth management, treasury and corporate payments. These solutions are in demand among our regional and community financial institution clients as they look for ways to replace highly regulated fee revenues. The combination also favorably impacts our revenue mix, with a greater concentration of license revenues and higher margin services. Our combined revenues for the first quarter of 2016 included an $81 million reduction of revenue as a result of the purchase accounting adjustment to reduce deferred revenue to fair value. Similar reductions will be experienced throughout 2016 as the assumed deferred revenue balance runs off. Amortization of intangible assets acquired in the Acquisition increased our cost of revenues by $116 million for the March 2016 quarter, and comparable amortization charges will be recorded through 2025. As we integrate SunGard into our existing operations, we anticipate significant cost savings in administration and technology expenses, with a goal of achieving annual synergy run-rate savings of $200 million by the end of 2017. Certain one-time severance and other costs will be incurred related to delivering these run-rate savings.
 
We are actively migrating a number of our financial institution clients to outsourced integrated technology solutions to improve their profitability and rapidly address increasing regulatory requirements. As a provider of outsourcing solutions, we benefit from multi-year recurring revenue streams, which help moderate the effects of broader year-to-year economic and market changes that otherwise might have a larger impact on our results of operations. We believe our integrated solutions and outsourced services are well-positioned to address this outsourcing trend across the markets we serve.

A realignment of resources in our GFS segment resulted in severance costs of $44.6 million in the first quarter of 2015. The realignment activities were a combination of optimizing on-shore and off-shore resources as well as the removal of overlapping management resources.

Consumer preference continues to shift from traditional branch banking services to digital banking solutions, and our clients seek to provide a single integrated banking experience through their branch, mobile, internet and voice-banking channels. We are focused on enabling our clients to deliver this experience to their customers through our integrated solutions and services. We continue to develop and invest in these integrated solutions and services to assist clients as they address this market demand.
We continue to see demand for innovative solutions in the payments market that will deliver faster, more convenient payment solutions in mobile channels, internet applications and cards. We believe mobile payments will grow and partially replace existing payment tender volumes over time as consumers and merchants embrace the convenience, incremental services and benefits. Mobile payment volume is growing significantly but does not yet represent a meaningful amount of the payments market. Additionally, new formidable non-traditional payments competitors and large merchants are investing in and innovating mobile payment technologies to address the emerging market opportunity, and it is unclear the extent to which particular technologies or services will succeed. We believe the growth of mobile payments continues to present both an opportunity and a risk to us as the market develops. Although we cannot predict which mobile payment technologies or solutions will be successful, we cautiously believe our client relationships, payments infrastructure and experience, adapted solutions and emerging solutions are well-positioned to maintain or grow our clients' existing payment volumes, which is our focus.
High profile North American merchant payment card information security breaches have pushed the payment card industry towards Europay, MasterCard and VISA ("EMV") integrated circuit cards as financial institutions, card networks and merchants seek to improve information security and reduce fraud costs. We have invested in our card management solutions and card manufacturing and processing capabilities to accommodate EMV integrated circuit cards so we can guide our clients through this anticipated technology transition and grow our card-driven businesses. We believe the trend to migrate to EMV cards will continue and we continue to invest to address market demand.

The use of checks continues to decline as a percentage of total payments, which negatively impacts our check warranty and item-processing businesses, and we expect this trend to continue. In 2014 and 2015, we observed a modest slowdown in our check volume decline and to date have been able to successfully mitigate the majority of the impacts of this decline through cost and fraud efficiency actions and new market solutions, which remain our continued focus.
We anticipate consolidation within the banking industry will continue, primarily in the form of merger and acquisition activity, which we believe as a whole is detrimental to our business. However, consolidation resulting from specific merger and acquisition transactions may be beneficial or detrimental to our business. When consolidations of financial institutions occur, merger partners often operate systems licensed from competing service providers. The newly formed entity generally makes a determination to migrate its core and payments systems to a single platform. When a financial institution processing client is involved in a consolidation, we may benefit by their expanding the use of our services if such services are chosen to survive the

19


consolidation and support the newly combined entity. Conversely, we may lose market share if we are providing services to both entities, or if a client of ours is involved in a consolidation and our services are not chosen to survive the consolidation and support the newly combined entity. It is also possible that larger financial institutions resulting from consolidation may have greater leverage in negotiating terms or could decide to perform in-house some or all of the services that we currently provide or could provide. We seek to mitigate the risks of consolidations by offering other competitive services to take advantage of specific opportunities at the surviving company. In 2015, we experienced lower consolidation activity and resulting termination fees compared to 2014 and 2013, and this trend is continuing into 2016.

Notwithstanding challenging global economic conditions, our international business continued to experience growth across all major regions, including Europe and Asia on a constant currency basis during the three months ended March 31, 2016. By comparison with FIS, a greater percentage of SunGard's revenues have been concentrated historically in international markets, which will contribute to this growth trend. Demand for our solutions will also continue to be driven in developing countries by government-led financial inclusion policies aimed to reduce the unbanked population and by growth in the middle classes in these markets driving the need for more sophisticated banking solutions. The majority of our European revenue is generated by clients in the United Kingdom, France and Germany. In 2015, we experienced adverse currency impacts in our international businesses as a consequence of a relative strengthening of the U.S. dollar. In 2016, we expect the unfavorable foreign currency impact compared to the comparable prior year periods to continue.

Globally, attacks on information technology systems continue to grow in frequency, complexity and sophistication. This is a trend we expect to continue. Such attacks have become a point of focus for individuals, businesses and governmental entities. The objectives of these attacks include, among other things, gaining unauthorized access to systems to facilitate financial fraud, disrupt operations, cause denial of service events, corrupt data, and steal non-public information. These circumstances present both a threat and an opportunity for FIS. As part of our business, we electronically receive, process, store and transmit a wide range of confidential information, including sensitive customer information and personal consumer data. We also operate payment, cash access and prepaid card systems.

FIS remains focused on making strategic investments in information security to protect our clients and our information systems. This includes both capital expenditures and operating expense on hardware, software, personnel and consulting services. We also participate in industry and governmental initiatives to improve information security for our clients. Through the expertise we have gained with this ongoing focus and involvement, we have developed fraud, security, risk management and compliance solutions to target this growth opportunity in the financial services industry.
  
Critical Accounting Policies

There have been no significant changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015.

Transactions with Related Parties

See Note 2 to the Notes to Condensed Consolidated Financial Statements (Unaudited) for a detailed description of transactions with related parties.
     

20


Comparisons of three-month periods ended March 31, 2016 and 2015

Consolidated Results of Operations (Unaudited)
(in millions, except per share amounts)

 
Three months ended
March 31,
 
2016
 
2015
Processing and services revenues
$
2,181

 
$
1,555

Cost of revenues
1,553

 
1,070

Gross profit
628

 
485

Selling, general, and administrative expenses
444

 
270

Operating income
184

 
215

Other income (expense):
 
 
 
Interest expense, net
(93
)
 
(37
)
Other income (expense), net
(1
)
 
(2
)
Total other income (expense), net
(94
)
 
(39
)
Earnings from continuing operations before income taxes
90

 
176

Provision for income taxes
31

 
58

Earnings from continuing operations, net of tax
59

 
118

Earnings (loss) from discontinued operations, net of tax

 
(3
)
Net earnings
59

 
115

Net earnings attributable to noncontrolling interest
(4
)
 
(4
)
Net earnings attributable to FIS common stockholders
$
55

 
$
111

Net earnings per share — basic from continuing operations attributable to FIS common stockholders
$
0.17

 
$
0.40

Net earnings (loss) per share — basic from discontinued operations attributable to FIS common stockholders

 
(0.01
)
Net earnings per share — basic attributable to FIS common stockholders
$
0.17

 
$
0.39

Weighted average shares outstanding — basic
324

 
283

Net earnings per share — diluted from continuing operations attributable to FIS common stockholders
$
0.17

 
$
0.40

Net earnings (loss) per share — diluted from discontinued operations attributable to FIS common stockholders

 
(0.01
)
Net earnings per share — diluted attributable to FIS common stockholders
$
0.17

 
$
0.39

Weighted average shares outstanding — diluted
327

 
287

Amounts attributable to FIS common stockholders:
 
 
 
Earnings from continuing operations, net of tax
$
55

 
$
114

Earnings (loss) from discontinued operations, net of tax

 
(3
)
Net earnings attributable to FIS
$
55

 
$
111


 Processing and Services Revenues

Processing and services revenues totaled $2,181 million and $1,555 million during the three-month periods ended March 31, 2016 and 2015, respectively. Processing and services revenues for the three-month ended March 31, 2016 included approximately $41 million of unfavorable foreign currency impact primarily resulting from a stronger U.S. Dollar versus the Brazilian Real. Excluding the unfavorable foreign currency impact, revenue increases for the three months ended March 31, 2016 as compared to 2015 were primarily attributable to incremental revenues from the SunGard acquisition, including growth driven by higher transaction volumes in global trading, growth in Business Process as a Service (BPaaS) and strong term software license renewals. Our combined revenues included an $81 million reduction of revenue as a result of the purchase

21


accounting adjustment to reduce deferred revenue to fair value. We also experienced continued growth in digital solutions (internet banking and mobile applications) and in professional services.
 

Cost of Revenues and Gross Profit

Cost of revenues totaled $1,553 million and $1,070 million during the three-month periods ended March 31, 2016 and 2015, respectively, resulting in gross profit of $628 million and $485 million during the respective three-month periods. Gross profit as a percentage of revenues was 28.8% and 31.2% during the three-month periods ended March 31, 2016 and 2015, respectively. The change in gross profit during the 2016 period as compared to 2015 primarily resulted from the revenue variances noted above. The gross profit percentage during the three-months ended March 31, 2016 as compared to the 2015 period was negatively impacted by higher acquired intangible asset amortization expense resulting from the SunGard acquisition. This negative impact was partially offset by the addition of higher margin revenues from SunGard as well as on-going operating leverage in key markets outside of North America.

Selling, General and Administrative Expenses

Selling, general and administrative expenses totaled $444 million and $270 million during the three-month periods ended March 31, 2016 and 2015, respectively. The year-over-year increase primarily resulted from incremental expenses from SunGard, including integration and severance.

Operating Income

Operating income totaled $184 million and $215 million during the three-month periods ended March 31, 2016 and 2015, respectively. Operating income as a percentage of revenue (“operating margin”) was 8.4% and 13.8% during the three-month periods ended March 31, 2016 and 2015, respectively. The changes in operating income for the three-month period of 2016 as compared to 2015 resulted from the variances addressed above. The decrease in operating margin resulted from higher acquired intangible asset amortization expense and other incremental integration and severance costs.
 
Total Other Income (Expense), Net

Total other income (expense), net was $(94) million and $(39) million during the three-month periods ended March 31, 2016 and 2015, respectively. Interest expense increased $56 million during the three-month period ended March 31, 2016 as compared to 2015 primarily due to higher outstanding debt associated with financing the SunGard acquisition.

Provision for Income Taxes

Income tax expense from continuing operations totaled $31 million and $58 million during the three-month periods ended March 31, 2016 and 2015, resulting in effective tax rates from continuing operations of 35% and 33%, respectively. The effective tax rate during the three months ended March 31, 2015 included favorable non-recurring tax adjustments.

Earnings from Continuing Operations, Net of Tax, Attributable to FIS Common Stockholders

Earnings from continuing operations, net of tax, attributable to FIS common stockholders totaled $55 million and $114 million resulting in earnings per diluted share of $0.17 and $0.40 for the three-month periods ended March 31, 2016 and 2015, respectively, reflecting the variances described above as well as the increase in shares outstanding from the SunGard acquisition.


22


Segment Results of Operations (Unaudited)
Integrated Financial Solutions
(in millions)

 
Three months ended
March 31,
 
2016
 
2015
Processing and services revenues
$
1,121

 
$
928

Operating income
$
359

 
$
319


Processing and services revenues for IFS totaled $1,121 million and $928 million during the three-months ended March 31, 2016 and 2015, respectively. The overall segment increase of $193 million or 20.8% for the three months ended March 31, 2016 compared to the 2015 period was primarily attributable to incremental revenues from the SunGard acquisition, card production activities associated with the roll-out of EMV cards across the industry, growth in digital solutions (internet banking and mobile) and on-going demand for professional services related to regulatory remediation projects.
Operating income for IFS totaled $359 million and $319 million during the three-month periods ended March 31, 2016 and 2015, respectively. Operating margin was 32.0% and 34.4% during the three-month periods ended March 31, 2016 and 2015, respectively. The increase in operating income primarily resulted from the revenue variances noted above. The decrease in operating margin during the three-month period ended March 31, 2016 compared to the 2015 period primarily resulted from revenue mix, higher incentives and other discrete accrual items.

