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Changes in Accounting Policies | 6 Months Ended
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Jun. 30, 2018
Accounting Changes and Error Corrections [Abstract] |
Changes in Accounting Policies | Changes in Accounting Policies The Company adopted Topic 606, Revenue from Contracts with Customers, with a date of initial application of January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition. The details of the significant changes and quantitative impact of the changes are disclosed below. The Company applied Topic 606 retrospectively using certain practical expedients in paragraph 606-10-65-1(f). For completed contracts that have variable consideration, the Company used the transaction price at the date the contract was completed rather than estimating variable consideration amounts in the comparative reporting periods. Further, the Company did not disclose the amount of consideration allocated to the remaining performance obligations or an explanation of when the Company expects to recognize that amount as revenue for the 2017 interim reporting periods presented before the date of the initial application. Lastly, the Company did not retrospectively restate contracts modified before the beginning of the earliest reporting period presented but reflects the aggregate effect of all modifications that occurred before the beginning of the earliest period presented. Principal vs. Agent Considerations In customer transactions that also involve third parties, the Company determines whether it is responsible for providing the ultimate solution or service as a principal, or whether it is merely arranging for the solution or service to be provided by the third party as an agent. When the Company is acting as a principal in a transaction, the Company recognizes the gross amounts billed as revenue. When the Company is acting as an agent in a transaction, the Company recognizes the net amount retained as revenue. Previously, the Company followed the guidance of Topic 605, which lists eight specific indicators that are determinative in evaluating whether a contract is recorded on a gross or a net basis. Under Topic 606, the determination is based on whether an entity obtains control of goods or services prior to transfer to a customer. The Company determined interchange and third-party network fees associated with certain parts of the payment processing business were significantly impacted by the adoption of Topic 606. Previously, gross accounting applied to certain types of these transactions, depending on the specific facts and circumstances. However, under Topic 606 revenues from these arrangements will be presented on a net basis because the Company has concluded that it is acting as an agent in the transaction. Software License Rentals The Company previously recognized revenue for initial license fees only when a contract existed, the fee was fixed or determinable, software delivery had occurred, collection was deemed probable, and vendor specific objective evidence of fair value had been established for any undelivered elements in the arrangement. If those criteria were not met, the initial license revenue was either deferred or recognized over time depending on the specific facts and circumstances. Software license rentals typically include payments that are delayed for a period of time, causing the Company to conclude that some portion of the license fee was not fixed or determinable. In these arrangements, license revenue would be deferred until payments become due and payable. Under Topic 606, the Company’s software licenses are generally considered distinct performance obligations, and revenue allocated to the software license is typically recognized at a point in time upon delivery of the license. Software license revenue is also typically recognized at a point in time upon delivery of the license under Topic 606 even if it is sold in a rental model or with extended payment terms, provided collectability is probable. Accordingly, a larger portion of software license revenue is