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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________

Form 10-Q

_______________________________________________



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from		to

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 of incorporation or organization)		(I.R.S. Employer Identification No.)


601 Riverside Avenue
Jacksonville	Florida	32204
(Address of principal executive offices)		(Zip Code)

(904) 438-6000

(Registrant’s telephone number, including area code)

(Former Name or Former Address, if Changed Since Last Report)

Table of Contents



Securities registered pursuant to Section 12(b) of the Act:

	Trading	Name of each exchange
Title of each class	Symbol(s)	on which registered
Common Stock, par value $0.01 per share	FIS	New York Stock Exchange
0.400% Senior Notes due 2021	FIS21A	New York Stock Exchange
Floating Rate Senior Notes due 2021	FIS21B	New York Stock Exchange
0.125% Senior Notes due 2021	FIS21C	New York Stock Exchange
1.700% Senior Notes due 2022	FIS22B	New York Stock Exchange
0.750% Senior Notes due 2023	FIS23A	New York Stock Exchange
1.100% Senior Notes due 2024	FIS24A	New York Stock Exchange
2.602% Senior Notes due 2025	FIS25A	New York Stock Exchange
1.500% Senior Notes due 2027	FIS27	New York Stock Exchange
2.000% Senior Notes due 2030	FIS30	New York Stock Exchange
3.360% Senior Notes due 2031	FIS31	New York Stock Exchange
2.950% Senior Notes due 2039	FIS39	New York Stock Exchange

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES ☐ NO ☒

As of August 5, 2019, 613,444,279 shares of the Registrant’s Common Stock were outstanding.

FORM 10-Q

QUARTERLY REPORT

Quarter Ended June 30, 2019

INDEX



	Page
Part I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
A. Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018	2
B. Condensed Consolidated Statements of Earnings for the three and six months ended June 30, 2019 and 2018	3
C. Condensed Consolidated Statements of Comprehensive Earnings for the three and six months ended June 30, 2019 and 2018	4
D. Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2019 and 2018	5
E. Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018	7
F. Notes to Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3. Quantitative and Qualitative Disclosure About Market Risks	34
Item 4. Controls and Procedures	36
Part II: OTHER INFORMATION
Item 1A. Risk Factors	36
Item 6. Exhibits	48

Table of Contents

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In millions, except per share amounts)

(Unaudited)



	June 30, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	9,756		$	703
Settlement deposits	538			700
Trade receivables, net of allowance for doubtful accounts of $27 and $17 as of June 30, 2019 and December 31, 2018, respectively	1,366			1,472
Contract assets	122			123
Settlement receivables	289			281
Other receivables	137			166
Prepaid expenses and other current assets	297			288
Total current assets	12,505			3,733
Property and equipment, net	541			587
Goodwill	13,542			13,545
Intangible assets, net	2,863			3,132
Computer software, net	1,798			1,795
Other noncurrent assets	1,049			503
Deferred contract costs, net	561			475
Total assets	$	32,859		$	23,770
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable, accrued and other liabilities	$	1,030		$	1,099
Settlement payables	792			972
Deferred revenue	788			739
Short-term borrowings	1,507			267
Current portion of long-term debt	53			48
Total current liabilities	4,170			3,125
Long-term debt, excluding current portion	16,682			8,670
Deferred income taxes	1,295			1,360
Other long-term liabilities	664			326
Deferred revenue	56			67
Total liabilities	22,867			13,548
Equity:
FIS stockholders’ equity:
Preferred stock, $0.01 par value, 200 shares authorized, none issued and outstanding as of June 30, 2019 and December 31, 2018	—			—
Common stock, $0.01 par value, 600 shares authorized, 433 and 433 shares issued as of June 30, 2019 and December 31, 2018	4			4
Additional paid in capital	10,887			10,800
Retained earnings	4,599			4,528
Accumulated other comprehensive earnings (loss)	(438		)	(430		)
Treasury stock, $0.01 par value, 109 and 106 common shares as of June 30, 2019 and December 31, 2018, respectively, at cost	(5,067		)	(4,687		)
Total FIS stockholders’ equity	9,985			10,215
Noncontrolling interest	7			7
Total equity	9,992			10,222
Total liabilities and equity	$	32,859		$	23,770

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(In millions, except per share amounts)

(Unaudited)