Global Financial Solutions
(in millions)

 
Three months ended
March 31,
 
2016
 
2015
Processing and services revenues
$
990

 
$
512

Operating income
$
187

 
$
46


Processing and services revenues for GFS totaled $990 million and $512 million during the three-month periods ended March 31, 2016 and 2015, respectively. The three-month period ended March 31, 2016 included approximately $40 million of unfavorable foreign currency impact primarily resulting from a stronger U.S. Dollar versus the Brazilian Real. Excluding the foreign currency impact, revenue increases were primarily attributable to incremental revenues from the SunGard acquisition, including growth driven by higher transaction volumes in global trading, growth in BPaaS and strong term software license renewals.

Operating income for GFS totaled $187 million and $46 million during the three-month periods ended March 31, 2016 and 2015, respectively. Operating margin was 18.9% and 9.0% during the three-month periods ended March 31, 2016 and 2015, respectively. The increase in operating income for GFS primarily resulted from the 2015 cost realignment activities as well as the revenue variances noted above. The increase in operating margin primarily resulted from the addition of higher margin revenues from SunGard as well as on-going operating leverage in key markets outside of North America.

Corporate and Other
(in millions)

 
Three months ended
March 31,
 
2016
 
2015
Processing and services revenues
$
70

 
$
115

Operating income
$
(362
)
 
$
(150
)


23


The Corporate and Other segment results consist of selling, general and administrative expenses and depreciation and intangible asset amortization not otherwise allocated to the reportable segments. Corporate and Other also includes operations from non-strategic businesses, including commercial services, public sector and education, and check processing.

Processing and services revenues for Corporate and Other totaled $70 million and $115 million during the three-month periods ended March 31, 2016 and 2015, respectively. The revenue decline for the three month ended March 31, 2016 period compared to the 2015 period was primarily attributable to the $81 million purchase accounting impact on deferred revenue (all of which was recorded as a contra-revenue item in the Corporate and Other Segment), the impact of the divestiture of our check gaming business in the second quarter of 2015 and lower revenue in commercial services, partially offset by the additions of the businesses from the SunGard acquisition.

Operating loss for Corporate and Other totaled $362 million and $150 million during the three-month periods ended March 31, 2016 and 2015, respectively. The year-over-year increase in operating loss primarily resulted from the revenue reductions noted above, incremental expenses from SunGard, higher purchased intangible asset amortization, and other integration and severance costs from the SunGard acquisition.

Liquidity and Capital Resources
Cash Requirements

Our ongoing cash requirements include operating expenses, income taxes, mandatory debt service payments, capital expenditures, stockholder dividends, working capital and timing differences in settlement-related assets and liabilities, and may include discretionary debt payments, share repurchases and business acquisitions. Our principal sources of funds are cash generated by operations and borrowings, including the capacity under our Revolving Loan described in Note 7 to the Notes to Condensed Consolidated Financial Statements (Unaudited).
As of March 31, 2016, we had cash and cash equivalents of $702 million and debt of $11.3 billion, including the current portion, net of capitalized debt issuance costs. Of the $702 million cash and cash equivalents, approximately $482 million is held by our foreign entities and would generally be subject to U.S. income taxation upon repatriation to the U.S. The majority of our U.S. cash and cash equivalents represents net deposits-in-transit at the balance sheet dates and relates to daily settlement activity. We expect that cash and cash equivalents plus cash flows from operations over the next twelve months will be sufficient to fund our operating cash requirements, capital expenditures and mandatory debt service.
We currently expect to continue to pay quarterly dividends. However, the amount, declaration and payment of future dividends is at the discretion of the Board of Directors and depends on, among other things, our investment opportunities, results of operations, financial condition, cash requirements, future prospects, and other factors that may be considered relevant by our Board of Directors, including legal and contractual restrictions. Additionally, the payment of cash dividends may be limited by covenants in certain debt agreements. A regular quarterly dividend of $0.26 per common share is payable on June 30, 2016 to shareholders of record as of the close of business on June 16, 2016.
Cash Flows from Operations
Cash flows from operations were $385 million and $231 million during the three-month periods ended March 31, 2016 and 2015, respectively. Cash flows from operations were $154 million higher in the 2016 period primarily due to increased cash flow coming from the Acquisition.
Capital Expenditures and Other Investing Activities
Our principal capital expenditures are for computer software (purchased and internally developed) and additions to property and equipment. We invested approximately $145 million and $101 million in capital expenditures (excluding capital leases) during the three-month periods ended March 31, 2016 and 2015, respectively. The increased investment reflects the addition of SunGard to our operations. We expect to invest approximately 6.0% of 2016 revenue in capital expenditures.
Financing

For information regarding the Company's long-term debt and financing activity, see Note 7 of the Notes to Condensed Consolidated Financial Statements (Unaudited). There were no share repurchases during the three months ended March 31, 2016 compared to $150 million in the comparable 2015 period.
  

24


Contractual Obligations

There were no material changes in our contractual obligations during the first three months of 2016 in comparison to the table included in our Annual Report on Form 10-K as filed on February 26, 2016, except as disclosed in Note 7 of the Notes to Condensed Consolidated Financial Statements (Unaudited).
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.

Recent Accounting Pronouncements

Recent Accounting Guidance Not Yet Adopted

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU
2014-09”). ASU 2014-09 amends substantially all authoritative literature for revenue recognition, including industry-specific
requirements, and converges the guidance under this topic with that of the International Financial Reporting Standards. The
ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed
to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and
uncertainty of revenues and cash flows from contracts with customers. Other provisions include ensuring the time value of
money is considered in the transaction price and allowing estimates of variable consideration to be recognized before
contingencies are resolved in certain circumstances. The effective date to the amendments was postponed to reporting periods beginning after December 15, 2017, with early adoption allowed for reporting periods beginning after December 15, 2016. Entities can transition to the standard either with retrospective application to the earlier years presented in their financial statements or with a cumulative-effect adjustment as of the date of adoption. We are currently assessing the impact the adoption of ASU 2014-09 will have on our financial position and results of operations as well as the transition method we expect to employ.

On February 25, 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of leases with a term of twelve months or less) at the commencement date: (a) a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and (b) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. The pronouncement 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 modified retrospective approach would not require any transition accounting for leases that expire before the earliest comparative period presented. A full retrospective transition approach is not permitted. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. We are currently assessing the impact the adoption of ASU 2016-02 will have on our financial position and results of operations.

On March 30, 2016, the FASB issued Accounting Standards Update No. 2016-09 (“ASU 2016-09”), “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The amendments are intended to simplify and improve the accounting for employee share-based payments. Under the new guidance, all excess tax benefits and tax deficiencies over/under compensation expense recognized will be reflected in the income statement as they occur. This will replace the current guidance, which requires tax benefits that exceed compensation expense (windfalls) to be recognized in equity. It will also eliminate the need to maintain a “windfall pool,” and will remove the requirement to delay recognizing a windfall until it reduces current taxes payable. The new guidance will also change the cash flow presentation of excess tax benefits, classifying them as operating inflows, consistent with other cash flows related to income taxes. Under current guidance, windfalls are classified as financing activities. These changes may result in more volatile net earnings. Similarly, effective tax rates will be subject to more variability since the new guidance reflects all tax benefit excesses and deficiencies in tax expense. Under current practice, stock compensation generally does not impact the effective tax rate since any difference between compensation expense and the ultimate tax deduction is reflected in additional paid in capital. Also under the new guidance, excess tax benefits will no longer be included in assumed proceeds from applying the treasury stock method when computing diluted earnings per share since they will no longer be recognized in additional paid in capital. Consequently, the reduction to common stock equivalents for assumed purchases from proceeds will be lower and the impact of common stock equivalents will be more dilutive. For public companies, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any organization in any interim or annual period. We are currently assessing the impact the adoption of ASU 2016-09 will have on our financial position and results of operations.

25



Item 3. Quantitative and Qualitative Disclosure About Market Risks
Market Risk
We are exposed to market risks primarily from changes in interest rates and foreign currency exchange rates. We use certain derivative financial instruments, including interest rate swaps and foreign currency forward contracts, to manage interest rate and foreign currency risk. We do not use derivatives for trading purposes or to engage in speculative activity.
Interest Rate Risk
In addition to existing cash balances and cash provided by operating activities, we use fixed rate and variable rate debt to finance our operations. We are exposed to interest rate risk on these debt obligations and related interest rate swaps.
The senior notes as described in Note 7 of the Notes to Condensed Consolidated Financial Statements (Unaudited) represent substantially all of our fixed-rate long-term debt obligations as of March 31, 2016. The carrying value of the notes was $7,450 million as of March 31, 2016. The fair value of the senior notes was approximately $7,677 million as of March 31, 2016.

Our floating rate long-term debt obligations principally relate to borrowings under the FIS Credit Agreements (as defined in Note 7 of the Notes to Condensed Consolidated Financial Statements (Unaudited)). An increase of 100 basis points in the LIBOR rate would increase our annual debt service under the FIS Credit Agreements, after we include the impact of our interest rate swaps, by $22 million (based on principal amounts outstanding as of March 31, 2016). We performed the foregoing sensitivity analysis based on the principal amount of our floating rate debt as of March 31, 2016, less the principal amount of such debt that was then subject to an interest rate swap converting such debt into fixed rate debt. This sensitivity analysis is based solely on the principal amount of such debt as of March 31, 2016, and does not take into account any changes that occurred in the prior 12 months or that may take place in the next 12 months in the amount of our outstanding debt or in the notional amount of outstanding interest rate swaps in respect of our debt. Further, in this sensitivity analysis, the change in interest rates is assumed to be applicable for an entire year. For comparison purposes, based on principal amounts of floating rate debt outstanding as of March 31, 2015, and calculated in the same manner as set forth above, an increase of 100 basis points in the LIBOR rate would have increased our annual interest expense, after we calculate the impact of our interest rate swaps, by $15 million.

We use interest rate swaps for the purpose of managing our interest expense through the mix of fixed rate and floating rate debt. See Note 7 to the Notes to Condensed Consolidated Financial Statements (Unaudited) for the listing of interest rate swap transactions we have entered into as of March 31, 2016, converting a portion of the interest rate exposure on our Term and Revolving Loans from variable to fixed.

We have designated these interest rate swaps as cash flow hedges for accounting purposes. A portion of the amount included in accumulated other comprehensive earnings is reclassified into interest expense as a yield adjustment as interest payments are made on the Term and Revolving Loans. In accordance with the authoritative guidance for fair value measurements, the inputs used to determine the estimated fair value of our interest rate swaps are Level 2-type measurements. We considered our own credit risk and the credit risk of the counterparties when determining the fair value of our interest rate swaps.

Foreign Currency Risk

We are exposed to foreign currency risks that arise from normal business operations. These risks include the translation of local currency balances of foreign subsidiaries, transaction gains and losses associated with intercompany loans with foreign subsidiaries and transactions denominated in currencies other than a location's functional currency. Our objective is to minimize our exposure to these risks through a combination of normal operating activities and the use of foreign currency forward contracts. Contracts are denominated in currencies of major industrial countries.
Our exposure to foreign currency exchange risks generally arises from our non-U.S. operations, to the extent they are conducted in local currency. Changes in foreign currency exchange rates affect translations of revenues denominated in currencies other than the U.S. Dollar. During the three months ended March 31, 2016, our international operations generated approximately $405 million in revenues denominated in currencies other than the U.S. Dollar. The major currencies to which our revenues are exposed are the Brazilian Real, the Euro, the British Pound Sterling and the Indian Rupee. A 10% move in average exchange rates for these currencies (assuming a simultaneous and immediate 10% change in all of such rates for the relevant period) would have resulted in the following increase or (decrease) in our reported revenues for the three months ended March 31, 2016 and 2015 (in millions):

26



 
 
Three months ended
March 31,
Currency
 
2016
 
2015
Euro
 
$
10

 
$
8

Pound Sterling
 
8

 
6

Real
 
7

 
8

Indian Rupee
 
3

 
2

Total increase (decrease)
 
$
28

 
$
24


While our results of operations have been impacted by the effects of currency fluctuations, our international operations' revenues and expenses are generally denominated in local currency, which reduces our economic exposure to foreign exchange risk in those jurisdictions.

Revenues included $41 million and operating income included $1 million of unfavorable foreign currency impact during the three months ended March 31, 2016 resulting from a stronger U.S. Dollar during 2016 as compared to 2015. In 2016, we expect a moderate increase in unfavorable foreign currency impact on our operating income resulting from the continued strengthening of U.S. Dollar versus other currencies.

Our foreign exchange risk management policy permits the use of derivative instruments, such as forward contracts and options, to reduce volatility in our results of operations and/or cash flows resulting from foreign exchange rate fluctuations. We do not enter into foreign currency derivative instruments for trading purposes or to engage in speculative activity. We do periodically enter into foreign currency forward exchange contracts to hedge foreign currency exposure to intercompany loans. As of March 31, 2016, the notional amount of these derivatives was $91 million and the fair value was nominal. These derivatives are intended to hedge the foreign exchange risks related to intercompany loans but have not been designated as hedges for accounting purposes.

