Item 8. Financial Statements and Supplementary Data

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Item 8. Financial Statements and Supplementary Data

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

INDEX TO FINANCIAL INFORMATION

Page Number
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting50
Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements51
Consolidated Balance Sheets as of December 31, 2017 and 201652
Consolidated Statements of Earnings for the years ended December 31, 2017, 2016 and 201553
Consolidated Statements of Comprehensive Earnings for the years ended December 31, 2017, 2016 and 201554
Consolidated Statements of Equity for the years ended December 31, 2017, 2016 and 201555
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 201556
Notes to Consolidated Financial Statements57

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and board of directors

Fidelity National Information Services, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Fidelity National Information Services, Inc.’s and subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2017 and 2016, the related consolidated statements of earnings, comprehensive earnings, equity, and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes (collectively, the “consolidated financial statements”), and our report dated February 22, 2018 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Jacksonville, Florida

February 22, 2018

Certified Public Accountants

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and board of directors

Fidelity National Information Services, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Fidelity National Information Services, Inc. and subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of earnings, comprehensive earnings, equity, and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 22, 2018 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company's auditor since 2004.

Jacksonville, Florida

February 22, 2018

Certified Public Accountants

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2017 and 2016

(In millions, except per share amounts)

20172016
ASSETS
Current assets:
Cash and cash equivalents$665$683
Settlement deposits677520
Trade receivables, net1,6501,639
Settlement receivables291175
Other receivables7065
Prepaid expenses and other current assets253236
Deferred income taxes—101
Assets held for sale—863
Total current assets3,6064,282
Property and equipment, net610626
Goodwill13,73014,178
Intangible assets, net3,9504,664
Computer software, net1,7281,608
Deferred contract costs, net362310
Other noncurrent assets531363
Total assets$24,517$26,031
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities$1,241$1,146
Settlement payables949714
Deferred revenues688680
Current portion of long-term debt1,045332
Liabilities held for sale—279
Total current liabilities3,9233,151
Long-term debt, excluding current portion7,71810,146
Deferred income taxes1,5082,484
Deferred revenues2119
Other long-term liabilities403386
Total liabilities13,57316,186
Equity:
FIS stockholders’ equity:
Preferred stock, $0.01 par value, 200 shares authorized, none issued and outstanding as of December 31, 2017 and 2016——
Common stock, $0.01 par value, 600 shares authorized, 432 and 431 shares issued as of December 31, 2017 and 2016, respectively44
Additional paid in capital10,53410,380
Retained earnings4,2333,299
Accumulated other comprehensive earnings(332)(331)
Treasury stock, $0.01 par value, 99 and 103 shares as of December 31, 2017 and 2016, respectively, at cost(3,604)(3,611)
Total FIS stockholders’ equity10,8359,741
Noncontrolling interest109104
Total equity10,9449,845
Total liabilities and equity$24,517$26,031

The accompanying notes are an integral part of these consolidated financial statements.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

Consolidated Statements of Earnings

Years Ended December 31, 2017, 2016 and 2015

(In millions, except per share amounts)

201720162015
Processing and services revenues (for related party activity, see note 17)$9,123$9,241$6,596
Cost of revenues (for related party activity, see note 17)6,1816,2334,395
Gross profit2,9423,0082,201
Selling, general, and administrative expenses (for related party activity, see note17)1,4501,7101,102
Operating income1,4921,2981,099
Other income (expense):
Interest income222016
Interest expense(359)(403)(199)
Other income (expense), net(119)(9)121
Total other income (expense)(456)(392)(62)
Earnings from continuing operations before income taxes and equity method investment earnings1,0369061,037
Provision (benefit) for income taxes(319)317379
Equity method investment earnings(3)——
Earnings from continuing operations, net of tax1,352589658
Earnings (loss) from discontinued operations, net of tax—1(7)
Net earnings1,352590651
Net earnings attributable to noncontrolling interest(33)(22)(19)
Net earnings attributable to FIS common stockholders$1,319$568$632
Net earnings per share — basic from continuing operations attributable to FIS common stockholders$4.00$1.74$2.24
Net earnings (loss) per share — basic from discontinued operations attributable to FIS common stockholders——(0.03)
Net earnings per share — basic attributable to FIS common stockholders *$4.00$1.74$2.22
Weighted average shares outstanding — basic330326285
Net earnings per share — diluted from continuing operations attributable to FIS common stockholders$3.93$1.72$2.21
Net earnings (loss) per share — diluted from discontinued operations attributable to FIS common stockholders——(0.03)
Net earnings per share — diluted attributable to FIS common stockholders *$3.93$1.72$2.19
Weighted average shares outstanding — diluted336330289
Amounts attributable to FIS common stockholders:
Earnings from continuing operations, net of tax$1,319$567$639
Earnings (loss) from discontinued operations, net of tax—1(7)
Net earnings attributable to FIS common stockholders$1,319$568$632
  • Amounts may not sum due to rounding.

The accompanying notes are an integral part of these consolidated financial statements.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Earnings

Years Ended December 31, 2017, 2016 and 2015

(In millions)

201720162015
Net earnings$1,352$590$651
Other comprehensive earnings, before tax:
Unrealized gain (loss) on investments and derivatives$(28)$(4)$(17)
Reclassification adjustment for gains (losses) included in net earnings—94
Unrealized gain (loss) on investments and derivatives, net(28)5(13)
Foreign currency translation adjustments23(7)(196)
Minimum pension liability adjustments(8)(1)(1)
Other comprehensive earnings (loss), before tax(13)(3)(210)
Provision for income tax expense (benefit) related to items of other comprehensive earnings(11)31(5)
Other comprehensive earnings (loss), net of tax$(2)(2)$(34)(34)$(205)(205)
Comprehensive earnings1,350556446
Net (earnings) loss attributable to noncontrolling interest(33)(22)(19)
Other comprehensive (earnings) losses attributable to noncontrolling interest1(19)32
Comprehensive earnings attributable to FIS common stockholders$1,318$515$459

The accompanying notes are an integral part of these consolidated financial statements.

FIDELITY NATIONAL INFORMATION SERVICES, INC. AND SUBSIDIARIES Consolidated Statements of Equity Years ended December 31, 2017, 2016 and 2015 (In millions, except per share amounts)
Amount
FIS Stockholders
Accumulated
Number of sharesAdditionalother
CommonTreasuryCommonpaid inRetainedcomprehensiveTreasuryNoncontrollingTotal
sharessharesstockcapitalearningsearningsstockinterestequity
Balances, December 31, 2014388(103)$4$7,337$2,747$(107)$(3,424)$135$6,692
Exercise of stock options and stock purchase rights—2—1——56—57
Treasury shares held for taxes due upon exercise of stock options——————(20)—(20)
Excess income tax benefit from exercise of stock options———29————29
Stock-based compensation———98————98
Cash dividends declared ($1.04 per share) and other distributions————(306)——(27)(333)
Purchases of treasury stock—(5)————(300)—(300)
SunGard acquisition42——2,744———42,748
Other———1——1(13)(11)
Net earnings————632——19651
Other comprehensive earnings, net of tax—————(172)—(32)(204)
Balances, December 31, 2015430(106)$4$10,210$3,073$(279)$(3,687)$86$9,407
Issuance of restricted stock1————————
Exercise of stock options—3—21——88—109
Treasury shares held for taxes due upon exercise of stock options———(24)——(16)—(40)
Excess income tax benefit from exercise of stock options———32————32
Stock-based compensation———137————137
Cash dividends declared ($1.04 per share) and other distributions————(342)——(23)(365)
Other———4——4—8
Net earnings————568——22590
Other comprehensive earnings, net of tax—————(52)—19(33)
Balances, December 31, 2016431(103)$4$10,380$3,299$(331)$(3,611)$104$9,845
Issuance of restricted stock1————————
Exercise of stock options—5—73——137—210
Treasury shares held for taxes due upon exercise of stock options———(28)——(25)—(53)
Stock-based compensation———109————109
Cash dividends declared ($1.16 per share) and other distributions————(385)——(27)(412)
Purchases of treasury stock—(1)————(105)—(105)
Net earnings————1,319——331,352
Other comprehensive earnings, net of tax—————(1)—(1)(2)
Balances, December 31, 2017432(99)$4$10,534$4,233$(332)$(3,604)$109$10,944

The accompanying notes are an integral part of these consolidated financial statements.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended December 31, 2017, 2016 and 2015

(In millions)

201720162015
Cash flows from operating activities:
Net earnings$1,352$590$651
Adjustment to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization1,3911,174669
Amortization of debt issue costs191911
Gain on sale of assets(62)—(149)
Loss on extinguishment of debt196——
Stock-based compensation10713798
Deferred income taxes(985)(164)48
Excess income tax benefit from exercise of stock options—(32)(29)
Other operating activities, net—(2)4
Net changes in assets and liabilities, net of effects from acquisitions and foreign currency:
Trade receivables(167)57(103)
Settlement activity(51)155
Prepaid expenses and other assets(2)(8)(46)
Deferred contract costs(166)(138)(120)
Deferred revenue(6)18263
Accounts payable, accrued liabilities, and other liabilities1159529
Net cash provided by operating activities1,7411,9251,131
Cash flows from investing activities:
Additions to property and equipment(145)(145)(133)
Additions to computer software(468)(471)(282)
Acquisitions, net of cash acquired——(1,720)
Net proceeds from sale of assets1,307—241
Other investing activities, net(4)(3)(4)
Net cash provided by (used in) investing activities690(619)(1,898)
Cash flows from financing activities:
Borrowings9,6157,74513,216
Repayment of borrowings and capital lease obligations(11,689)(8,749)(11,561)
Debt issuance costs(13)(25)(37)
Excess income tax benefit from exercise of stock options—3229
Proceeds from exercise of stock options20811257
Treasury stock activity(153)(40)(320)
Dividends paid(385)(341)(305)
Distributions to Brazilian Venture partner(23)(20)(24)
Other financing activities, net(40)(23)(40)
Net cash (used in) provided by financing activities(2,480)(1,309)1,015
Effect of foreign currency exchange rate changes on cash314(59)
Net increase (decrease) in cash and cash equivalents(18)1189
Cash and cash equivalents, beginning of year683682493
Cash and cash equivalents, end of year$665$683$682
Supplemental cash flow information:
Cash paid for interest$354$351$142
Cash paid for income taxes$545$341$355

The accompanying notes are an integral part of these consolidated financial statements.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unless stated otherwise or the context otherwise requires, all references to “FIS,” “we,” the “Company” or the “registrant” are to Fidelity National Information Services, Inc., a Georgia corporation, and its subsidiaries.

(1) Basis of Presentation

FIS is a global leader in financial services technology with a focus on retail and institutional banking, payments, asset and wealth management, risk and compliance, consulting and outsourcing solutions.

On August 12, 2015, FIS and certain of its wholly owned subsidiaries entered into an Agreement and Plan of Merger with SunGard and SunGard Capital Corp. II (collectively “SunGard”) pursuant to which, through a series of mergers, FIS acquired SunGard (collectively the "SunGard acquisition"). FIS completed the SunGard acquisition on November 30, 2015, and SunGard's results of operations and financial position are included in the Consolidated Financial Statements from and after the date of acquisition.

We report the results of our operations in three reporting segments: Integrated Financial Solutions (“IFS”), Global Financial Solutions (“GFS”) and Corporate and Other (Note 19).

(2)Summary of Significant Accounting Policies

The following describes the significant accounting policies of the Company used in preparing the accompanying Consolidated Financial Statements.

(a)Principles of Consolidation

The Consolidated Financial Statements include the accounts of FIS, its wholly-owned subsidiaries and subsidiaries that are majority-owned. All significant intercompany profits, transactions and balances have been eliminated in consolidation.

