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 Reporting53
Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements54
Consolidated Balance Sheets as of December 31, 2019 and 201856
Consolidated Statements of Earnings for the years ended December 31, 2019, 2018 and 201757
Consolidated Statements of Comprehensive Earnings for the years ended December 31, 2019, 2018 and 201758
Consolidated Statements of Equity for the years ended December 31, 2019, 2018 and 201759
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 201760
Notes to Consolidated Financial Statements61

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, 2019, 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, 2019, 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, 2019 and 2018, 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, 2019, and the related notes (collectively, the consolidated financial statements), and our report dated February 20, 2020 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired Worldpay, Inc. (Worldpay) during 2019, and management excluded from its assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2019, Worldpay's internal control over financial reporting. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Worldpay. The acquired business represents approximately 73% of total assets, consisting principally of goodwill and other intangible assets, and 18% of total revenue included in the consolidated financial statements of the Company as of and for the year ended December 31, 2019.

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 20, 2020

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, 2019 and 2018, 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, 2019, 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, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2019, 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, 2019, 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 20, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2(o) to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases.

Acquisition of Worldpay, Inc.

As discussed in Note 3 to the consolidated financial statements, the Company acquired Worldpay, Inc. (Worldpay) on July 31, 2019.

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.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of software license revenue from arrangements with terms and conditions that are not standard

As discussed in Notes 2(p) and 4 to the consolidated financial statements, the Company enters into arrangements containing software licenses. Software license revenue typically relates to the Company’s promise to provide the customer a right to use the Company’s intellectual property and is typically part of an offering of multiple services. Offerings that contain software license components often contain non-standard terms and conditions and vary with regards to the number and type of promises included and pricing.

We identified the evaluation of software license revenue from arrangements with terms and conditions that are not standard as a critical audit matter. Significant auditor judgment was required to evaluate the Company's assessment of the impact on revenue recognition of certain terms and conditions that are unique to individual contracts. Specifically, judgment was required to evaluate the Company's identification of performance obligations and determination of the corresponding pattern of revenue recognition, particularly for new contracts or renewals with software license performance obligations.

The primary procedures performed to address this critical audit matter included the following. We tested certain internal controls over the Company's revenue recognition process, including controls over the Company's assessment of contractual terms and conditions on software license revenue recognition. We tested certain arrangements containing software license components by reading the underlying contracts and evaluating the Company's assessment of the contractual terms and conditions in accordance

with the revenue recognition requirements. Specifically, this included an evaluation of the Company's identification and assessment of terms and conditions that were not standard that could give rise to additional performance obligations or different patterns of revenue recognition. We obtained external confirmation directly from certain of the Company's customers and compared the key terms and conditions relevant to the Company's revenue recognition to the Company's written customer agreement. Additionally, we tested a sample of individual software license revenue, and obtained the underlying contract and accounting analysis to evaluate the identification of performance obligations and timing of software license revenue recognition.

Evaluation of the acquisition-date fair value of the customer relationship intangible assets and software assets acquired in the Worldpay transaction

As discussed in Note 3 to the consolidated financial statements, on July 31, 2019, the Company acquired Worldpay in a business combination. As a result of the transaction, the Company acquired customer relationship intangible assets associated with the generation of future income from Worldpay's existing customers and software assets associated with Worldpay's technology applications. The acquisition-date fair value for the customer relationship intangible assets and software assets was $13.7 billion and $1.3 billion, respectively.

We identified the evaluation of the acquisition-date fair value of the customer relationship intangible assets and software assets acquired in the Worldpay transaction as a critical audit matter. There was a high degree of subjectivity in evaluating the discounted cash flow model used to determine the acquisition-date fair value of the customer relationship intangible assets and software assets. The discounted cash flow model included the internally-developed assumptions for which there was limited observable market information, and the fair value of such assets could be sensitive to changes. The internally-developed assumptions for customer relationship intangible assets included 1) forecasted revenue attributable to existing customer contracts and relationships, 2) estimated annual attrition, 3) forecasted earnings before interest, taxes, depreciation and amortization (EBITDA) margin, and 4) weighted-average cost of capital (WACC), including estimated discount rates. For software assets, the internally developed assumptions included 1) forecasted revenue attributable to software assets, including obsolescence rates, 2) estimated royalty rates, and 3) WACC, including estimated discount rates.

The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company's acquisition-date valuation process, including controls over the development of the above assumptions. We compared the Company's estimates of 1) forecasted revenue, including obsolescence rates on software assets, and forecasted EBITDA margin to Worldpay's historical actual results and to the Company's peers and industry reports, 2) forecasted annual attrition to Worldpay's historical customer attrition data and industry data and 3) royalty rates to third-party royalty rates of similar software licenses. We assessed the assumptions for comparison to those of a market participant, including consideration of recent similar market transactions. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

•evaluating the Company's determined WACC by comparing relevant inputs to independent market data for the Company's peers,
•evaluating the Company's discount rates, by comparing them against a discount rate range that was independently developed using publicly available market data for comparable entities,
•evaluating the Company's selected royalty rates, by comparing them against a royalty rate range that was independently developed using publicly available market data for comparable licensing activities, and
•testing the Company's model utilized to estimate the fair value of the customer relationship intangible assets and software assets using the Company's cash flow forecasts and discount rates.

/s/ KPMG LLP

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

Jacksonville, Florida

February 20, 2020

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2019 and 2018

(In millions, except per share amounts)

20192018
ASSETS
Current assets:
Cash and cash equivalents$1,152$703
Settlement deposits and merchant float2,882700
Trade receivables, net3,2421,472
Contract assets124123
Settlement receivables647281
Other receivables337166
Prepaid expenses and other current assets308288
Total current assets8,6923,733
Property and equipment, net900587
Goodwill52,24213,545
Intangible assets, net15,7983,132
Software, net3,2041,795
Other noncurrent assets2,303503
Deferred contract costs, net667475
Total assets$83,806$23,770
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable, accrued and other liabilities$2,374$1,099
Settlement payables4,228972
Deferred revenue817739
Short-term borrowings2,823267
Current portion of long-term debt14048
Total current liabilities10,3823,125
Long-term debt, excluding current portion17,2298,670
Deferred income taxes4,2811,360
Other noncurrent liabilities2,406326
Deferred revenue5267
Total liabilities34,35013,548
Equity:
FIS stockholders’ equity:
Preferred stock, $0.01 par value, 200 shares authorized, none issued and outstanding as of December 31, 2019 and 2018——
Common stock, $0.01 par value, 750 and 600 shares authorized, 615 and 433 shares issued as of December 31, 2019 and 2018, respectively64
Additional paid in capital45,35810,800
Retained earnings4,1614,528
Accumulated other comprehensive earnings (loss)(33)(430)
Treasury stock, $0.01 par value, less than 1 and 106 common shares as of December 31, 2019 and 2018, respectively, at cost(52)(4,687)
Total FIS stockholders' equity49,44010,215
Noncontrolling interest167
Total equity49,45610,222
Total liabilities and equity$83,806$23,770

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, 2019, 2018 and 2017

(In millions, except per share amounts)

201920182017
Revenue (for related party activity, see Note 18)$10,333$8,423$8,668
Cost of revenue (for related party activity, see Note 18)6,6105,5695,794
Gross profit3,7232,8542,874
Selling, general and administrative expenses (for related party activity, see Note 18)2,6671,3011,442
Asset impairments8795—
Operating income9691,4581,432
Other income (expense):
Interest income521722
Interest expense(389)(314)(359)
Other income (expense), net(219)(57)(119)
Total other income (expense), net(556)(354)(456)
Earnings before income taxes and equity method investment earnings (loss)4131,104976
Provision (benefit) for income taxes100208(321)
Equity method investment earnings (loss)(10)(15)(3)
Net earnings3038811,294
Net (earnings) loss attributable to noncontrolling interest(5)(35)(33)
Net earnings attributable to FIS common stockholders$298$846$1,261
Net earnings per share-basic attributable to FIS common stockholders$0.67$2.58$3.82
Weighted average shares outstanding-basic445328330
Net earnings per share-diluted attributable to FIS common stockholders$0.66$2.55$3.75
Weighted average shares outstanding-diluted451332336

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, 2019, 2018 and 2017

(In millions)

201920182017
Net earnings$303$881$1,294
Other comprehensive earnings (loss), before tax:
Unrealized gain (loss) on derivatives$(17)$—$(28)
Adjustment for (gain) loss reclassified to net earnings2——
Unrealized gain (loss) on derivatives, net(15)—(28)
Foreign currency translation adjustments646(120)23
Minimum pension liability adjustments(38)5(8)
Other comprehensive earnings (loss), before tax593(115)(13)
Provision for income tax expense (benefit) related to items of other comprehensive earnings1961(11)
Other comprehensive earnings (loss), net of tax$397397$(116)(116)$(2)(2)
Comprehensive earnings7007651,292
Net (earnings) loss attributable to noncontrolling interest(5)(35)(33)
Other comprehensive (earnings) loss attributable to noncontrolling interest—181
Comprehensive earnings attributable to FIS common stockholders$695$748$1,260

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, 2019, 2018 and 2017 (In millions, except per share amounts)
Amount
FIS Stockholders
Accumulated
Number of sharesAdditionalother
CommonTreasuryCommonpaid inRetainedcomprehensiveTreasuryNoncontrollingTotal
sharessharesstockcapitalearningsearnings (loss)stockinterestequity
Balances, December 31, 2016431(103)$4$10,380$3,233$(331)$(3,611)$104$9,779
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)
Purchases of treasury stock—(1)————(105)—(105)
Stock-based compensation———109————109
Cash dividends declared ($1.16 per share) and other distributions————(385)——(27)(412)
Net earnings————1,261——331,294
Other comprehensive earnings (loss), net of tax—————(1)—(1)(2)
Balances, December 31, 2017432(99)$4$10,534$4,109$(332)$(3,604)$109$10,820
Issuance of restricted stock1————————
Exercise of stock options—4—135——155—290
Treasury shares held for taxes due upon exercise of stock options———(10)——(22)—(32)
Purchases of treasury stock—(11)————(1,216)—(1,216)
Stock-based compensation———84————84
Cash dividends declared ($1.28 per share) and other distributions————(422)——(29)(451)
Brazilian Venture divestiture———57———(90)(33)
Other————(5)———(5)
Net earnings————846——35881
Other comprehensive earnings (loss), net of tax—————(98)—(18)(116)
Balances, December 31, 2018433(106)$4$10,800$4,528$(430)$(4,687)$7$10,222
Worldpay acquisition180109234,040——5,0421139,095
Issuance of restricted stock1—————2—2
Exercise of stock options11—117——46—163
Treasury shares held for taxes due upon exercise of stock options———(1)——(55)—(56)
Purchases of treasury stock—(4)————(400)—(400)
Stock-based compensation———402————402
Cash dividends declared ($1.40 per share) and other distributions————(658)——(7)(665)
Other————(7)———(7)
Net earnings————298——5303
Other comprehensive earnings (loss), net of tax—————397——397
Balances, December 31, 2019615—$6$45,358$4,161$(33)$(52)$16$49,456

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, 2019, 2018 and 2017

(In millions)

201920182017
Cash flows from operating activities:
Net earnings$303$881$1,294
Adjustment to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization2,4441,4201,366
Amortization of debt issue costs241719
Acquisition-related financing foreign exchange(125)——
Asset impairments8795—
Loss (gain) on sale of businesses, investments and other1850(62)
Loss on extinguishment of debt2171196
Stock-based compensation40284107
Deferred income taxes(109)(116)(985)
Net changes in assets and liabilities, net of effects from acquisitions and foreign currency:
Trade and other receivables(161)78(232)
Contract assets17(20)62
Settlement activity(165)9(51)
Prepaid expenses and other assets(129)4(2)
Deferred contract costs(379)(248)(153)
Deferred revenue40(100)67
Accounts payable, accrued liabilities, and other liabilities(74)(162)115
Net cash provided by operating activities2,4101,9931,741
Cash flows from investing activities:
Additions to property and equipment(200)(127)(145)
Additions to software(628)(495)(468)
Acquisitions, net of cash acquired(6,632)——
Net proceeds from sale of businesses and investments49(16)1,307
Other investing activities, net(90)(30)(4)
Net cash provided by (used in) investing activities(7,501)(668)690
Cash flows from financing activities:
Borrowings33,35226,3719,615
Repayment of borrowings and other financing obligations(24,672)(26,148)(11,689)
Debt issuance costs(101)(30)(13)
Proceeds from exercise of stock options161288208
Treasury stock activity(453)(1,255)(153)
Dividends paid(656)(421)(385)
Distribution to Brazilian Venture partner—(26)(23)
Other financing activities, net(50)(15)(40)
Net cash provided by (used in) financing activities7,581(1,236)(2,480)
Effect of foreign currency exchange rate changes on cash18(51)31
Net increase (decrease) in cash and cash equivalents2,50838(18)
Cash and cash equivalents, beginning of year703665683
Cash and cash equivalents, end of year (see Note 2(b))$3,211$703$665
Supplemental cash flow information:
Cash paid for interest$332$298$354
Cash paid for income taxes$321$503$545

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 leading provider of technology solutions for merchants, banks and capital markets firms globally.