Our subsidiary SunGard (see Note 4 of the Notes to Condensed Consolidated Financial Statements Unaudited) historically used currency forward contracts to manage its exposure to fluctuations in costs caused by variations in Indian Rupee (“INR”) exchange rates. As of March 31, 2016, the notional amount of these derivatives was approximately $35 million and the fair value was nominal. These INR forward contracts are designated as cash flow hedges. The fair value of these currency forward contracts is determined using currency exchange market rates, obtained from reliable, independent, third party banks, at the balance sheet date. The fair value of forward contracts is subject to changes in currency exchange rates. The Company has no ineffectiveness related to its use of currency forward contracts in connection with INR cash flow hedges.
 
Item 4. Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on this evaluation, our principal executive officer and principal financial officer concluded that the disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (a) recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms; and (b) accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

We completed the SunGard acquisition on November 30, 2015.  As indicated in our Annual Report on Form 10-K for the year ended December 31, 2015,  we were not able to complete a review of the internal controls of the acquired business by year end due to the limited time available following the Acquisition.  As permitted by related SEC staff interpretive guidance, we excluded the acquired business from our 2015 annual assessment of the effectiveness of our internal control over financial reporting.   During 2016, we are continuing the transition of SunGard to our accounting and reporting processes and the integration of their systems and processes into our framework of internal controls over financial reporting.   These actions will result in changes in our processes and controls, and our assessment of the effectiveness of our internal controls over financial reporting including such changes will be concluded by the end of 2016.   

There were no other changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

27



Part II: OTHER INFORMATION

Item 1. Legal Proceedings

The information set forth under “Commitments and Contingencies” in Note 8 in the Notes to Condensed Consolidated Financial Statements (Unaudited) under Item 1F. of Part I of this report “Financial Information,” is incorporated herein by reference.

Item 1A. Risk Factors

See "Item 1A. - Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2015 for a detailed discussion of risk factors affecting the Company. There have been no material changes in the Risk Factors described therein.

Item 6. Exhibits
(a) Exhibits:



28


 
 
Incorporated by Reference
 
Exhibit
 
 
SEC File
 
 
Filed/ Furnished
No.
Exhibit Description
Form
Number
Exhibit
Filing Date
Herewith
31.1

Certification of Gary A. Norcross, President and Chief Executive Officer of Fidelity National Information Services, Inc., pursuant to rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
*
31.2

Certification of James W. Woodall, Corporate Executive Vice President and Chief Financial Officer of Fidelity National Information Services, Inc., pursuant to rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
*
32.1

Certification of Gary A. Norcross, President and and Chief Executive Officer of Fidelity National Information Services, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
*
32.2

Certification of James W. Woodall, Corporate Executive Vice President and Chief Financial Officer of Fidelity National Information Services, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
*
101.INS+
XBRL Instance Document.
 
 
 
 
*
101.SCH+
XBRL Taxonomy Extension Schema Document.
 
 
 
 
*
101.CAL+
XBRL Taxonomy Extension Calculation Linkbase Document.
 
 
 
 
*
101.DEF+
XBRL Taxonomy Extension Definition Linkbase Document.
 
 
 
 
*
101.LAB+
XBRL Taxonomy Extension Label Linkbase Document.
 
 
 
 
*
101.PRE+
XBRL Taxonomy Extension Presentation Linkbase Document.
 
 
 
 
*
* Filed or furnished herewith

+ Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.



29


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
FIDELITY NATIONAL INFORMATION SERVICES, INC.
 
Date: May 4, 2016
By:  
/s/ JAMES W. WOODALL  
 
 
James W. Woodall 
 
 
Corporate Executive Vice President and Chief Financial Officer
(Principal Financial Officer ) 



 
FIDELITY NATIONAL INFORMATION SERVICES, INC.
 
Date: May 4, 2016
By:  
/s/ MICHAEL A. NUSSBAUM
 
 
Michael A. Nussbaum
 
 
Corporate Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer) 



30


FIDELITY NATIONAL INFORMATION SERVICES, INC.
FORM 10-Q
INDEX TO EXHIBITS

 
 
Incorporated by Reference
 
Exhibit
 
 
SEC File
 
 
Filed/ Furnished
No.
Exhibit Description
Form
Number
Exhibit
Filing Date
Herewith
31.1

Certification of Gary A. Norcross, President and Chief Executive Officer of Fidelity National Information Services, Inc., pursuant to rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
*
31.2

Certification of James W. Woodall, Corporate Executive Vice President and Chief Financial Officer of Fidelity National Information Services, Inc., pursuant to rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
*
32.1

Certification of Gary A. Norcross, President and Chief Executive Officer of Fidelity National Information Services, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
*
32.2

Certification of James W. Woodall, Corporate Executive Vice President and Chief Financial Officer of Fidelity National Information Services, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
*
101.INS+
XBRL Instance Document.
 
 
 
 
*
101.SCH+
XBRL Taxonomy Extension Schema Document.
 
 
 
 
*
101.CAL+
XBRL Taxonomy Extension Calculation Linkbase Document.
 
 
 
 
*
101.DEF+
XBRL Taxonomy Extension Definition Linkbase Document.
 
 
 
 
*
101.LAB+
XBRL Taxonomy Extension Label Linkbase Document.
 
 
 
 
*
101.PRE+
XBRL Taxonomy Extension Presentation Linkbase Document.
 
 
 
 
*
* Filed or furnished herewith

+ Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

31


Exhibit 31.1

CERTIFICATIONS

I, Gary A Norcross, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Fidelity National Information Services, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date:
May 4, 2016
By:  
/s/  GARY A. NORCROSS
 
 
 
Gary A. Norcross
 
 
 
President and Chief Executive Officer 







Exhibit 31.2

CERTIFICATIONS

I, James W. Woodall, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Fidelity National Information Services, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date:
May 4, 2016
By:  
/s/ JAMES W. WOODALL  
 
 
 
James W. Woodall 
 
 
 
Corporate Executive Vice President and Chief Financial Officer 
 
 
 
(Principal Financial Officer)






Exhibit 32.1

CERTIFICATION OF PERIODIC FINANCIAL REPORTS PURSUANT TO 18 U.S.C. §1350

     The undersigned hereby certifies that he is the duly appointed and acting Chief Executive Officer of Fidelity National Information Services, Inc., a Georgia corporation (the “Company”), and hereby further certifies as follows.
1.
The periodic report containing financial statements to which this certificate is an exhibit fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934.
2.
The information contained in the periodic report to which this certificate is an exhibit fairly presents, in all material respects, the financial condition and results of operations of the Company.
     In witness whereof, the undersigned has executed and delivered this certificate as of the date set forth opposite his signature below.


Date:
May 4, 2016
By:  
/s/  GARY A. NORCROSS
 
 
 
Gary A. Norcross
 
 
 
President and Chief Executive Officer






Exhibit 32.2



CERTIFICATION OF PERIODIC FINANCIAL REPORTS PURSUANT TO 18 U.S.C. §1350

     The undersigned hereby certifies that he is the duly appointed and acting Chief Financial Officer of Fidelity National Information Services, Inc., a Georgia corporation (the “Company”), and hereby further certifies as follows.
1.
The periodic report containing financial statements to which this certificate is an exhibit fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934.
2.
The information contained in the periodic report to which this certificate is an exhibit fairly presents, in all material respects, the financial condition and results of operations of the Company.
     In witness whereof, the undersigned has executed and delivered this certificate as of the date set forth opposite his signature below.

Date:
May 4, 2016
By:  
/s/ JAMES W. WOODALL  
 
 
 
James W. Woodall 
 
 
 
Corporate Executive Vice President and Chief Financial Officer 
 
 
 
(Principal Financial Officer)




v3.4.0.3
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2016
Apr. 30, 2016
Document and Entity Information [Abstract]    
Entity Registrant Name Fidelity National Information Services, Inc.  
Entity Central Index Key 0001136893  
Document Type 10-Q  
Document Period End Date Mar. 31, 2016  
Amendment Flag false  
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q1  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   326,453,930
v3.4.0.3
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Millions
Mar. 31, 2016
Dec. 31, 2015
Current assets:    
Cash and cash equivalents $ 702 $ 682
Settlement deposits 299 371
Trade receivables, net of allowance for doubtful accounts of $21 and $16 as of March 31, 2016 and December 31, 2015, respectively 1,727 1,731
Settlement receivables 291 162
Other receivables 178 197
Prepaid expenses and other current assets 290 266
Deferred income taxes 142 100
Total current assets 3,629 3,509
Property and equipment, net 611 611
Goodwill 14,576 14,745
Intangible assets, net 5,387 5,159
Computer software, net 1,608 1,584
Deferred contract costs, net 264 253
Other noncurrent assets 355 339
Total assets 26,430 26,200
Current liabilities:    
Accounts payable and accrued liabilities 1,194 1,196
Settlement payables 574 538
Deferred revenues 790 615
Current portion of long-term debt 764 15
Total current liabilities 3,322 2,364
Long-term debt, excluding current portion 10,533 11,429
Deferred income taxes 2,743 2,658
Deferred revenues 19 30
Other long-term liabilities 324 312
Total liabilities 16,941 16,793
FIS stockholders’ equity:    
Preferred stock, $0.01 par value, 200 shares authorized, none issued and outstanding as of March 31, 2016 and December 31, 2015 0 0
Common stock, $0.01 par value, 600 shares authorized, 430 shares issued as of March 31, 2016 and December 31, 2015, respectively 4 4
Additional paid in capital 10,239 10,210
Retained earnings 3,043 3,073
Accumulated other comprehensive earnings (loss) (232) (279)
Treasury stock, 105 and 106 shares as of March 31, 2016 and December 31, 2015, respectively, at cost (3,661) (3,687)
Total FIS stockholders’ equity 9,393 9,321
Noncontrolling interest 96 86
Total equity 9,489 9,407
Total liabilities and equity $ 26,430 $ 26,200
v3.4.0.3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
$ in Millions
Mar. 31, 2016
Dec. 31, 2015
Current assets:    
Allowance for doubtful accounts $ 21 $ 16
FIS stockholders' equity:    
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized (in shares) 200,000,000 200,000,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 600,000,000 600,000,000
Common stock, shares issued (in shares) 430,000,000 430,000,000
Treasury stock, shares (in shares) 105,000,000 106,000,000
v3.4.0.3
Condensed Consolidated Statements of Earnings (Unaudited) - USD ($)
shares in Millions, $ in Millions
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Income Statement [Abstract]    
Processing and services revenues $ 2,181 $ 1,555
Cost of revenues 1,553 1,070
Gross profit 628 485
Selling, general, and administrative expenses 444 270
Operating income 184 215
Other income (expense):    
Interest expense, net (93) (37)
Other income (expense), net (1) (2)
Total other income (expense), net (94) (39)
Earnings from continuing operations before income taxes 90 176
Provision for income taxes 31 58
Earnings from continuing operations, net of tax 59 118
Earnings (loss) from discontinued operations, net of tax 0 (3)
Net earnings 59 115
Net earnings attributable to noncontrolling interest (4) (4)
Net earnings attributable to FIS common stockholders $ 55 $ 111
Net earnings per share — basic from continuing operations attributable to FIS common stockholders (in dollars per share) $ 0.17 $ 0.40
Net earnings (loss) per share — basic from discontinued operations attributable to FIS common stockholders (in dollars per share) 0.00 (0.01)
Net earnings per share — basic attributable to FIS common stockholders (in dollars per share) [1] $ 0.17 $ 0.39
Weighted average shares outstanding — basic (in shares) 324 283
Net earnings per share — diluted from continuing operations attributable to FIS common stockholders (in dollars per share) $ 0.17 $ 0.40
Net earnings (loss) per share — diluted from discontinued operations attributable to FIS common stockholders (in dollars per share) 0.00 (0.01)
Net earnings per share — diluted attributable to FIS common stockholders (in dollars per share) [1] $ 0.17 $ 0.39
Weighted average shares outstanding — diluted (in shares) 327 287
Cash dividends paid per share (in dollars per share) $ 0.26 $ 0.26
Amounts attributable to FIS common stockholders:    
Earnings from continuing operations, net of tax $ 55 $ 114
Earnings (loss) from discontinued operations, net of tax 0 (3)
Net earnings attributable to FIS common stockholders $ 55 $ 111
[1] * Amounts may not sum due to rounding.
v3.4.0.3
Condensed Consolidated Statements of Comprehensive Earnings (Unaudited) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Statement of Comprehensive Income [Abstract]    
Net earnings $ 59 $ 115
Other comprehensive earnings, before tax:    
Unrealized gain (loss) on investments and derivatives (6) (2)
Reclassification adjustment for (gains) losses included in net earnings 2 1
Unrealized gain (loss) on investments and derivatives, net (4) (1)
Foreign currency translation adjustments 54 (139)
Other comprehensive earnings (loss), before tax: 50 (140)
Provision for income tax expense (benefit) related to items of other comprehensive earnings (4) (2)
Other comprehensive earnings (loss), net of tax 54 (138)
Comprehensive (loss) earnings: 113 (23)
Net earnings attributable to noncontrolling interest (4) (4)
Other comprehensive (earnings) losses attributable to noncontrolling interest (7) 17
Comprehensive earnings (loss) attributable to FIS common stockholders $ 102 $ (10)
v3.4.0.3
Condensed Consolidated Statement of Equity (Unaudited) - 3 months ended Mar. 31, 2016 - USD ($)
shares in Millions, $ in Millions
Total
Common stock
Additional Paid In Capital
Retained Earnings
Accumulated Other Comprehensive Earnings
Treasury Stock
Noncontrolling Interest
Beginning Balance (in shares) at Dec. 31, 2015   430       106  
Beginning Balance at Dec. 31, 2015 $ 9,407 $ 4 $ 10,210 $ 3,073 $ (279) $ (3,687) $ 86
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Exercise of stock options (in shares)           1  
Exercise of stock options 22   (9)     $ 31  
Treasury shares held for taxes due upon exercise of stock options (in shares)           0  
Treasury shares held for taxes due upon exercise of stock options (5)         $ (5)  
Excess income tax benefit from exercise of stock options 8   8        
Stock-based compensation 30   30        
Cash dividends paid ($0.26 per share per quarter) and other distributions (86)     (85)     (1)
Net earnings 59     55     4
Other comprehensive loss, net of tax 54       47   7
Ending Balance (in shares) at Mar. 31, 2016   430       105  
Ending Balance at Mar. 31, 2016 $ 9,489 $ 4 $ 10,239 $ 3,043 $ (232) $ (3,661) $ 96
v3.4.0.3
Condensed Consolidated Statement of Equity (Unaudited) (Parenthetical) - $ / shares
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Statement of Stockholders' Equity [Abstract]    
Cash dividends paid per share (in dollars per share) $ 0.26 $ 0.26
v3.4.0.3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Cash flows from operating activities:    
Net earnings $ 59 $ 115
Adjustment to reconcile net earnings to net cash provided by operating activities:    
Depreciation and amortization 293 153
Amortization of debt issue costs 5 2
Stock-based compensation 30 19
Deferred income taxes (64) (22)
Excess income tax benefit from exercise of stock options (8) (9)
Other operating activities (1) 2
Net changes in assets and liabilities, net of effects from acquisitions and foreign currency:    
Trade receivables 21 (22)
Settlement activity (20) (54)
Prepaid expenses and other assets (51) (24)
Deferred contract costs (17) (28)
Deferred revenue 165 56
Accounts payable, accrued liabilities, and other liabilities (27) 43
Net cash provided by operating activities 385 231
Cash flows from investing activities:    
Additions to property and equipment (34) (42)
Additions to computer software (111) (59)
Other investing activities, net (1) (1)
Net cash used in investing activities (146) (102)
Cash flows from financing activities:    
Borrowings 1,639 1,686
Repayment of borrowings (1,791) (1,559)
Excess income tax benefit from exercise of stock options 8 9
Proceeds from exercise of stock options 26 13
Treasury stock activity (18) (156)
Dividends paid (85) (74)
Other financing activities, net (18) (17)
Net cash used in financing activities (239) (98)
Effect of foreign currency exchange rate changes on cash 20 (35)
Net increase (decrease) in cash and cash equivalents 20 (4)
Cash and cash equivalents, beginning of period 682 493
Cash and cash equivalents, end of period 702 489
Supplemental cash flow information:    
Cash paid for interest 37 25
Cash paid for income taxes $ 48 $ 20
v3.4.0.3
Basis of Presentation
3 Months Ended
Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation
Basis of Presentation