(b)Cash and Cash Equivalents

The Company considers all cash on hand, money market funds and other highly liquid investments with original maturities of three months or less to be cash and cash equivalents. As part of the Company’s payment processing business, the Company provides cash settlement services to financial institutions and state and local governments. These services involve the movement of funds between the various parties associated with automated teller machines ("ATM"), point-of-sale or electronic benefit transactions ("EBT") and this activity results in a balance due to the Company at the end of each business day that it recoups over the next few business days. The in-transit balances due to the Company are included in cash and cash equivalents. The carrying amounts reported in the Consolidated Balance Sheets for these instruments approximate their fair value. As of December 31, 2017, we had cash and cash equivalents of $665 million of which approximately $415 million is held by our foreign entities.

(c)Fair Value Measurements

Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations

ASC Topic 805, Business Combinations, requires an acquirer to recognize, separately from goodwill, the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree, and to measure these items generally at their acquisition date fair values. Goodwill is recorded as the residual amount by which the purchase price exceeds the fair value of the net assets acquired. Fair values are determined using the framework outlined below under Fair Value Hierarchy and the methodologies addressed in the individual subheadings. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, we are required to report provisional amounts in the financial statements for the items for which the accounting is incomplete. Adjustments to provisional amounts initially recorded that are identified during the measurement period are recognized in the reporting period in which the adjustment amounts are determined. This includes any effect on earnings of changes in depreciation, amortization, or other income effects as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

During the measurement period, we are also required to recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period ends the sooner of one year from the combination date or when we receive the information we were seeking about facts and circumstances that existed as of the acquisition date or learn that more information is not obtainable.

Fair Value of Financial Instruments

The carrying amounts reported in the Consolidated Balance Sheets for receivables and accounts payable approximate their fair values because of their immediate or short-term maturities. The fair value of the Company’s long-term debt is estimated to be approximately $156 million and $183 million higher than the carrying value as of December 31, 2017 and 2016, respectively. These estimates are based on values of trades of our debt in close proximity to year end, which are considered Level 2-type measurements, as discussed below. These estimates are subjective in nature and involve uncertainties and significant judgment in the interpretation of current market data. Therefore, the values presented are not necessarily indicative of amounts the Company could realize or settle currently. The Company holds, or has held, certain derivative instruments, specifically interest rate swaps and foreign exchange forward contracts. Derivative instruments are valued using Level 2-type measurements.

Fair Value Hierarchy

The authoritative accounting literature defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy based on the quality of inputs used to measure fair value.

The fair value hierarchy includes three levels that are based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). If the inputs used to measure the fair value fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the asset or liability. The three levels of the fair value hierarchy are described below:

Level 1. Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2. Inputs to the valuation methodology include:

  • Quoted prices for similar assets or liabilities in active markets;

  • Quoted prices for identical or similar assets or liabilities in inactive markets;

  • Inputs other than quoted prices that are observable for the asset or liability;

•Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3. Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

Fair Value Measurements

Generally accepted accounting principles require that, subsequent to their initial recognition, certain assets be reviewed for impairment on a nonrecurring basis by comparison to their fair value. As more fully discussed in their respective subheadings below, this includes goodwill, long-lived assets, intangible assets, computer software and investments. There were no significant fair value measurement impairments for 2017, 2016 or 2015.

Contingent consideration liabilities recorded in connection with business acquisitions must also be adjusted for changes in fair value until settled.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(d)Derivative Financial Instruments

The Company accounts for derivative financial instruments in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 815, Derivatives and Hedging. During 2017, 2016 and 2015, the Company engaged in hedging activities relating to its variable rate debt through the use of interest rate swaps. The Company designates these interest rate swaps as cash flow hedges. The estimated fair values of the cash flow hedges are determined using Level 2 type measurements. They are recorded as an asset or liability of the Company and are included in the accompanying Consolidated Balance Sheets in prepaid expenses and other current assets, other non-current assets, accounts payable and accrued liabilities or other long-term liabilities, as appropriate, and as a component of accumulated other comprehensive earnings, net of deferred taxes. A portion of the amount included in accumulated other comprehensive earnings is recorded in interest expense as a yield adjustment as interest payments are made on the Company’s Term and Revolving Loans (Note 10).

The Company's foreign exchange risk management policy permits the use of derivative instruments, such as forward contracts and options, to reduce volatility in the Company's results of operations and/or cash flows resulting from foreign exchange rate fluctuations. During 2017 and 2016, the Company entered into foreign currency forward exchange contracts to hedge foreign currency exposure to intercompany loans. As of December 31, 2017 and 2016, the notional amount of these derivatives was approximately $0 million and $143 million, respectively, and the fair value was nominal. These derivatives have not been designated as hedges for accounting purposes.

The Company also utilizes derivative and non-derivative net investment hedges in order to reduce the volatility in the income statement caused by the impact of changes in foreign currency exchange rates on the investment in foreign denominated operations. The change in fair value of the net investment hedges due to remeasurement of the effective portion, net of tax, is recorded in other comprehensive income (loss). The ineffective portion of these hedging instruments impacts net income when the ineffectiveness occurs.

We also have used currency forward contracts to manage our exposure to fluctuations in costs caused by variations in Indian Rupee ("INR") exchange rates, however, we terminated those contracts in 2017. These INR forward contracts were designated as cash flow hedges. The fair value of these currency forward contracts was determined using currency exchange market rates, obtained from reliable, independent, third party banks, at the balance sheet date. The fair value of forward contracts was subject to changes in currency exchange rates. The Company had no ineffectiveness related to its use of currency forward contracts in connection with INR cash flow hedges.

In September 2015, the Company entered into treasury lock hedges with a total notional amount of $1.0 billion, reducing the risk of changes in the benchmark index component of the 10-year treasury yield. The Company designated these derivatives as cash flow hedges. On October 13, 2015, in conjunction with the pricing of the $4.5 billion senior notes, the Company terminated these treasury lock contracts for a cash settlement payment of $16 million, which was recorded as a component of Other Comprehensive Earnings and will be reclassified as an adjustment to interest expense over the ten years during which the related interest payments that were hedged will be recognized in income.

(e)Trade Receivables

A summary of trade receivables, net, as of December 31, 2017 and 2016 is as follows (in millions):

20172016
Trade receivables — billed$1,479$1,452
Trade receivables — unbilled234228
Total trade receivables1,7131,680
Allowance for doubtful accounts(63)(41)
Total trade receivables, net$1,650$1,639

When evaluating the adequacy of the allowance for doubtful accounts, the Company considers historical bad debts, customer creditworthiness, current economic trends, changes in customer payment terms and collection trends. Any change in

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

the assumptions used may result in an additional allowance for doubtful accounts being recognized in the period in which the change occurs.

A summary roll forward of the allowance for doubtful accounts for 2017, 2016 and 2015 is as follows (in millions):

Allowance for doubtful accounts as of December 31, 2014$(16)
Bad debt expense(10)
Write-offs, net of recoveries10
Allowance for doubtful accounts as of December 31, 2015(16)
Bad debt expense(29)
Write-offs, net of recoveries4
Allowance for doubtful accounts as of December 31, 2016(41)
Bad debt expense(26)
Write-offs, net of recoveries4
Allowance for doubtful accounts as of December 31, 2017$(63)

(f)Settlement Deposits, Receivables and Payables

We manage certain integrated electronic payment services and programs and wealth management processes for our clients that require us to hold and manage client cash balances used to fund their daily settlement activity. Settlement deposits represent funds we hold that were drawn from our clients to facilitate settlement activities. Settlement receivables represent amounts funded by us. Settlement payables consist of settlement deposits from clients, settlement payables to third parties and outstanding checks related to our settlement activities for which the right of offset does not exist or we do not intend to exercise our right of offset. Our accounting policy for such outstanding checks is to include them in settlement payables on the Consolidated Balance Sheets and operating cash flows on the Consolidated Statements of Cash Flows. The payment solution services that give rise to these settlement balances are separate and distinct from those settlement activities referred to under (b) Cash and Cash Equivalents, where the services we provide primarily facilitate the movement of funds.

(g)Goodwill

Goodwill represents the excess of cost over the fair value of identifiable assets acquired and liabilities assumed in business combinations. FASB ASC Topic 350, Intangibles — Goodwill and Other, requires that goodwill and other intangible assets with indefinite useful lives not be amortized, but rather be tested for impairment annually, or more frequently if circumstances indicate potential impairment. The guidance allows an entity first to assess qualitatively whether it is more likely than not that a reporting unit's carrying amount exceeds its fair value, referred to as "step zero." If an entity concludes that it is more likely than not that a reporting unit's fair value is less than its carrying amount (that is, a likelihood of more than 50 percent), the "step one" quantitative assessment must be performed for that reporting unit. ASC Topic 350 provides examples of events and circumstances that should be considered in performing the "step zero" qualitative assessment, including macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, events affecting a reporting unit or the entity as a whole and a sustained decrease in share price.

In applying the quantitative analysis, we determine the fair value of our reporting units based on a weighted average of multiple valuation techniques, principally a combination of an income approach and a market approach, which are Level 3 and Level 2 type measurements. The income approach calculates a value based upon the present value of estimated future cash flows, while the market approach uses earnings multiples of similarly situated guideline public companies. If the fair value of a reporting unit exceeds the carrying value of the reporting unit’s net assets, goodwill is not impaired and further testing is not required. We engaged independent specialists to perform valuations of our reporting units effective January 1, 2015 in conjunction with our re-segmentation. There was a substantial excess of fair value over carrying value for our reporting units in the 2015 independent valuations.

In conjunction with the organizational modifications in the first quarter of 2016, we reallocated goodwill associated with the reclassified businesses based on relative fair values as of January 1, 2016. We refreshed our step zero qualitative analysis identifying no indications of impairment for any of our reporting units.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company assesses goodwill for impairment on an annual basis during the fourth quarter using a September 30 measurement date unless circumstances require a more frequent measurement. For each of 2017, 2016, and 2015, we began our assessment with the step zero qualitative analysis. In performing the step zero qualitative analysis for each year, examining those factors most likely to affect our valuations, we concluded that it remained more likely than not that the fair value of each of our reporting units continued to exceed their carrying amounts. Consequently, we did not perform a step one quantitative analysis specifically for the purpose of our annual impairment test in any year presented in these financial statements.

(h)Long-Lived Assets

Long-lived assets and intangible assets with finite useful lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset, which are Level 3-type measurements. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset.

(i)Intangible Assets

The Company has intangible assets that consist primarily of customer relationships and trademarks that are recorded in connection with acquisitions at their fair value based on the results of valuation analyses. Customer relationships are amortized over their estimated useful lives using an accelerated method that takes into consideration expected customer attrition rates up to a 10-year period. Intangible assets with finite lives (principally customer relationships and certain trademarks) are reviewed for impairment in accordance with FASB ASC Section 360-10-35, Impairment or Disposal of Long-Lived Assets, while certain trademarks determined to have indefinite lives are reviewed for impairment at least annually in accordance with FASB ASC Topic 350. Similar to the guidance for goodwill, ASC Topic 350 allows an organization to first perform a qualitative assessment of whether it is more likely than not that an asset has been impaired.

We engaged independent specialists to perform a valuation of our indefinite lived intangible assets in 2016 and 2015, using a form of income approach valuation known as the relief-from-royalty method, which is a Level 3-type measurement. For 2017, we began our assessment of indefinite lived intangibles with the step zero qualitative analysis because there was a substantial excess of fair value over carrying value for each of our indefinite-lived intangible assets based on the 2016 and 2015 independent valuations. Based upon the results of these assessments, there were no indications of impairment.

(j)Computer Software

Computer software includes software acquired in business combinations, purchased software and capitalized software development costs. Software acquired in business combinations is generally valued using the relief-from-royalty method, a Level 3-type measurement. Purchased software is recorded at cost and amortized using the straight-line method over its estimated useful life and software acquired in business combinations is recorded at its fair value and amortized using straight-line or accelerated methods over its estimated useful life, ranging from five to 10 years.