On March 17, 2019, FIS, Wrangler Merger Sub, Inc., a wholly owned subsidiary of FIS ("Merger Sub"), and Worldpay, Inc. ("Worldpay") entered into an Agreement and Plan of Merger (the "merger agreement") pursuant to which Merger Sub would merge with and into Worldpay (the "merger"), with Worldpay surviving the merger and becoming a wholly owned subsidiary of FIS (collectively, the "Worldpay acquisition"). On July 31, 2019, FIS completed the acquisition of Worldpay, and Worldpay's results of operations and financial position are included in the Consolidated Financial Statements from and after the date of acquisition.

As a result of the Company's acquisition of Worldpay, the Company reorganized its reportable segments and recast all prior-period segment information presented to align with the new reportable segments. The new segments are Merchant Solutions, Banking Solutions, and Capital Market Solutions, which are organized based on the markets and clients served aligned with the solutions they provide, as well as the Corporate and Other segment (see Note 22).

**(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 on the Consolidated Balance Sheets. The carrying amounts reported in the Consolidated Balance Sheets for these instruments approximate their fair value. The Company records restricted cash in captions other than Cash and cash equivalents in the Consolidated Balance Sheets. The reconciliation between Cash and cash equivalents in the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows is as follows (in millions):

December 31.
20192018
Cash and cash equivalents on the Consolidated Balance Sheets$1,152$703
Merchant float restricted cash (in Settlement deposits and merchant float) (see Note 2(f))1,519—
Other restricted cash (in Other noncurrent assets) (see Note 11)540—
Total Cash and cash equivalents per the Consolidated Statements of Cash Flows$3,211$703

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

**(c)**Fair Value Measurements

Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations

FASB Accounting Standards Codification ("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. 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 acquisition 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. Contingent consideration liabilities or receivables recorded in connection with business acquisitions must also be adjusted for changes in fair value until settled.

Fair Value of Financial Instruments

The carrying amounts reported in the Consolidated Balance Sheets for receivables, accounts payable, and short-term borrowings approximate their fair values because of their immediate or short-term maturities. The fair value of the Company's long-term debt is based on quoted prices of our senior notes and trades of our debt in close proximity to year end, which are considered Level 2-type measurements. The Company also holds, or has held, certain derivative instruments, specifically interest rate swaps and foreign currency exchange forward contracts, which are also valued using Level 2-type measurements. 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.

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 the following:

•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.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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.

**(d)**Derivative Financial Instruments

The Company accounts for derivative financial instruments in accordance with FASB ASC Topic 815, Derivatives and Hedging. This guidance establishes accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. All derivatives, whether designated in hedging relationships or not, are required to be recorded on the Consolidated Balance Sheets at fair value. During 2019, the Company entered into foreign currency forward contracts as well as treasury lock and interest rate swap contracts to reduce the volatility in the Company's cash flows during the period leading up to the Company's debt issuances related to the Worldpay transaction. The Company designated these treasury lock and interest rate swap contracts as cash flow hedges. During 2019 and 2018, the Company used cross-currency interest rate swaps to engage in hedging activities relating to its investment in foreign currency denominated operations. The Company designated these interest rate swaps as net investment hedges. Also during 2018, the Company used an interest rate swap to engage in hedging activities relating to changes in fair value of its foreign currency denominated debt. The Company designated this interest rate swap as a fair value hedge. During 2017, the Company engaged in hedging activities relating to its variable-rate debt through the use of interest rate swaps. The Company designated these interest rate swaps as cash flow hedges. The estimated fair values of the derivative instruments are determined using Level 2-type measurements. The derivative instruments are recorded at fair value as assets or liabilities and are included in the accompanying Consolidated Balance Sheets in Prepaid expenses and other current assets; Other noncurrent assets; Accounts payable, accrued and other liabilities; or Other noncurrent liabilities, as appropriate. Changes in fair value are recorded as a component of Accumulated other comprehensive earnings (loss), net of tax, for all derivative instruments except the fair value hedge, which is recorded as an adjustment to long-term debt, and the foreign currency forward contracts, which are recorded through Other income (expense), net. The amounts included in Accumulated other comprehensive earnings (loss) for the cash flow hedges are recorded in interest expense as yield adjustments over the periods in which the related interest payments that were hedged are made. See Notes 13 and 20 for additional details.

The Company also utilizes foreign currency denominated debt as non-derivative net investment hedges in order to reduce the volatility of the net investment value of its foreign currency denominated operations. The change in fair value of the net investment hedges due to remeasurement of the effective portion, net of tax, is recorded as a component of Accumulated other comprehensive earnings (loss). The ineffective portion of these hedging instruments impacts net earnings when the ineffectiveness occurs.

The Company also has used foreign currency forward contracts to manage our exposure to fluctuations in costs caused by variations in Indian Rupee ("INR") exchange rates. These INR forward contracts, which were terminated in 2017, were designated as cash flow hedges. The Company had no ineffectiveness related to its use of foreign currency forward contracts in connection with INR cash flow hedges.

**(e)**Trade Receivables

A summary of trade receivables, net, as of December 31, 2019 and 2018 is as follows (in millions):

20192018
Trade receivables$3,302$1,489
Allowance for doubtful accounts(60)(17)
Total Trade receivables, net$3,242$1,472

The Company records allowance for doubtful accounts when it is probable that a trade receivable balance will not be collected. The Company writes-off a trade receivable balance when the likelihood of collection is considered remote.

A summary roll forward of the allowance for doubtful accounts for 2019, 2018 and 2017 is as follows (in millions):

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Allowance for doubtful accounts as of December 31, 2016$(41)
Bad debt expense(26)
Write-offs, net of recoveries4
Allowance for doubtful accounts as of December 31, 2017(63)
Bad debt expense(13)
Write-offs, net of recoveries59
Allowance for doubtful accounts as of December 31, 2018(17)
Bad debt expense(53)
Write-offs, net of recoveries15
Foreign currency adjustments(5)
Allowance for doubtful accounts as of December 31, 2019$(60)

**(f)**Settlement Activity and Merchant Float

The payment solution services that give rise to the settlement balances described below 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.

Banking Solutions

We manage certain 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 or clients, 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.

Merchant Solutions

Settlement deposits and merchant float, Settlement receivables, and Settlement payables represent intermediary balances arising from the settlement process which involves the transferring of funds between card issuers, merchants and various banks and financial institutions ("Sponsoring Members"). Funds are processed under two models, a sponsorship model and a direct member model. In the U.S., the Company operates under the sponsorship model, and outside the U.S., the Company operates under the direct membership model.

Under the sponsorship model, in order for the Company to provide electronic payment processing services, Visa, MasterCard and other payment networks require sponsorship by a member clearing bank. The Company has an agreement with Sponsoring Members to provide sponsorship services to the Company. Under the sponsorship agreements the Company is registered as a Visa Third-Party Agent and a MasterCard Service Provider. The sponsorship services allow us to route transactions under the Sponsoring Members' membership to clear card transactions through Visa, MasterCard and other networks. Under this model, the standards of the payment networks restrict us from performing funds settlement and as such require that these funds be in the possession of the Sponsoring Member until the merchant is funded. Accordingly, settlement receivables and settlement payables resulting from the submission of settlement files to the network or cash received from the network in advance of funding the network are the responsibility of the Sponsoring Member and are not recorded on the Company's Consolidated Balance Sheets.

Settlement receivables and settlement payables are also recorded in the U.S. as a result of intermediary balances due to/from the Sponsoring Member. The Company receives funds from certain networks which are owed to the Sponsoring Member for settlement. In other cases the Company transfers funds to the Sponsoring Member for settlement in advance of receiving funds from the network. These timing differences result in settlement receivables and settlement payables. The amounts are

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generally collected or paid the following one to three business days. Additionally, U.S. settlement receivables and settlement payables arise related to interchange expenses, merchant reserves and exception items.

Under the direct membership model, the Company is a direct member in Visa, MasterCard and other payment networks as third party sponsorship to the networks is not required. This results in the Company performing settlement between the networks and the merchant and requires adherence to the standards of the payment networks in which the Company is a direct member. Settlement deposits and merchant float, settlement receivables and settlement payables result when the Company submits the merchant file to the network or when funds are received by the Company in advance of paying the funds to the merchant. The amounts are generally collected or paid the following one to three business days.

Under the direct membership model, merchant float represents cash balances the Company holds on behalf of merchants when the incoming amount from the card networks precedes when the funding to merchants falls due. Merchant float funds held in segregated accounts in a fiduciary capacity are considered restricted cash (see Note 2(b)).

**(g)**Contract Related Balances

The payment terms and conditions in our customer contracts may vary. In some cases, customers pay in advance of our delivery of solutions or services; in other cases, payment is due as services are performed or in arrears following the delivery of the solutions or services. Differences in timing between revenue recognition and invoicing result in accrued trade receivables, contract assets, or deferred revenue on our Consolidated Balance Sheets. Receivables are accrued when revenue is recognized prior to invoicing but the right to payment is unconditional (i.e., only the passage of time is required). This occurs most commonly when software term licenses recognized at a point in time are paid for periodically over the license term. Contract assets result when amounts allocated to distinct performance obligations are recognized when or as control of a solution or service is transferred to the customer but invoicing is contingent on performance of other performance obligations or on completion of contractual milestones. Contract assets are transferred to receivables when the rights become unconditional, typically upon invoicing of the related performance obligations in the contract or upon achieving the requisite project milestone. Deferred revenue results from customer payments in advance of our satisfaction of the associated performance obligation(s) and relates primarily to prepaid maintenance or other recurring services. Deferred revenue is relieved as revenue is recognized. Contract assets and deferred revenue are reported on a contract-by-contract basis at the end of each reporting period. Changes in the contract assets and deferred revenue balances for the years ended December 31, 2019 and 2018 were not materially impacted by any factors other than those described above. Also, in some cases, signing bonuses are paid or credits are offered to customers in connection with the origination or renewal of customer contracts. These incentives are recorded as Other noncurrent assets on our Consolidated Balance Sheets and amortized on a straight-line basis as a reduction of revenue over the lesser of the useful life of the solution or the expected customer relationship period for new contracts or over the contract period for renewal contracts.

**(h)**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. FASB 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.

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The Company assesses goodwill for impairment on an annual basis during the fourth quarter or more frequently if circumstances indicate potential impairment. For each of 2019, 2018, and 2017, we began our assessment with the step zero qualitative assessment. In performing the step zero qualitative assessment for each year, examining those factors most likely to effect 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 assessment for the purpose of our annual impairment test in any year presented in these financial statements.

**(i)**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.

**(j)**Intangible Assets

The Company has intangible assets that consist primarily of customer relationships and trademarks (i.e., a collective term for trademarks, trade names, and related intellectual property rights) that are recorded in connection with acquisitions at their fair value based on the results of valuation analyses. Customer relationships and trademarks acquired in business combinations are generally valued using the multi-period excess earnings method and relief-from-royalty method, respectively, which are Level 3-type measurements. 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. Trademarks determined to have indefinite lives are not amortized. Trademarks with finite lives are amortized over periods ranging up to five years. Intangible assets with finite lives (principally customer relationships and certain trademarks) are reviewed for impairment in accordance with FASB ASC Subtopic 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 indefinite-lived intangible asset has been impaired.