The unaudited financial information included in this report includes the accounts of FIS and its subsidiaries prepared in accordance with U.S. generally accepted accounting principles and the instructions to Form 10-Q and Article 10 of Regulation S-X. All adjustments considered necessary for a fair presentation have been included. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The preparation of these Condensed Consolidated Financial Statements (Unaudited) in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements (Unaudited) and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. Certain reclassifications have been made in the 2015 Condensed Consolidated Financial Statements (Unaudited) to conform to the classifications used in 2016.

On August 12, 2015, FIS and certain of its wholly owned subsidiaries entered into an Agreement and Plan of Merger with SunGard and SunGard Capital Corp. II (collectively “SunGard”) pursuant to which, through a series of mergers, FIS acquired SunGard (collectively the "SunGard acquisition" or the "Acquisition"). FIS completed the SunGard acquisition on November 30, 2015, (Note 4) and SunGard's results of operations and financial position are included in the consolidated financial statements from and after the date of acquisition.

We report the results of our operations in three reporting segments: Integrated Financial Solutions (“IFS”), Global Financial Solutions (“GFS”) and Corporate and Other (Note 10).
v3.4.0.3
Related Party Transactions
3 Months Ended
Mar. 31, 2016
Related Party Transactions [Abstract]  
Related Party Transactions
Related Party Transactions

Brazilian Venture

The Company operates a joint venture ("Brazilian Venture") with Banco Bradesco S.A. ("Banco Bradesco"), in which we own a 51% controlling interest, to provide comprehensive, fully-outsourced transaction processing, call center, cardholder support and collection services to multiple card issuing clients in Brazil, including Banco Bradesco. The original accounting for this transaction resulted in the establishment of a contract intangible asset and a liability for amounts payable to the original partner banks upon final migration of their respective card portfolios and achieving targeted volumes (the “Brazilian Venture Notes”). The unamortized contract intangible asset balance as of March 31, 2016 was $92 million. The value of the noncontrolling interest as of March 31, 2016 was $91 million.

The Company recorded Brazilian Venture revenues of $51 million and $63 million during the three months ended March 31, 2016 and 2015, respectively, from Banco Bradesco relating to these services. Banco Bradesco Brazilian Venture revenues included $19 million of unfavorable currency impact during the three months ended March 31, 2016 resulting from a stronger U.S. Dollar in 2016 as compared to 2015.

A summary of the Company’s related party receivables and payables is as follows (in millions):

 
 
 
 
March 31,
 
December 31,
Related Party
 
Balance sheet location
 
2016
 
2015
Banco Bradesco
 
Trade receivables
 
$
59

 
$
31

Banco Bradesco
 
Accounts payable and accrued liabilities
 
10

 
9

Banco Bradesco
 
Other long-term liabilities
 
26

 
24

v3.4.0.3
Net Earnings per Share
3 Months Ended
Mar. 31, 2016
Earnings Per Share [Abstract]  
Net Earnings per Share
Net Earnings per Share
The basic weighted average shares and common stock equivalents for the three months ended March 31, 2016 and 2015 are computed using the treasury stock method.
The following table summarizes the earnings per share attributable to FIS common stockholders for the three months ended March 31, 2016 and 2015 (in millions, except per share amounts):
 
Three months ended
March 31,
 
2016
 
2015
Earnings from continuing operations attributable to FIS common stockholders, net of tax
$
55

 
$
114

Earnings (loss) from discontinued operations attributable to FIS common stockholders, net of tax

 
(3
)
Net earnings attributable to FIS common stockholders
$
55

 
$
111

Weighted average shares outstanding — basic
324

 
283

Plus: Common stock equivalent shares
3

 
4

Weighted average shares outstanding — diluted
327

 
287

Net earnings per share — basic from continuing operations attributable to FIS common stockholders
$
0.17

 
$
0.40

Net earnings (loss) per share — basic from discontinued operations attributable to FIS common stockholders

 
(0.01
)
Net earnings per share — basic attributable to FIS common stockholders *
$
0.17

 
$
0.39

Net earnings per share — diluted from continuing operations attributable to FIS common stockholders
$
0.17

 
$
0.40

Net earnings (loss) per share — diluted from discontinued operations attributable to FIS common stockholders

 
(0.01
)
Net earnings per share — diluted attributable to FIS common stockholders *
$
0.17

 
$
0.39

 
 
 
 
* Amounts may not sum due to rounding.
 
 
 

Options to purchase approximately 11 million and 5 million shares of our common stock for the three months ended March 31, 2016 and 2015, respectively, were not included in the computation of diluted earnings per share because they were anti-dilutive.
v3.4.0.3
Acquisitions
3 Months Ended
Mar. 31, 2016
Business Combinations [Abstract]  
Acquisitions
Acquisitions

SunGard

FIS completed the SunGard acquisition on November 30, 2015, and SunGard's results of operations and financial position are included in the consolidated financial statements from and after the date of acquisition. The SunGard acquisition increased our existing portfolio of solutions to automate a wide range of complex business processes for financial services institutions and corporate and government treasury departments, adding trading, securities operations, administering investment portfolios, accounting for investment assets, and managing risk and compliance requirements.

Through a series of mergers, FIS acquired 100 percent of the equity of SunGard, for a total purchase price as follows (in millions):
Cash consideration, including SunGard transaction fees paid at closing
$
2,335

Value of stock and vested equity awards exchanged for FIS shares
2,697

Value of vested portion of SunGard stock awards exchanged for FIS awards
47

 
$
5,079



We recorded a preliminary allocation of the purchase price to SunGard tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of November 30, 2015. The provisional amounts for intangible assets were based on independent third-party valuations performed. Land and building valuations were based on appraisals performed by certified property appraisers. Goodwill was recorded as the residual amount by which the purchase price exceeded the provisional fair value of the net assets acquired. Our evaluations of the facts and circumstances available as of November 30, 2015 to assign fair values to other assets acquired and liabilities assumed are ongoing, as are our assessments of the economic characteristics of the acquired software and other intangibles. These evaluations may result in changes to the provisional amounts recorded. In accordance with ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, the financial statements will not be retrospectively adjusted for any measurement-period adjustments that occur in subsequent periods. Rather, we will recognize any adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment is determined. During the quarter ended March 31, 2016, adjustments were recorded to increase the fair values assigned to intangible assets, deferred taxes, other liabilities and property and equipment and to reduce the value assigned to goodwill. We are also required to record, in the same period’s financial statements in which adjustments are recorded, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of any change to the provisional amounts, calculated as if the accounting adjustment had been completed at the acquisition date. Additional depreciation and amortization of $6 million that would have been recognized in 2015 was recorded in the quarter ended March 31, 2016 related to the changes in provisional values.

The preliminary purchase price allocation, as adjusted for measurement period adjustments recorded through March 31, 2016, is as follows (in millions):

Cash
$
631

Trade and other receivables
574

Property and equipment
145

Computer software
674

Intangible assets
4,540

Other assets
68

Goodwill
5,809

Liabilities assumed and noncontrolling interest
(7,362
)
 
$
5,079


The following table summarizes the liabilities assumed in the SunGard acquisition (in millions):
Long-term debt, subsequently retired
$
4,738

Deferred income taxes
1,753

Deferred revenue
278

Other liabilities and noncontrolling interest
593

 
$
7,362



The gross contractual amount of trade and other receivables acquired was approximately $583 million. The difference between that total and the provisional amount reflected above represents our best estimate at the acquisition date of the contractual cash flows not expected to be collected. This difference was derived using SunGard's historical bad debts, sales allowances and collection trends.
v3.4.0.3
Discontinued Operations and Other Dispositions
3 Months Ended
Mar. 31, 2016
Discontinued Operation, Income (Loss) from Discontinued Operation Disclosures [Abstract]  
Discontinued Operations and Other Dispositions
Discontinued Operations and Other Dispositions

During the second quarter of 2015, we sold certain assets associated with our gaming industry check warranty business, resulting in a pre-tax gain of $139 million, which is included in Other income (expense), net. The sale did not meet the standard necessary to be reported as discontinued operations; therefore, the gain and related prior period earnings remain reported within earnings from continuing operations.

Certain other operations are reported as discontinued in the Condensed Consolidated Statements of Earnings (Unaudited) for the three months ended March 31, 2015, as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015 and in our 2015 Quarterly Reports on Form 10-Q.
v3.4.0.3
Condensed Consolidated Financial Statement Details
3 Months Ended
Mar. 31, 2016
Condensed Consolidated Financial Statement Details [Abstract]  
Condensed Consolidated Financial Statement Details
Condensed Consolidated Financial Statement Details
The following table shows the Company’s condensed consolidated financial statement details as of March 31, 2016 and December 31, 2015 (in millions):

 
March 31, 2016
 
December 31, 2015
 
Cost
 
Accumulated
depreciation and amortization
 
Net
 
Cost
 
Accumulated
depreciation and amortization
 
Net
Property and equipment
$
1,426

 
$
815

 
$
611

 
$
1,396

 
$
785

 
$
611

Intangible assets
$
7,335

 
$
1,948

 
$
5,387

 
$
6,963

 
$
1,804

 
$
5,159

Computer software
$
2,387

 
$
779

 
$
1,608

 
$
2,300

 
$
716

 
$
1,584


       
The Company entered into capital lease obligations of $1 million during each of the three-month periods ended March 31, 2016 and 2015, respectively. The assets are included in property and equipment and the remaining capital lease obligations are classified as long-term debt on our Condensed Consolidated Balance Sheets (Unaudited) as of March 31, 2016. Periodic payments are included in repayment of borrowings on the Condensed Consolidated Statements of Cash Flows (Unaudited).