	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018

Revenue	$	2,112		$	2,106		$	4,169		$	4,172
Cost of revenue	1,404			1,414			2,785			2,828
Gross profit	708			692			1,384			1,344
Selling, general and administrative expenses	317			339			678			697
Operating income	391			353			706			647
Other income (expense):
Interest expense, net	(72		)	(73		)	(147		)	(144		)
Other income (expense), net	(120		)	(4		)	(172		)	(2		)
Total other income (expense), net	(192		)	(77		)	(319		)	(146		)
Earnings before income taxes and equity method investment earnings (loss)	199			276			387			501
Provision (benefit) for income taxes	40			51			72			85
Equity method investment earnings (loss)	(4		)	(7		)	(11		)	(8		)
Net earnings	155			218			304			408
Net (earnings) loss attributable to noncontrolling interest	(1		)	(6		)	(2		)	(14		)
Net earnings attributable to FIS common stockholders	$	154		$	212		$	302		$	394

Net earnings per share — basic attributable to FIS common stockholders	$	0.48		$	0.64		$	0.93		$	1.20
Weighted average shares outstanding — basic	324			329			323			329
Net earnings per share — diluted attributable to FIS common stockholders	$	0.47		$	0.64		$	0.92		$	1.18
Weighted average shares outstanding — diluted	327			333			327			334

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Earnings

(In millions)

(Unaudited)



	Three months ended June 30,												Six months ended June 30,
	2019						2018						2019						2018

Net earnings				$	155					$	218					$	304					$	408
Other comprehensive earnings, before tax:
Unrealized gain (loss) on derivatives	$	(16	)				$	—					$	(16	)				$	—
Reclassification adjustment for (gains) losses included in net earnings	(4		)				—						(4		)				—
Unrealized gain (loss) on derivatives, net	(20		)				—						(20		)				—
Foreign currency translation adjustments	11						(102		)				17						(88		)
Minimum pension liability adjustment	—						—						(4		)				—
Other comprehensive earnings (loss), before tax:	(9		)				(102		)				(7		)				(88		)
Provision for income tax expense (benefit) related to items of other comprehensive earnings	2						—						1						—
Other comprehensive earnings (loss), net of tax	$	(11	)	(11		)	$	(102	)	(102		)	$	(8	)	(8		)	$	(88	)	(88		)
Comprehensive earnings:				144						116						296						320
Net (earnings) loss attributable to noncontrolling interest				(1		)				(6		)				(2		)				(14		)
Other comprehensive (earnings) loss attributable to noncontrolling interest				—						17						—						17
Comprehensive earnings attributable to FIS common stockholders				$	143					$	127					$	294					$	323

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Equity

Three and six months ended June 30, 2019

(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 (loss)			stock			interest			equity
Balances, March 31, 2019	433	(110	)	$	4	$	10,844	$	4,558		$	(427	)	$	(5,083	)	$	7		$	9,903
Exercise of stock options	—	1		—		19		—			—			16			—			35
Stock-based compensation	—	—		—		24		—			—			—			—			24
Cash dividends paid ($0.35 per share per quarter) and other distributions	—	—		—		—		(113		)	—			—			(1		)	(114		)
Net earnings	—	—		—		—		154			—			—			1			155
Other comprehensive earnings, net of tax	—	—		—		—		—			(11		)	—			—			(11		)
Balances, June 30, 2019	433	(109	)	$	4	$	10,887	$	4,599		$	(438	)	$	(5,067	)	$	7		$	9,992



				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 (loss)			stock			interest			equity
Balances, December 31, 2018	433	(106	)	$	4	$	10,800	$	4,528		$	(430	)	$	(4,687	)	$	7		$	10,222
Exercise of stock options	—	1		—		44		—			—			43			—			87
Treasury shares held for taxes due upon exercise of stock options	—	—		—		—		—			—			(23		)	—			(23		)
Purchases of treasury stock	—	(4	)	—		—		—			—			(400		)	—			(400		)
Stock-based compensation	—	—		—		43		—			—			—			—			43
Cash dividends paid ($0.35 per share per quarter) and other distributions	—	—		—		—		(226		)	—			—			(2		)	(228		)
Other	—	—		—		—		(5		)	—			—			—			(5		)
Net earnings	—	—		—		—		302			—			—			2			304
Other comprehensive earnings, net of tax	—	—		—		—		—			(8		)	—			—			(8		)
Balances, June 30, 2019	433	(109	)	$	4	$	10,887	$	4,599		$	(438	)	$	(5,067	)	$	7		$	9,992