The Company assesses indefinite-lived intangible assets for impairment on an annual basis during the fourth quarter or more frequently if circumstances indicate potential impairment. For each of 2019, 2018 and 2017, we performed a qualitative assessment examining those factors most likely to affect our valuations and concluded that it is more likely than not that our indefinite-lived intangible assets were not impaired. Consequently, we did not perform a quantitative impairment assessment for the purpose of our annual impairment tests for 2019, 2018 and 2017.

**(k)**Software

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 one 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 revenue to total anticipated revenue over its useful life. The Company assesses the recorded value of software to be marketed for impairment on a regular basis by comparing the

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carrying value to the estimated future cash flows to be generated by the underlying software asset (i.e., a net realizable value analysis) and reviews internal-use software for recoverability pursuant to long-lived asset guidance discussed above.

**(l)**Deferred Contract Costs

The Company incurs costs as a result of both the origination and fulfillment of our contracts with customers. Origination costs relate primarily to the payment of sales commissions that are directly related to sales transactions. Fulfillment costs include the cost of implementation services related to software as a service ("SaaS") and other cloud-based arrangements when the implementation service is not distinct from the ongoing service. When origination costs and fulfillment costs that will be used to satisfy future performance obligations are directly related to the execution of our contracts with customers, and the costs are recoverable under the contract, the costs are capitalized as a deferred contract cost. Impairment losses are recognized if the carrying amounts of the deferred contract costs are not recoverable. There were no significant impairment losses recognized on deferred contract costs for 2019, 2018, or 2017.

Origination costs for contracts that contain a distinct software license recognized at a point in time are allocated between the license and all other performance obligations of the contract and amortized according to the pattern of performance for the respective obligations. Otherwise, origination costs are capitalized as a single asset for each contract or portfolio of similar contracts and amortized using an appropriate single measure of performance considering all of the performance obligations in the contracts. The Company amortizes origination costs over the expected benefit period to which the deferred contract cost relates. Origination costs related to initial contracts with a customer are amortized over the lesser of the useful life of the solution or the expected customer relationship period. Commissions paid on renewals are amortized over the renewal period. Capitalized fulfillment costs are amortized over the lesser of the useful life of the solution or the expected customer relationship period.

**(m)**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 as follows: 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.

**(n)**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.

**(o)**Leases

Change in Accounting Policy

The Company adopted Topic 842, Leases, with an initial application date of January 1, 2019. As a result, the Company has changed its accounting policy for leases. The accounting policy pursuant to Topic 842 for operating leases is disclosed below. The primary impact of adopting Topic 842 is the establishment of a right-of-use ("ROU") model that requires a lessee to recognize ROU assets and lease liabilities on the consolidated balance sheet for operating leases.

The Company applied Topic 842 using the effective date method; consequently, financial information was not updated and the disclosures required under the new standard were not provided for dates and periods before January 1, 2019. For transition purposes, the Company elected the "package of practical expedients," which permits the Company not to reassess under the new standard prior conclusions about lease identification, lease classification and initial direct costs. The Company also

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elected the practical expedient not to separate lease and non-lease components. The Company did not elect the use-of-hindsight practical expedient nor the short-term lease recognition exemption allowed under the new standard.

The adoption of ASC 842 resulted in the recognition of operating lease ROU assets and lease liabilities on the Company's Consolidated Balance Sheet of $442 million and $446 million, respectively, on January 1, 2019. The standard did not impact the Company's results of operations or cash flows.

Operating Leases

The Company leases certain of its property, primarily real estate, under operating leases. Operating lease ROU assets are included in Other noncurrent assets, and operating lease liabilities are included in Accounts payable, accrued and other liabilities and Other noncurrent liabilities on the Consolidated Balance Sheets. ROU assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease ROU assets also include any prepaid lease payments and exclude lease incentives received. The Company uses an incremental borrowing rate based on information available at commencement date in determining the present value of lease payments. Lease terms may include options to extend, generally ranging from one to five years, or to terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. Lease agreements may include lease and related non-lease components, which are accounted for as a single lease component. Additionally, for certain equipment leases, the Company applies a portfolio approach to effectively account for the operating lease ROU assets and liabilities.

**(p)**Revenue Recognition

The Company generates revenue in a number of ways, including from the delivery of account- or transaction-based processing, SaaS, business process as a service ("BPaaS"), cloud offerings, software licensing, software-related services and professional services.

The Company enters into arrangements with customers to provide services, software and software-related services such as maintenance, implementation and training either individually or as part of an integrated offering of multiple services. At contract inception, the Company assesses the solutions and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a solution or service (or bundle of solutions or services) that is distinct - i.e., if a solution or service is separately identifiable from other items in the bundled package and if a customer can benefit from it on its own or with other resources that are readily available to the customer. To identify its performance obligations, the Company considers all of the solutions or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. The Company recognizes revenue when or as it satisfies a performance obligation by transferring control of a solution or service to a customer.

Revenue is measured based on the consideration that the Company expects to receive in a contract with a customer. The Company's contracts with its customers frequently contain variable consideration. Variable consideration exists when the amount which the Company expects to receive in a contract is based on the occurrence or non-occurrence of future events, such as processing services performed under usage-based pricing arrangements or professional services billed on a time-and-materials basis. Variable consideration is also present in certain transactions in the form of discounts, credits, price concessions, penalties, and similar items. If the amount of a discount or rebate in a contract is fixed and not contingent, that discount or rebate is not variable consideration. The Company estimates variable consideration in its contracts primarily using the expected value method. In some contracts, the Company applies the most likely amount method by considering the single most likely amount in a limited range of possible consideration amounts. The Company develops estimates of variable consideration on the basis of both historical information and current trends. Variable consideration included in the transaction price is constrained such that a significant revenue reversal is not probable.

Taxes collected from customers and remitted to governmental authorities are not included in revenue. Postage costs associated with print and mail services are accounted for as a fulfillment cost and are included in cost of revenue.

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. The Company determines whether it is responsible for providing the actual solution or service as a principal, or

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for arranging for the solution or service to be provided by the third party as an agent. Judgment is applied to determine whether we are the principal or the agent by evaluating whether the Company has control of the solution or service prior to it being transferred to the customer. The principal versus agent assessment is performed at the performance obligation level. Indicators that the Company considers in determining if it has control include whether the Company is primarily responsible for fulfilling the promise to provide the specified solution or service to the customer, the Company has inventory risk and the Company has discretion in establishing the price the customer ultimately pays for the solution or service. Depending upon the level of our contractual responsibilities and obligations for delivering solutions to end customers, we have arrangements where we are the principal and recognize the gross amount billed to the customer and other arrangements where we are the agent and recognize the net amount retained.

Once the Company has determined the transaction price, the total transaction price is allocated to each performance obligation in a manner depicting the amount of consideration to which the Company expects to be entitled in exchange for transferring the solution(s) or service(s) to the customer (the "allocation objective"). If the allocation objective is met at contractual prices, no allocation adjustments from contract prices are made. Otherwise, the Company reallocates the transaction price to each performance obligation identified in the contract on a relative standalone selling price basis, except when the criteria are met for allocating variable consideration or a discount to one or more, but not all, performance obligations in the contract. The Company allocates variable consideration to one or more, but not all performance obligations when the terms of the variable payment relate specifically to the Company's efforts to satisfy the performance obligation (or transfer the distinct solution or service) and when such allocation is consistent with the allocation objective when considering all performance obligations in the contract. Determining whether the criteria for allocating variable consideration to one or more, but not all, performance obligations in the contract requires significant judgment and may affect the timing and amount of revenue recognized. The Company does not typically meet the requirements to allocate discounts to one or more, but not all, performance obligations in a contract.

In order to determine the standalone selling price of its promised solutions or services, the Company conducts a regular analysis to determine whether various solutions or services have an observable standalone selling price. If the Company does not have an observable standalone selling price for a particular solution or service, then standalone selling price for that particular solution or service is estimated using all information that is reasonably available and maximizing observable inputs with approaches including historical pricing, cost plus a margin, adjusted market assessment, and residual approach.

The following describes the nature of the Company's primary types of revenue and the revenue recognition policies and significant payment terms as they pertain to the types of transactions the Company enters into with its customers.

Transaction Processing and Services Revenue

Transaction processing and services revenue is primarily comprised of payment processing, data processing, application management, and outsourced services, including our SaaS, BPaaS and cloud offerings. Revenue from transaction processing and services is recurring and is typically volume- or activity-based depending on factors such as the number of payments, transactions, accounts or trades processed, number of users, number of hours of services or amount of computer resources used. Fees may include tiered pricing structures with the base tier representing a minimum monthly usage fee. Pricing within the tiers typically resets on a monthly basis, and minimum monthly volumes are generally met or exceeded. Contract lengths for processing services typically span one or more years; however, when distinct hosting services are offered, they are often cancelable without a significant penalty with 30-days' notice. Payment is generally due in advance or in arrears on a monthly or quarterly basis and may include fixed or variable payment amounts depending on the specific payment terms and activity in the period.

For processing services revenue, the nature of the Company's promise to the customer is to stand ready to provide continuous access to the Company's processing platforms and perform an unspecified quantity of outsourced and transaction-processing services for a specified term or terms. Accordingly, processing services are generally viewed as a stand-ready performance obligation comprised of a series of distinct daily services. The Company typically satisfies its processing services performance obligations over time as the services are provided. A time-elapsed output method is used to measure progress because the Company's efforts are expended evenly throughout the period given the nature of the promise is a stand-ready service. The Company has evaluated its variable payment terms related to its processing services revenue accounted for as a series of distinct days of service and concluded that they generally meet the criteria for allocating variable consideration entirely to one or more, but not all, performance obligations in a contract. Accordingly, when the criteria are met, variable amounts based on the number and type of services performed during a period are allocated to and recognized on the day in

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which the Company performs the related services. Fixed fees for processing services are generally recognized ratably over the contract period.

Processing revenue also includes network, interchange, and other pass-through fees. Pass-through fees generally represent variable consideration and are allocated to and recognized on the day on which the related services are performed. Pass-through fees are billed monthly. Network and interchange fees are presented on a net basis; other pass through fees may be recorded on either a gross or a net basis depending on whether the Company is acting as a principal or an agent.

Software Maintenance Revenue

Software maintenance is comprised of technical support services and unspecified software updates and upgrades provided on a when-and-if-available basis. Software maintenance revenue is generally based on fixed fees. Payment terms are typically annually, quarterly, or monthly in advance. Contract terms vary and can span multiple years. The Company generally satisfies its maintenance-related performance obligations evenly using a time-elapsed output method over the contract term given there is no discernible pattern of performance.

Other Recurring Revenue

Other recurring revenue is comprised primarily of services provided by dedicated personnel resources who work full time at client sites and under the client's direction. Revenue from dedicated resource agreements is generally based on fixed monthly fees per resource. Payment terms are typically annually, quarterly, or monthly in advance. Contract terms vary and can span multiple years. The Company generally satisfies its dedicated resource obligations evenly using a time-elapsed output method over the contract term given there is no discernible pattern of performance.

Software License Revenue

The Company's software licenses generally have significant stand-alone functionality to the customer upon delivery and are considered to be functional intellectual property. Additionally, the nature of the Company's promise in granting these software licenses to a customer is typically to provide the customer a right to use the Company's intellectual property. The Company's software licenses are generally considered distinct performance obligations. Revenue allocated to software licenses is typically recognized at a point in time upon delivery of the license and is non-recurring. Contracts that contain software licenses often have non-standard terms that require significant judgments that may affect the amount and timing of revenue recognized.