The capitalization of software development costs is governed by FASB ASC Subtopic 985-20 if the software is to be sold, leased or otherwise marketed, or by FASB ASC Subtopic 350-40 if the software is for internal use. After the technological feasibility of the software has been established (for software to be marketed) or at the beginning of application development (for internal-use software), software development costs, which primarily include salaries and related payroll costs and costs of independent contractors incurred during development, are capitalized. Research and development costs incurred prior to the establishment of technological feasibility (for software to be marketed) or prior to application development (for internal-use software), are expensed as incurred. Software development costs are amortized on a product-by-product basis commencing on the date of general release (for software to be marketed) or the date placed in service (for internal-use software). Software development costs for software to be marketed are amortized using the greater of (1) the straight-line method over its estimated useful life, which ranges from three to 10 years, or (2) the ratio of current revenues to total anticipated revenues over its useful life.

(k)Deferred Contract Costs

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Costs of sales, including costs incurred for bid and proposal activities, are generally expensed as incurred. However, certain costs incurred upon initiation of a contract, including sales commissions, are deferred and amortized as expense over the contract life. These costs represent incremental external costs or certain specific internal costs that are directly related to the contract acquisition or transition activities.

In the event indications exist that a particular deferred contract cost balance may be impaired, undiscounted estimated cash flows of the contract are projected over its remaining term and compared to the unamortized deferred contract cost balance. If the projected cash flows are not adequate to recover the unamortized cost balance, the balance would be adjusted to equal the contract’s net realizable value, including any termination fees provided for under the contract, in the period such a determination is made.

(l)Property and Equipment

Property and equipment is recorded at cost, less accumulated depreciation and amortization. Depreciation and amortization are computed primarily using the straight-line method based on the estimated useful lives of the related assets: 30 years for buildings and three to seven years for furniture, fixtures and computer equipment. Leasehold improvements are amortized using the straight-line method over the lesser of the initial term of the applicable lease or the estimated useful lives of such assets.

(m)Income Taxes

The Company recognizes deferred income tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities and expected benefits of using net operating loss and credit carryforwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The impact on deferred income taxes of changes in tax rates and laws, if any, is reflected in the Consolidated Financial Statements in the period enacted. A valuation allowance is established for any portion of a deferred income tax asset for which management believes it is more likely than not that the Company will not be able to realize the benefits of all or a portion of that deferred income tax asset.

(n)Revenue Recognition

The Company generates revenues from the delivery of bank processing, credit and debit card and wealth management processing services, other payment processing services, professional services, software licensing, software as a service ("SaaS"), business process as a service ("BPaaS"), cloud revenue and software related services. The Company recognizes revenue when: (i) evidence of an arrangement exists; (ii) delivery has occurred; (iii) the fees are fixed or determinable; and (iv) collection is considered probable. Taxes collected from customers and remitted to governmental authorities are not included in revenue. Revenue generated from contracts executed outside of our North American operations represented approximately 26%, 24% and 22% of total revenue in 2017, 2016 and 2015, respectively.

The Company enters into arrangements with customers to provide services, software and software-related services such as post-contract customer support and implementation and training either individually or as part of an integrated offering of multiple services. The revenues for services provided under these multiple element arrangements are recognized in accordance with the applicable revenue recognition accounting principles as further described below.

In multiple-element arrangements, consideration is allocated to each deliverable using the relative selling price method. The selling price for each deliverable is based on vendor-specific objective evidence (“VSOE”) if available, third-party evidence (“TPE”) if VSOE is not available, or estimated selling price (“ESP”) if neither VSOE or TPE are available. A delivered item in a multiple element arrangement is considered a separate unit of accounting if (a) the item has value to the customer on a standalone basis; and (b) delivery or performance of the undelivered item or items is considered probable and substantially in the Company's control if the arrangement includes a general right of return relative to the delivered item.

We establish VSOE of selling price using the price charged when the same element is sold separately, or in the case of post-contract customer support , when a substantive stated renewal rate is provided to the customer. In certain circumstances, the Company is not able to establish VSOE for all deliverables in a multiple element arrangement. This may be due to infrequent standalone sales for an element, a limited sales history for new solutions or pricing within a broader range than permissible by our policy to establish VSOE. In those circumstances, we proceed to the alternative levels in the hierarchy of

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determining selling price. TPE of selling price is established by evaluating largely similar and interchangeable competitor products or services in standalone sales to similarly situated customers. The Company is typically not able to determine TPE and we rarely use this measure since we are generally unable to reliably verify standalone prices of competitive solutions. ESP is established in those instances where neither VSOE nor TPE are available, considering internal factors such as margin objectives, pricing practices and controls, customer segment pricing strategies and the product life cycle. Consideration is also given to market conditions such as competitor pricing strategies and industry technology life cycles.

The Company's arrangements with multiple deliverables may include one or more elements that are subject to the software revenue recognition guidance. The consideration for these multiple element arrangements is allocated to the software deliverables and the non-software deliverables based on the relative selling prices of all of the elements in the arrangement using the above hierarchy. The appropriate revenue recognition guidance is then applied to the respective software and non-software elements.

The following describes the Company’s primary types of revenues and its revenue recognition policies as they pertain to the types of transactions the Company enters into with its customers.

Processing Services Revenues

Processing services are comprised of data processing and application and/or facility management, including our SaaS and cloud offerings. Revenues from processing services are typically volume- or activity-based depending on factors such as the number of accounts processed, transactions or trades processed, users, number of hours of services or computer resources used. They can also be based on minimum monthly usage fees. Revenues from these arrangements are recognized as services are performed. Processing services represented 70%, 67%, and 75% of total revenues in 2017, 2016 and 2015, respectively.

Technology or service components from third parties are frequently embedded in or combined with our applications or service offerings. We are often responsible for billing the client in these arrangements and transmitting the applicable fees to the third party. Whether a company should recognize revenue based on the gross amount billed to a customer or the net amount retained is a matter of judgment that depends on the relevant facts and circumstances. Certain factors or indicators have been identified in the authoritative literature that should be considered in the evaluation. In certain of these arrangements, we have concluded that recognizing the gross amount billed is appropriate while in others we recognize the net amount retained, depending upon the level of our contractual responsibilities and obligations for delivering solutions to end customers.

Professional Services Revenues

Revenues and costs related to implementation, conversion and programming services associated with the Company’s data processing and application management agreements during the implementation phase are deferred and subsequently recognized using the straight-line method over the term of the related services agreement when these upfront services do not have standalone value or if revenue otherwise allocable to these elements is contingent upon delivery of other elements in the arrangement. Revenues and costs related to other consulting service agreements are recognized as the services are provided, assuming the separation criteria outlined above are satisfied. Professional services as a percentage of total revenues were 12%, 15% and 14% in 2017, 2016 and 2015, respectively. A significant portion of our professional services revenues is derived from contracts for dedicated personnel resources who are often working full-time at a client site and under their direction. These revenues generally re-occur as contracts are renewed.

License and Software Related Revenues

The Company recognizes software license and post-contract customer support fees, as well as associated implementation, training, conversion and programming fees in accordance with FASB ASC Subtopic 985-605. Initial license fees are recognized when a contract exists, the fee is fixed or determinable, software delivery has occurred and collection of the receivable is deemed probable, provided that VSOE of fair value has been established for any undelivered elements in the arrangement. If evidence of fair value of all undelivered elements exists but evidence does not exist for one or more delivered elements, then revenue is recognized using the residual method. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is recognized as revenue. If evidence of fair value does not exist for one or more undelivered elements of a contract, then all revenue is deferred until all elements are delivered or VSOE of fair value is determined for all remaining undelivered elements. Revenue from post-contract customer support is recognized ratably over the term of the agreement. The Company records deferred revenue for all billings invoiced prior to revenue recognition.

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Software license fees in certain of our SunGard businesses include rental fees for clients who would prefer a periodic fee instead of a larger up-front payment. Software rentals combine the license and maintenance services into a bundled element, and the fee is recognized ratably over the corresponding services period when the client has the right to use the software product and receive maintenance and support services.

Software license revenue and related post-contract customer support represented approximately 16%, 16% and 9% of total revenues in 2017, 2016 and 2015, respectively, with over 45% of the revenue representing post-contractual support revenue.

When the arrangement with the customer includes significant customization, modification, or production of software, the Company recognizes revenue applying contract accounting. For elements accounted for under contract accounting, revenue is recognized using the percentage-of-completion method since reasonably dependable estimates of revenues and contract hours applicable to various elements of a contract can be made. Cost-to-cost or efforts-expended (labor hours) methods are used to measure progress toward completion. Revenues in excess of billings on these agreements are recorded as unbilled receivables and are included in trade receivables. Billings in excess of revenue recognized on these agreements are recorded as deferred revenue until revenue recognition criteria are met. Changes in estimates for revenues, costs and profits are recognized in the period in which they are determinable. If and when the Company’s estimates indicate that the entire contract will be performed at a loss, a provision for the entire loss is recorded in that accounting period.

In arrangements where the licensed software includes hosting the software for the customer, a software element is only considered present if the customer has the contractual right to take possession of the software at any time during the hosting period without significant penalty and it is feasible for the customer to either operate the software on their own hardware or contract with another vendor to host the software. If the arrangement meets these criteria, as well as the other criteria for recognition of the license revenues described above, a software element is present and license revenues are recognized when the software is delivered and hosting revenues are recognized as the service is provided. If a separate software element as described above is not present, the related revenues are combined and recognized ratably over the hosting or maintenance period, whichever is longer.

Hardware and Other Revenues

Hardware and other miscellaneous revenues including termination fees represented approximately 2%, 2% and 2% of our total revenues in 2017, 2016 and 2015, respectively, and are recognized following the separation and recognition criteria discussed above. The Company generally does not stock in inventory the hardware products sold, but arranges for delivery of hardware from third-party suppliers. The Company evaluates the principal vs. agent indicators for these transactions and records the revenue related to hardware transactions on a gross basis as appropriate and the related costs are included in cost of revenue as appropriate if the Company is considered the primary obligor by the customer, bears risk of loss and has latitude in establishing prices on the equipment.

Recent Accounting Guidance Not Yet Adopted

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 amends substantially all authoritative literature for revenue recognition, including industry-specific requirements, and converges the guidance under this topic with that of the International Financial Reporting Standards. It also includes guidance on accounting for the incremental costs of obtaining and costs incurred to fulfill a contract with a customer. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. The FASB has issued several amendments to Topic 606, including further guidance on principal versus agent consideration, clarification on identifying performance obligations and accounting for licenses of intellectual property.

The effective date of the standard was postponed to reporting periods beginning after December 15, 2017, with early adoption allowed for reporting periods beginning after December 15, 2016. We will adopt the new standard effective January 1, 2018.

Entities can transition to the standard with retrospective application to the earliest years presented in their financial statements, retrospectively using certain practical expedients, or with a cumulative-effect adjustment as of the date of adoption. We will adopt the new standard using the retrospective method with the application of certain practical expedients.

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The largest impacts from the adoption of Topic 606 on our revenue recognition are related to the following areas:

•Certain revenues, particularly those related to interchange and third-party network fees associated with our payment processing business currently recorded on a gross basis as a principal will be recorded on a net basis as an agent to the extent the Company does not control the good or service before it is transferred to the customer.
•Recognition of certain term license early renewals will be deferred until the conclusion of the term in effect at the time of the renewal. Currently, term license early renewals are generally recognized upon execution of the renewal agreement.
•We will recognize the license portion of software rental fees in certain of our global trading, asset management, and securities processing businesses upon delivery. Currently, software license rental fees are recognized ratably over the rental period as the payments become due and payable.

Impacts related to other changes introduced by the standard were substantially less significant than those listed above.