Changes in goodwill during the three months ended March 31, 2016 are summarized as follows (in millions):
 
IFS
 
GFS
 
Corporate
and Other
 
Total
Balance, December 31, 2015
$
7,676

 
$
6,606

 
$
463

 
$
14,745

Adjustments to SunGard provisional purchase price allocation
(6
)
 
(169
)
 
(10
)
 
(185
)
Foreign currency adjustments

 
16

 

 
16

Balance, March 31, 2016
$
7,670

 
$
6,453

 
$
453

 
$
14,576



Settlement Activity

We manage certain integrated electronic payment services and programs and wealth management processes for our clients that require us to hold and manage client cash balances used to fund their daily settlement activity. Settlement deposits represent funds we hold that were drawn from our clients to facilitate settlement activities and, as of March 31, 2016 and December 31, 2015, included $125 million and $125 million, respectively, of investments with original maturities of greater than 90 days. These investments are Level 1 and Level 2 type measurements in the fair-value hierarchy. Settlement receivables represents amounts funded by us. Settlement payables consist of settlement deposits from clients, settlement payables to third parties, and outstanding checks related to our settlement activities for which the right of offset does not exist or we do not intend to exercise our right of offset. Our accounting policy for such outstanding checks is to include them in settlement payables on the Condensed Consolidated Balance Sheets (Unaudited) and operating cash flows on the Condensed Consolidated Statements of Cash Flows (Unaudited).
v3.4.0.3
Long-Term Debt
3 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
Long-Term Debt
Long-Term Debt
Long-term debt as of March 31, 2016 and December 31, 2015, consisted of the following (in millions):
 
March 31, 2016
 
December 31, 2015
2017 Term Loans (1)
$
750

 
$
1,300

2018 Term Loans (2)
1,500

 
1,500

Senior Notes due June 2017, interest payable semi-annually at 1.450%
300

 
300

Senior Notes due April 2018, interest payable semi-annually at 2.000%
250

 
250

Senior Notes due October 2018, interest payable semi-annually at 2.850%
750

 
750

Senior Notes due October 2020, interest payable semi-annually at 3.625%
1,750

 
1,750

Senior Notes due March 2022, interest payable semi-annually at 5.000%
700

 
700

Senior Notes due October 2022, interest payable semi-annually at 4.500%
500

 
500

Senior Notes due April 2023, interest payable semi-annually at 3.500%
1,000

 
1,000

Senior Notes due June 2024, interest payable semi-annually at 3.875%
700

 
700

Senior Notes due October 2025, interest payable semi-annually at 5.000%
1,500

 
1,500

Revolving Loan (3)
1,650

 
1,250

Other
(53
)
 
(56
)
 
11,297

 
11,444

Current portion
(764
)
 
(15
)
Long-term debt, excluding current portion
$
10,533

 
$
11,429

__________________________________________
(1)
Interest on the 2017 Term Loans is generally payable at LIBOR plus an applicable margin of up to 1.75% based upon the Company's corporate credit ratings. As of March 31, 2016, the weighted average interest rate on the 2017 Term Loans was 1.69%.
(2)
Interest on the 2018 Term Loans is generally payable at LIBOR plus an applicable margin of up to 1.75% based upon the Company's corporate credit ratings. As of March 31, 2016, the weighted average interest rate on the 2018 Term Loans was 1.69%.
(3)
Interest on the Revolving Loan is generally payable at LIBOR plus an applicable margin of up to 1.75% plus an unused commitment fee of up to 0.25%, each based upon the Company's corporate credit ratings. As of March 31, 2016, the applicable margin on the Revolving Loan, excluding facility fees and unused commitment fees, was 1.25%.

FIS is a party to a syndicated credit agreement (the "Credit Agreement"), which as of March 31, 2016, provided total committed capital of $3,750 million comprised of: (1) a revolving credit facility in an aggregate maximum principal amount of $3,000 million maturing on December 18, 2019 (the "Revolving Loan"); and (2) term loans of $750 million maturing on March 30, 2017 (the "2017 Term Loans"). FIS is also a party to a syndicated term loan agreement (the "Term Loan Agreement" and together with the Credit Agreement the "FIS Credit Agreements"), which as of March 31, 2016 provided term loans of $1,500 million maturing on November 30, 2018 (the "2018 Term Loans"). As of March 31, 2016, the outstanding principal balance of the Revolving Loan was $1,650 million, with $1,342 million of borrowing capacity remaining thereunder (net of $8 million in outstanding letters of credit issued under the Revolving Loan).

The obligations of FIS under the FIS Credit Agreements and under all of its outstanding senior notes rank equal in priority and are unsecured. The FIS Credit Agreements and the senior notes remain subject to customary covenants, including, among others, limitations on the payment of dividends by FIS, and events of default.
      
The following summarizes the aggregate maturities of our debt and capital leases on stated contractual maturities, excluding unamortized non-cash bond premiums and discounts of $15 million as of March 31, 2016 (in millions).

 
 
 
 
 
Total
2016
 
$
14

2017
 
1,062

2018
 
2,502

2019
 
1,650

2020
 
1,750

Thereafter
 
4,400

Total principal payments
 
11,378

Debt issuance costs, net of accumulated amortization
 
(66
)
Total long-term debt
 
$
11,312



Voluntary prepayment of the Term Loans is generally permitted at any time without fee. There are no mandatory principal payments on the Revolving Loan and any balance outstanding on the Revolving Loan will be due and payable at its scheduled maturity date, which occurs at December 18, 2019.

We monitor the financial stability of our counterparties on an ongoing basis. The lender commitments under the undrawn portions of the Revolving Loan are comprised of a diversified set of financial institutions, both domestic and international. The failure of any single lender to perform its obligations under the Revolving Loan would not adversely impact our ability to fund operations.

The fair value of the Company’s long-term debt is estimated to be approximately $229 million higher than the carrying value as of March 31, 2016. This estimate is based on quoted prices of our senior notes and trades of our other debt in close proximity to March 31, 2016, which are considered Level 2-type measurements. This estimate is subjective in nature and involves uncertainties and significant judgment in the interpretation of current market data. Therefore, the values presented are not necessarily indicative of amounts the Company could realize or settle currently.

As of March 31, 2016, we have entered into the following interest rate swap transactions converting a portion of the interest rate exposure on our Term and Revolving Loans from variable to fixed (in millions):

Effective date
 
Termination date
 
Notional amount
 
Bank pays
variable rate of
 
FIS pays
 fixed rate of
February 2014
 
February 2017
 
$
400

 
1 Month LIBOR (1)
 
0.89
%
(2)
January 2016
 
January 2017
 
400

 
1 Month LIBOR (1)
 
0.65
%
(2)
January 2016
 
January 2018
 
500

 
1 Month LIBOR (1)
 
0.92
%
(2)
January 2016
 
January 2019
 
250

 
1 Month LIBOR (1)
 
1.18
%
(2)
February 2016
 
February 2017
 
200

 
1 Month LIBOR (1)
 
0.71
%
(2)
 
 
 
 
$
1,750

 
 
 
 
 
___________________________________
(1)
0.44% in effect as of March 31, 2016.
(2)
Does not include the applicable margin and facility fees paid to lenders on term loans and revolving loans as described above.

We have designated these interest rate swaps as cash flow hedges and, as such, they are carried on the Condensed Consolidated Balance Sheets (Unaudited) at fair value with changes in fair value included in other comprehensive earnings, net of tax.

A summary of the fair value of the Company’s interest rate derivative instruments is as follows (in millions):

 
March 31, 2016
 
December 31, 2015
 
Balance sheet location
 
Fair
value
 
Balance sheet location
 
Fair
value
Interest rate swap contracts
Other noncurrent assets
 
$

 
Other noncurrent assets
 
$
1

Interest rate swap contracts
Accounts payable and accrued liabilities
 
2

 
Accounts payable and accrued liabilities
 

Interest rate swap contracts
Other long-term liabilities
 
5

 
Other long-term liabilities
 
1



In accordance with the authoritative guidance for fair value measurements, the inputs used to determine the estimated fair value of our interest rate swaps are Level 2-type measurements. We considered our own credit risk and the credit risk of the counterparties when determining the fair value of our interest rate swaps. Adjustments are made to these amounts and to accumulated other comprehensive earnings ("AOCE") within the Condensed Consolidated Statements of Comprehensive Earnings (Unaudited) and Condensed Consolidated Statement of Equity (Unaudited) as the factors that impact fair value change, including current and projected interest rates, time to maturity and required cash transfers/settlements with our counterparties. Periodic actual and estimated settlements with counterparties are recorded to interest expense as a yield adjustment to effectively fix the otherwise variable rate interest expense associated with the Term and Revolving Loans for hedge notional amounts.

A summary of the effect of derivative instruments on the Company’s Condensed Consolidated Statements of Comprehensive Earnings (Unaudited) and recognized in AOCE for the three months ended March 31, 2016 and 2015 are as follows (in millions):

 
 
Amount of gain (loss)
recognized in AOCE on
derivatives
 
 
 
Amount of gain (loss) reclassified
from AOCE into
income
Derivatives in cash
 
Three months ended
 
Location of loss
 
Three months ended
flow hedging
 
March 31,
 
reclassified from
 
March 31,
relationships
 
2016
 
2015
 
AOCE into income
 
2016
 
2015
Interest rate derivative contracts
 
$
(9
)
 
$
(2
)
 
Interest expense
 
$
(2
)
 
$
(1
)


Approximately $2 million of the balance in AOCE as of March 31, 2016, is expected to be reclassified into income over the next twelve months.

Our existing cash flow hedges are highly effective and there was no impact on earnings due to hedge ineffectiveness. It is our practice to execute such instruments with credit-worthy banks at the time of execution and not to enter into derivative financial instruments for speculative purposes. As of March 31, 2016, we believe that our interest rate swap counterparties will be able to fulfill their obligations under our agreements, and we believe we will have debt outstanding through the various expiration dates of the swaps such that the forecasted transactions remain probable of occurring.

In September 2015, in contemplation of issuing long-term financing for the SunGard acquisition (see Note 4), the Company entered into treasury lock hedges with a total notional amount of $1 billion reducing the risk of changes in the benchmark index component of the 10-year treasury yield. The Company designated these derivatives as cash flow hedges. On October 13, 2015, in conjunction with the pricing of the $4.5 billion senior notes, the Company terminated these treasury lock contracts for a cash settlement payment of $16 million, which was recorded as a component of Other Comprehensive Earnings and will be reclassified as an adjustment to interest expense over the ten years during which the related interest payments that were hedged will be recognized in income.
v3.4.0.3
Commitments and Contingencies
3 Months Ended
Mar. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
Litigation
     In the ordinary course of business, the Company is involved in various pending and threatened litigation matters related to operations, some of which include claims for punitive or exemplary damages. The Company believes no actions, other than the matters listed below, depart from customary litigation incidental to its business. As background to the disclosure below, please note the following:

These matters raise difficult and complicated factual and legal issues and are subject to many uncertainties and complexities.

The Company reviews all of its litigation on an on-going basis and follows the authoritative provisions for accounting for contingencies when making accrual and disclosure decisions. A liability must be accrued if (a) it is probable that a liability has been incurred and (b) the amount of loss can be reasonably estimated. If one of these criteria has not been met, disclosure is required when there is at least a reasonable possibility that a material loss may be incurred. When assessing reasonably possible and probable outcomes, the Company bases decisions on the assessment of the ultimate outcome following all appeals. Legal fees associated with defending litigation matters are expensed as incurred.

 DataTreasury Corporation v. Fidelity National Information Services, Inc. et. al.

On May 28, 2013, DataTreasury Corporation (the “Plaintiff”) filed a patent infringement lawsuit against the Company and multiple banks in the U.S. District Court for the Eastern District of Texas, Marshall Division.  Plaintiff alleges that the Company infringes the patents at issue by making, using, selling or offering to sell systems and methods for image-based check processing. The Plaintiff seeks damages, injunctive relief and attorneys' fees for the alleged infringement of two patents.  On October 25, 2013, the Company filed for covered business method ("CBM") post-grant reviews of the validity of the Plaintiff's asserted patents at the U.S. Patent and Trademark Office ("USPTO").  The Company filed a Motion to Stay the case pending the outcome of the CBM post-grant reviews. On April 29, 2014, the USPTO instituted the Company's two CBM petitions. On August 14, 2014, the Court granted the Company's Motion to Stay the litigation pending the outcome of the CBM review proceedings. On April 29, 2015, the Patent Trial and Appeal Board ("PTAB") issued final written decisions on the Company’s two CBM petitions holding that all claims of the Plaintiff’s two patents are unpatentable. The Plaintiff's request for rehearing of these decisions has been denied by PTAB. On August 27, 2015, the Plaintiff filed a notice of appeal to the U.S. Court of Appeals for the Federal Circuit of the USPTO’s Final Written Decisions. Briefing was completed on April 7, 2016 and the Parties are awaiting a date for oral argument. An estimate of a possible loss or range of possible loss, if any, for this action cannot be made at this time.