When a software license requires frequent updates that are integral to maintaining the utility of the license to the customer, the Company combines the software license and the maintenance into a single performance obligation, and revenue for the combined performance obligation is recognized in other recurring revenue as the maintenance is provided, consistent with the treatment described for maintenance above. When a software license contract also includes professional services that provide significant modification or customization of the software license, the Company combines the software license and professional services into a single performance obligation, and revenue for the combined performance obligation is recognized as the professional services are provided, consistent with the methods described below for professional services revenue.

The Company has contracts where the licensed software is offered in conjunction with hosting services. The licensed software may be considered a separate performance obligation from the hosting services if the customer can take possession of the software during the contractual term without incurring a significant penalty and if it is feasible for the customer to run the software on its own infrastructure or hire a third party to host the software. If the licensed software and hosting services are separately identifiable, license revenue is recognized when the hosting services commence and it is within the customer's control to obtain a copy of the software. If the software license is not separately identifiable from the hosting service, then the related revenue for the combined performance obligation is recognized ratably over the hosting period and classified as processing revenue.

Occasionally, the Company offers extended payment terms on its license transactions and evaluates whether any potential significant financing components exist. For certain of its business units, the Company will provide a software license through a rental model for customers who would prefer a periodic fee instead of a larger upfront payment. Revenue recognition under these arrangements follows the same recognition pattern as the arrangements outlined above; however, the customer generally pays for the software license and maintenance in monthly or quarterly installments as opposed to an upfront software license

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fee. Judgment is required to determine whether these arrangements contain a significant financing component. The Company evaluates whether there is a significant difference between the amount of promised consideration over the rental term and the cash selling price of the software license, and the overall impact of the time value of money on the transaction. Rental software license arrangements that include a significant financing component are adjusted for the time value of money at the Company's incremental borrowing rate by recording a contract asset and interest income. The Company does not adjust the promised amount of consideration for the effects of the time value of money if it is expected, at contract inception, that the period between when the Company transfers a promised solution or service to a customer and when the customer pays for that solution or service will be one year or less.

Professional Services Revenue

Professional services revenue is comprised of implementation, conversion, and programming services associated with the Company's data processing and application management agreements and implementation or installation services related to licensed software. Although this revenue is non-recurring in nature, it is generally recognized over time, with service durations spanning from several weeks to several years, depending on the scope and complexity of the work. Payment terms for professional services may be based on an upfront fixed fee, fixed upon the achievement of milestones, or on a time-and-materials basis.

In assessing whether implementation services provided on data processing, application management or software agreements are a distinct performance obligation, the Company considers whether the services are both capable of being distinct (i.e., can the customer benefit from the services alone or in combination with other resources that are readily available to the customer) and distinct within the context of the contract (i.e., separately identifiable from the other performance obligations in the contract). Implementation services and other professional services are typically considered distinct performance obligations. However, when these services involve significant customization or modification of an underlying solution or offering, or if the services are complex and not available from a third-party provider and must be completed prior to a customer having the ability to benefit from a solution or offering, then such services and the underlying solution or offering will be accounted for as a combined performance obligation.

The Company's professional services that are accounted for as distinct performance obligations and that are billed on a fixed fee basis are typically satisfied as services are rendered; thus, the Company uses a cost-based input method, such as cost-to-cost or efforts expended (labor hours), to provide a faithful depiction of the transfer of those services. For professional services that are distinct and billed on a time-and-materials basis, revenue is generally recognized using an output method that corresponds with the time and materials billed and delivered, which is reflective of the transfer of the services to the customer. Professional services that are not distinct from an associated solution or offering are recognized over the common measure of progress for the overall performance obligation (typically a time-elapsed output measure that corresponds to the period over which the solution or offering is made available to the customer).

Other Non-recurring Revenue

Other non-recurring revenue is comprised primarily of hardware, one-time card production, and early termination fees. The Company typically does not stock in inventory the hardware solutions sold but arranges for delivery of hardware from third-party suppliers. The Company determines whether hardware delivered from third-party suppliers should be recognized on a gross or net basis by evaluating whether the Company has control of the solution or service prior to it being transferred to the customer. Equipment and one-time card production revenue is generally recognized at a point in time upon delivery. Early contract terminations are treated as contract modifications. Early termination fees are added to a contract's transaction price once it becomes likely that liquidated damages will be charged to a customer, typically upon notification of early termination. Early termination fees are recognized over the remaining period of the related performance obligation(s).

Material Rights

Some of the Company's contracts with customers include options for the customer to acquire additional solutions or services in the future, including options to renew existing services. Options may represent a material right to acquire solutions or services if the discount is incremental to the range of discounts typically given for those solutions or services to that class of customer in that geographical area or market, and the customer would not have obtained the option without entering into the contract. If deemed to be a material right, the Company will account for the material right as a separate performance obligation and determine the standalone selling price based on directly observable prices when available. If the standalone selling price is

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not directly observable, then the Company estimates the standalone selling price to be equal to the discount that the customer would obtain by exercising the option, as adjusted for any discount that the customer would receive without exercising the option and for the likelihood that the option will be exercised.

**(q)**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 and trademark 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.

**(r)**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 is reversed. Certain of our stock awards contain market conditions. In those circumstances, compensation cost is recognized over the service period and is not reversed even if the award does not become exercisable because the market condition is not achieved.

**(s)**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 measuring foreign currency transactions into the respective functional currency are included in Other income (expense), net in the Consolidated Statements of Earnings.

**(t)**Management Estimates

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 revenue and expenses during the reporting periods. Actual results could differ from those estimates.

**(u)**Net Earnings per Share

The basic weighted average shares and common stock equivalents for the years ended December 31, 2019, 2018 and 2017 are computed using the treasury stock method.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Net earnings and earnings per share for the years ended December 31, 2019, 2018 and 2017 are as follows (in millions, except per share data):

Year ended December 31,
201920182017
Net earnings attributable to FIS common stockholders$298$846$1,261
Weighted average shares outstanding-basic445328330
Plus: Common stock equivalent shares646
Weighted average shares outstanding-diluted451332336
Net earnings per share-basic attributable to FIS common stockholders$0.67$2.58$3.82
Net earnings per share-diluted attributable to FIS common stockholders$0.66$2.55$3.75

Options to purchase approximately 1 million, 1 million and 4 million shares of our common stock for the years ended December 31, 2019, 2018 and 2017, respectively, were not included in the computation of diluted earnings per share because they were anti-dilutive.

**(v)**Certain Reclassifications

Certain reclassifications have been made in the 2018 and 2017 Consolidated Financial Statements to conform to the classifications used in 2019.

**(3)**Worldpay Acquisition

On July 31, 2019, FIS completed the acquisition of Worldpay by acquiring 100 percent of Worldpay's equity pursuant to the merger agreement. Through its acquisition of Worldpay, FIS is now a global leader in technology, solutions and services for merchants, as well as banks and capital markets. The Worldpay acquisition brings an integrated technology platform with a comprehensive suite of products and services serving merchants and financial institutions. Through the Worldpay acquisition, FIS has enhanced global payment capabilities, robust risk and fraud solutions and advanced data analytics.

At the closing, Worldpay shareholders received approximately 289 million shares of FIS common stock and $3.4 billion in cash, using an exchange ratio of 0.9287 FIS shares plus $11.00 in cash for each share of Worldpay common stock. The acquisition-date fair value of the 289 million shares of the Company's common stock was determined based on the share price of $133.69 per share, the closing price of the Company's common stock on the New York Stock Exchange on July 30, 2019, since the acquisition closed before the market opened on July 31, 2019. FIS also converted approximately 8 million outstanding Worldpay equity awards into corresponding equity awards with respect to shares of FIS common stock pursuant to an exchange ratio in the merger agreement designed to maintain the intrinsic value of the applicable award immediately prior to conversion. The fair value of the converted equity awards was approximately $789 million based on a valuation as of the date of closing. 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. In connection with the Worldpay acquisition, FIS also repaid approximately $7.5 billion of Worldpay debt, including $5.7 billion for Worldpay debt that was not contractually assumed in the acquisition and was included as an adjustment to the purchase price. FIS funded the cash portion of the merger consideration, the pay-off of the indebtedness of Worldpay and the payment of transaction-related expenses through a combination of available cash-on-hand and proceeds from debt issuances, including proceeds from concurrent public offerings on May 21, 2019 of Euro-, Pound Sterling-, and U.S. Dollar-denominated senior unsecured notes and borrowings under the Euro-commercial paper program established on May 29, 2019. See Note 12 for further discussion of these debt issuances.

The total purchase price is as follows (in millions):

Cash consideration$3,423
Value of FIS share consideration38,635
Pay-off of Worldpay long-term debt not contractually assumed5,738
Value of outstanding converted equity awards attributed to services already rendered449
Total purchase price$48,245

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The acquisition was accounted for as a business combination under FASB ASC Topic 805, Business Combinations ("Topic 805"). We recorded an allocation of the purchase price to Worldpay tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of July 31, 2019. The amounts for intangible assets were based on third-party valuations performed. Goodwill was recorded as the residual amount by which the purchase price exceeded the provisional fair value of the net assets acquired. Goodwill consists primarily of expected synergies of combining operations, the acquired workforce, and growth opportunities, none of which qualify as separately identifiable intangible assets. As of December 31, 2019, the Company has substantially completed its allocation of the purchase price. The principal open items relate to the valuation of certain income tax matters and contingencies as management is awaiting additional information to complete its assessment. Estimates have been recorded as of the acquisition date and updates to these estimates may increase or decrease goodwill.

Pursuant to Topic 805, the financial statements will not be retrospectively adjusted for any provisional amount changes that occur in subsequent periods. Rather, we will recognize any provisional amount adjustments during the reporting period in which the adjustments are determined. We will also be required to record, in the same period's financial statements, 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 had been completed at the acquisition date. We expect to finalize the purchase price allocation as soon as practicable, but no later than one year from the acquisition date.

The purchase price allocation as of December 31, 2019, is as follows (in millions):

Cash acquired$305
Settlement deposits and merchant float (1)2,445
Trade receivables1,599
Goodwill38,068
Intangible assets13,682
Software1,297
Other noncurrent assets (2)1,569
Accounts payable, accrued and other liabilities(1,055)
Settlement payables(3,167)
Deferred income taxes(2,828)
Long-term debt, subsequently repaid(1,805)
Other liabilities and noncontrolling interest (3)(1,865)
Total purchase price$48,245

(1)Includes $1,693 million of merchant float.

(2)Includes $534 million of other restricted cash.

(3)Includes $542 million of noncurrent tax receivable agreement liability (see Note 16) and $819 million contingent value rights liability (see Note 11).

The gross contractual amount of trade receivables acquired was approximately $1,646 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 Worldpay's historical bad debts, sales allowances and collection trends.

Intangible assets primarily consist of software, customer relationship assets and trademarks with weighted average estimated useful lives of seven years, ten years and five years, respectively, and fair value amounts assigned of $1,297 million, $13,272 million and $410 million, respectively.

See Note 16 for acquired contingencies resulting from the Worldpay acquisition.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Unaudited Supplemental Pro Forma Results Giving Effect to the Worldpay Acquisition

Worldpay's revenue and pre-tax loss of $1,880 million and $436 million, respectively, which include the impact of purchase accounting adjustments, are included in the Consolidated Statements of Earnings for the period from July 31, 2019 through December 31, 2019.

Pursuant to ASC 805, unaudited supplemental pro forma results of operations for the years ended December 31, 2019 and 2018, assuming the acquisition had occurred as of January 1, 2018, are presented below (in millions, except per share amounts):

Years ended December 31,
20192018
Revenue$12,724$12,373
Net earnings (loss) attributable to FIS common stockholders$254$(57)
Net earnings (loss) per share-basic attributable to FIS common stockholders$0.41$(0.09)
Net earnings (loss) per share-diluted attributable to FIS common stockholders$0.41$(0.09)

The unaudited pro forma results include certain pro forma adjustments to revenue and net earnings that were directly attributable to the acquisition, assuming the acquisition had occurred on January 1, 2018, including the following:

•additional amortization expense that would have been recognized relating to the acquired intangible assets;
•adjustment to interest expense to reflect the removal of Worldpay debt and the additional borrowings of FIS in conjunction with the acquisition; and
•a reduction in expenses for the year ended December 31, 2019 of $260 million and an increase in expenses for the year ended December 31, 2018 of $267 million for acquisition-related transaction costs and other one-time non-recurring costs.