Upon retrospective application of Topic 606, we estimate that our revenues will decrease by approximately $455 million and $410 million and that net income, excluding tax reform impact, will decrease approximately $35 million and $45 million for the years ended December 31, 2017 and 2016 respectively. For the year ended December 31, 2017, the impact of tax reform on the application of Topic 606 will result in additional tax expense of approximately $20 million due to the re-measurement of deferred tax assets. We anticipate recording a net reduction to opening retained earnings of approximately $30 million as of January 1, 2016 due to the cumulative impact of adopting the standard. The impact of Topic 606 on our 2017 and 2016 operating results may or may not be representative of the impact on subsequent years’ results.

(o)Cost of Revenue and Selling, General and Administrative Expenses

Cost of revenue includes payroll, employee benefits, occupancy costs and other costs associated with personnel employed in customer service and service delivery roles, including program design and development and professional services. Cost of revenue also includes data processing costs, amortization of software, customer relationship intangible assets and depreciation on operating assets.

Selling, general and administrative expenses include payroll, employee benefits, occupancy and other costs associated with personnel employed in sales, marketing, human resources, finance, risk management and other administrative roles. Selling, general and administrative expenses also include depreciation on non-operating corporate assets, advertising costs and other marketing-related programs.

(p)Stock-Based Compensation Plans

The Company accounts for stock-based compensation plans using the fair value method. Thus, compensation cost is measured based on the fair value of the award at the grant date and is recognized over the service period. Certain of our stock awards also contain performance conditions. In those circumstances, compensation cost is recognized over the service period when it is probable the outcome of that performance condition will be achieved. If the Company concludes at any point prior to completion of the requisite service period that it is not probable that the performance condition will be met, any previously recorded expense would be reversed.

(q)Foreign Currency Translation

The functional currency for the foreign operations of the Company is either the U.S. Dollar or the local foreign currency. For foreign operations where the local currency is the functional currency, the translation into U.S. Dollars for consolidation is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using the average exchange rate during the period. The adjustments resulting from the translation are included in accumulated other comprehensive earnings (loss) in the Consolidated Statements of Equity and Consolidated Statements of Comprehensive Earnings and are excluded from net earnings.

Gains or losses resulting from foreign currency transactions are included in other income.

(r)Management Estimates

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The preparation of these Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

(s)Net Earnings per Share

The basic weighted average shares and common stock equivalents for the years ended December 31, 2017, 2016 and 2015 are computed using the treasury stock method.

Net earnings and earnings per share for the years ended December 31, 2017, 2016 and 2015 are as follows (in millions, except per share data):

Year ended December 31,
201720162015
Earnings from continuing operations attributable to FIS, net of tax$1,319$567$639
Earnings (loss) from discontinued operations attributable to FIS, net of tax—1(7)
Net earnings attributable to FIS common stockholders$1,319$568$632
Weighted average shares outstanding — basic330326285
Plus: Common stock equivalent shares644
Weighted average shares outstanding — diluted336330289
Net earnings per share — basic from continuing operations attributable to FIS common stockholders$4.00$1.74$2.24
Net earnings (loss) per share — basic from discontinued operations attributable to FIS common stockholders——(0.03)
Net earnings per share — basic attributable to FIS common stockholders *$4.00$1.74$2.22
Net earnings per share — diluted from continuing operations attributable to FIS common stockholders$3.93$1.72$2.21
Net earnings (loss) per share — diluted from discontinued operations attributable to FIS common stockholders——(0.03)
Net earnings per share — diluted attributable to FIS common stockholders *$3.93$1.72$2.19
* amounts may not sum due to rounding.

Options to purchase approximately 4 million, 3 million and 4 million shares of our common stock for the years ended December 31, 2017, 2016 and 2015, respectively, were not included in the computation of diluted earnings per share because they were anti-dilutive.

(t)Certain Reclassifications

Certain reclassifications have been made in the 2016 and 2015 Consolidated Financial Statements to conform to the classifications used in 2017.

(3)Acquisitions

SunGard

FIS completed the SunGard acquisition on November 30, 2015, and SunGard's results of operations and financial position are included in the Consolidated Financial Statements from and after the date of acquisition. The SunGard acquisition increased our existing portfolio of solutions to automate a wide range of complex business processes for financial services

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institutions and corporate and government treasury departments, adding trading, securities operations, administering investment portfolios, accounting for investment assets, and managing risk and compliance requirements.

Through a series of mergers, FIS acquired 100 percent of the equity of SunGard, for a total purchase price as follows (in millions):

Cash consideration, including SunGard transaction fees paid at closing$2,335
Value of stock and vested equity awards exchanged for FIS shares2,697
Value of vested portion of SunGard stock awards exchanged for FIS awards47
$5,079

As of December 31, 2015, we recorded a preliminary allocation of the purchase price to SunGard tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of November 30, 2015. The provisional amounts for intangible assets were based on independent third-party valuations performed. Land and building valuations were based on appraisals performed by certified property appraisers. Goodwill was recorded as the residual amount by which the purchase price exceeded the provisional fair value of the net assets acquired. Land and building valuations based on appraisals performed by certified property appraisers were underway as of December 31, 2015 and were completed during 2016. Our evaluations of the facts and circumstances available as of November 30, 2015 to assign fair values to other assets acquired and liabilities assumed was completed as of December 31, 2016, as are our assessments of the economic characteristics of the acquired software and other intangibles.

In accordance with ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, the financial statements were not retrospectively adjusted for any measurement-period adjustments that occurred in subsequent periods. Rather, any adjustments to provisional amounts that were identified during the measurement period are recorded in the reporting period in which the adjustment was determined. During the year ended December 31, 2016, adjustments were recorded to increase the fair values assigned to intangible assets, deferred taxes, other liabilities and property and equipment and to reduce the value assigned to goodwill. We are also required to record, in the same period’s financial statements in which adjustments are recorded, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of any change to the provisional amounts, calculated as if the accounting adjustment had been completed at the acquisition date. Additional depreciation and amortization of $5 million that would have been recognized in 2015 was recorded during the year ended December 31, 2016 related to the changes in provisional values of intangible assets made during 2016.

The purchase price allocation as adjusted for measurement period adjustments recorded through December 31, 2016 is as follows (in millions):

Cash$631
Trade receivables526
Other receivables57
Property and equipment145
Computer software674
Intangible assets4,560
Other assets67
Goodwill5,800
Liabilities assumed and noncontrolling interest(7,381)
$5,079

The following table summarizes the liabilities assumed in the SunGard acquisition (in millions):

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Long-term debt (subsequently retired)$4,738
Deferred income taxes1,772
Deferred revenue278
Other liabilities and noncontrolling interest593
$7,381

The gross contractual amount of trade receivables acquired was approximately $546 million. The difference between that total and the amount reflected above represents our best estimate at the acquisition date of the contractual cash flows not expected to be collected. This difference was derived using SunGard's historical bad debts, sales allowances and collection trends.

In connection with the SunGard acquisition, we also granted approximately 2 million restricted stock units in replacement of similar outstanding unvested awards held by SunGard employees. The amounts attributable to services already rendered were included as an adjustment to the purchase price and the amounts attributable to future services will be expensed over the remaining vesting period based on a valuation as of the date of closing.

Pro Forma Results

SunGard's revenues and pre-tax loss from continuing operations of $254 million and $12 million, respectively, from November 30, 2015 through December 31, 2015, are included in the Consolidated Statements of Earnings. Selected unaudited pro forma results of operations for the year ended December 31, 2015, assuming the SunGard acquisition had occurred as of January 1, 2014, are presented for comparative purposes below (in millions, except per share amounts):

2015
Total processing and services revenues$9,139
Net earnings (loss) from continuing operations attributable to FIS common stockholders$389
Pro forma earnings (loss) per share - basic from continuing operations attributable to FIS common stockholders$1.19
Pro forma earnings (loss) per share - diluted from continuing operations attributable to FIS common stockholders$1.17

The pro forma results do not include any anticipated synergies, but do include the impacts of purchase accounting adjustments and conforming commission policies. SunGard elected to expense commission payments as incurred whereas FIS recognizes commission expense over the period that the related revenue is recognized. The pro forma earnings (pre-tax) have been increased by $12 million for 2015 to conform SunGard’s expense recognition to FIS' policy. SunGard’s policies and practices surrounding software development and capitalization of related costs differed from those used by FIS and were conformed to those of FIS prospectively. As a result, more development costs qualify to be capitalized than SunGard had recorded historically. It is not practicable to determine what the impact of the changes in application of the capitalization principles would have been for purposes of these pro forma results.

Excluding the impact of deferred revenue adjustments, total pro forma revenues would be $9,149 million for 2015.

(4)Property and Equipment

Property and equipment as of December 31, 2017 and 2016 consists of the following (in millions):

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20172016
Land$31$31
Buildings228204
Leasehold improvements158137
Computer equipment1,073909
Furniture, fixtures, and other equipment167207
1,6571,488
Accumulated depreciation and amortization(1,047)(862)
$610$626

During the years ended December 31, 2017 and 2016, the Company entered into capital lease and other financing obligations of $84 million and $43 million, respectively, for certain computer hardware and software. The assets are included in property and equipment and computer software and the remaining capital lease obligation is classified as long-term debt on our Consolidated Balance Sheets as of December 31, 2017. Periodic payments are included in repayment of borrowings on the Consolidated Statements of Cash Flows.

Depreciation and amortization expense on property and equipment, including that recorded under capital leases, amounted to $180 million, $185 million and $139 million for the years ended December 31, 2017, 2016 and 2015, respectively.

(5)Goodwill

Changes in goodwill during the years ended December 31, 2017 and 2016 are summarized as follows (in millions):

IFSGFSCorporate & OtherTotal
Balance, December 31, 2015$7,676$6,605$464$14,745
Purchase price and foreign currency adjustments—(273)65(208)
Goodwill relating to PS&E included in assets held for sale——(359)(359)
Balance, December 31, 20167,6766,33217014,178
Purchase price and foreign currency adjustments—39—39
Goodwill distributed through sale of businesses(14)(473)—(487)
Balance, December 31, 2017$7,662$5,898$170$13,730

During 2017, foreign currency adjustments includes an immaterial prior period adjustment related to the allocation of goodwill to the appropriate foreign currency at the time of multi-currency entity acquisitions, with the related offset to accumulated other comprehensive earnings (loss).

In conjunction with the organizational modifications in the first quarter of 2016, we reallocated goodwill associated with the reclassified businesses based on relative fair value as of January 1, 2016. We refreshed our step zero qualitative analysis, identifying no indications of impairment for any of our reporting units. In performing the step zero qualitative analysis for 2016 and 2017, examining those factors most likely to affect our valuations, we concluded that it remained more likely than not that the fair value of each of our reporting units continued to exceed their carrying amounts. As a result, no reporting units were at risk of impairment as of the September 30, 2016 and 2017 measurement dates (see Note 2 (g)).

(6)Intangible Assets

Customer relationships and other intangible assets are obtained as part of acquired businesses and are amortized over their estimated useful lives, generally five to 10 years, using accelerated methods. Trademarks determined to have indefinite lives are not amortized. Certain other trademarks are amortized over periods ranging up to 15 years. As of December 31, 2017 and 2016, trademarks carried at $48 million and $80 million, respectively, were classified as indefinite-lived.