Acquired Contingencies

The Company became responsible for certain contingencies which were assumed in the SunGard acquisition. These matters include resolution of a customer claim, unclaimed property examinations, tax compliance matters, and finalizing the sale prices for two previously divested businesses. The Condensed Consolidated Balance Sheet as of March 31, 2016 includes a provisional liability totaling $153 million related to these matters, including $84 million in unrecognized tax benefits assumed. Subsequent to March 31, 2016, the provisional liability decreased to approximately $125 million. This provisional liability is subject to further change as these contingencies are finalized. Changes in this provisional liability are reflected in our purchase accounting for the Acquisition, not through our income statement. As a result of the uncertainties associated with these matters, we are unable to estimate a range of loss in excess of the aggregate amount accrued.

For approximately one week in August 2015, certain U.S. operations of a single SunGard customer were disrupted by an issue affecting its SunGard-hosted fund accounting platform that occurred following a recommended operating system update implemented by SunGard. The customer uses the platform for the processing of net asset values (NAVs) for certain mutual funds, exchange-traded funds and collective investment funds. While the incident resulted in delayed publication of certain NAVs or use of alternative NAVs, no data was lost as a result of the incident. The platform is operating as designed and we worked with our customer to resolve any known resulting matters. No other SunGard customers were disrupted.

The State of Delaware, Department of Finance, Division of Revenue (Unclaimed Property) and nine other states are currently conducting a joint examination of the books and records of certain subsidiaries acquired in the SunGard acquisition to determine compliance with the unclaimed property laws. Additionally, prior to the Acquisition, SunGard entered into voluntary disclosure agreements to address the potential unclaimed property exposure for certain entities not included in the scope of the ongoing unclaimed property examination.

Brazilian Tax Authorities Claims

In 2004, Proservvi Empreendimentos e Servicios, Ltda., the predecessor to Fidelity National Servicos de Tratamento de Documentos e Informatica Ltda. (“Servicos”), a subsidiary of Fidelity National Participacoes Ltda., our former item processing and remittance services operation in Brazil, acquired certain assets and employees and leased certain facilities from the Transpev Group (“Transpev”) in Brazil. Transpev’s remaining assets were later acquired by Prosegur, an unrelated third party. When Transpev discontinued its operations after the asset sale to Prosegur, it had unpaid federal taxes and social contributions owing to the Brazilian tax authorities. The Brazilian tax authorities brought a claim against Transpev and beginning in 2012 brought claims against Prosegur and Servicos on the grounds that Prosegur and Servicos were successors in interest to Transpev. To date, the Brazilian tax authorities filed six claims against Servicos asserting potential tax liabilities of approximately $6 million. There are potentially 30 additional claims against Transpev/Prosegur for which Servicos is named as a co-defendant or may be named, but for which Servicos has not yet been served. These additional claims amount to approximately $58 million making the total potential exposure for all 36 claims approximately $64 million. We do not believe a liability for these 36 total claims is probable or reasonably estimable and, therefore, have not recorded a liability for any of these claims.

Indemnifications and Warranties

The Company generally indemnifies its customers, subject to certain limitations and exceptions, against damages and costs resulting from claims of patent, copyright, or trademark infringement associated solely with its customers' use of the Company's software applications or services. Historically, the Company has not made any material payments under such indemnifications, but continues to monitor the conditions that are subject to the indemnifications to identify whether it is probable that a loss has occurred, and would recognize any such losses when they are estimable. In addition, the Company warrants to customers that its software operates substantially in accordance with the software specifications. Historically, no material costs have been incurred related to software warranties and no accruals for warranty costs have been made.
v3.4.0.3
Segment Information
3 Months Ended
Mar. 31, 2016
Segment Reporting [Abstract]  
Segment Information
Segment Information

In 2015, FIS finalized a reorganization and began reporting its financial performance based on three segments: Integrated Financial Solutions (“IFS”), Global Financial Solutions (“GFS”) and Corporate and Other. We re-casted all previous periods to conform to the new segment presentation. Following the November 30, 2015 Acquisition, SunGard was included within the GFS segment as its economic characteristics, international business model, and various other factors largely aligned with those of our GFS segment. As we have further integrated the businesses through March 31, 2016, we have reclassified certain SunGard businesses that are oriented more to the retail banking and payments activities of IFS into that segment (corporate liquidity and wealth management). Certain other non-strategic businesses from both SunGard (public sector and education) and legacy FIS (commercial services and check processing) have been reclassified to the Corporate and Other segment, as have SunGard administrative expenses. Prior periods have also have been reclassified to conform to the current segment presentation.
Summarized financial information for the Company’s segments is shown in the following tables.
As of and for the three months ended March 31, 2016 (in millions):

 
IFS
 
GFS
 
Corporate
and Other
 
Total
Processing and services revenues
$
1,121

 
$
990

 
$
70

 
$
2,181

Operating expenses
762

 
803

 
432

 
1,997

Operating income (loss)
$
359

 
$
187

 
$
(362
)
 
184

Other income (expense) unallocated
 
 
 
 
 
 
(94
)
Income from continuing operations before income taxes
 
 
 
 
 
 
$
90

Depreciation and amortization
$
67

 
$
64

 
$
162

 
$
293

Capital expenditures (1)
$
60

 
$
75

 
$
11

 
$
146

Total assets (2)
$
10,093

 
$
9,420

 
$
6,913

 
$
26,426

Goodwill
$
7,670

 
$
6,453

 
$
453

 
$
14,576

(1)
Capital expenditures for the three months ended March 31, 2016 includes $1 million of capital leases.
(2)
Total assets as of March 31, 2016 exclude $4 million related to discontinued operations.

As of and for the three months ended March 31, 2015 (in millions):

 
IFS
 
GFS
 
Corporate
and Other
 
Total
Processing and services revenues
$
928

 
$
512

 
$
115

 
$
1,555

Operating expenses
609

 
466

 
265

 
1,340

Operating income (loss)
$
319

 
$
46

 
$
(150
)
 
215

Other income (expense) unallocated
 
 
 
 
 
 
(39
)
Income from continuing operations before income taxes
 
 
 
 
 
 
$
176

Depreciation and amortization
$
52

 
$
35

 
$
66

 
$
153

Capital expenditures (1)
$
62

 
$
35

 
$
5

 
$
102

Total assets (2)
$
8,886

 
$
3,607

 
$
1,937

 
$
14,430

Goodwill
$
6,725

 
$
1,948

 
$
162

 
$
8,835



(1)
Capital expenditures for the three months ended March 31, 2015 include $1 million of capital leases.
(2)
Total assets as of March 31, 2015 exclude $4 million related to discontinued operations.

Integrated Financial Solutions ("IFS")

The IFS segment is focused on serving the North American regional and community bank market for transaction and account processing, payment solutions, channel solutions (including lending and wealth management solutions), digital channels, risk and compliance solutions, and services, capitalizing on the continuing trend to outsource these solutions. IFS also includes corporate liquidity and wealth management solutions acquired in the SunGard acquisition. IFS’ primary software applications function as the underlying infrastructure of a financial institution's processing environment. These applications include core bank processing software, which banks use to maintain the primary records of their customer accounts, and complementary applications and services that interact directly with the core processing applications. Clients in this segment include regional and community banks, credit unions, commercial lenders, independent community and savings institutions as well as government institutions, merchants and other commercial organizations. This market is primarily served through integrated solutions and characterized by multi-year processing contracts that generate highly recurring revenues. The predictable nature of cash flows generated from this segment provides opportunities for further investments in innovation, product integration, information and security, and compliance in a cost effective manner.

Global Financial Solutions ("GFS")

The GFS segment is focused on serving the largest financial institutions around the globe with banking and payments solutions, as well as consulting and transformation services. The GFS segment has extended its reach through the SunGard acquisition, and now also delivers a broader array of capital markets and asset management and insurance solutions and services.

GFS clients include the largest global financial institutions, including those headquartered in the United States, as well as all international financial institutions we serve as clients in more than 130 countries around the world. These institutions face unique business and regulatory challenges and account for the majority of financial institution information technology spend globally. The purchasing patterns of GFS clients vary from those of IFS clients who typically purchase solutions on an outsourced basis. GFS clients purchase our solutions and services in various ways including licensing and managing technology “in-house”, using consulting and third party service providers as well as fully outsourced end-to-end solutions. We have long-established relationships with many of these financial institutions that generate significant recurring revenue. GFS clients now also include asset managers, buy- and sell-side securities and trading firms, insurers and private equity firms due to the addition of SunGard. This segment also includes the Company's consolidated Brazilian Venture (Note 2).

Clients in Brazil, the United Kingdom, France and Germany accounted for the majority of the revenues from clients based outside of North America for all periods presented. Included in this segment are long-term assets, excluding goodwill and other intangible assets, located outside of the United States totaling $478 million and $351 million as of March 31, 2016 and 2015, respectively. These assets are predominantly located in Brazil, India, Germany and the United Kingdom.

Corporate and Other

The Corporate and Other segment consists of corporate overhead expense, certain leveraged functions and miscellaneous expenses that are not included in the operating segments as well as certain non-strategic businesses as indicated above. The overhead and leveraged costs relate to marketing, corporate finance and accounting, human resources, legal, and amortization of acquisition-related intangibles and other costs that are not considered when management evaluates revenue generating segment performance, such as acquisition integration and severance costs. The Corporate and Other segment also includes the impact on revenue for 2016 of adjusting SunGard's deferred revenue to fair value.
v3.4.0.3
Related Party Transactions - (Summary of Receivables and Payables) (Tables)
3 Months Ended
Mar. 31, 2016
Related Party Transactions [Abstract]  
Schedule of Related Party Receivables and Payables
A summary of the Company’s related party receivables and payables is as follows (in millions):

 
 
 
 
March 31,
 
December 31,
Related Party
 
Balance sheet location
 
2016
 
2015
Banco Bradesco
 
Trade receivables
 
$
59

 
$
31

Banco Bradesco
 
Accounts payable and accrued liabilities
 
10

 
9

Banco Bradesco
 
Other long-term liabilities
 
26

 
24

v3.4.0.3
Net Earnings per Share - (Tables)
3 Months Ended
Mar. 31, 2016
Earnings Per Share [Abstract]  
Earnings per share attributable to FIS common stockholders
The following table summarizes the earnings per share attributable to FIS common stockholders for the three months ended March 31, 2016 and 2015 (in millions, except per share amounts):
 
Three months ended
March 31,
 
2016
 
2015
Earnings from continuing operations attributable to FIS common stockholders, net of tax
$
55

 
$
114

Earnings (loss) from discontinued operations attributable to FIS common stockholders, net of tax

 
(3
)
Net earnings attributable to FIS common stockholders
$
55

 
$
111

Weighted average shares outstanding — basic
324

 
283

Plus: Common stock equivalent shares
3

 
4

Weighted average shares outstanding — diluted
327

 
287

Net earnings per share — basic from continuing operations attributable to FIS common stockholders
$
0.17

 
$
0.40

Net earnings (loss) per share — basic from discontinued operations attributable to FIS common stockholders

 
(0.01
)
Net earnings per share — basic attributable to FIS common stockholders *
$
0.17

 
$
0.39

Net earnings per share — diluted from continuing operations attributable to FIS common stockholders
$
0.17

 
$
0.40

Net earnings (loss) per share — diluted from discontinued operations attributable to FIS common stockholders

 
(0.01
)
Net earnings per share — diluted attributable to FIS common stockholders *
$
0.17

 
$
0.39

 
 
 
 
* Amounts may not sum due to rounding.
 