**(4)**Revenue

Disaggregation of Revenue

In the following tables, revenue is disaggregated by primary geographical market and type of revenue. The tables also include a reconciliation of the disaggregated revenue with the Company's reportable segments. Prior-period amounts have been reclassified to conform to the new reportable segment presentation as discussed in Note 22.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

For the year ended December 31, 2019 (in millions):

Reportable Segments
Merchant SolutionsBanking SolutionsCapital Market SolutionsCorporate and OtherTotal
Primary Geographical Markets:
North America$1,409$4,940$1,510$—$7,859
All others604933937—2,474
Total$2,013$5,873$2,447$—$10,333
Type of Revenue:
Recurring revenue:
Transaction processing and services$1,951$4,298$1,109$—$7,358
Software maintenance2360482—844
Other recurring37177106—320
Total recurring1,9904,8351,697—8,522
Software license8150341—499
Professional services1587406—994
Other non-recurring143013—318
Total$2,013$5,873$2,447$—$10,333

For the year ended December 31, 2018 (in millions):

Reportable Segments
Merchant SolutionsBanking SolutionsCapital Market SolutionsCorporate and OtherTotal
Primary Geographical Markets:
North America$208$4,546$1,485$44$6,283
All others681,166906—2,140
Total$276$5,712$2,391$44$8,423
Type of Revenue:
Recurring revenue:
Transaction processing and services$263$4,340$1,084$44$5,731
Software maintenance3351480—834
Other recurring—207114—321
Total recurring2664,8981,678446,886
Software license4101311—416
Professional services1567402—970
Other non-recurring5146——151
Total$276$5,712$2,391$44$8,423

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

For the year ended December 31, 2017 (in millions):

Reportable Segments
Merchant SolutionsBanking SolutionsCapital Market SolutionsCorporate and OtherTotal
Primary Geographical Markets:
North America$198$4,376$1,616$106$6,296
All others631,1761,133—2,372
Total$261$5,552$2,749$106$8,668
Type of Revenue:
Recurring revenue:
Transaction processing and services$243$4,201$1,111$84$5,639
Software maintenance334846412827
Other recurring—188189—377
Total recurring2464,7371,764966,843
Software license11952851392
Professional services160870071,316
Other non-recurring3112—2117
Total$261$5,552$2,749$106$8,668

Contract Balances

The Company recognized revenue of $762 million, $740 million and $741 million, during the years ended December 31, 2019, 2018 and 2017, respectively, that was included in the corresponding deferred revenue balance at the beginning of the period.

Transaction Price Allocated to the Remaining Performance Obligations

As of December 31, 2019, approximately $20.5 billion of revenue is estimated to be recognized in the future from the Banking Solutions and Capital Market Solutions segments' remaining unfulfilled performance obligations, which are primarily comprised of recurring account- and volume-based processing services. This excludes the amount of anticipated recurring renewals not yet contractually obligated. The Company expects to recognize approximately 35% of the Banking Solutions and Capital Market Solutions segments' remaining performance obligations over the next 12 months, approximately another 25% over the next 13 to 24 months, and the balance thereafter.

As permitted by ASC 606, Revenue from Contracts with Customers, the Company has elected to exclude from this disclosure an estimate for the Merchant Solutions segment, which is primarily comprised of contracts with an original duration of one year or less or variable consideration that meet specific criteria. This segment's core performance obligations consist of variable consideration under a stand-ready series of distinct days of service, and revenue from the segment's products and service arrangements are generally billed and recognized as the services are performed. The aggregate fixed consideration portion of customer contracts with an initial contract duration greater than one year is not material.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

**(5)**Property and Equipment

Property and equipment as of December 31, 2019 and 2018 consists of the following (in millions):

20192018
Land$34$31
Buildings275235
Leasehold improvements163135
Computer equipment1,3821,047
Furniture, fixtures, and other equipment323197
2,1771,645
Accumulated depreciation and amortization(1,277)(1,058)
Total Property and equipment, net$900$587

During the years ended December 31, 2019 and 2018, the Company entered into other financing obligations of $215 million and $91 million, respectively, for certain hardware and software. The assets are included in property and equipment and software and the other financing obligations are classified as Long-term debt on our Consolidated Balance Sheets. Periodic payments are included in repayment of borrowings on the Consolidated Statements of Cash Flows.

Depreciation and amortization expense on property and equipment amounted to $201 million, $184 million and $180 million for the years ended December 31, 2019, 2018 and 2017, respectively.

**(6)**Goodwill

Changes in goodwill during the years ended December 31, 2019 and 2018 are summarized below (in millions). Prior-period amounts have been reclassified to conform to the new reportable segment presentation as discussed in Note 22.

Merchant SolutionsBanking SolutionsCapital Market SolutionsCorporate and OtherTotal
Balance, December 31, 2017$383$8,905$4,399$43$13,730
Goodwill distributed through sale of businesses—(14)(24)(43)(81)
Brazilian Venture impairment—(25)——(25)
Foreign currency adjustments(5)(14)(60)—(79)
Balance, December 31, 20183788,8524,315—13,545
Goodwill attributable to acquisitions (1)34,6573,414———38,071
Foreign currency adjustments618(3)11—626
Balance, December 31, 2019$35,653$12,263$4,326$—$52,242
(1)The amount of goodwill attributable to the Worldpay acquisition, including its allocation to reportable segments, is provisional and subject to change. See Note 3 for additional discussion.

Effective August 31, 2018, FIS sold substantially all the assets of the Certegy Check Services business unit in North America, resulting in a pre-tax loss of $54 million, including goodwill distributed through the sale of business of $43 million.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

**(7)**Intangible Assets

Intangible assets as of December 31, 2019 consist of the following (in millions):

CostAccumulated AmortizationNet
Customer relationships and other$18,018$(2,681)$15,337
Finite-lived trademarks503(85)418
Indefinite-lived trademarks43—43
Total Intangible assets, net$18,564$(2,766)$15,798

Intangible assets as of December 31, 2018 consist of the following (in millions):

CostAccumulated AmortizationNet
Customer relationships and other$6,011$(2,944)$3,067
Finite-lived trademarks68(46)22
Indefinite-lived trademarks43—43
Total Intangible assets, net$6,122$(2,990)$3,132

Amortization expense for intangible assets with finite lives, including the contract intangible in our Brazilian Venture, which was amortized as a reduction of revenue until impaired during the third quarter of 2018 (see Note 19), was $1,444 million, $659 million and $670 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Estimated amortization of intangible assets for the next five years is as follows (in millions):

2020$2,382
20212,308
20222,155
20231,967
20241,773

**(8)**Software

Software as of December 31, 2019 and 2018 consists of the following (in millions):

20192018
Software from acquisitions$1,959$1,116
Capitalized software development costs2,2581,624
Purchased software603363
4,8203,103
Accumulated amortization(1,616)(1,308)
Total Software, net$3,204$1,795

During the year ended December 31, 2019, the Company recorded pre-tax asset impairments of $87 million, primarily related to certain software resulting from the Company's net realizable value analysis.

Amortization expense for software was $616 million, $468 million and $436 million for the years ended December 31, 2019, 2018 and 2017, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

**(9)**Deferred Contract Costs

Origination and fulfillment costs from contracts with customers capitalized as of December 31, 2019 and 2018 consists of the following (in millions):

20192018
Contract costs on implementations in progress$138$93
Contract origination costs on completed implementations, net352219
Contract fulfillment costs on completed implementations, net177163
Total Deferred contract costs, net$667$475

For the years ended December 31, 2019, 2018 and 2017, amortization of deferred contract costs on completed implementations was $184 million, $123 million and $102 million.

**(10)**Accounts Payable, Accrued and Other Liabilities

Accounts payable, accrued and other liabilities as of December 31, 2019 and 2018 consists of the following (in millions):

20192018
Salaries and incentives$414$218
Accrued benefits and payroll taxes11666
Trade accounts payable and other accrued liabilities1,386687
Accrued interest payable10971
Taxes other than income tax22057
Operating lease liabilities129—
Total Accounts payable, accrued and other liabilities$2,374$1,099

**(11)**Other Noncurrent Assets and Liabilities

Other noncurrent assets as of December 31, 2019 and 2018 consists of the following (in millions):

20192018
Visa Europe and contingent value rights ("CVR") related assets$940$—
Operating lease ROU assets (1)564—
Other noncurrent assets799503
Total Other noncurrent assets$2,303$503

Other noncurrent liabilities as of December 31, 2019 and 2018 consists of the following (in millions):

20192018
CVR liability$838$—
Tax Receivable Agreement liability (2)532—
Operating lease liabilities (1)466—
Other noncurrent liabilities570326
Total Other noncurrent liabilities$2,406$326
(1)See Note 14, Operating Leases
(2)See Note 16, Commitments and Contingencies

FIDELITY NATIONAL INFORMATION SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Visa Europe and Contingent Value Rights

As part of the Worldpay acquisition, the Company acquired certain assets and liabilities related to the June 2016 Worldpay Group plc ("Legacy Worldpay") disposal of its ownership interest in Visa Europe to Visa Inc. As part of the disposal, Legacy Worldpay received consideration from Visa Inc. in the form of cash and convertible Visa Inc. Series B preferred stock ("preferred stock"), the value of which may be reduced by settlement of potential liabilities relating to ongoing interchange-related litigation involving Visa Europe. Also in connection with the disposal, Legacy Worldpay agreed to pay former Legacy Worldpay owners 90% of the net-of-tax proceeds from the disposal, known as contingent value rights ("CVR"), pending the finalization of the proceeds from disposal, which is expected to occur no later than June 2028, at which time the preferred stock is subject to mandatory conversion into Visa Inc. Class A common stock.

The Company has elected the fair value option under ASC 825, Financial Instruments ("ASC 825"), for measuring its preferred stock asset and related CVR liability. The estimated fair value of the preferred stock and related CVR liability are determined using Level 3-type measurements. Significant inputs into the valuation of the preferred stock include the Visa Inc. Class A common stock price per share and the conversion ratio, which are observable, and an estimate of potential losses that will result from the ongoing litigation involving Visa Europe, which is unobservable. The Company engaged third-party valuation specialists and external counsel to assist management in making the fair value determination for the preferred stock. The fair value of the preferred stock is $400 million at December 31, 2019, recorded in Other noncurrent assets on the Consolidated Balance Sheet.

The fair value of the CVR liability is determined based on 90% of the net-of-tax proceeds from the disposal, including the preferred stock and the cash consideration. The portion of the cash consideration that is payable as part of the CVR liability is segregated pursuant to contractual provisions and reflected as restricted cash in the amount of $540 million at December 31, 2019 (see Note 2(b)) and is recorded in Other noncurrent assets on the Consolidated Balance Sheet. The fair value of the CVR liability is $838 million at December 31, 2019, recorded in Other noncurrent liabilities on the Consolidated Balance Sheet. Pursuant to ASC 825, the Company remeasures the fair value of the preferred stock and related CVR liability each reporting period after the initial recognition at fair value as of the Worldpay acquisition date. The net change in fair value was $5 million for the year ended December 31, 2019, recorded in Other income (expense), net on the Consolidated Statement of Earnings.

**(12)**Debt

Long-term debt as of December 31, 2019 and 2018 consists of the following (in millions):

December 31, 2019
Weighted
Average
InterestInterestDecember 31,
RatesRateMaturities20192018
Fixed Rate Notes
Senior USD Notes3.00% - 5.00%3.83%2023 - 2048$4,938$6,950
Senior Euro Notes0.13% - 2.95%1.06%2021 - 20398,6941,144
Senior GBP Notes1.70% - 3.36%2.65%2022 - 20312,440382
Senior Euro Floating Rate Notes0.00%2021561—
Revolving Credit Facility (1)2.80%2023600208
Other13634
Total long-term debt, including current portion17,3698,718
Current portion of long-term debt(140)(48)
Long-term debt, excluding current portion$17,229$8,670
(1)Interest on the Revolving Credit Facility is generally payable at LIBOR plus an applicable margin of up to 1.625% plus an unused commitment fee of up to 0.225%, each based upon the Company's corporate credit ratings. The weighted average interest rate on the Revolving Credit Facility excludes fees.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Short-term borrowings as of December 31, 2019 and 2018, consists of the following (in millions):

December 31, 2019
Weighted
Average
InterestDecember 31,
RateMaturities20192018
Euro-commercial paper notes ("ECP Notes")(0.21)%Up to 183 days$2,523$—
U.S. commercial paper notes ("USCP Notes")2.05%Up to 397 days200250
Other10017
Total Short-term borrowings$2,823$267

As of December 31, 2019, the weighted average interest rate of the Company's outstanding debt was 1.66%, including the impact of interest rate swaps (see Note 13).