recognized upfront for such transactions under Topic 606 than under Topic 605. Term License Early Renewals The Company previously recognized revenue for term software license renewals upon execution of a license renewal contract, provided all other revenue recognition requirements were met. Under Topic 606, revenue attributable to software term license renewals is now recognized at a later date than it would have been recognized under the previous accounting policy. Impacts on Financial Statements The following tables summarize the impacts of Topic 606 adoption on the Company’s Condensed Consolidated Financial Statements (Unaudited). Condensed Consolidated Balance Sheet (Unaudited) as of December 31, 2017 (in millions):
| As Previously |  |  |  |
| Reported |  | Adjustments |  | As Adjusted
ASSETS |  |  |  |  |
Current assets: |  |  |  |  |
Cash and cash equivalents | $ | 665 |  |  | $ | — |  |  | $ | 665 |
Settlement deposits | 677 |  |  | — |  |  | 677 |
Trade receivables, net | 1,650 |  |  | (26 | ) |  | 1,624 |
Contract assets | — |  |  | 108 |  |  | 108 |
Settlement receivables | 291 |  |  | — |  |  | 291 |
Other receivables | 70 |  |  | — |  |  | 70 |
Prepaid expenses and other current assets | 253 |  |  | — |  |  | 253 |
Total current assets | 3,606 |  |  | 82 |  |  | 3,688 |
Property and equipment, net | 610 |  |  | — |  |  | 610 |
Goodwill | 13,730 |  |  | — |  |  | 13,730 |
Intangible assets, net | 3,950 |  |  | (65 | ) |  | 3,885 |
Computer software, net | 1,728 |  |  | — |  |  | 1,728 |
Deferred contract costs, net | 362 |  |  | (8 | ) |  | 354 |
Other noncurrent assets | 531 |  |  | — |  |  | 531 |
Total assets | $ | 24,517 |  |  | $ | 9 |  |  | $ | 24,526 |
LIABILITIES AND EQUITY |  |  |  |  |
Current liabilities: |  |  |  |  |
Accounts payable and accrued liabilities | $ | 1,241 |  |  | $ | — |  |  | $ | 1,241 |
Settlement payables | 949 |  |  | — |  |  | 949 |
Deferred revenues | 688 |  |  | 88 |  |  | 776 |
Current portion of long-term debt | 1,045 |  |  | — |  |  | 1,045 |
Total current liabilities | 3,923 |  |  | 88 |  |  | 4,011 |
Long-term debt, excluding current portion | 7,718 |  |  | — |  |  | 7,718 |
Deferred income taxes | 1,508 |  |  | (40 | ) |  | 1,468 |
Deferred revenues | 21 |  |  | 85 |  |  | 106 |
Other long-term liabilities | 403 |  |  | — |  |  | 403 |
Total liabilities | 13,573 |  |  | 133 |  |  | 13,706 |
Equity: |  |  |  |  |
FIS stockholders’ equity: |  |  |  |  |
Preferred stock | — |  |  | — |  |  | — |
Common stock | 4 |  |  | — |  |  | 4 |
Additional paid in capital | 10,534 |  |  | — |  |  | 10,534 |
Retained earnings | 4,233 |  |  | (124 | ) |  | 4,109 |
Accumulated other comprehensive earnings | (332 | ) |  | — |  |  | (332 | )
Treasury stock, at cost | (3,604 | ) |  | — |  |  | (3,604 | )
Total FIS stockholders’ equity | 10,835 |  |  | (124 | ) |  | 10,711 |
Noncontrolling interest | 109 |  |  | — |  |  | 109 |
Total equity | 10,944 |  |  | (124 | ) |  | 10,820 |
Total liabilities and equity | $ | 24,517 |  |  | $ | 9 |  |  | $ | 24,526 |
Condensed Consolidated Statement of Earnings (Unaudited) for the three months ended June 30, 2017 (in millions):
| As previously |  |  |  |
| Reported |  | Adjustments |  | As Adjusted
Revenues | $ | 2,341 |  |  | $ | (83 | ) |  | $ | 2,258 |
Cost of revenues | 1,612 |  |  | (92 | ) |  | 1,520 |
Gross profit | 729 |  |  | 9 |  |  | 738 |
Selling, general, and administrative expenses | 370 |  |  | (2 | ) |  | 368 |
Operating income | 359 |  |  | 11 |  |  | 370 |
Other income (expense): |  |  |  |  |
Interest income (expense), net | (91 | ) |  | — |  |  | (91 | )
Other income (expense), net | 4 |  |  | — |  |  | 4 |
Total other income (expense), net | (87 | ) |  | — |  |  | (87 | )
Earnings before income taxes and equity method investment earnings (loss) | 272 |  |  | 11 |  |  | 283 |
Provision (benefit) for income taxes | 132 |  |  | 4 |  |  | 136 |
Equity method investment earnings (loss) | — |  |  | — |  |  | — |
Net earnings | 140 |  |  | 7 |  |  | 147 |
Net (earnings) loss attributable to noncontrolling interest | (8 | ) |  | — |  |  | (8 | )