Intangible assets as of December 31, 2017 consist of the following (in millions):

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CostAccumulated AmortizationNet
Customer relationships and other$6,300$(2,442)$3,858
Trademarks149(57)92
$6,449$(2,499)$3,950

Intangible assets as of December 31, 2016 consist of the following (in millions):

CostAccumulated AmortizationNet
Customer relationships and other$6,367$(1,840)$4,527
Trademarks180(43)137
$6,547$(1,883)$4,664

Amortization expense for intangible assets with finite lives, including the contract intangible in our Brazilian Venture, which is amortized as a reduction of revenue, was $679 million, $523 million and $246 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Estimated amortization of intangibles, including the contract intangible in our Brazilian Venture, which is amortized as a reduction in revenue, for the next five years is as follows (in millions):

2018$678
2019667
2020489
2021457
2022439

(7)Computer Software

Computer software as of December 31, 2017 and 2016 consists of the following (in millions):

20172016
Software from business acquisitions$1,130$1,138
Capitalized software development costs1,4221,066
Purchased software310172
Computer software2,8622,376
Accumulated amortization(1,134)(768)
Computer software, net of accumulated amortization$1,728$1,608

Amortization expense for computer software was $436 million, $396 million and $229 million for the years ended December 31, 2017, 2016 and 2015, respectively.

(8)Deferred Contract Costs

Deferred contract costs as of December 31, 2017 and 2016 consists of the following (in millions):

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20172016
Installations and conversions in progress$66$57
Installations and conversions completed, net120108
Sales commissions and other, net176145
Deferred contract costs, net$362$310

Amortization of deferred contract costs was $118 million, $87 million and $71 million for the years ended December 31, 2017, 2016 and 2015, respectively.

(9)Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities as of December 31, 2017 and 2016 consists of the following (in millions):

20172016
Salaries and incentives$265$379
Accrued benefits and payroll taxes7198
Trade accounts payable and other accrued liabilities776512
Accrued interest payable7089
Taxes other than income tax5962
Capco acquisition related liabilities—6
Total accounts payable and accrued liabilities$1,241$1,146

(10)Long-Term Debt

Long-term debt as of December 31, 2017 and 2016 consisted of the following (in millions):

20172016
2018 Term Loans (1)$—$550
Senior Notes due June 2017, interest payable semi-annually at 1.450%—300
Senior Notes due April 2018, interest payable semi-annually at 2.000%250250
Senior Notes due October 2018, interest payable semi-annually at 2.850%750750
Senior Notes due October 2020, interest payable semi-annually at 3.625%1,1501,750
Senior Euro Notes due January 2021, interest payable annually at 0.400%599—
Senior Notes due August 2021, interest payable semi-annually at 2.250%750750
Senior Notes due March 2022, interest payable semi-annually at 5.000%—700
Senior GBP Notes due June 2022, interest payable annually at 1.700%405—
Senior Notes due October 2022, interest payable semi-annually at 4.500%300500
Senior Notes due April 2023, interest payable semi-annually at 3.500%7001,000
Senior Notes due June 2024, interest payable semi-annually at 3.875%400700
Senior Euro Notes due July 2024, interest payable annually at 1.100%599—
Senior Notes due October 2025, interest payable semi-annually at 5.000%9001,500
Senior Notes due August 2026, interest payable semi-annually at 3.000%1,2501,250
Senior Notes due August 2046, interest payable semi-annually at 4.500%500500
Revolving Loan, (2)19536
Other15(58)
8,76310,478
Current portion(1,045)(332)
Long-term debt, excluding current portion$7,718$10,146

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(1)Interest on the 2018 Term Loans was generally payable at LIBOR plus an applicable margin of up to 1.75% based upon the Company's corporate credit ratings. The outstanding balance on the 2018 Term Loans was repaid in full prior to December 31, 2017.
(2)Interest on the Revolving Loan is generally payable at LIBOR plus an applicable margin of up to 1.75% plus an unused commitment fee of up to 0.25%, each based upon the Company's corporate credit ratings. As of December 31, 2017, the weighted average interest rate on the Revolving Loan, excluding fees, was 2.64%.

FIS has a syndicated credit agreement (the “FIS Credit Agreement”) that provides total committed capital of $3,000 million in the form of a revolving credit facility (the "Revolving Loan") maturing on August 10, 2021. As of December 31, 2017, the outstanding principal balance of the Revolving Loan was $195 million, with $2,799 million of borrowing capacity remaining thereunder (net of $6 million in outstanding letters of credit issued under the Revolving Loan).

The obligations of FIS under the FIS Credit Agreement and under all of its outstanding senior notes rank equal in priority and are unsecured. The FIS Credit Agreement and the senior notes are subject to customary covenants, including, among others, limitations under the FIS Credit Agreement on the payment of dividends by FIS, and customary events of default.

On August 11, 2016, FIS issued $2,500 million of new senior notes, including $750 million of Senior Notes due in 2021 (the "2021 Notes") that bear interest at 2.250%, $1,250 million of Senior Notes due in 2026 (the "2026 Notes") that bear interest at 3.000% and $500 million of Senior Notes due in 2046 (the "2046 Notes") that bear interest at 4.500%. Net proceeds from the offering, after deducting discounts and underwriting fees, were $2,461 million. FIS used the proceeds to pay down the outstanding balance of its Revolving Loan and partially pay down the 2018 Term Loans.

On March 15, 2017, FIS redeemed 100% of the outstanding aggregate principal amount of its $700 million 5.000% Senior Notes due March 2022 (the "Notes"). On February 1, 2017, the Company also paid down the outstanding balance on the 2018 Term Loans. The Notes and 2018 Term Loans were funded by borrowings under the Company’s Revolving Loan and cash proceeds from the sale of the Public Sector and Education ("PS&E") business. As a result of the redemption of the Notes and the pay down of the 2018 Term Loans, FIS incurred a pre-tax charge of approximately $25 million consisting of the call premium on the Notes and the write-off of previously capitalized debt issuance costs.

On July 10, 2017, FIS issued €1,000 million and £300 million principal amount of new senior notes in an inaugural European bond offering. The new senior notes include €500 million of Senior Notes due in 2021 (the “2021 Euro Notes”) that bear interest at 0.400%, £300 million of Senior Notes due in 2022 (the “2022 GBP Notes”) that bear interest at 1.700% and €500 million of Senior Notes due in 2024 (the “2024 Euro Notes”) that bear interest at 1.100%. Net proceeds from the offering, after deducting discounts and underwriting fees, were $1,491 million using a conversion rate of 1.12 EUR/USD and 1.27 GBP/USD. The new senior notes include covenants and events of default customary for similar debt obligations.

On July 25, 2017, pursuant to cash tender offers ("Tender Offers"), FIS repurchased approximately $2,000 million in aggregate principal of debt securities with a weighted average coupon of approximately 4.0%. The following approximate amounts of FIS's debt securities were repurchased: $600 million of its 3.625% notes due 2020, $600 million of its 5.000% notes due 2025, $200 million of its 4.500% notes due 2022, $300 million of its 3.875% due 2024 and $300 million of its 3.500% notes due 2023. The Company funded the Tender Offers with proceeds from the European bond offering and borrowings on its Revolving Loan, approximately $469 million of which were almost immediately repaid with proceeds from the sale of a majority ownership stake in the Capco consulting business and risk and compliance consulting business, which was completed on July 31, 2017 (see Note 15). FIS paid approximately $150 million in tender premiums to par to purchase the notes in the Tender Offers.

During the year ended December 31, 2017, due to the issuance of the 2021 and 2024 Euro Notes and 2022 GBP Notes, FIS recorded approximately $13 million of deferred financing costs, which will be amortized into interest expense over the life of the notes. Also, as a result of the Tender Offers above, FIS incurred a pre-tax charge upon extinguishment of approximately $171 million, consisting of tender premiums, the write-off of previously capitalized debt issue costs and other direct costs.

During the year ended December 31, 2016, as a result of the pay down of the 2017 Term Loans and the partial pay down of the 2018 Term Loans, FIS incurred a pre-tax charge upon extinguishment of approximately $2 million due to the write-off associated with previously capitalized debt issue costs.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following summarizes the aggregate maturities of our debt and capital leases on stated contractual maturities, excluding unamortized non-cash bond premiums and discounts net of $30 million as of December 31, 2017 (in millions):

Total
2018$1,045
201944
20201,157
20211,546
2022705
Thereafter4,349
Total principal payments8,846
Debt issuance costs, net of accumulated amortization(53)
Total long-term debt$8,793

There are no mandatory principal payments on the Revolving Loan and any balance outstanding on the Revolving Loan will be due and payable at its scheduled maturity date, which occurs at August 10, 2021.

FIS may redeem the 2018 Notes, 2020 Notes, 2021 Notes, 2021 Euro Notes, 2022 Notes, 2022 GBP Notes, 2023 Notes, 2024 Notes, 2024 Euro Notes, 2025 Notes, 2026 Notes, and 2046 Notes at its option in whole or in part, at any time and from time to time, at a redemption price equal to the greater of 100% of the principal amount to be redeemed and a make-whole amount calculated as described in the related indenture in each case plus accrued and unpaid interest to, but excluding, the date of redemption, provided no make-whole amount will be paid for redemptions of the 2020 Notes, the 2021 Notes, the 2021 Euro Notes and the 2022 GBP Notes during the one month prior to their maturity, the 2022 Notes during the two months prior to their maturity, the 2023 Notes, the 2024 Notes, the 2024 Euro Notes, the 2025 Notes, and the 2026 Notes during the three months prior to their maturity, and the 2046 Notes during the six months prior to their maturity.

Debt issuance costs of $53 million, net of accumulated amortization, remain capitalized as of December 31, 2017, related to all of the above outstanding debt.

We monitor the financial stability of our counterparties on an ongoing basis. The lender commitments under the undrawn portions of the Revolving Loan are comprised of a diversified set of financial institutions, both domestic and international. The failure of any single lender to perform its obligations under the Revolving Loan would not adversely impact our ability to fund operations.

The fair value of the Company’s long-term debt is estimated to be approximately $156 million higher than the carrying value as of December 31, 2017. This estimate is based on quoted prices of our senior notes and trades of our other debt in close proximity to December 31, 2017, which are considered Level 2-type measurements. This estimate is subjective in nature and involves uncertainties and significant judgment in the interpretation of current market data. Therefore, the values presented are not necessarily indicative of amounts the Company could realize or settle currently.

(11)Financial Instruments

As of December 31, 2017, we had no outstanding interest rate swap transactions and no significant forward contracts.

Interest rate swaps with a notional amount totaling $500 million and $1,250 million , respectively, were terminated as of December 31, 2017 and 2016. As a result, FIS recognized approximately $1 million and $2 million, respectively, before tax loss due to the release of fair value changes from other comprehensive earnings during the years ended December 31, 2017 and 2016.

The amount of gain (loss) recognized in accumulated other comprehensive earnings was $0 million, $(7) million and $(17) million during the years ended December 31, 2017, 2016 and 2015, respectively. The amount of gain (loss) reclassified from

FIDELITY NATIONAL INFORMATION SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

accumulated other comprehensive earnings into income was $(1) million, $(9) million and $(4) million during the years ended December 31, 2017, 2016 and 2015, respectively.

Net Investment Hedges

In June 2017, the Company entered into two Euro-denominated foreign currency exchange forward contracts totaling €999 million and a GBP-denominated foreign currency exchange forward contract of £298 million, which were designated as a net investment hedge of its investment in Euro and GBP denominated operations, respectively, in order to reduce the volatility in the income statement caused by the changes in foreign currency exchange rates of the Euro and GBP with respect to the U.S. dollar.

In July 2017, the forward contracts above were terminated and the Company designated its Euro-denominated Senior Notes due 2021 (€500 million) and Senior Notes due 2024 (€500 million) and GBP-denominated Senior Notes due 2022 (£300 million) as a net investment hedge of its investment in Euro and GBP denominated operations, respectively, in order to reduce the volatility in the income statement caused by the changes in foreign currency exchange rates of the Euro and GBP with respect to the U.S. dollar.

The change in fair value of the net investment hedges due to remeasurement of the effective portion is recorded in other comprehensive income (loss). The ineffective portion of the hedging instruments impacts net income when the ineffectiveness occurs. During the year ended December 31, 2017, net investment hedge combined losses of $63 million, net of tax, respectively, were recognized in other comprehensive income. No ineffectiveness was recorded on the net investment hedges.