The obligations of FIS under the Revolving Credit Facility, ECP Notes and USCP Notes, and all of its outstanding senior notes rank equal in priority and are unsecured.

During March 2019, concurrent with the execution of the Worldpay merger agreement (see Note 3), we secured $9.5 billion of bridge financing commitments to ensure our ability to fund the cash requirements related to the Worldpay transaction. The bridge financing commitments were terminated in full in May 2019 following the (a) amendment of the Restated Credit Agreement to modify certain provisions and covenants of the Revolving Credit Facility and (b) the issuance of the senior notes discussed below.

The following summarizes the aggregate maturities of our long-term debt, including other financing obligations for certain hardware and software, based on stated contractual maturities, excluding the fair value of the interest rate swap discussed below and net unamortized non-cash bond premiums and discounts of $36 million as of December 31, 2019 (in millions):

Total
2020$140
20211,743
20221,556
20232,729
2024979
Thereafter10,369
Total principal payments17,516
Debt issuance costs, net of accumulated amortization(111)
Total long-term debt$17,405

There are no mandatory principal payments on the Revolving Credit Facility and any balance outstanding on the Revolving Credit Facility will be due and payable at its scheduled maturity date, which occurs at September 21, 2023.

Senior Notes

In December 2019, pursuant to cash tender offers (the "Any and All Tender Offer" and the "Maximum Tender Offer") FIS purchased certain Senior USD Notes. Under the Any and All Tender Offer, FIS purchased Senior USD Notes with an aggregate principal amount of $1,342 million, interest rates ranging from 2.25% to 4.50% and maturities ranging from 2020 to 2022 (the "Any and All Notes"). FIS called for redemption all of the remaining Any and All Notes that were not tendered and not accepted for purchase in the Any and All Tender Offer for the remaining aggregate principal amount of $858 million. Under the Maximum Tender Offer, FIS purchased Senior USD Notes with an aggregate principal amount of $812 million, interest rates ranging from 4.50% to 5.00% and maturities ranging from 2025 to 2048 (the "Maximum Tender Offer Notes"). Collectively between the Any and All Notes and the Maximum Tender Offer Notes, FIS purchased and redeemed an aggregate principal amount of $3.0 billion in Senior USD Notes, resulting in a pre-tax charge of approximately $217 million relating to

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

tender premiums and fees as well as the write-off of previously capitalized debt issuance costs. The Company funded the purchase and redemption of the Any and All Notes and the Maximum Tender Offer Notes with proceeds on borrowings from the issuance and sale of Euro- and Pound Sterling-denominated senior notes on December 3, 2019.

On December 3, 2019, FIS completed the issuance and sale of senior notes, consisting of Senior Euro Notes of €2.25 billion in aggregate principal amount with interest rates ranging from 0.13% to 1.00% and maturities ranging from 2022 to 2028 and Senior GBP Notes of £300 million in aggregate principal amount with an interest rate of 2.25% and maturity of 2029. The proceeds from the debt issuances were subsequently used to purchase and redeem the Any and All Notes and the Maximum Tender Offer Notes as noted above.

On May 21, 2019, FIS completed the issuance and sale of Euro- and Pound Sterling-denominated senior notes, consisting of Senior Euro Floating Rate Notes of €500 million with maturity of 2021, Senior Euro Notes of €4.5 billion in aggregate principal amount with interest rates ranging from 0.13% to 2.95% and maturities ranging from 2021 to 2039, Senior GBP Notes of £1.25 billion in aggregate principal amount with interest ranging from 2.60% to 3.36% and maturities ranging from 2025 to 2031 and Senior USD Notes of $1.0 billion in aggregate principal amount with an interest rate of 3.75% and maturity of 2029. The proceeds of the debt issuances were subsequently used to pay the cash portion of the purchase price and certain of the costs and expenses of the Worldpay transaction and to repay the outstanding Worldpay bank debt and notes.

On July 25, 2017, pursuant to cash tender offers, FIS repurchased approximately $2.0 billion in aggregate principal amount of Senior USD Notes with a weighted average coupon of approximately 4.0% and maturities ranging from 2020 to 2025. The Company funded the cash tender offers with proceeds from a European bond offering and borrowings on its Revolving Credit Facility, 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 19). FIS paid approximately $150 million in tender premiums to purchase the notes and incurred a pre-tax charge upon extinguishment of approximately $171 million, in tender premiums, the write-off of previously capitalized debt issuance costs and other direct costs.

On March 15, 2017, FIS redeemed 100% of the outstanding aggregate principal amount of its $700 million 5.00% Senior USD Notes due 2022. On February 1, 2017, the Company also paid down the outstanding balance on its syndicated term loan agreement due 2018 ("Term Loans"). The redemption of the USD Senior Notes and the repayment of the Term Loans were funded by borrowings under the Revolving Credit Facility and cash proceeds from the sale of the PS&E business (see Note 19). As a result of the redemption of the USD Senior Notes and the repayment of the Term Loans, FIS incurred a pre-tax charge of approximately $25 million consisting of the call premium on the USD Senior Notes and the write-off of previously capitalized debt issuance costs.

FIS may redeem the Senior USD Notes, Senior Euro Notes and Senior GBP Notes (collectively, the "Senior 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 Senior Notes during the period described in the related indenture (ranging from one to six months) prior to their maturity.

The Senior Notes are subject to customary covenants, including, among others, customary events of default.

Commercial Paper

On May 29, 2019, FIS established a Euro-commercial paper ("ECP") program for the issuance and sale of senior, unsecured commercial paper notes, up to a maximum aggregate amount outstanding at any time of $4.7 billion (or its equivalent in other currencies). The incremental borrowings under the ECP program were used to pay for certain of the costs and expenses of the Worldpay transaction. The ECP program is also expected to be used for general corporate purposes.

On September 21, 2018, FIS established a U.S. commercial paper ("USCP") program for the issuance and sale of senior, unsecured commercial paper notes, up to a maximum aggregate amount outstanding at any time of $4.0 billion. On May 29, 2019, FIS increased the capacity on the USCP program to $5.5 billion. The USCP program has been and is expected to be used for general corporate purposes.

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Revolving Credit Facility

On September 21, 2018, FIS entered into a Seventh Amendment and Restatement Agreement ("Credit Facility Agreement"), which amended and restated FIS' existing credit agreement (as amended, the "Restated Credit Agreement"). The Credit Facility Agreement increased the revolving credit commitments outstanding under the Revolving Credit Facility ("Revolving Credit Facility") existing under the Restated Credit Agreement from $3.0 billion to $4.0 billion and extended the term of the Restated Credit Agreement to September 21, 2023. On May 29, 2019, FIS entered into an amendment to the Restated Credit Agreement to increase the revolving credit commitments outstanding under the Revolving Credit Facility from $4.0 billion to $5.5 billion. Borrowing under the Revolving Credit Facility will generally be used for general corporate purposes, including backstopping any notes that FIS may issue under the USCP and ECP programs described above. As of December 31, 2019, the outstanding principal balance of the Revolving Credit Facility was $600 million, with $4,897 million of borrowing capacity remaining thereunder (net of $3 million in outstanding letters of credit issued under the Revolving Credit Facility).

The Revolving Credit Facility is subject to customary covenants, including, among others, customary events of default, a provision allowing for financing related to the acquisition of Worldpay and limitations on the payment of dividends by FIS.

We monitor the financial stability of our counterparties on an ongoing basis. The lender commitments under the undrawn portions of the Revolving Credit Facility 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 Credit Facility would not adversely impact our ability to fund operations.

Fair Value of Debt

The fair value of the Company's long-term debt is estimated to be approximately $900 million and $140 million higher than the carrying value, excluding the fair value of the interest rate swap and unamortized discounts, as of December 31, 2019 and 2018, respectively.

**(13)**Financial Instruments

Forward Contracts

During the second quarter of 2019, the Company entered into foreign currency forward contracts to reduce the volatility in the Company's cash flows due to foreign exchange rate fluctuations during the period leading up to the Company's Euro- and Pound Sterling-denominated debt issuances related to the Worldpay transaction (see Note 12 for further discussion of these debt issuances). These forward contracts were settled on July 31, 2019, resulting in a net pre-tax loss of $14 million during the year ended December 31, 2019. As of December 31, 2019 and 2018, the Company had no significant forward contracts outstanding.

Cash Flow Hedges

During the second quarter of 2019, the Company entered into treasury lock and forward-starting interest rate swap contracts with total notional amounts of €1,500 million, £500 million, and $500 million to reduce the volatility in the Company's cash flows due to changes in the benchmark interest rates during the period leading up to the Company's fixed-rate debt issuances related to the Worldpay transaction (see Note 12 for further discussion of these debt issuances). The Company designated these derivatives as cash flow hedges for accounting purposes. During May 2019, in conjunction with the debt issuances, the Company terminated these contracts for an aggregate cash settlement payment of $17 million, which was recorded as a component of Other comprehensive earnings (loss) on the Consolidated Statement of Comprehensive Earnings. The amounts in Other comprehensive earnings (loss) are reclassified as an adjustment to interest expense on the Consolidated Statement of Earnings over the respective periods during which the related hedged interest payments are recognized in income, which range from four to 12 years. Settlement cash flows related to these contracts were recorded as Other financing activities, net on the Consolidated Statement of Cash Flows.

The amount of gain (loss) recognized in Other comprehensive earnings (loss) related to cash flow hedges was $(17) million, $0 million and $0 million during the years ended December 31, 2019, 2018 and 2017, respectively. The amount of gain (loss) reclassified from Other comprehensive earnings into income was $(2) million, $(1) million and $(1) million during

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the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019 and 2018, the Company had no outstanding cash flow hedge contracts.

Fair Value Hedge

During the fourth quarter of 2018, the Company entered into an interest rate swap with a €500 million notional value converting the interest rate exposure on the Company's Senior Euro Notes due 2024 from fixed to variable. We designated this interest rate swap as a fair value hedge for accounting purposes. The fair value of the interest rate swap was a $10 million asset and $(1) million liability at December 31, 2019 and 2018, respectively, reflected as an increase (decrease) in the hedged debt balance.

Net Investment Hedges

The purpose of the Company's net investment hedges, as discussed below, is to reduce the volatility of FIS' net investment value in its Euro- and Pound Sterling- denominated operations due to changes in foreign currency exchange rates.

The Company recorded net investment hedge aggregate gain (loss), net of tax, for the change in fair value as Foreign currency translation adjustments, within Other comprehensive earnings (loss) on the Consolidated Statements of Comprehensive Earnings of $(229) million, $59 million and $(63) million, during the years ended December 31, 2019, 2018 and 2017. No ineffectiveness was recorded on the net investment hedges.

Foreign Currency Denominated Debt Designations

During 2019, in conjunction with the closing of the Worldpay acquisition in the third quarter and in conjunction with the foreign currency denominated debt issuances in the fourth quarter, the Company designated certain foreign currency denominated debt as net investment hedges of its investment in Euro- and Pound Sterling-denominated operations. This is in addition to the Company's designation during the third quarter of 2017 of its foreign currency denominated debt outstanding. As of December 31, 2019, an aggregate €10,509 million was designated as a net investment hedge of the Company's investment in Euro-denominated operations related to the Senior Euro Floating Rate Notes, Senior Euro Notes with maturities ranging from 2021 to 2039 and ECP Notes, and an aggregate £864 million was designated as a net investment hedge of the Company's Pound Sterling-denominated operations related to the Senior GBP Notes with maturities ranging from 2022 to 2031.