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Equity

Three and six months ended June 30, 2018

(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 (loss)			stock			interest			equity
Balances, March 31, 2018	432	(102	)	$	4	$	10,585		$	4,186		$	(318	)	$	(3,962	)	$	116		$	10,611
Issuance of restricted stock	1	—		—		—			—			—			—			—			—
Exercise of stock options	—	2		—		59			—			—			53			—			112
Treasury shares held for taxes due upon exercise of stock options	—	—		—		(10		)	—			—			(3		)	—			(13		)
Purchases of treasury stock	—	(2	)	—		—			—			—			(200		)	—			(200		)
Stock-based compensation	—	—		—		25			—			—			—			—			25
Cash dividends paid ($0.32 per share per quarter) and other distributions	—	—		—		—			(107		)	—			—			—			(107		)
Net earnings	—	—		—		—			212			—			—			6			218
Other comprehensive earnings, net of tax	—	—		—		—			—			(85		)	—			(17		)	(102		)
Balances, June 30, 2018	433	(102	)	$	4	$	10,659		$	4,291		$	(403	)	$	(4,112	)	$	105		$	10,544



				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 (loss)			stock			interest			equity
Balances, December 31, 2017	432	(99	)	$	4	$	10,534		$	4,109		$	(332	)	$	(3,604	)	$	109		$	10,820
Issuance of restricted stock	1	—		—		—			—			—			—			—			—
Exercise of stock options	—	3		—		91			—			—			113			—			204
Treasury shares held for taxes due upon exercise of stock options	—	—		—		(11		)	—			—			(20		)	—			(31		)
Purchases of treasury stock	—	(6	)	—		—			—			—			(601		)	—			(601		)
Stock-based compensation	—	—		—		45			—			—			—			—			45
Cash dividends paid ($0.32 per share per quarter) and other distributions	—	—		—		—			(212		)	—			—			(1		)	(213		)
Net earnings	—	—		—		—			394			—			—			14			408
Other comprehensive earnings, net of tax	—	—		—		—			—			(71		)	—			(17		)	(88		)
Balances, June 30, 2018	433	(102	)	$	4	$	10,659		$	4,291		$	(403	)	$	(4,112	)	$	105		$	10,544

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)



	Six months ended June 30,
	2019			2018
Cash flows from operating activities:
Net earnings	$	304		$	408
Adjustment to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	736			706
Amortization of debt issue costs	10			9
Acquisition-related financing foreign exchange	104			—
Loss (gain) on sale of businesses and investments	—			(6		)
Loss (gain) other	17			—
Loss on extinguishment of debt	—			1
Stock-based compensation	43			45
Deferred income taxes	(68		)	(24		)
Net changes in assets and liabilities, net of effects from acquisitions and foreign currency:
Trade and other receivables	93			189
Contract assets	1			(3		)
Settlement activity	(27		)	13
Prepaid expenses and other assets	(140		)	(11		)
Deferred contract costs	(174		)	(119		)
Deferred revenue	39			(2		)
Accounts payable, accrued liabilities, and other liabilities	(118		)	(383		)
Net cash provided by operating activities	820			823

Cash flows from investing activities:
Additions to property and equipment	(57		)	(83		)
Additions to computer software	(228		)	(233		)
Net proceeds from sale of businesses and investments	43			49
Other investing activities, net	(42		)	(6		)
Net cash provided by (used in) investing activities	(284		)	(273		)

Cash flows from financing activities:
Borrowings	19,201			5,703
Repayment of borrowings and other financing obligations	(10,028		)	(5,521		)
Debt issuance costs	(71		)	(24		)
Proceeds from exercise of stock options	86			203
Treasury stock activity	(423		)	(637		)
Dividends paid	(226		)	(211		)
Other financing activities, net	(24		)	(2		)
Net cash provided by (used in) financing activities	8,515			(489		)

Effect of foreign currency exchange rate changes on cash	2			(43		)
Net increase (decrease) in cash and cash equivalents	9,053			18
Cash and cash equivalents, beginning of period	703			665