(12)Income Taxes

Income tax expense (benefit) attributable to continuing operations for the years ended December 31, 2017, 2016 and 2015 consists of the following (in millions):

201720162015
Current provision:
Federal$476$308$248
State815433
Foreign12713152
Total current provision$684$493$333
Deferred provision (benefit):
Federal$(983)$(147)$50
State(21)(12)5
Foreign1(17)(9)
Total deferred provision(1,003)(176)46
Total provision for income taxes$(319)$317$379

The provision for income taxes is based on pre-tax income from continuing operations, which is as follows for the years ended December 31, 2017, 2016 and 2015 (in millions):

201720162015
United States$580$571$864
Foreign456335173
Total$1,036$906$1,037

Total income tax expense for the years ended December 31, 2017, 2016 and 2015 is allocated as follows (in millions):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

201720162015
Tax expense per statements of earnings$(319)$317$379
Tax expense attributable to discontinued operations—1(2)
Unrealized (loss) gain on foreign currency translation—30—
Other components of other comprehensive income(11)1(5)
Total income tax expense (benefit) allocated to other comprehensive income(11)31(5)
Tax benefit from exercise of stock options—(32)(29)
Total income tax expense$(330)$317$343

A reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate for the years ended December 31, 2017, 2016 and 2015 is as follows:

201720162015
Federal statutory income tax rate35.0%35.0%35.0%
State income taxes2.53.04.6
Federal benefit of state taxes(0.9)(1.0)(1.6)
Foreign rate differential(4.8)(3.0)(2.6)
Tax Cuts and Jobs Act of 2017(70.9)——
Book basis in excess of tax basis for dispositions17.4——
Tax benefit from stock-based compensation(6.3)——
Other(2.8)1.01.1
Effective income tax rate(30.8)%35.0%36.5%

The significant components of deferred income tax assets and liabilities as of December 31, 2017 and 2016 consist of the following (in millions):

20172016
Deferred income tax assets:
Net operating loss carryforwards$130$223
Employee benefit accruals69111
Other deferred tax assets106151
Total gross deferred income tax assets305485
Less valuation allowance(129)(177)
Total deferred income tax assets176308
Deferred income tax liabilities:
Amortization of goodwill and intangible assets1,4682,464
Deferred contract costs96131
Other deferred tax liabilities9075
Total deferred income tax liabilities1,6542,670
Net deferred income tax liability$1,478$2,362

Deferred income taxes have been classified in the Consolidated Balance Sheets as of December 31, 2017 and 2016 as follows (in millions):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

20172016
Current assets$—$101
Noncurrent assets (included in other noncurrent assets)3025
Total deferred income tax assets30126
Current liabilities (included in accounts payable and accrued liabilities)—(4)
Noncurrent liabilities(1,508)(2,484)
Total deferred income tax liabilities(1,508)(2,488)
Net deferred income tax liability$(1,478)$(2,362)

We believe that based on our historical pattern of taxable income, projections of future income, tax planning strategies and other relevant evidence, the Company will produce sufficient income in the future to realize its deferred income tax assets. A valuation allowance is established for any portion of a deferred income tax asset for which we believe it is more likely than not that the Company will not be able to realize the benefits of all or a portion of that deferred income tax asset. We also receive periodic assessments from taxing authorities challenging our positions that must be taken into consideration in determining our tax accruals. Resolving these assessments, which may or may not result in additional taxes due, may require an extended period of time. Adjustments to the valuation allowance will be made if there is a change in our assessment of the amount of deferred income tax asset that is realizable.

As of December 31, 2017 and 2016, the Company had income taxes (payable) receivable of $(143) million and $13 million, respectively. These amounts are included in accounts payable and accrued liabilities and other long-term liabilities as of December 31, 2017 and other receivables as of December 31, 2016, in the Consolidated Balance Sheets.

As of December 31, 2017 and 2016, the Company has federal, state and foreign net operating loss carryforwards resulting in deferred tax assets of $130 million and $223 million, respectively. The federal and state net operating losses result in deferred tax assets as of December 31, 2017 and 2016 of $44 million and $49 million, respectively, which expire between 2020 and 2037. The Company has a valuation allowance related to these deferred tax assets for net operating loss carryforwards in the amounts of $37 million and $34 million as of December 31, 2017 and 2016. The Company has foreign net operating loss carryforwards resulting in deferred tax assets as of December 31, 2017 and 2016 of $86 million and $174 million, respectively. The Company has a full valuation allowance against the net operating losses as of December 31, 2017 and a valuation allowance of $143 million as of December 31, 2016. As of December 31, 2017 and 2016, the Company had foreign tax credit carryforwards of $3 million and $1 million, respectively, which expire between 2020 and 2027.

The Company participates in the IRS' Compliance Assurance Process (CAP), which is a real-time continuous audit. The IRS has completed its review for years through 2015. Currently, we believe the ultimate resolution of the IRS examinations will not result in a material adverse effect to the Company's financial position or results of operations. Substantially all material foreign income tax return matters have been concluded through 2010. Substantially all state income tax returns have been concluded through 2011.

The Company provides for United States income taxes on earnings of foreign subsidiaries unless they are considered indefinitely reinvested outside the United States. As of December 31, 2016, neither U.S. income nor foreign income taxes had been provided on a cumulative total of $813 million of such earnings. As of December 31, 2017, the Company has a cumulative total of $930.0 million of earnings that are indefinitely reinvested outside of the United States. Due to changes introduced by the Tax Act, the Company provided for U.S. income tax on such earnings in 2017. As of December 31, 2017, the Company has not provided foreign income taxes on such earnings. At this time, a determination of the amount of unrecognized deferred tax liability is not practicable.

As of December 31, 2017 and 2016, the Company had gross unrecognized tax benefits of $75 million and $87 million of which $56 million and $67 million would favorably impact our income tax rate in the event that the unrecognized tax benefits are recognized.

The following table reconciles the gross amounts of unrecognized tax benefits at the beginning and end of the period (in millions):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Gross Amount
Amounts of unrecognized tax benefits as of January 1, 2016$98
Amount of decreases due to lapse of the applicable statute of limitations(4)
Amount of decreases due to settlements(23)
Increases as a result of tax positions taken in the current period2
Increases as a result of tax positions taken in a prior period14
Amount of unrecognized tax benefit as of December 31, 201687
Amount of decreases due to lapse of the applicable statute of limitations(12)
Amount of decreases due to settlements(19)
Increases as a result of tax positions taken in the current period5
Increases as a result of tax positions taken in a prior period14
Amount of unrecognized tax benefit as of December 31, 2017$75

The total amount of interest expense recognized in the Consolidated Statements of Earnings for unpaid taxes is $5 million, $6 million and $2 million for the years ended December 31, 2017, 2016 and 2015, respectively. The total amount of interest and penalties included in the Consolidated Balance Sheets is $22 million and $25 million as of December 31, 2017 and 2016, respectively. Interest and penalties are recorded as a component of income tax expense in the Consolidated Statements of Earnings.

Due to the expiration of various statutes of limitation in the next twelve months, an estimated $3 million of gross unrecognized tax benefits may be recognized during that twelve-month period.

On December 22, 2017, H.R. 1, originally known as the Tax Cuts and Jobs Act, the "Act", was signed into law. The Act included significant changes to the Internal Revenue Code. Changes impacting the Company were the decrease in the corporate Federal rate from 35% to 21%, the transition to a territorial system of taxation from a worldwide system, and a one-time tax on the deemed repatriation of cumulative foreign earnings and profits. The Company has included in its December 31, 2017 tax provision its best estimate of the impact of the Act based on its understanding of the Act and the related guidance issued as of the date of this filing. The Company recorded a tax benefit of approximately $772 million related to re-measurement of its net deferred tax liabilities using the decreased federal rate, tax expense related to the one-time deemed repatriation tax of approximately $68 million, and a tax benefit of approximately $30 million related to the release of the tax liability for earnings previously not considered to be indefinitely reinvested. The Company also recorded a tax benefit of approximately $48 million related to foreign taxes which are now available to partially offset the deemed repatriation tax.

On December 22, 2017, the SEC issued SEC Staff Accounting Bulletin No. 118 (SAB 118) providing a measurement period for determining the final financial statement impacts from the Act. This guidance allows a registrant to report provisional amounts for the effects of the law change when accounting for the change can be reasonably estimated but the final accounting is not complete. Provisional items included in the December 31, 2017 financial statements are tax expense related to the one-time deemed repatriation tax of approximately $68 million, and a tax benefit of approximately $30 million related to the release of the US tax liability for earnings previously not considered to be indefinitely reinvested. These items are provisional because the data necessary for their computation is not yet fully available. Additional collection and review of data in determining cash and cash equivalents and applicable tax attributes necessary for the computation of these provisional items is required and will be compiled and evaluated within the measurement period allowed by SAB 118. As the provisional amounts are finalized during the measurement period, the required adjustments, if any, will be recorded in the quarter when the final amount is determined.

(13)Commitments and Contingencies

Reliance Trust Claims

Reliance Trust Company, the Company’s subsidiary, is named as a defendant in a class action arising out of its provision of services as the discretionary trustee for a 401(k) Plan for one of its customers. Plaintiffs in the action seek damages and attorneys’ fees, as well as equitable relief, for alleged breaches of fiduciary duty and prohibited transactions under the Employee Retirement Income Security Act of 1974. The action also makes claims against the Plan's sponsor and recordkeeper. Reliance Trust Company is vigorously defending the action and believes that it has meritorious defenses. While we believe that

FIDELITY NATIONAL INFORMATION SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

the ultimate resolution of the matter will not have a material impact on our financial condition, we are unable at this time to make an estimate of potential losses arising from the action because the matter is still in pretrial proceedings and involves unresolved questions of fact and law.

Brazilian Tax Authorities Claims

In 2004, Proservvi Empreendimentos e Servicos, Ltda., the predecessor to Fidelity National Servicos de Tratamento de Documentos e Informatica Ltda. (“Servicos”), a subsidiary of Fidelity National Participacoes Ltda., our former item processing and remittance services operation in Brazil, acquired certain assets and employees and leased certain facilities from the Transpev Group (“Transpev”) in Brazil. Transpev’s remaining assets were later acquired by Prosegur, an unrelated third party. When Transpev discontinued its operations after the asset sale to Prosegur, it had unpaid federal taxes and social contributions owing to the Brazilian tax authorities. The Brazilian tax authorities brought a claim against Transpev and beginning in 2012 brought claims against Prosegur and Servicos on the grounds that Prosegur and Servicos were successors in interest to Transpev. To date, the Brazilian tax authorities filed 11 claims against Servicos asserting potential tax liabilities of approximately $15 million. There are potentially 24 additional claims against Transpev/Prosegur for which Servicos is named as a co-defendant or may be named, but for which Servicos has not yet been served. These additional claims amount to approximately $56 million making the total potential exposure for all 35 claims approximately $71 million. We do not believe a liability for these 35 total claims is probable and, therefore, have not recorded a liability for any of these claims.

Acquired Contingencies (SunGard)

The Company became responsible for certain contingencies which were assumed in the SunGard acquisition. The Consolidated Balance Sheet as of December 31, 2017 includes a liability of $75 million mostly related to unclaimed property examinations and tax compliance matters.

Indemnifications and Warranties

The Company generally indemnifies its clients, subject to certain limitations and exceptions, against damages and costs resulting from claims of patent, copyright, or trademark infringement associated solely with its customers' use of the Company's software applications or services. Historically, the Company has not made any material payments under such indemnifications, but continues to monitor the conditions that are subject to the indemnifications to identify whether it is probable that a loss has occurred, and would recognize any such losses when they are estimable. In addition, the Company warrants to customers that its software operates substantially in accordance with the software specifications. Historically, no material costs have been incurred related to software warranties and no accruals for warranty costs have been made.