Cross-Currency Interest Rate Swap Designations

During the fourth quarters of 2019 and 2018, the Company entered into cross-currency interest rate swaps that were designated as net investment hedges of its investment in Euro- and Pound Sterling- denominated operations. As of December 31, 2019, an aggregate notional amount of €2,006 million was designated as a net investment hedge of the Company's investment in Euro-denominated operations and an aggregate notional amount of £1,536 million was designated as a net investment hedge of the Company's Pound Sterling-denominated operations. The fair value of the cross-currency interest rate swaps was a net $(167) million liability and $2 million asset at December 31, 2019 and 2018, respectively.

**(14)**Operating Leases

The classification of the Company's operating lease ROU assets and liabilities in the Consolidated Balance Sheet as of December 31, 2019 is as follows (in millions):

ClassificationDecember 31, 2019
Operating lease ROU assetsOther noncurrent assets$564
Operating lease liabilitiesAccounts payable, accrued and other liabilities$129
Other noncurrent liabilities466
Total operating lease liabilities$595

Operating lease cost was $145 million and variable lease cost was $34 million for the year ended December 31, 2019. Cash paid for amounts included in the measurement of operating lease liabilities included in operating cash flows was $139

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million for the year ended December 31, 2019. Operating lease ROU assets obtained in exchange for operating lease liabilities was $112 million for the year ended December 31, 2019. The weighted average remaining operating lease term was 5.9 years, and the weighted average operating lease discount rate was 3.7% as of December 31, 2019.

Maturities of operating lease liabilities, as of December 31, 2019 are as follows (in millions):

2020$151
2021135
2022104
202377
202459
Thereafter138
Total lease payments664
Less: Imputed interest(69)
Total operating lease liabilities$595

Aggregate future minimum operating lease payments for each of the years in the five years ending December 31, 2023, and thereafter, as of December 31, 2018 consists of the following (in millions):

2019$121
2020104
202180
202251
202338
Thereafter86
Total$480

**(15)**Income Taxes

Income tax expense (benefit) attributable to continuing operations for the years ended December 31, 2019, 2018 and 2017 consists of the following (in millions):

201920182017
Current provision:
Federal$53$169$476
State465081
Foreign116105127
Total current provision$215$324$684
Deferred provision (benefit):
Federal$(47)$(95)$(979)
State7(11)(24)
Foreign(75)(10)(2)
Total deferred provision (benefit)(115)(116)(1,005)
Total Provision (benefit) for income taxes$100$208$(321)

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The provision for income taxes is based on pre-tax income from continuing operations, which is as follows for the years ended December 31, 2019, 2018 and 2017 (in millions):

201920182017
United States$220$744$530
Foreign193360446
Total$413$1,104$976

Total income tax expense for the years ended December 31, 2019, 2018 and 2017 is allocated as follows (in millions):

201920182017
Tax expense (benefit) per statement of earnings$100$208$(321)
Tax expense (benefit) attributable to discontinued operations—(1)—
Unrealized (loss) gain on foreign currency translation240——
Unrealized gain (loss) on interest rate swaps(41)——
Other components of other comprehensive earnings (loss)(3)1(11)
Total income tax expense (benefit) allocated to other comprehensive income1961(11)
Total income tax expense (benefit)$296$208$(332)

A reconciliation of the federal statutory income tax rate to the Company's effective income tax rate for the years ended December 31, 2019, 2018 and 2017 is as follows:

201920182017
Federal statutory income tax rate21.0%21.0%35.0%
State income taxes2.53.02.4
Federal benefit of state taxes(0.5)(0.6)(0.8)
Foreign rate differential(1.7)—(5.1)
Non-deductible executive compensation10.6——
Tax benefit from stock-based compensation(8.1)(5.2)(6.7)
State tax rate adjustment5.1——
Foreign-derived intangible income deduction(3.3)(1.8)—
Research and development credit(2.4)(0.9)(0.9)
Unrecognized tax benefits(1.4)(0.3)—
Book basis in excess of tax basis for dispositions—3.018.5
Tax Cuts and Jobs Act of 2017——(73.1)
Other2.40.6(2.2)
Effective income tax rate24.2%18.8%(32.9)%

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The significant components of deferred income tax assets and liabilities as of December 31, 2019 and 2018 consist of the following (in millions):

20192018
Deferred income tax assets:
Net operating loss carryforwards$177$108
Employee benefit accruals17758
Other deferred tax assets142105
Total gross deferred income tax assets496271
Less valuation allowance(178)(116)
Total deferred income tax assets318155
Deferred income tax liabilities:
Amortization of goodwill and intangible assets(4,123)(1,291)
Foreign currency translation adjustment(208)—
Deferred contract costs(125)(109)
Other deferred tax liabilities(105)(83)
Total deferred income tax liabilities(4,561)(1,483)
Net deferred income tax liability$(4,243)$(1,328)

Deferred income taxes are classified in the Consolidated Balance Sheets as of December 31, 2019 and 2018 as follows (in millions):

20192018
Noncurrent assets (included in Other noncurrent assets)$38$32
Total deferred income tax assets3832
Noncurrent liabilities(4,281)(1,360)
Total deferred income tax liabilities(4,281)(1,360)
Net deferred income tax liability$(4,243)$(1,328)

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, 2019 and 2018, the Company had net income taxes receivable of $174 million and $30 million, respectively. These amounts are included in Other receivables and Accounts payable, accrued and other liabilities as of December 31, 2019 and 2018, in the Consolidated Balance Sheets.

As of December 31, 2019 and 2018, the Company has federal, state and foreign net operating loss carryforwards resulting in deferred tax assets of $177 million and $108 million, respectively. The federal and state net operating losses result in deferred tax assets as of December 31, 2019 and 2018 of $68 million and $42 million, respectively, which expire between 2021 and 2039. The Company has a valuation allowance related to these deferred tax assets for net operating loss carryforwards in the amounts of $48 million and $36 million as of December 31, 2019 and 2018. The Company has foreign net operating loss carryforwards resulting in deferred tax assets as of December 31, 2019 and 2018 of $110 million and $66 million, respectively. The Company has a full valuation allowance against the foreign net operating losses as of December 31, 2019 and December 31, 2018.

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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 2017. 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 2012. Substantially all state income tax returns have been concluded through 2012.

As of December 31, 2019 and 2018, the Company had gross unrecognized tax benefits of $45 million and $61 million of which $38 million and $52 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):

Gross Amount
Amounts of unrecognized tax benefits as of January 1, 2018$75
Amount of decreases due to lapse of the applicable statute of limitations(4)
Amount of decreases due to settlements(12)
Increases as a result of tax positions taken in the current period1
Increases as a result of tax positions taken in a prior period1
Amount of unrecognized tax benefit as of December 31, 201861
Amount of decreases due to lapse of the applicable statute of limitations(5)
Amount of decreases due to settlements(17)
Increases as a result of tax positions taken in the current period1
Assumed in Worldpay acquisition5
Amount of unrecognized tax benefit as of December 31, 2019$45

The total amount of interest expense recognized in the Consolidated Statements of Earnings for unpaid taxes is $3 million, $4 million and $5 million for the years ended December 31, 2019, 2018 and 2017, respectively. The total amount of interest and penalties included in the Consolidated Balance Sheets is $19 million and $24 million as of December 31, 2019 and 2018, 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 12 months, an estimated $1 million of gross unrecognized tax benefits may be recognized during that 12-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. In 2017, the Company recorded amounts for certain enactment-date effects of the Act by applying the guidance in SEC Staff Accounting Bulletin No. 118 ("SAB 118").

Due to 2017 tax reform, the Company provided for U.S. income tax on its deemed repatriation of accumulated foreign earnings. Those historic earnings are indefinitely reinvested offshore, however, those undistributed earnings could still be subject to additional income tax if repatriated. It is not practicable to determine the unrecognized deferred tax liability on a hypothetical distribution of those earnings.

**(16)**Commitments and Contingencies

Reliance Trust Claims

Reliance Trust Company ("Reliance"), 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 (the "Plan") for one of its customers. Plaintiffs in the action filed in 2015 seek damages and attorneys' fees, as well as equitable relief, on behalf of Plan participants for alleged breaches of fiduciary duty under the Employee Retirement Income Security Act of 1974 against Reliance and the Plan's sponsor and record-

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keeper. Reliance is vigorously defending the action and believes it has meritorious defenses. Pre-trial discovery has been completed and the matter has been set for trial. Reliance contends that no breaches of fiduciary duty or prohibited transactions occurred and that the Plan suffered no damages. Plaintiffs allege damages of approximately $115 million against all defendants. While we are unable at this time to estimate more precisely the potential loss or range of loss because of unresolved questions of fact and law, we believe that the ultimate resolution of the matter will not have a material impact on our financial condition. We do not believe a liability for this action is probable and, therefore, have not recorded a liability for this action.

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 13 claims against Servicos asserting potential tax liabilities of approximately $14 million. There are potentially 25 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 $50 million, making the total potential exposure for all 38 claims approximately $64 million. We do not believe a liability for these 38 total claims is probable and, therefore, have not recorded a liability for any of these claims.

Acquired Contingencies - Worldpay

The Company assumed in the Worldpay acquisition a Tax Receivable Agreement ("TRA") under which the Company agreed to make payments to Fifth Third Bank ("Fifth Third") of 85% of the federal, state, local and foreign income tax benefits realized by the Company as a result of certain tax deductions. In December 2019, the Company entered into a Tax Receivable Purchase Addendum (the "Amendment") that provides written call and put options (collectively "the options") to terminate certain estimated obligations under the TRA in exchange for fixed cash payments.

The remaining obligations under the TRA not subject to the Amendment or for which the options are not exercised are based on the cash savings realized by the Company by comparing the actual income tax liability of the Company to the amount of such taxes the Company would have been required to pay had there been no deductions related to the tax attributes. Under the TRA, in certain specified circumstances, such as certain changes of control, the Company may be required to make payments in excess of such cash savings.

Concurrent with the Amendment, the Company and Fifth Third entered into a Mutual Release Agreement, in which Fifth Third waived its claim that the acquisition of Worldpay by the Company triggered provisions in the TRA that would remove the contingency that adequate taxable income be earned to realize tax savings. As a consequence, Fifth Third also dismissed its related declaratory judgment action.

Obligations recorded in our financial statements pursuant to the TRA are based on estimates of future deductions and future tax rates. The timing and/or amount of aggregate payments due under the TRA may vary based on a number of factors, including the exercise of options, the amount and timing of taxable income the Company generates in the future and the tax rate then applicable, the use of loss carryforwards and amortizable basis. Each reporting period, the Company evaluates the assumptions underlying the TRA obligations. Based on an evaluation by the Company of the Amendment, the provisional TRA obligations recorded as of the Worldpay acquisition were adjusted through purchase accounting to reflect management's expectation that the options will be exercised. In addition, in January 2020, the Company exercised its first call option pursuant to the Amendment, which will result in fixed cash payments to Fifth Third under the TRA of $42 million.

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The Consolidated Balance Sheet as of December 31, 2019 includes a total liability of $564 million relating to the TRA. The following table summarizes our estimated payment obligation timing under the TRA as of December 31, 2019 (in millions):

Payments Due in
Type of ObligationTotalLess than 1 year1-3 Years3-5 YearsMore than 5 Years
Obligations under TRA$564$32$267$252$13

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.

Purchase Commitments

The Company has agreements with various vendors, generally with one- to five-year-remaining terms, principally for software, maintenance support, telecommunication and network services. Additionally, we have agreements with third-party processors to provide gateway authorization and other processing services. The Company's estimated aggregate contractual obligation remaining under these agreements is approximately $807 million as of December 31, 2019. 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 processing needs. The foregoing amounts do not include obligations of the Company under operating leases.

**(17)**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 $15 million, $14 million, and $14 million, respectively, for the years ended December 31, 2019, 2018 and 2017, 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 pre-tax 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 $91 million, $82 million and $80 million, respectively, for the years ended December 31, 2019, 2018 and 2017, relating to the participation of FIS employees in the 401(k) plan.