 
 
v3.4.0.3
Acquisitions Acquisitions (Tables)
3 Months Ended
Mar. 31, 2016
Business Combinations [Abstract]  
Schedule of Business Acquisitions Stock and Equity Awards
Through a series of mergers, FIS acquired 100 percent of the equity of SunGard, for a total purchase price as follows (in millions):
Cash consideration, including SunGard transaction fees paid at closing
$
2,335

Value of stock and vested equity awards exchanged for FIS shares
2,697

Value of vested portion of SunGard stock awards exchanged for FIS awards
47

 
$
5,079

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed
The preliminary purchase price allocation, as adjusted for measurement period adjustments recorded through March 31, 2016, is as follows (in millions):

Cash
$
631

Trade and other receivables
574

Property and equipment
145

Computer software
674

Intangible assets
4,540

Other assets
68

Goodwill
5,809

Liabilities assumed and noncontrolling interest
(7,362
)
 
$
5,079


The following table summarizes the liabilities assumed in the SunGard acquisition (in millions):
Long-term debt, subsequently retired
$
4,738

Deferred income taxes
1,753

Deferred revenue
278

Other liabilities and noncontrolling interest
593

 
$
7,362

v3.4.0.3
Condensed Consolidated Financial Statement Details - (Tables)
3 Months Ended
Mar. 31, 2016
Condensed Consolidated Financial Statement Details [Abstract]  
Condensed Consolidated Financial Statement Details
The following table shows the Company’s condensed consolidated financial statement details as of March 31, 2016 and December 31, 2015 (in millions):

 
March 31, 2016
 
December 31, 2015
 
Cost
 
Accumulated
depreciation and amortization
 
Net
 
Cost
 
Accumulated
depreciation and amortization
 
Net
Property and equipment
$
1,426

 
$
815

 
$
611

 
$
1,396

 
$
785

 
$
611

Intangible assets
$
7,335

 
$
1,948

 
$
5,387

 
$
6,963

 
$
1,804

 
$
5,159

Computer software
$
2,387

 
$
779

 
$
1,608

 
$
2,300

 
$
716

 
$
1,584

Schedule of Goodwill
Changes in goodwill during the three months ended March 31, 2016 are summarized as follows (in millions):
 
IFS
 
GFS
 
Corporate
and Other
 
Total
Balance, December 31, 2015
$
7,676

 
$
6,606

 
$
463

 
$
14,745

Adjustments to SunGard provisional purchase price allocation
(6
)
 
(169
)
 
(10
)
 
(185
)
Foreign currency adjustments

 
16

 

 
16

Balance, March 31, 2016
$
7,670

 
$
6,453

 
$
453

 
$
14,576

v3.4.0.3
Long-Term Debt (Tables)
3 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
Long-Term Debts
Long-term debt as of March 31, 2016 and December 31, 2015, consisted of the following (in millions):
 
March 31, 2016
 
December 31, 2015
2017 Term Loans (1)
$
750

 
$
1,300

2018 Term Loans (2)
1,500

 
1,500

Senior Notes due June 2017, interest payable semi-annually at 1.450%
300

 
300

Senior Notes due April 2018, interest payable semi-annually at 2.000%
250

 
250

Senior Notes due October 2018, interest payable semi-annually at 2.850%
750

 
750

Senior Notes due October 2020, interest payable semi-annually at 3.625%
1,750

 
1,750

Senior Notes due March 2022, interest payable semi-annually at 5.000%
700

 
700

Senior Notes due October 2022, interest payable semi-annually at 4.500%
500

 
500

Senior Notes due April 2023, interest payable semi-annually at 3.500%
1,000

 
1,000

Senior Notes due June 2024, interest payable semi-annually at 3.875%
700

 
700

Senior Notes due October 2025, interest payable semi-annually at 5.000%
1,500

 
1,500

Revolving Loan (3)
1,650

 
1,250

Other
(53
)
 
(56
)
 
11,297

 
11,444

Current portion
(764
)
 
(15
)
Long-term debt, excluding current portion
$
10,533

 
$
11,429

__________________________________________
(1)
Interest on the 2017 Term Loans is generally payable at LIBOR plus an applicable margin of up to 1.75% based upon the Company's corporate credit ratings. As of March 31, 2016, the weighted average interest rate on the 2017 Term Loans was 1.69%.
(2)
Interest on the 2018 Term Loans is generally payable at LIBOR plus an applicable margin of up to 1.75% based upon the Company's corporate credit ratings. As of March 31, 2016, the weighted average interest rate on the 2018 Term Loans was 1.69%.
(3)
Interest on the Revolving Loan is generally payable at LIBOR plus an applicable margin of up to 1.75% plus an unused commitment fee of up to 0.25%, each based upon the Company's corporate credit ratings. As of March 31, 2016, the applicable margin on the Revolving Loan, excluding facility fees and unused commitment fees, was 1.25%.
Principal maturities of long-term debt
The following summarizes the aggregate maturities of our debt and capital leases on stated contractual maturities, excluding unamortized non-cash bond premiums and discounts of $15 million as of March 31, 2016 (in millions).

 
 
 
 
 
Total
2016
 
$
14

2017
 
1,062

2018
 
2,502

2019
 
1,650

2020
 
1,750

Thereafter
 
4,400

Total principal payments
 
11,378

Debt issuance costs, net of accumulated amortization
 
(66
)
Total long-term debt
 
$
11,312

Interest rate swap
As of March 31, 2016, we have entered into the following interest rate swap transactions converting a portion of the interest rate exposure on our Term and Revolving Loans from variable to fixed (in millions):

Effective date
 
Termination date
 
Notional amount
 
Bank pays
variable rate of
 
FIS pays
 fixed rate of
February 2014
 
February 2017
 
$
400

 
1 Month LIBOR (1)
 
0.89
%
(2)
January 2016
 
January 2017
 
400

 
1 Month LIBOR (1)
 
0.65
%
(2)
January 2016
 
January 2018
 
500

 
1 Month LIBOR (1)
 
0.92
%
(2)
January 2016
 
January 2019
 
250

 
1 Month LIBOR (1)
 
1.18
%
(2)
February 2016
 
February 2017
 
200

 
1 Month LIBOR (1)
 
0.71
%
(2)
 
 
 
 
$
1,750

 
 
 
 
 
___________________________________
(1)
0.44% in effect as of March 31, 2016.
(2)
Does not include the applicable margin and facility fees paid to lenders on term loans and revolving loans as described above.
Summary of interest rate derivative instruments
A summary of the fair value of the Company’s interest rate derivative instruments is as follows (in millions):

 
March 31, 2016
 
December 31, 2015
 
Balance sheet location
 
Fair
value
 
Balance sheet location
 
Fair
value
Interest rate swap contracts
Other noncurrent assets
 
$

 
Other noncurrent assets
 
$
1

Interest rate swap contracts
Accounts payable and accrued liabilities
 
2

 
Accounts payable and accrued liabilities
 

Interest rate swap contracts
Other long-term liabilities
 
5

 
Other long-term liabilities
 
1

Effect of derivate instruments on earnings and recognized in AOCE
A summary of the effect of derivative instruments on the Company’s Condensed Consolidated Statements of Comprehensive Earnings (Unaudited) and recognized in AOCE for the three months ended March 31, 2016 and 2015 are as follows (in millions):

 
 
Amount of gain (loss)
recognized in AOCE on
derivatives
 
 
 
Amount of gain (loss) reclassified
from AOCE into
income
Derivatives in cash
 
Three months ended
 
Location of loss
 
Three months ended
flow hedging
 
March 31,
 
reclassified from
 
March 31,
relationships
 
2016
 
2015
 
AOCE into income
 
2016
 
2015
Interest rate derivative contracts
 
$
(9
)
 
$
(2
)
 
Interest expense
 
$
(2
)
 
$
(1
)
v3.4.0.3
Segment Information - (Tables)
3 Months Ended
Mar. 31, 2016
Segment Reporting [Abstract]  
Segment Information
Summarized financial information for the Company’s segments is shown in the following tables.
As of and for the three months ended March 31, 2016 (in millions):

 
IFS
 
GFS
 
Corporate
and Other
 
Total
Processing and services revenues
$
1,121

 
$
990

 
$
70

 
$
2,181

Operating expenses
762

 
803

 
432

 
1,997

Operating income (loss)
$
359

 
$
187

 
$
(362
)
 
184

Other income (expense) unallocated
 
 
 
 
 
 
(94
)
Income from continuing operations before income taxes
 
 
 
 
 
 
$
90

Depreciation and amortization
$
67

 
$
64

 
$
162

 
$
293

Capital expenditures (1)
$
60

 
$
75

 
$
11

 
$
146

Total assets (2)
$
10,093

 
$
9,420

 
$
6,913

 
$
26,426

Goodwill
$
7,670

 
$
6,453

 
$
453

 
$
14,576

(1)
Capital expenditures for the three months ended March 31, 2016 includes $1 million of capital leases.
(2)
Total assets as of March 31, 2016 exclude $4 million related to discontinued operations.

As of and for the three months ended March 31, 2015 (in millions):

 
IFS
 
GFS
 
Corporate
and Other
 
Total
Processing and services revenues
$
928

 
$
512

 
$
115

 
$
1,555

Operating expenses
609

 
466

 
265

 
1,340

Operating income (loss)
$
319

 
$
46

 
$
(150
)
 
215

Other income (expense) unallocated
 
 
 
 
 
 
(39
)
Income from continuing operations before income taxes
 
 
 
 
 
 
$
176

Depreciation and amortization
$
52

 
$
35

 
$
66

 
$
153

Capital expenditures (1)
$
62

 
$
35

 
$
5

 
$
102

Total assets (2)
$
8,886

 
$
3,607

 
$
1,937

 
$
14,430

Goodwill
$
6,725

 
$
1,948

 
$
162

 
$
8,835



(1)
Capital expenditures for the three months ended March 31, 2015 include $1 million of capital leases.
(2)
Total assets as of March 31, 2015 exclude $4 million related to discontinued operations.

