Segment Information

Integrated Financial Solutions ("IFS")

The IFS segment is focused primarily on serving the North American regional and community bank and savings institution market for transaction and account processing, payment solutions, channel solutions, lending and wealth management solutions, corporate liquidity, digital channels, risk and compliance solutions, and services, capitalizing on the continuing trend to outsource these solutions. 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 and commercial lenders, 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. The business solutions in this segment included the risk and compliance consulting business through its divestiture on July 31, 2017 (Note 9).

Global Financial Solutions ("GFS")

The GFS segment is focused on serving the largest global financial institutions and/or international financial institutions with a broad array of capital markets and asset management and insurance solutions, as well as banking and payments solutions.

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. 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”, fully outsourced end-to-end solutions, and using consulting and third party service providers. We have long-established relationships with many of these financial institutions that generate significant recurring revenue. GFS clients also include asset managers, buy- and sell-side securities and trading firms, insurers and private equity firms. This segment also includes the Company's consolidated Brazilian Venture (Note 7). The business solutions in this segment included the Capco consulting business through its divestiture on July 31, 2017 (Note 9).

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. The business solutions in this segment included the PS&E business through its divestiture on February 1, 2017 (Note 9), commercial services and check authorization. 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 2017 and 2016 of adjusting SunGard's deferred revenue to fair value.

Adjusted EBITDA

This measure is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, Adjusted EBITDA, as it relates to our segments, is presented in conformity with Accounting Standards Codification Topic 280, "Segment Reporting". Adjusted EBITDA is defined as EBITDA (defined as net income (loss) before net interest expense, income tax provision (benefit) and depreciation and amortization, including amortization of purchased intangibles), plus certain non-operating items. The non-operating items affecting the segment profit measure generally include acquisition accounting adjustments, acquisition, integration and severance costs, and restructuring expenses. For consolidated reporting purposes, these costs and adjustments are recorded in the Corporate and Other segment for the periods discussed below. Adjusted EBITDA for the respective segments excludes the foregoing costs and adjustments.

Summarized financial information for the Company’s segments is shown in the following tables.

As of and for the three months ended September 30, 2017 (in millions):



	IFS		GFS		Corporate and Other			Total
Processing and services revenues	$	1,120	$	997	$	81		$	2,198
Operating expenses	744		703		363			1,810
Depreciation and amortization from continuing operations	82		65		16			163
Purchase accounting amortization	—		—		185			185
EBITDA	458		359		(81		)	736
Acquisition deferred revenue adjustment	—		—		2			2
Acquisition, integration and severance costs	—		—		22			22
Adjusted EBITDA	$	458	$	359	$	(57	)	760

EBITDA								$	736
Interest expense								84
Depreciation and amortization from continuing operations								163
Purchase accounting amortization								185
Other income (expense) unallocated								(182		)
Provision for income taxes								51
Net earnings attributable to noncontrolling interest								10
Net earnings attributable to FIS common stockholders								$	61
Capital expenditures (1)	$	82	$	66	$	4		$	152
Total assets (2)	$	10,273	$	8,386	$	5,635		$	24,294
Goodwill	$	7,662	$	5,867	$	170		$	13,699


(1)	Capital expenditures for the three months ended September 30, 2017 include $1 million of capital leases.

As of and for the three months ended September 30, 2016 (in millions):



	IFS		GFS		Corporate and Other			Total
Processing and services revenues	$	1,114	$	1,068	$	127		$	2,309
Operating expenses	731		789		391			1,911
Depreciation and amortization from continuing operations	70		64		14			148
Purchase accounting amortization	—		—		144			144
EBITDA	453		343		(106		)	690
Acquisition deferred revenue adjustment	—		—		37			37
Acquisition, integration and severance costs	—		—		39			39
Adjusted EBITDA	$	453	$	343	$	(30	)	$	766

EBITDA								$	690
Interest expense								98
Depreciation and amortization from continuing operations								148
Purchase accounting amortization								144
Other income (expense) unallocated								(6		)
Provision for income taxes								103
Net earnings attributable to noncontrolling interest								6
Net earnings attributable to FIS common stockholders								$	185
Capital expenditures (1)	$	82	$	79	$	8		$	169
Total assets (2)	$	10,179	$	9,131	$	6,820		$	26,130
Goodwill	$	7,670	$	6,443	$	456		$	14,569


(1)	Capital expenditures for the three months ended September 30, 2016 include $16 million of capital leases.


(2)	Total assets as of September 30, 2016 exclude $4 million related to discontinued operations.

For the nine months ended September 30, 2017 (in millions):



	IFS		GFS		Corporate and Other			Total
Processing and services revenues	$	3,430	$	3,092	$	272		$	6,794
Operating expenses	2,298		2,317		1,172			5,787
Depreciation and amortization from continuing operations	237		198		47			482
Purchase accounting amortization	—		—		551			551
EBITDA	1,369		973		(302		)	2,040
Acquisition deferred revenue adjustment	—		—		6			6
Acquisition, integration and severance costs	—		—		141			141
Adjusted EBITDA	$	1,369	$	973	$	(155	)	2,187

EBITDA								$	2,040
Interest expense								267
Depreciation and amortization from continuing operations								482
Purchase accounting amortization								551
Other income (expense) unallocated								(123		)
Provision for income taxes								262
Net earnings attributable to noncontrolling interest								24
Net earnings attributable to FIS common stockholders								$	331
Capital expenditures (1)	$	289	$	224	$	15		$	528


(1)	Capital expenditures for the nine months ended September 30, 2017 include $80 million of capital leases.

For the nine months ended September 30, 2016 (in millions):



	IFS		GFS		Corporate and Other			Total
Processing and services revenues	$	3,379	$	3,106	$	310		$	6,795
Operating expenses	2,256		2,415		1,259			5,930
Depreciation and amortization from continuing operations	201		183		47			431
Purchase accounting amortization	1		6		438			445
EBITDA	1,325		880		(464		)	1,741
Acquisition deferred revenue adjustment	—		—		177			177
Acquisition, integration and severance costs	—		—		181			181
Adjusted EBITDA	$	1,325	$	880	$	(106	)	$	2,099

EBITDA								$	1,741
Interest expense								284
Depreciation and amortization from continuing operations								431
Purchase accounting amortization								445
Other income (expense) unallocated								(8		)
Provision for income taxes								200
Net earnings from discontinued operations								1
Net earnings attributable to noncontrolling interest								13
Net earnings attributable to FIS common stockholders								$	361
Capital expenditures (1)	$	212	$	221	$	31		$	464


(1)	Capital expenditures for the nine months ended September 30, 2016 include $18 million of capital leases.

Clients in Brazil, the United Kingdom, Germany, Canada and India accounted for the majority of the revenues from clients based outside of the U.S. for all periods presented. Long-term assets, excluding goodwill and other intangible assets, located outside of the United States total $515 million and $527 million as of September 30, 2017 and 2016, respectively. These assets are predominantly located in Brazil, India, Germany and the United Kingdom.

During the three and nine months ended September 30, 2017 the Company recorded certain costs relating to integration and severance activity primarily from the SunGard acquisition of $22 million and $141 million, respectively. During the three and nine months ended September 30, 2016 the Company recorded transaction and other costs, including integration activity, related to SunGard and other recent acquisitions and other severance costs of $39 million and $181 million. These costs for the 2017 and 2016 periods were recorded in the Corporate and Other segment.