Leases

The Company leases certain of its property under leases which expire at various dates. Several of these agreements include escalation clauses and provide for purchases and renewal options for periods ranging from one to five years.

Future minimum operating lease payments for leases with remaining terms greater than one year for each of the years in the five years ending December 31, 2022, and thereafter, in the aggregate, are as follows (in millions):

2018$87
201979
202062
202146
202228
Thereafter42
Total$344

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

In addition, the Company has operating lease commitments relating to office equipment and computer hardware with annual lease payments of approximately $3 million per year that renew on a short-term basis. See Note 4 for information on the Company's capital lease obligations.

Rent expense incurred under all operating leases during the years ended December 31, 2017, 2016 and 2015, was $134 million, $143 million and $93 million, respectively.

Data Processing, Maintenance and Other Service Agreements. The Company has agreements with various vendors, which expire between 2017 and 2023, principally for portions of its computer data processing operations and related functions. The Company’s estimated aggregate contractual obligation remaining under these agreements was approximately $420 million as of December 31, 2017. However, this amount could be more or less depending on various factors such as the inflation rate, foreign exchange rates, the introduction of significant new technologies, or changes in the Company’s data processing needs.

(14)Employee Benefit Plans

Stock Purchase Plan

FIS employees participate in an Employee Stock Purchase Plan (ESPP). Eligible employees may voluntarily purchase, at current market prices, shares of FIS’ common stock through payroll deductions. Pursuant to the ESPP, employees may contribute an amount between 3% and 15% of their base salary and certain commissions. Shares purchased are allocated to employees based upon their contributions. The Company contributes a matching amount as specified in the ESPP of 25% of the employee's contribution. The Company recorded expense of $14 million, $19 million and $26 million, respectively, for the years ended December 31, 2017, 2016 and 2015, relating to the participation of FIS employees in the ESPP.

401(k) Profit Sharing Plans

The Company’s U.S. employees are covered by a qualified 401(k) plan. Eligible employees may contribute up to 40% of their pretax annual compensation, up to the amount allowed pursuant to the Internal Revenue Code. The Company generally matches 50% of each dollar of employee contribution up to 6% of the employee’s total eligible compensation. The Company recorded expense of $80 million, $80 million and $38 million, respectively, for the years ended December 31, 2017, 2016 and 2015, relating to the participation of FIS employees in the 401(k) plan.

SunGard and its subsidiaries also maintained savings and other defined contribution plans in and outside of the U.S. The U.S. 401(k) plan was frozen with respect to new contributions effective with the SunGard acquisition and during 2016 was merged with the FIS plan, in which legacy SunGard employees now participate.

Stock Compensation Plans

In 2008, the Company adopted the FIS 2008 Omnibus Incentive Plan ("FIS Plan"). The FIS Plan was amended and restated in 2013 and combined with a plan assumed in conjunction with the 2009 Metavante acquisition ("FIS Restated Plan"). The restatement authorized an additional 6 million shares for issuances, which was approved by stockholders in 2013. In May 2015, another 12 million shares were authorized for issuance under the FIS Restated Plan and approved by stockholders.

On November 30, 2015, in conjunction with the SunGard acquisition, the Company registered an additional 10 million shares, representing the remaining shares available for issuance under the SunGard 2005 Management Incentive Plan, as amended ("the SG Plan"), immediately prior to the consummation of the SunGard acquisition. These shares are now available for grant under the FIS Restated Plan for legacy SunGard employees and new FIS employees.

Also on November 30, 2015, in conjunction with the SunGard acquisition, the Company registered up to approximately 2 million shares of FIS common stock on a Post-Effective Amendment on Form S-8, reserved for issuance with respect to converted restricted stock units ("RSU's") under the SG Plan. This SG Plan will remain in existence until such time as these RSU's vest and the shares are exercised or the SG Plan is otherwise terminated.

A summary of the options granted (all of which vest over three years), outstanding and shares available for grant under the FIS Restated Plan follows (in millions):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

FIS Restated Plan
Available for grant as of December 31, 201526
Granted in 20165
Outstanding as of December 31, 201617
Available for grant as of December 31, 201621
Granted in 20174
Outstanding as of December 31, 201715
Available for grant as of December 31, 201717

The following schedule summarizes the stock option activity for the years ended December 31, 2017, 2016 and 2015 (in millions except for per share amounts):

SharesWeighted Average Exercise Price
Balance, December 31, 201415$41.56
Granted365.91
Exercised(2)29.67
Cancelled—54.08
Balance, December 31, 20151647.19
Granted563.58
Exercised(3)36.15
Cancelled(1)62.25
Balance, December 31, 20161753.21
Granted480.05
Exercised(5)44.72
Cancelled(1)70.50
Balance, December 31, 20171561.97

The intrinsic value of options exercised during the years ended December 31, 2017, 2016 and 2015 was $196 million, $103 million and $73 million, respectively. The Company generally issues shares from treasury stock for stock options exercised.

The following table summarizes information related to stock options outstanding and exercisable as of December 31, 2017:

Outstanding OptionsExercisable Options
Range of Exercise PriceNumber of OptionsWeighted Average Remaining Contractual LifeWeighted Average Exercise PriceIntrinsic Value as of December 31, 2017 (a)Number of OptionsWeighted Average Remaining Contractual LifeWeighted Average Exercise PriceIntrinsic Value as of December 31, 2017 (a)
(In millions)(In millions)(In millions)(In millions)
$ 0.00 - $ 34.3311.40$30.05$8111.40$30.05$81
$ 34.34 - $ 48.7522.7648.7510022.7648.75100
$ 48.76 - $ 59.9133.8158.199323.8058.1763
$ 59.92 - $ 62.9235.2162.929415.2262.9230
$ 62.93 - $ 66.6224.7165.785914.6065.5225
$ 66.63 - $ 93.3646.1480.0353—3.8779.411
$ 0.00 - $ 93.36154.4561.97$48073.3551.99$300

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(a)Intrinsic value is based on a closing stock price as of December 31, 2017 of $94.09.

The weighted average fair value of options granted during the years ended December 31, 2017, 2016 and 2015 was estimated to be $12.78, $9.35 and $10.67, respectively, using the Black-Scholes option pricing model with the assumptions below:

201720162015
Risk free interest rate1.8%1.2%1.4%
Volatility20.1%20.4%21.7%
Dividend yield1.4%1.6%1.6%
Weighted average expected life (years)4.24.24.2

The Company estimates future forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company bases the risk-free interest rate that is used in the stock option valuation model on U.S. Treasury securities issued with maturities similar to the expected term of the options. The expected stock volatility factor is determined using historical daily price changes of the Company's common stock over the most recent period commensurate with the expected term of the option and the impact of any expected trends. The dividend yield assumption is based on the current dividend yield at the grant date or management's forecasted expectations. The expected life assumption is determined by calculating the average term from the Company's historical stock option activity and considering the impact of expected future trends.

The Company granted a total of 1 million restricted stock shares at prices ranging from $79.44 to $93.36 on various dates in 2017. The Company granted a total of 1 million restricted stock shares at prices ranging from $56.44 to $79.41 on various dates in 2016. The Company granted a total of 1 million restricted stock shares at prices ranging from $61.33 to $69.33 on various dates in 2015. These shares were granted at the closing market price on the date of grant and vest annually over three years. As of December 31, 2017 and 2016, we have approximately 2 million and 3 million unvested restricted shares remaining. The December 31, 2017 balance includes those RSU's converted in connection with the SunGard acquisition as noted above.

The Company has provided for total stock compensation expense of $107 million, $137 million and $98 million for the years ended December 31, 2017, 2016 and 2015, respectively, which is included in selling, general, and administrative expense in the Consolidated Statements of Earnings, unless the expense is attributable to a discontinued operation.

As of December 31, 2017 and 2016, the total unrecognized compensation cost related to non-vested stock awards is $111 million and $141 million, respectively, which is expected to be recognized in pre-tax income over a weighted average period of 1.5 years and 1.4 years, respectively.

German Pension Plans

Our German operations have unfunded, defined benefit plan obligations. These obligations relate to benefits to be paid to German employees upon retirement. The accumulated benefit obligation as of December 31, 2017 and 2016, was $57 million and $49 million, respectively, and the projected benefit obligation was $57 million and $50 million, respectively. The plan remains unfunded as of December 31, 2017.

(15)Divestitures and Discontinued Operations

On July 31, 2017, FIS closed on the sale of a majority ownership stake in its Capco consulting business and risk and compliance consulting business to Clayton, Dubilier & Rice L.P., by and through certain funds that it manages ("CD&R"), for cash proceeds of approximately $469 million, resulting in a pre-tax loss of approximately $41 million. The divestiture is consistent with our strategy to focus on our IP-led businesses. CD&R acquired preferred units convertible into 60% of the common units of the venture, Cardinal Holdings, L.P. ("Cardinal") and FIS obtained common units representing the remaining 40%, in each case before equity is issued to management. The preferred units are entitled to a quarterly dividend at an annual rate of 12%, payable in cash (if available) or additional preferred units at FIS' option. The businesses sold were included within the GFS and IFS segments. The sale did not meet the standard necessary to be reported as discontinued operations; therefore, the pre-tax loss and related prior period earnings remain reported within earnings from continuing operations. Prior to the sale,

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the Capco consulting business and risk and compliance consulting business' pre-tax earnings, excluding certain unallocated corporate costs, for the periods ended December 31, 2017, 2016 and 2015 were $14 million, $55 million, and $60 million, respectively.

FIS' 40% ownership in Cardinal was initially valued at $172 million and was recorded as an equity method investment included within other noncurrent assets on the Consolidated Balance Sheet. After the sale on July 31, 2017, FIS began to recognize the investment earnings in after-tax equity method investment earnings outside of operating income and segment Adjusted EBITDA. For periods prior to July 31, 2017, the Capco consulting business and risk and compliance consulting business were included within operating income and segment Adjusted EBITDA.

On February 1, 2017, the Company closed on the sale of the PS&E business for $850 million, resulting in a pre-tax gain of $85 million. The transaction included all PS&E solutions, which provided a comprehensive set of technology solutions to address public safety and public administration needs of government entities as well as the needs of K-12 school districts. The divestiture is consistent with our strategy to serve the financial services markets. Cash proceeds were used to reduce outstanding debt (note 10). Net cash proceeds after payment of taxes and transaction-related expenses were approximately $500 million. The PS&E business was included in the Corporate and Other segment. The sale did not meet the standard necessary to be reported as discontinued operations; therefore, the gain and related prior period earnings remain reported within earnings from continuing operations. Prior to the sale, PS&E's pre-tax earnings, excluding certain unallocated corporate costs, for the periods ended December 31, 2017, 2016 and 2015 were $3 million, $42 million, and $6 million, respectively.

During the second quarter of 2015, we sold certain assets associated with our gaming industry check warranty business, resulting in a pre-tax gain of $139 million, which is included in Other income (expense), net. The sale did not meet the standard necessary to be reported as discontinued operations; therefore, the gain and related prior period earnings remain reported within earnings from continuing operations.

As described below, certain operations are reported as discontinued in the Consolidated Statements of Earnings for the years ended December 31, 2017, 2016 and 2015. The earnings (losses) of the businesses included in discontinued operations for the periods presented were as follows:

Earnings (loss) from discontinued operations net of tax:201720162015
eCas business line$—$—$(4)
Participacoes operations—1(3)
Total discontinued operations$—$1$(7)

China eCas Business Line

During the second quarter of 2014, the Company committed to a plan to sell our business operation that provides eCas core banking software solutions to small financial institutions in China because it did not align with our strategic plans. We entered into a purchase agreement in January 2015 to sell this business and the transaction closed during the second quarter of 2015.