v3.4.0.3
Basis of Presentation (Details)
3 Months Ended
Mar. 31, 2016
segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Number of reportable segments 3
v3.4.0.3
Related Party Transactions - (Narrative) (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Related Party Transaction [Line Items]    
Ownership percentage of the Brazilian venture (as a percent) 51.00%  
Corporate Joint Venture | Contract-Based Intangible Assets    
Related Party Transaction [Line Items]    
Finite-lived intangible assets, net $ 92  
Noncontrolling interest in joint venture 91  
Banco Bradesco Brazilian Venture    
Related Party Transaction [Line Items]    
Revenues from related parties 51 $ 63
Unfavorable Currency Impact | Corporate Joint Venture    
Related Party Transaction [Line Items]    
Revenues from related parties $ 19  
v3.4.0.3
Related Party Transaction - (Receivables, and Payables) (Details) - USD ($)
$ in Millions
Mar. 31, 2016
Dec. 31, 2015
Related Party Transaction [Line Items]    
Other long-term liabilities $ 324 $ 312
Banco Bradesco Brazilian Venture    
Related Party Transaction [Line Items]    
Trade receivables 59 31
Accounts payable and accrued liabilities 10 9
Other long-term liabilities $ 26 $ 24
v3.4.0.3
Net Earnings per Share - (Summary of Earnings per Share) (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Earnings Per Share [Abstract]    
Earnings from continuing operations attributable to FIS common stockholders, net of tax $ 55 $ 114
Earnings (loss) from discontinued operations attributable to FIS common stockholders, net of tax 0 (3)
Net earnings attributable to FIS common stockholders $ 55 $ 111
Weighted average shares outstanding — basic (in shares) 324 283
Plus: Common stock equivalent shares ( in shares) 3 4
Weighted average shares outstanding — diluted (in shares) 327 287
Net earnings per share — basic from continuing operations attributable to FIS common stockholders (in dollars per share) $ 0.17 $ 0.40
Net earnings (loss) per share — basic from discontinued operations attributable to FIS common stockholders (in dollars per share) 0.00 (0.01)
Net earnings per share — basic attributable to FIS common stockholders (in dollars per share) [1] 0.17 0.39
Net earnings per share — diluted from continuing operations attributable to FIS common stockholders (in dollars per share) 0.17 0.40
Net earnings (loss) per share — diluted from discontinued operations attributable to FIS common stockholders (in dollars per share) 0.00 (0.01)
Net earnings per share — diluted attributable to FIS common stockholders (in dollars per share) [1] $ 0.17 $ 0.39
[1] * Amounts may not sum due to rounding.
v3.4.0.3
Net Earnings per Share - (Narrative) (Details) - shares
shares in Millions
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Earnings Per Share [Abstract]    
Antidilutive securities excluded from computation of earnings per share (in shares) 11 5
v3.4.0.3
Acquisitions - (Narrative) (Details) - SunGard - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2016
Nov. 30, 2015
Business Acquisition [Line Items]    
Business acquisition, percentage of voting interests acquired   100.00%
Gross contractual receivables   $ 583
Increase in depreciation and amortization that would have been recognized in 2015 $ 6  
v3.4.0.3
Acquisitions - (SunGard Consideration Transferred) (Details) - SunGard
$ in Millions
Nov. 30, 2015
USD ($)
Business Acquisition [Line Items]  
Cash consideration, including SunGard transaction fees paid at closing $ 2,335
Business combination consideration transferred 5,079
Stock and Vested Equity Awards  
Business Acquisition [Line Items]  
Value of awards exchanged for FIS shares 2,697
Vested Stock Awards  
Business Acquisition [Line Items]  
Value of awards exchanged for FIS shares $ 47
v3.4.0.3
Acquisitions - (Assets Acquired and Goodwill) (Details) - USD ($)
$ in Millions
Mar. 31, 2016
Dec. 31, 2015
Mar. 31, 2015
Business Acquisition [Line Items]      
Goodwill $ 14,576 $ 14,745 $ 8,835
SunGard      
Business Acquisition [Line Items]      
Cash 631    
Trade and other receivables 574    
Property and equipment 145    
Computer software 674    
Intangible assets 4,540    
Other assets 68    
Goodwill 5,809    
Liabilities assumed and noncontrolling interest (7,362)    
Recognized identifiable assets $ 5,079    
v3.4.0.3
Acquisitions - (Liabilities Assumed and Noncontrolling Interest) (Details) - SunGard
$ in Millions
Mar. 31, 2016
USD ($)
Business Acquisition [Line Items]  
Long-term debt, subsequently retired $ 4,738
Deferred income taxes 1,753
Deferred revenue 278
Other liabilities and noncontrolling interest 593
Liabilities assumed and noncontrolling interest $ 7,362
v3.4.0.3
Discontinued Operations and Other Dispositions - (Narrative) (Details)
$ in Millions
3 Months Ended
Jun. 30, 2015
USD ($)
Other Nonoperating Income (Expense)  
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]  
Gain on assets sold $ 139
v3.4.0.3
Condensed Consolidated Financial Statement Details - (Summary of Net Assets and Narrative) (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Goodwill [Line Items]      
Property and equipment, cost $ 1,426   $ 1,396
Property and equipment, accumulated depreciation and amortization 815   785
Property and equipment, net 611   611
Intangible assets, cost 7,335   6,963
Intangible assets, accumulated depreciation and amortization 1,948   1,804
Intangible assets, net 5,387   5,159
Computer Software, cost 2,387   2,300
Computer software, accumulated depreciation and amortization 779   716
Computer software, net 1,608   1,584
Capital lease obligations incurred 1 $ 1  
Goodwill [Roll Forward]      
Beginning balance 14,745    
Adjustments to SunGard provisional purchase price allocation (185)    
Foreign currency adjustments 16    
Ending balance 14,576 $ 8,835 14,745
Settlement deposits $ 125   $ 125
Maturity of short-term investments (greater than 90 days) 90 days   90 days
Integrated Financial Solutions      
Goodwill [Roll Forward]      
Beginning balance $ 7,676    
Adjustments to SunGard provisional purchase price allocation (6)    
Foreign currency adjustments 0    
Ending balance 7,670   $ 7,676
Global Financial Solutions      
Goodwill [Roll Forward]      
Beginning balance 6,606    
Adjustments to SunGard provisional purchase price allocation (169)    
Foreign currency adjustments 16    
Ending balance 6,453   6,606
Corporate and Other      
Goodwill [Roll Forward]      
Beginning balance 463    
Adjustments to SunGard provisional purchase price allocation (10)    
Foreign currency adjustments 0    
Ending balance $ 453   $ 463
v3.4.0.3
Long-Term Debt - (Schedule of Long-Term Debt) (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Mar. 31, 2016
Dec. 31, 2014
Dec. 31, 2015
Long-Term Debt      
Other $ (53)   $ (56)
Total long-term debt 11,297   11,444
Current portion (764)   (15)
Long-term debt, excluding current portion 10,533   11,429
2017 Term Loans      
Long-Term Debt      
Term Loan $ 750   1,300
Applicable margin 1.75% 1.75%  
Weighted average interest rate 1.69%    
2018 Term Loans      
Long-Term Debt      
Term Loan $ 1,500   1,500
Applicable margin 1.75%    
Weighted average interest rate 1.69%    
Senior Notes due June 2017, interest payable semi-annually at 1.450%      
Long-Term Debt      
Senior notes $ 300   $ 300
Debt instrument, stated percentage 1.45%   1.45%
Senior Notes due April 2018, interest payable semi-annually at 2.000%      
Long-Term Debt      
Senior notes $ 250   $ 250
Debt instrument, stated percentage 2.00%   2.00%
Senior Notes due October 2018, interest payable semi-annually at 2.850%      
Long-Term Debt      
Senior notes $ 750   $ 750
Debt instrument, stated percentage 2.85%   2.85%
Senior Notes due October 2020, interest payable semi-annually at 3.625%      
Long-Term Debt      
Senior notes $ 1,750   $ 1,750
Debt instrument, stated percentage 3.625%   3.625%
Senior Notes due March 2022, interest payable semi-annually at 5.000%      
Long-Term Debt      
Senior notes $ 700   $ 700
Debt instrument, stated percentage 5.00%   5.00%
Senior Notes due October 2022, interest payable semi-annually at 4.500%      
Long-Term Debt      
Senior notes $ 500   $ 500
Debt instrument, stated percentage 4.50%   4.50%
Senior Notes due April 2023, interest payable semi-annually at 3.500%      
Long-Term Debt      
Senior notes $ 1,000   $ 1,000
Debt instrument, stated percentage 3.50%   3.50%
Senior Notes due June 2024, interest payable semi-annually at 3.875%      
Long-Term Debt      
Senior notes $ 700   $ 700
Debt instrument, stated percentage 3.875%   3.875%
Senior Notes due October 2025, interest payable semi-annually at 5.000%      
Long-Term Debt      
Senior notes $ 1,500   $ 1,500
Debt instrument, stated percentage 5.00%   5.00%
Revolving Loan      
Long-Term Debt      
Term Loan $ 1,650   $ 1,250
Applicable margin 1.75%    
Unused commitment fee 0.25% 0.25%  
Line of credit facility marginal rates 1.25%    
v3.4.0.3
Long-Term Debt - (Principal Maturities of Long-Term Debt) (Details) - FIS Credit Agreements
$ in Millions
Mar. 31, 2016
USD ($)
Principal maturities of long-term debt  
2016 $ 14
2017 1,062
2018 2,502
2019 1,650
2020 1,750
Thereafter 4,400
Total principal payments 11,378
Debt issuance costs, net of accumulated amortization (66)
Total long-term debt $ 11,312
v3.4.0.3
Long-Term Debt - (Interest Rate Swap) (Details)
Mar. 31, 2016
USD ($)
Interest rate swap  
Notional amount $ 1,750,000,000
1 month LIBOR rate in effect 0.44%
Interest Rate Swap One  
Interest rate swap  
Notional amount $ 400,000,000
FIS pays fixed rate of 0.89%
Interest Rate Swap Two  
Interest rate swap  
Notional amount $ 400,000,000
FIS pays fixed rate of 0.65%
Interest Rate Swap Three  
Interest rate swap  
Notional amount $ 500,000,000
FIS pays fixed rate of 0.92%
Interest Rate Swap Four  
Interest rate swap  
Notional amount $ 250,000,000
FIS pays fixed rate of 1.18%
Interest Rate Swap Five  
Interest rate swap  
Notional amount $ 200,000,000
FIS pays fixed rate of 0.71%
v3.4.0.3
Long-Term Debt - (Narrative) (Details) - USD ($)
1 Months Ended
Oct. 13, 2015
Oct. 31, 2015
Mar. 31, 2016
Oct. 20, 2015
Sep. 30, 2015
Debt Instrument [Line Items]          
Unamortized bond premium discount, net     $ 15,000,000    
Fair value, aggregate differences     229,000,000    
AOCE expected to reclassified during next twelve months     2,000,000    
Derivative, notional amount     1,750,000,000    
Unsecured Debt          
Debt Instrument [Line Items]          
Debt instrument, term   3 years      
Senior Notes          
Debt Instrument [Line Items]          
Face amount of loans       $ 4,500,000,000.0  
FIS Credit Agreements          
Debt Instrument [Line Items]          
Total committed capital, credit agreement     3,750,000,000    
FIS Credit Agreements | Revolving Credit Facility          
Debt Instrument [Line Items]          
Revolving credit facility, maximum borrowing capacity     3,000,000,000    
Credit facility outstanding amount     1,650,000,000    
Additional term and revolving loan capacity in the future     1,342,000,000    
FIS Credit Agreements | FIS Credit Agreement 2017 Term Loans          
Debt Instrument [Line Items]          
Face amount of loans     750,000,000    
FIS Credit Agreements | FIS Credit Agreement 2018 Term Loan          
Debt Instrument [Line Items]          
Face amount of loans     1,500,000,000    
Letter of Credit | Revolving Credit Facility          
Debt Instrument [Line Items]          
Credit facility outstanding amount     $ 8,000,000    
Treasury Lock          
Debt Instrument [Line Items]          
Derivative, notional amount         $ 1,000,000,000.0
Cash Flow Hedging | Treasury Lock          
Debt Instrument [Line Items]          
Derivative instruments, loss recognized in other comprehensive income (loss) $ 16,000,000        
Amortization period of deferred gain (loss) on derivative 10 years        
v3.4.0.3
Long-Term Debt - (Schedule of Fair Value of Derivative Instruments) (Details) - Interest Rate Swap - USD ($)
$ in Millions
Mar. 31, 2016
Dec. 31, 2015
Other Noncurrent Assets    
Derivatives, Fair Value [Line Items]    
Interest rate swap contracts $ 0 $ 1
Accounts Payable and Accrued Liabilities    
Derivatives, Fair Value [Line Items]    
Interest rate swap contracts 2 0
Other Liabilities    
Derivatives, Fair Value [Line Items]    
Interest rate swap contracts $ 5 $ 1
v3.4.0.3
Long-Term Debt Long-Term Debt - (Schedule Effect of Derivative Instruments on the Company's Condensed Consolidated Statements of Earnings) (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Interest Rate Contract    
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]    
Interest rate derivative contracts $ (9) $ (2)
Interest Expense    
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]    
Interest expense $ (2) $ (1)
v3.4.0.3
Commitments and Contingencies - (Narrative) (Details)
$ in Millions
3 Months Ended
Apr. 29, 2015
patent
May. 28, 2013
patent
Mar. 31, 2016
USD ($)
claim
DataTreasury Corporation v. Fidelity National Information Services, Inc. et. al      
Loss Contingencies [Line Items]      
Loss contingency, number of patents allegedly infringed upon | patent 2 2  
SunGard      
Loss Contingencies [Line Items]      
Provisional liability     $ 153
Unrecognized tax benefits assumed     84
Decrease in provisional liability     125
Potential Tax Liability | Pending Litigation | Secretariat of the Federal Revenue Bureau of Brazil      
Loss Contingencies [Line Items]      
Loss contingency, value of damages sought     $ 6
Loss contingency, number of potential new claims filed | claim     30
Loss contingency, potential additional claims amount ought     $ 58
Loss contingency, number of total pending and potential pending claims | claim     36
Participacoes Operations | Potential Tax Liability | Pending Litigation | Secretariat of the Federal Revenue Bureau of Brazil | Discontinued Operations, Disposed of by Sale      
Loss Contingencies [Line Items]      
Loss contingency, number of claims pending | claim     6
Maximum | Potential Tax Liability | Pending Litigation | Secretariat of the Federal Revenue Bureau of Brazil      
Loss Contingencies [Line Items]      
Loss contingency, estimate of possible loss     $ 64
v3.4.0.3
Segment Information - (Summarized Financial Information and Narrative) (Details)
$ in Millions
3 Months Ended
Mar. 31, 2016
USD ($)
segment
country
Mar. 31, 2015
USD ($)
Dec. 31, 2015
USD ($)
Segment Information      
Processing and services revenues $ 2,181 $ 1,555  
Operating expenses 1,997 1,340  
Operating income 184 215  
Other income (expense) unallocated (94) (39)  
Earnings from continuing operations before income taxes 90 176  
Depreciation and amortization 293 153  
Capital expenditures 146 102  
Total assets 26,426 14,430  
Goodwill $ 14,576 8,835 $ 14,745
Segment Information (Textuals) [Abstract]      
Number of reportable segments | segment 3    
Capital lease obligations $ 1 1  
Amount related to discontinued operations that is excluded from total asset 4 4  
Integrated Financial Solutions      
Segment Information      
Goodwill 7,670   7,676
Global Financial Solutions      
Segment Information      
Goodwill $ 6,453   6,606
Segment Information (Textuals) [Abstract]      
Number of countries we operate in (more than) | country 130    
Long-term assets, excluding goodwill and other intangible assets $ 478 351  
Corporate and Other      
Segment Information      
Goodwill 453   $ 463
Operating Segments | Integrated Financial Solutions      
Segment Information      
Processing and services revenues 1,121 928  
Operating expenses 762 609  
Operating income 359 319  
Depreciation and amortization 67 52  
Capital expenditures 60 62  
Total assets 10,093 8,886  
Goodwill 7,670 6,725  
Operating Segments | Global Financial Solutions      
Segment Information      
Processing and services revenues 990 512  
Operating expenses 803 466  
Operating income 187 46  
Depreciation and amortization 64 35  
Capital expenditures 75 35  
Total assets 9,420 3,607  
Goodwill 6,453 1,948  
Operating Segments | Corporate and Other      
Segment Information      
Processing and services revenues 70 115  
Operating expenses 432 265  
Operating income (362) (150)  
Depreciation and amortization 162 66  
Capital expenditures 11 5  
Total assets 6,913 1,937  
Goodwill $ 453 $ 162  
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