Condensed Consolidated Financial Statement Details

3 Months Ended

Mar. 31, 2023

Condensed Consolidated Financial Statement Details [Abstract]

Condensed Consolidated Financial Statement Details

Cash and Cash Equivalents

The Company records restricted cash in captions other than Cash and cash equivalents in the consolidated balance sheets. The reconciliation between Cash and cash equivalents in the consolidated balance sheets and Cash, cash equivalents and restricted cash per the consolidated statements of cash flows is as follows (in millions):


	March 31, 2023		December 31, 2022
Cash and cash equivalents on the consolidated balance sheets	$	1,871	$	2,188
Merchant float (in Settlement assets)	2,471		2,625
Total Cash and cash equivalents and restricted cash per the consolidated statements of cash flows	$	4,342	$	4,813

Settlement Assets

The principal components of the Company's settlement assets on the consolidated balance sheets are as follows (in millions):


	March 31, 2023		December 31, 2022
Settlement assets
Settlement deposits	$	527	$	492
Merchant float	2,471		2,625
Settlement receivables	1,427		2,738
Total Settlement assets	$	4,425	$	5,855

Intangible Assets, Software and Property and Equipment

The following table provides details of Intangible assets, Software and Property and equipment as of March 31, 2023, and December 31, 2022 (in millions):


	March 31, 2023						December 31, 2022
	Cost		Accumulated depreciation and amortization		Net		Cost		Accumulated depreciation and amortization		Net
Intangible assets	$	18,362	$	9,831	$	8,531	$	18,260	$	9,304	$	8,956
Software	$	6,635	$	3,413	$	3,222	$	6,607	$	3,369	$	3,238
Property and equipment	$	2,394	$	1,556	$	838	$	2,381	$	1,519	$	862

As of March 31, 2023, Intangible assets, net of amortization, includes $8,305 million of customer relationships and $226 million of trademarks and other intangible assets. Amortization expense with respect to Intangible assets was $496 million and $557 million for the three months ended March 31, 2023 and 2022, respectively.

Depreciation expense for property and equipment was $57 million and $73 million for the three months ended March 31, 2023 and 2022, respectively.

Amortization expense with respect to software was $251 million and $287 million for the three months ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023 and 2022, the Company recorded $16 million and $62 million, respectively, of incremental software amortization expense resulting from the Company's platform modernization. Platform modernization includes sunsetting certain technology platforms, which resulted in shortened estimated useful lives and accelerated amortization methods primarily impacting the associated assets over approximately three years, beginning in the third quarter of 2021.

Impairments

For the three months ended March 31, 2022, the Company also recorded $58 million of impairments primarily related to real estate-related assets as a result of office space reductions.

Goodwill

Changes in goodwill during the three months ended March 31, 2023, are summarized below (in millions). Prior-period amounts have been reclassified to conform to the new reportable segment presentation as discussed in Note 10.


					Capital		Corporate
	Banking		Merchant		Market		And
	Solutions		Solutions		Solutions		Other		Total
Balance, December 31, 2022	$	12,536	$	17,460	$	4,260	$	20	$	34,276
Foreign currency adjustments	8		123		17		—		148
Balance, March 31, 2023	$	12,544	$	17,583	$	4,277	$	20	$	34,424

We assess goodwill for impairment on an annual basis during the fourth quarter or more frequently if circumstances indicate potential impairment. We evaluated if events and circumstances as of March 31, 2023, indicated potential impairment of our reporting units. We performed a qualitative assessment by examining factors most likely to affect our reporting units' fair values, including the impact of recent U.S. bank failures. The factors examined involve significant use of management judgment and included, among others, (1) forecast revenue, growth rates, operating margins, and capital expenditures used to calculate estimated future cash flows, (2) future economic and market conditions and (3) FIS' market capitalization. Based on our interim impairment assessment as of March 31, 2023, we concluded that it remained more likely than not that the fair value continues to exceed the carrying amount for each of our reporting units; therefore, goodwill was not impaired.

It is reasonably possible, however, that macroeconomic conditions, including rates of economic growth, inflation and interest, and foreign currency movements, or other events could have a material impact on one or more of the estimates and assumptions used to evaluate goodwill impairment and could result in future goodwill impairment.

The total carrying amount of goodwill as of March 31, 2023, and December 31, 2022, is net of accumulated impairment charges of $17.7 billion. Of this amount, $17.6 billion relates to the Merchant Solutions reporting unit which was impaired during the fourth quarter of 2022, and $94 million relates to non-strategic businesses within Corporate and Other which were impaired during the fourth quarter of 2020.

Visa Europe and Contingent Value Rights

As part of the Worldpay acquisition, the Company acquired certain assets and liabilities related to the June 2016 Worldpay Group plc (Legacy Worldpay) disposal of its ownership interest in Visa Europe to Visa Inc. As part of the disposal, Legacy Worldpay received proceeds from Visa Inc. in the form of cash ("cash consideration") and convertible preferred stock ("preferred stock"), the value of which may be reduced by losses incurred relating to ongoing interchange-related litigation involving Visa Europe. The preferred stock becomes convertible into Visa Inc. Class A common stock ("common stock") in stages as determined by Visa Inc. in accordance with the relevant transaction documents pertaining to the aforementioned disposal of the Visa Europe ownership interest. The preferred stock becomes fully convertible no later than 2028 (subject to a holdback to cover any pending claims). Also in connection with the disposal and pursuant to the terms of an amendment executed on September 17, 2020, the Company will pay the former Legacy Worldpay owners 90% of the net-of-tax proceeds from the disposal, known as contingent value rights, which is recorded as a liability ("CVR liability") on the consolidated balance sheets.

The Company has elected the fair value option under ASC 825, Financial Instruments ("ASC 825"), for measuring its preferred stock asset and CVR liability. The fair value of the preferred stock was $71 million and $55 million at March 31, 2023, and December 31, 2022, respectively, recorded in Other noncurrent assets on the consolidated balance sheets. The fair value of the CVR liability was $361 million and $342 million at March 31, 2023, and December 31, 2022, respectively, recorded in Other noncurrent liabilities on the consolidated balance sheets. Pursuant to ASC 825, the Company remeasures the fair value of the preferred stock and CVR liability each reporting period. The net change in fair value was $(3) million and $25 million for the three months ended March 31, 2023 and 2022, respectively, recorded in Other income (expense), net on the consolidated statements of earnings (loss).

Equity Security Investments

The Company holds various equity securities without readily determinable fair values that primarily represent strategic investments made by the Company as well as investments obtained through acquisitions. Such investments totaled $395 million and $393 million at March 31, 2023, and December 31, 2022, respectively, and are included within Other noncurrent assets on the consolidated balance sheets. The Company accounts for these investments at cost, less impairment, and adjusts the carrying values for observable price changes from orderly transactions for identical or similar investments of the same issuer. These adjustments are generally considered Level 2-type fair value measurements. The Company records gains and losses on these investments, realized and unrealized as well as impairment losses, as Other income (expense), net on the consolidated statements of earnings (loss) and recorded net gains of $(2) million and $41 million for the three months ended March 31, 2023 and 2022, respectively, related to these investments.