Brazil Item Processing and Remittance Services Operations

During the third quarter of 2010, the Company decided to pursue strategic alternatives for Fidelity National Participacoes Ltda. (“Participacoes”). Participacoes' processing volume was transitioned to other vendors or back to its clients during the second quarter of 2011. Participacoes had earnings (losses) before taxes of $0 million, $2 million and $(5) million during the years ended December 31, 2017, 2016 and 2015, respectively. The shut-down activities involved the transfer and termination of approximately 2,600 employees, which was completed in 2011. Former employees generally had up to two years from the date of terminations, extended through April 2013, to file labor claims and a number of them did file labor claims. As of December 31, 2017, there were approximately 320 active claims remaining. Consequently, we have continued exposure on these active claims, which were not transferred with other assets and liabilities in the disposal. Our accrued liability for active labor claims, net of $9 million in court ordered deposits, is $9 million as of December 31, 2017. Any changes in the estimated liability related to these labor claims will be recorded as discontinued operations.

(16)Components of Other Comprehensive Earnings

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The following table shows accumulated other comprehensive earnings ("AOCE") attributable to FIS by component, net of tax, for the year ended December 31, 2017 (in millions):

Foreign
Interest RateCurrency
SwapTranslation
ContractsAdjustmentsOther (1)Total
Balances, December 31, 2016$1$(314)$(18)$(331)
Other comprehensive gain/(loss) before reclassifications(1)25(25)(1)
Balances, December 31, 2017$—$(289)$(43)$(332)
(1)Includes the minimum pension liability adjustment and the cash settlement payment on treasury lock contracts associated with bridge financing for the SunGard acquisition. This amount will be amortized as an adjustment to interest expense over the ten years in which the related interest payments that were hedged are recognized in income.

The amount reclassified from AOCE for interest rate derivative contracts includes $1 million recorded as interest expense, reduced by a related $0 million provision for income taxes. See Note 12 for the tax provision associated with each component of other comprehensive income.

(17)Related Party Transactions

Cardinal Holdings

On July 31, 2017, FIS closed on the sale of a majority ownership stake in the Capco consulting business and risk and compliance consulting business to CD&R. CD&R acquired a 60% interest in the entity, Cardinal, and FIS obtained the remaining 40% interest, in each case before equity issued to management (Note 15). Cardinal became a related party effective July 31, 2017.

Upon closing on the sale of the Capco consulting business and risk and compliance consulting business, FIS and Cardinal entered into a short-term Transition Services Agreement ("TSA"), whereby FIS provides various agreed upon services to Cardinal. FIS also provides ongoing management consulting services and other services to Cardinal. Amounts transacted through these agreements were not significant to the 2017 periods presented.

Capco continues to provide Banco Bradesco S.A. ("Banco Bradesco") with consulting services. Capco revenue and related party receivables from Banco Bradesco through the July 31, 2017 closing is included below under Brazilian Venture revenue from Banco Bradesco.

Brazilian Venture

The Company operates a joint venture ("Brazilian Venture") with Banco Bradesco S.A. ("Banco Bradesco") in which we own a 51% controlling interest, to provide comprehensive, fully outsourced transaction processing, call center, cardholder support and collection services to multiple card issuing clients in Brazil, including Banco Bradesco. The original accounting for this transaction resulted in the establishment of a contract intangible asset and a liability for amounts payable to the original partner banks upon final migration of their respective card portfolios and achieving targeted volumes (the “Brazilian Venture Notes”). The unamortized contract intangible asset balance as of December 31, 2017 was $67 million. Upon the exit of one partner bank, certain terms of the Brazilian Venture were subsequently renegotiated between Banco Bradesco and FIS and were memorialized in an Amended Association Agreement in November 2010. Among other things, the payout for the Brazilian Venture Notes was extended over a ten-year period. Additional performance remuneration provisions upon the achievement of targeted account and transaction volumes were renegotiated, for which additional related party payables were recorded as of December 31, 2012, based on management's expectation that the targets will be met. The passage of time and the achievement of certain targets triggered payments to Banco Bradesco of $6 million and $6 million in 2017 and 2016, respectively. In addition, the board of directors for the Brazilian Venture declared a dividend during the years ended December 31, 2017 and 2016, resulting in payments of $23 million and $20 million respectively, to Banco Bradesco. The carrying value of the noncontrolling interest as of December 31, 2017 was $102 million.

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The Company recorded revenues of $329 million, $272 million and $237 million during the years ended December 31, 2017, 2016 and 2015, respectively, from Banco Bradesco. Revenues included $24 million of favorable and $12 million of unfavorable currency impact during the years ended December 31, 2017 and 2016, respectively, resulting from foreign currency exchange rate fluctuations between the U.S. Dollar and Brazilian Real in 2017 as compared to 2016 and 2016 as compared to 2015.

The Brazilian Venture currently processes approximately 73 million cards for clients in Brazil and provides call center, cardholder support and collection services for their card portfolios.

A summary of the Company’s related party receivables and payables is as follows (in millions):

December 31,
Related PartyBalance sheet location20172016
Banco BradescoTrade receivables$52$45
Banco BradescoAccounts payable and accrued liabilities1010
Banco BradescoOther long-term liabilities1722

(18)Concentration of Risk

The Company generates a significant amount of revenues from large clients, however, no individual client accounted for 10% or more of total revenues in the years ended December 31, 2017, 2016 and 2015.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents and trade receivables.

The Company places its cash equivalents with high credit-quality financial institutions and, by policy, limits the amount of credit exposure with any one financial institution.

Concentrations of credit risk with respect to trade receivables are limited because a large number of geographically diverse clients make up the Company’s client base, thus spreading the trade receivables credit risk. The Company controls credit risk through monitoring procedures.

(19)Segment Information

In 2015, FIS finalized a reorganization and began reporting its financial performance based on three segments: Integrated Financial Solutions (“IFS”), Global Financial Solutions (“GFS”) and Corporate and Other. We recast all previous periods to conform to the new segment presentation. Following our November 30, 2015 acquisition of SunGard, the SunGard business was included within the GFS segment as its economic characteristics, international business model, and various other factors largely aligned with those of our GFS segment. As we further integrated the acquired SunGard businesses through March 31, 2016, we reclassified certain SunGard businesses (corporate liquidity and wealth and retirement) that are oriented more to the retail banking and payments activities of IFS into that segment. Certain other businesses from both SunGard (public sector and education businesses, which was divested on February 1, 2017), and legacy FIS (global commercial services and retail check processing) were reclassified to the Corporate and Other segment, as were SunGard administrative expenses.

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 and retirement 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

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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, 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 15).

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 (see Note 17 of the Notes to Consolidated Financial Statements). The business solutions in this segment included the Capco consulting business through its divestiture on July 31, 2017 (Note 15).

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 15), commercial services and retail check processing. 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, 2016 and 2015 of adjusting SunGard's deferred revenue to fair value.

During 2017 and 2016 the Company recorded certain costs relating to integration and severance activity primarily from the SunGard acquisition of $178 million and $281 million, respectively. During 2015 the Company recorded transaction and other costs, including integration activity, related to SunGard and other recent acquisitions and other severance costs of $171 million and severance costs in connection with the reorganization and streamlining of operations in our GFS segment of $45 million.

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 reclassified to conform to the current segment presentation.

As of and for the year ended December 31, 2017 (in millions):

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IFSGFSCorporate and OtherTotal
Processing and services revenues$4,630$4,138$355$9,123
Operating expenses3,0782,9931,5607,631
Depreciation and amortization from continuing operations31627065651
Purchase accounting amortization——740740
EBITDA1,8681,415(400)2,883
Acquisition deferred revenue adjustment——77
Acquisition, integration and severance costs——178178
Adjusted EBITDA$1,868$1,415$(215)$3,068
EBITDA$2,883
Interest expense,net337
Depreciation and amortization from continuing operations651
Purchase accounting amortization740
Other income (expense) unallocated(122)
Provision (benefit) for income taxes(319)
Net earnings (loss) from discontinued operations—
Net earnings attributable to noncontrolling interest33
Net earnings attributable to FIS common stockholders$1,319
Capital expenditures (1)$374$301$22$697
Total assets$10,664$8,366$5,485$24,515
Goodwill$7,662$5,898$170$13,730

(1) Capital expenditures include $84 million of capital leases and other financing obligations.

As of and for the year ended December 31, 2016 (in millions):

IFSGFSCorporate and OtherTotal
Processing and services revenues$4,525$4,250$466$9,241
Operating expenses2,9983,2111,7347,943
Depreciation and amortization from continuing operations27024767584
Purchase accounting amortization16583590
EBITDA1,7981,292(618)2,472
Acquisition deferred revenue adjustment——192192
Acquisition, integration and severance costs——281281
Adjusted EBITDA$1,798$1,292$(145)$2,945
EBITDA$2,472
Interest expense, net383
Depreciation and amortization from continuing operations584
Purchase accounting amortization590
Other income (expense) unallocated(9)
Provision for income taxes317
Net earnings (loss) from discontinued operations1
Net earnings attributable to noncontrolling interest22
Net earnings attributable to FIS common stockholders$568
Capital expenditures (1)$294$317$48$659
Total assets$10,246$9,028$6,751$26,025
Goodwill$7,676$6,332$170$14,178

(1) Capital expenditures include $43 million of capital leases.

As of and for the year ended December 31, 2015 (in millions):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

IFSGFSCorporate and OtherTotal
Processing and services revenues$3,809$2,361$426$6,596
Operating expenses2,4721,9551,0705,497
Depreciation and amortization from continuing operations22314761431
Purchase accounting amortization13234238
EBITDA1,561556(349)1,768
Contract settlement——4848
Acquisition, integration and severance costs——171171
Global restructure$—$—$4545
Adjusted EBITDA$1,561$556$(85)2,032
EBITDA$1,768
Interest expense, net183
Depreciation and amortization from continuing operations431
Purchase accounting amortization238
Other income (expense) unallocated121
Provision for income taxes379
Net earnings (loss) from discontinued operations(7)
Net earnings attributable to noncontrolling interest19
Net earnings attributable to FIS common stockholders$632
Capital expenditures (1)$235$168$21$424
Total assets$10,022$9,508$6,669$26,199
Goodwill$7,676$6,605$464$14,745

(1) Capital expenditures include $9 million of capital leases.

Total assets as of December 31, 2017, 2016 and 2015 exclude $2 million, $6 million and $1 million, respectively, related to discontinued operations.

Revenue generated from contracts executed outside of our North American operations represented approximately 26%, 24% and 22% of total revenue in 2017, 2016 and 2015, respectively. Clients in Brazil, the United Kingdom, Germany, India, France, Switzerland and Australia accounted for the majority of the revenues from clients based outside of North America for all periods presented. FIS conducts business in over 130 countries, with no individual country outside of North America accounting for more than 10% of total revenue for the years ended December 31, 2017, 2016 and 2015.

Long-term assets, excluding goodwill and other intangible assets, located outside of the United States totaled $557 million and $509 million as of December 31, 2017 and 2016, respectively. These assets are predominantly located in Brazil, India, Germany and the United Kingdom.

(20)Share Repurchase Program

Our Board of Directors has approved a series of plans authorizing repurchases of our common stock in the open market at prevailing market prices or in privately negotiated transactions, the most current of which on July 20, 2017, authorized repurchases of up to $4.0 billion through December 31, 2020. This share repurchase authorization replaced any existing share repurchase authorization plan. Approximately $3,895 million of plan capacity remained available for repurchases as of December 31, 2017.

The table below summarizes annual share repurchase activity under these plans (in millions, except per share amounts):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Total cost of shares
purchased as part of
Total number ofAverage pricepublicly announced
Year endedshares purchasedpaid per shareplans or programs
December 31, 20171$93.24$105
December 31, 2016—$—$—
December 31, 20155$66.10$300

There were no share repurchases in 2016.

During January and February 2018, we repurchased an additional 4 million shares of our common stock for $401 million at an average price of $97.70 per share.

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