Print Page  |  Close Window

SEC Filings

10-Q
FIRST DATA CORP filed this Form 10-Q on 10/31/2018
Entire Document
 

The following table reconciles the reported Net income attributable to First Data Corporation presented in accordance with GAAP to the non-GAAP financial measure of adjusted net income for the periods presented:
 
 
Three months ended September 30,
 
Nine months ended September 30,
(in millions)
 
2018
 
2017
 
% Change
 
2018
 
2017
 
% Change
Net income attributable to First Data Corporation
 
$
401

 
$
296

 
36
 %
 
$
843

 
$
517

 
63
 %
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation
 
59

 
62

 
(5
)%
 
192

 
183

 
5
 %
Loss on debt extinguishment
 
2

 
1

 
NM

 
3

 
72

 
NM

Amortization of acquisition intangibles and deferred financing costs(a)
 
102

 
106

 
(4
)%
 
312

 
295

 
6
 %
Other(b)
 
(173
)
 
61

 
NM

 
(95
)
 
115

 
(182
)%
Non wholly-owned entities
 

 
(3
)
 
NM

 
(9
)
 
3

 
NM

Discrete tax adjustment(c)
 

 
3

 
NM

 

 
(1
)
 
NM

Discrete tax items(d)
 
(15
)
 
(138
)
 
89
 %
 
(116
)
 
(145
)
 
20
 %
Income tax on above items(e)
 
(36
)
 
(12
)
 
(200
)%
 
(140
)
 
(31
)
 
NM

Adjusted net income attributable to First Data Corporation(f)
 
$
340

 
$
376

 
(9
)%
 
$
990

 
$
1,008

 
(2
)%
NM represents not meaningful

(a)
Represents amortization of intangibles established in connection with the 2007 merger and acquisitions we have made since 2007, excluding the percentage of our consolidated amortization of acquisition intangibles related to non-wholly owned consolidated alliances equal to the portion of such alliances owned by our alliance partners. This line also includes amortization related to deferred financing costs of $4 million and $5 million for the three months ended September 30, 2018 and 2017, respectively, and $13 million and $13 for the nine months ended September 30, 2018 and 2017, respectively.
(b)
See "Other operating expense, net" and "Other income (expense)" in our unaudited consolidated statements of income in Part I of this Form 10-Q.
(c)
Prior to January 1, 2018, we excluded the impact of all discrete tax items from Adjusted Net Income and Diluted Adjusted Net Income per Share. We will no longer exclude certain discrete items which were deemed to be recurring in nature. We retrospectively adjusted the prior period results presented in these unaudited consolidated financial statements.
(d)
We exclude from Adjusted net income certain discrete tax item, such as tax law changes, tax impact of mergers and acquisitions, valuation allowance releases, and tax reserves related to issues that arose before KKR acquired us within a quarter.
(e)
The tax effect of the adjustments between our GAAP and adjusted results takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s). Generally, this results in a tax impact at the U.S. effective tax rate for certain adjustments, including the majority of amortization of intangible assets, deferred financing costs, stock compensation, and loss on debt extinguishment; whereas the tax impact of other adjustments, including restructuring expense, depends on whether the amounts are deductible in the respective tax jurisdictions and the applicable effective tax rate(s) in those jurisdictions.
(f)
Adjusted net income for the three and nine months ended September 30, 2018 includes discrete tax benefits in the amount of $12 million and $43 million, respectively, and the comparable periods in 2017 included discrete tax benefit in the amount of $2 million and $6 million for the three and nine months ended September 30, 2017, respectively.
Liquidity and Capital Resources
 
Our source of liquidity is principally cash generated from operating activities supplemented by our receivable securitization facility and, as necessary, on a short-term basis by borrowings against our senior secured revolving credit facility. We believe our current level of cash and short-term financing capabilities along with future cash flows from operations are sufficient to meet the ongoing needs of the business. To the extent future cash flows exceed the ongoing needs of the business, we expect to use all or a portion of the excess cash to reduce our debt balances.

On October 26, 2018, we refinanced our senior secured revolving credit facility and senior secured term loan facility with a $6 billion senior secured credit facilities. See note 14 "Subsequent Events" in our unaudited consolidated financial statements in Part I of this Form 10-Q for additional information.

Total borrowings and net debt

The table below shows the net debt balances as of September 30, 2018 and December 31, 2017. Net debt is a non-GAAP measure defined as total long-term borrowings plus short-term and current portion of long-term borrowings at par value excluding lines of credit used for settlement purposes less cash and cash equivalents. We believe that net debt provides additional insight on the level and management of leverage. Net debt is not, and should not be viewed as, a substitute for total outstanding borrowings under GAAP.

43