Net earnings attributable to FIS common stockholders | $ | 132 |  |  | $ | 7 |  |  | $ | 139 |
Net earnings per share — basic attributable to FIS common stockholders | $ | 0.40 |  |  | $ | 0.02 |  |  | $ | 0.42 |
Weighted average shares outstanding — basic | 330 |  |  | 330 |  |  | 330 |
Net earnings per share — diluted attributable to FIS common stockholders | $ | 0.40 |  |  | $ | 0.02 |  |  | $ | 0.42 |
Weighted average shares outstanding — diluted | 334 |  |  | 334 |  |  | 334 |
Condensed Consolidated Statement of Earnings (Unaudited) for the six months ended June 30, 2017 (in millions):
| As previously |  |  |  |
| Reported |  | Adjustments |  | As Adjusted
Revenues | $ | 4,596 |  |  | $ | (190 | ) |  | $ | 4,406 |
Cost of revenues | 3,195 |  |  | (184 | ) |  | 3,011 |
Gross profit | 1,401 |  |  | (6 | ) |  | 1,395 |
Selling, general, and administrative expenses | 783 |  |  | (4 | ) |  | 779 |
Operating income | 618 |  |  | (2 | ) |  | 616 |
Other income (expense): |  |  |  |  |
Interest income (expense), net | (183 | ) |  | — |  |  | (183 | )
Other income (expense), net | 60 |  |  | — |  |  | 60 |
Total other income (expense), net | (123 | ) |  | — |  |  | (123 | )
Earnings before income taxes and equity method investment earnings (loss) | 495 |  |  | (2 | ) |  | 493 |
Provision (benefit) for income taxes | 211 |  |  | (1 | ) |  | 210 |
Equity method investment earnings (loss) | — |  |  | — |  |  | — |
Net earnings | 284 |  |  | (1 | ) |  | 283 |
Net (earnings) loss attributable to noncontrolling interest | (14 | ) |  | — |  |  | (14 | )
Net earnings attributable to FIS common stockholders | $ | 270 |  |  | $ | (1 | ) |  | $ | 269 |
Net earnings per share — basic attributable to FIS common stockholders | $ | 0.82 |  |  | $ | — |  |  | $ | 0.82 |
Weighted average shares outstanding — basic | 329 |  |  | 329 |  |  | 329 |
Net earnings per share — diluted attributable to FIS common stockholders | $ | 0.81 |  |  | $ | — |  |  | $ | 0.81 |
Weighted average shares outstanding — diluted | 334 |  |  | 334 |  |  | 334 |
Condensed Consolidated Statement of Comprehensive Earnings (Unaudited) for the three months ended June 30, 2017 (in millions):
| As Previously |  |  |  |
| Reported |  | Adjustments |  | As Adjusted
Net earnings |  |  | $ | 140 |  |  |  |  | $ | 7 |  |  |  |  | $ | 147 |
Other comprehensive earnings, before tax: |  |  |  |  |  |  |  |  |  |  |
Unrealized gain (loss) on investments and derivatives | $ | (33 | ) |  |  |  | $ | — |  |  |  |  | $ | (33 | ) |  |
Reclassification adjustment for gain (loss) included in net earnings | — |  |  |  |  | — |  |  |  |  | — |  |  |
Unrealized gain (loss) on investments and derivatives, net | (33 | ) |  |  |  | — |  |  |  |  | (33 | ) |  |
Foreign currency translation adjustments | (62 | ) |  |  |  | — |  |  |  |  | (62 | ) |  |
Minimum pension liability adjustments | (10 | ) |  |  |  | — |  |  |  |  | (10 | ) |  |
Other comprehensive earnings (loss), before tax | (105 | ) |  |  |  | — |  |  |  |  | (105 | ) |  |
Provision for income tax expense (benefit) related to items of other comprehensive earnings | (13 | ) |  |  |  | — |  |  |  |  | (13 | ) |  |
Other comprehensive earnings (loss), net of tax | $ | (92 | ) |  | (92 | ) |  | $ | — |  |  | — |  |  | $ | (92 | ) |  | (92 | )
Comprehensive earnings: |  |  | 48 |  |  |  |  | 7 |  |  |  |  | 55 |
Net (earnings) loss attributable to noncontrolling interest |  |  | (8 | ) |  |  |  | — |  |  |  |  | (8 | )
Other comprehensive (earnings) loss attributable to noncontrolling interest |  |  | 5 |  |  |  |  | — |  |  |  |  | 5 |
Comprehensive earnings attributable to FIS common stockholders |  |  | $ | 45 |  |  |  |  | $ | 7 |  |  |  |  | $ | 52 |
Condensed Consolidated Statement of Comprehensive Earnings (Unaudited) for the six months ended June 30, 2017 (in millions):
| As Previously |  |  |  |
| Reported |  | Adjustments |  | As Adjusted
Net earnings |  |  | $ | 284 |  |  |  |  | $ | (1 | ) |  |  |  | $ | 283 |
Other comprehensive earnings, before tax: |  |  |  |  |  |  |  |  |  |  |
Unrealized gain (loss) on investments and derivatives | $ | (33 | ) |  |  |  | $ | — |  |  |  |  | $ | (33 | ) |  |
Reclassification adjustment for gain (loss) included in net earnings | — |  |  |  |  | — |  |  |  |  | — |  |  |
Unrealized gain (loss) on investments and derivatives, net | (33 | ) |  |  |  | — |  |  |  |  | (33 | ) |  |
Foreign currency translation adjustments | (26 | ) |  |  |  | — |  |  |  |  | (26 | ) |  |
Minimum pension liability adjustments | (10 | ) |  |  |  | — |  |  |  |  | (10 | ) |  |
Other comprehensive earnings (loss), before tax | (69 | ) |  |  |  | — |  |  |  |  | (69 | ) |  |
Provision for income tax expense (benefit) related to items of other comprehensive earnings | (13 | ) |  |  |  | — |  |  |  |  | (13 | ) |  |
Other comprehensive earnings (loss), net of tax | $ | (56 | ) |  | (56 | ) |  | $ | — |  |  | — |  |  | $ | (56 | ) |  | (56 | )
Comprehensive earnings: |  |  | 228 |  |  |  |  | (1 | ) |  |  |  | 227 |
Net (earnings) loss attributable to noncontrolling interest |  |  | (14 | ) |  |  |  | — |  |  |  |  | (14 | )
Other comprehensive (earnings) loss attributable to noncontrolling interest |  |  | 2 |  |  |  |  | — |  |  |  |  | 2 |
Comprehensive earnings attributable to FIS common stockholders |  |  | $ | 216 |  |  |  |  | $ | (1 | ) |  |  |  | $ | 215 |
Condensed Consolidated Statement of Cash Flows (Unaudited) for the six months ended June 30, 2017 (in millions):
| As Previously |  |  |  |
| Reported |  | Adjustments |  | As Adjusted
Cash flows from operating activities: |  |  |  |  |
Net earnings | $ | 284 |  |  | $ | (1 | ) |  | $ | 283 |
Adjustment to reconcile net earnings to net cash provided by operating activities: |  |  |  |  |
Depreciation and amortization | 685 |  |  | (12 | ) |  | 673 |
Amortization of debt issue costs | 17 |  |  | — |  |  | 17 |
Gain on sale of assets | (88 | ) |  | — |  |  | (88 | )
Stock-based compensation | 61 |  |  | — |  |  | 61 |
Deferred income taxes | (132 | ) |  | 2 |  |  | (130 | )
Net changes in assets and liabilities, net of effects from acquisitions and foreign currency: |  |  |  |  |
Trade receivables | 45 |  |  | (50 | ) |  | (5 | )
Contract assets | — |  |  | 51 |  |  | 51 |
Settlement activity | (19 | ) |  | — |  |  | (19 | )
Prepaid expenses and other assets | (52 | ) |  | — |  |  | (52 | )
Deferred contract costs | (70 | ) |  | 6 |  |  | (64 | )
Deferred revenues | 9 |  |  | 9 |  |  | 18 |
Accounts payable, accrued liabilities, and other liabilities | (212 | ) |  | (5 | ) |  | (217 | )
Net cash provided by operating activities | 528 |  |  | — |  |  | 528 |
Cash flows from investing activities: |  |  |  |  |
Additions to property and equipment | (69 | ) |  | — |  |  | (69 | )
Additions to computer software | (228 | ) |  | — |  |  | (228 | )
Net proceeds from sale of assets | 846 |  |  | — |  |  | 846 |
Other investing activities, net | (3 | ) |  | — |  |  | (3 | )
Net cash provided by (used in) investing activities | 546 |  |  | — |  |  | 546 |
Cash flows from financing activities: |  |  |  |  |
Borrowings | 3,698 |  |  | — |  |  | 3,698 |
Repayment of borrowings and capital lease obligations | (4,557 | ) |  | — |  |  | (4,557 | )
Proceeds from exercise of stock options | 109 |  |  | — |  |  | 109 |
Treasury stock activity | (43 | ) |  | — |  |  | (43 | )
Dividends paid | (192 | ) |  | — |  |  | (192 | )
Other financing activities, net | (5 | ) |  | — |  |  | (5 | )
Net cash provided by (used in) financing activities | (990 | ) |  | — |  |  | (990 | )
Effect of foreign currency exchange rate changes on cash | 19 |  |  | — |  |  | 19 |
Net increase (decrease) in cash and cash equivalents | 103 |  |  | — |  |  | 103 |
Cash and cash equivalents, beginning of year | 683 |  |  | — |  |  | 683 |
Cash and cash equivalents, end of year | $ | 786 |  |  | $ | — |  |  | $ | 786 |
Supplemental cash flow information: |  |  |  |  |
Cash paid for interest | $ | 195 |  |  | $ | — |  |  | $ | 195 |
Cash paid for income taxes | $ | 452 |  |  | $ | — |  |  | $ | 452 |

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- Definition The entire disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
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