Stock Compensation Plans

In 2008, the Company adopted the FIS 2008 Omnibus Incentive Plan ("FIS Plan"). In May 2013, the FIS Plan was 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.

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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 ("the SG Plan"), as amended immediately prior to the consummation of the SunGard acquisition. These shares are available for grant under the FIS Restated Plan for legacy SunGard employees and FIS employees hired after the SunGard acquisition.

On July 31, 2019, in conjunction with the Worldpay acquisition, the Company registered an additional 24 million shares, representing the remaining shares available for issuance under the Worldpay Inc. 2012 Equity Incentive Plan ("Worldpay Plan"), as amended immediately prior to the consummation of the Worldpay acquisition. These shares are available for grant under the FIS Restated Plan for legacy Worldpay employees and FIS employees hired after the Worldpay acquisition.

Also on July 31, 2019, in conjunction with the Worldpay acquisition, the Company registered up to 7 million shares of FIS common stock on a Post-Effective Amendment on Form S-8, reserved for issuance with respect to converted outstanding awards issued under the Worldpay Plan to individuals employed by Worldpay at the effective time of the merger.

During 2019, in conjunction with the Worldpay acquisition, the Company converted outstanding Worldpay equity awards into corresponding FIS equity awards, pursuant to the terms of the merger agreement. The converted equity awards are subject to time-based vesting criteria and include change in control provisions allowing for acceleration of unvested awards in the event of termination of employment without cause or for good reason. See Note 3 for additional information about the Worldpay equity awards conversion.

Stock options granted under the FIS Restated Plan for the years ended December 31, 2019, 2018 and 2017 are subject to time-based vesting criteria. Restricted stock shares granted under the FIS Restated Plan for the year ended December 31, 2019, are subject to time-based vesting criteria as well as performance and/or market conditions for certain grants. The grants with performance and market conditions are subject to the achievement of certain financial performance measures. Participants have the right to earn 0% to 300% of the target number of shares of the Company's common stock, determined by the level of the financial performance measures achieved during the performance period. The restricted stock shares granted under the FIS Restated Plan for the year ended December 31, 2018, are subject to time-based vesting criteria as well as market conditions for certain grants. Restricted stock shares granted under the FIS Restated Plan for the year ended December 31, 2017, are subject to time-based vesting as well as performance conditions for certain grants.

The number of shares available for future grants under the FIS Restated Plan was 36 million as of December 31, 2019.

Stock Options

The Company grants stock options to certain key employees, which typically vest annually over three years. All stock options are non-qualified stock options and the stock options granted by the Company expire on the seventh anniversary of the grant date and the stock options converted through the Worldpay acquisition expire on the tenth anniversary of the grant date.

The following table summarizes stock option activity for the year ended December 31, 2019 (in millions except for per share amounts):

OptionsWeighted Average Exercise PriceWeighted Average Remaining Contractual Term (Years)Aggregate Intrinsic Value
Balance, December 31, 20181070.034.1$337
Options converted through the Worldpay acquisition363.40
Granted1113.48
Exercised(3)56.26$189
Cancelled—89.07
Balance, December 31, 201911$76.014.4$745
Options exercisable at December 31, 20198$66.133.4$554

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The intrinsic value of options exercised during the years ended December 31, 2019, 2018 and 2017 was $189 million, $257 million and $196 million, respectively. The intrinsic value of the outstanding options and options exercisable is based on a closing stock price as of December 31, 2019 of $139.09. The Company issues authorized but unissued shares or share from treasury stock to settle stock options exercised.

The number of options granted for the years ended December 31, 2019, 2018 and 2017 was 1 million, 1 million and 4 million, respectively. The weighted average exercise price was $113.48, $96.49 and $80.05 for the years ended December 31, 2019, 2018 and 2017, respectively.

The weighted average fair value of options granted during the years ended December 31, 2019, 2018 and 2017 was $19.25, $16.07 and $12.78, respectively, using the Black-Scholes option pricing model with the assumptions below:

201920182017
Risk free interest rate2.2%2.5%1.8%
Volatility20.1%19.2%20.1%
Dividend yield1.2%1.3%1.4%
Weighted average expected life (years)4.14.24.2

The options converted through the Worldpay acquisition had a weighted average fair value of $71.05, a weighted average risk free interest rate of 1.9%, a weighted volatility of 18.6%, a weighted average dividend yield of 1.0% and a weighted average expected life of 3.9 years.

The Company estimates future forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ significantly from those estimates. The Company bases the risk-free interest rate that is used in the Black-Scholes 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 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 future trends.

Restricted Stock Shares

The Company issues restricted stock shares, which typically vest annually over three years. The grant date fair value of the restricted stock shares is based on the fair market value of our common stock on the grant date. The number of restricted stock shares granted during the years ended December 31, 2019, 2018 and 2017 was 2 million, 1 million and 1 million, respectively. The weighted average grant date fair value of these awards granted during the years ended December 31, 2019, 2018 and 2017 was $124.72, $96.50 and $80.12, respectively. Certain restricted stock shares granted in 2019 and 2017 are also subject to performance-based vesting criteria. Certain of the restricted stock shares granted in 2019 and 2018 are also subject to market conditions. The total fair value of restricted stock shares that vested was $169 million, $97 million and $142 million in 2019, 2018 and 2017, respectively.

The following table summarizes the restricted stock shares activity for the year ended December 31, 2019 (in millions except for per share amounts):

QuantityWeighted Average Fair Value
Balance, December 31, 20181$87.98
Shares converted through the Worldpay acquisition4$133.69
Granted2$124.72
Vested(1)$108.84
Forfeited—$117.04
Balance, December 31, 20196$127.23

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Stock Compensation Cost

The Company has provided for total stock compensation expense of $402 million, $84 million and $107 million for the years ended December 31, 2019, 2018 and 2017, respectively, which is included in Selling, general, and administrative expenses in the Consolidated Statements of Earnings. Stock compensation expense recorded related to the grants with performance conditions is based on management's expected level of achievement of the financial performance measures during the performance period and is adjusted as appropriate throughout the performance period based on the shares expected to be earned at that time.

As of December 31, 2019 and 2018, the total unrecognized compensation cost related to non-vested stock awards is $343 million and $106 million, respectively, which is expected to be recognized in pre-tax income over a weighted average period of 1.9 years and 1.5 years, respectively.

**(18)**Related Party Transactions

Cardinal Holdings

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"). CD&R acquired a 60% interest in the entity, Cardinal Holdings, L.P. ("Cardinal"), and FIS obtained the remaining 40% interest, in each case before equity issued to management (see Note 19). 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, whereby FIS provided various agreed-upon services to Cardinal during 2018 and 2017. FIS also provides ongoing management consulting services and other services to Cardinal. Amounts transacted through these agreements were not significant to the 2019, 2018 and 2017 periods presented.

Capco provided Banco Bradesco with consulting services. Capco revenue from Banco Bradesco through the July 31, 2017 closing are included below under Brazilian Venture revenue from Banco Bradesco.

Brazilian Venture

The Company operated the Brazilian Venture with Banco Bradesco in which FIS owned a 51% controlling interest through December 31, 2018, and provided 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 the Brazilian Venture 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.

FIS closed a transaction with Banco Bradesco on December 31, 2018 to unwind the Brazilian Venture pursuant to the agreement entered into September 28, 2018 (see Note 19). Banco Bradesco was a related party through December 31, 2018. During the third quarter of 2018, FIS incurred impairment charges of $95 million related to the disposal, including impairments of its contract intangible asset, goodwill and its assets held for sale to fair value less cost to sell. The carrying value of the noncontrolling interest as of December 31, 2018 was $0 million as a result of the transaction.

The board of directors for the Brazilian Venture declared dividends during the years ended December 31, 2018 and 2017, resulting in payments to Banco Bradesco of $26 million and $23 million, respectively.

The Company recorded revenue of $332 million and $329 million during the years ended December 31, 2018 and 2017, respectively, from Banco Bradesco. Revenue from Banco Bradesco included $46 million of unfavorable currency impact during the year ended December 31, 2018 resulting from foreign currency exchange rate fluctuations between the U.S. Dollar and Brazilian Real in 2018 as compared to 2017.

**(19)**Divestitures

On September 28, 2018, FIS entered into an agreement with Banco Bradesco to unwind the Brazilian Venture. The transaction closed on December 31, 2018. As a result of the transaction, the Brazilian Venture spun-off certain assets of the

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business that also provide services to non-Bradesco clients to a new wholly-owned FIS subsidiary. The subsidiary entered into a long-term commercial agreement to provide current and new services to Banco Bradesco effective January 1, 2019 that include software licensing, maintenance, application management, card portfolio migration, business process outsourcing, fraud management and professional services. As a result of the transaction, Banco Bradesco owns 100% of the entity that previously held the Brazilian Venture and its remaining assets that relate to card processing for Banco Bradesco, which Banco Bradesco will perform internally. During the third quarter of 2018, FIS incurred impairment charges of $95 million related to the expected disposal, including $42 million for the Brazilian Venture contract intangible asset, $25 million for goodwill, and $28 million for assets held for sale. Upon closing of the transaction, FIS recorded an additional pre-tax loss of $12 million related to the business divested, removed FIS' noncontrolling interest balance of $90 million, and recorded a $57 million increase to additional paid in capital for the business spun-off into the new wholly-owned FIS subsidiary. The impairment loss and pre-tax loss on disposal were recorded in the Corporate and Other segment. The Brazilian Venture business divested was included within the Capital Market Solutions segment as part of the consolidated Brazilian Venture results recorded by FIS through the transaction date. The transaction did not meet the standard necessary to be reported as discontinued operations; therefore, the impairment loss, pre-tax loss and related prior period earnings remain reported within earnings from continuing 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 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 intellectual property-led businesses. CD&R acquired preferred units convertible into 60% of the common units of Cardinal, and FIS obtained common units representing the remaining 40%, in each case before equity was 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 Capital Market Solutions and Banking Solutions 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, the Capco consulting business and risk and compliance consulting business' pre-tax earnings (loss), excluding certain unallocated corporate costs, for the period ended December 31, 2017 was $14 million.

FIS' ownership stake in Cardinal was initially valued at $172 million and is 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 after-tax equity method investment earnings (loss) outside of operating income and segment Adjusted EBITDA. FIS' ownership stake in Cardinal at December 31, 2019 and 2018 was 37% and 38%, respectively. The carrying value of this equity method investment as of December 31, 2019 and 2018 was $142 million and $151 million, respectively. 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. 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 period ended December 31, 2017 was $3 million.

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**(20)**Components of Other Comprehensive Earnings (Loss)

The following table shows Accumulated other comprehensive earnings (loss) attributable to FIS by component, net of tax, for the years ended December 31, 2019, 2018 and 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)$(1)
Balances, December 31, 2017—(289)(43)(332)
Other comprehensive gain (loss) before reclassifications—(102)4(98)
Balances, December 31, 2018—(391)(39)(430)
Other comprehensive gain (loss) before reclassifications(127)578(56)395
Amounts reclassified from accumulated other comprehensive earnings——22
Balances, December 31, 2019$(127)$187$(93)$(33)
(1)Includes the minimum pension liability adjustment and the cash settlement payment on treasury lock and forward-starting interest rate swap contracts associated with financing activities. Treasury lock and forward-starting interest rate swap related amounts will be amortized as an adjustment to interest expense over the periods in which the related interest payments that were hedged are recognized in income.

See Note 15 for the tax provision associated with each component of other comprehensive income.

**(21)**Concentration of Risk

The Company generates a significant amount of revenue from large clients; however, no individual client accounted for 10% or more of total revenue in the years ended December 31, 2019, 2018 and 2017.

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.

**(22)**Segment Information

As a result of the Company's acquisition of Worldpay, the Company reorganized its reportable segments and recast all prior-period segment information presented to align with the new reportable segments. The new segments are Merchant Solutions, Banking Solutions, and Capital Market Solutions, which are organized based on the markets and clients served aligned with the solutions they provide, as well as the Corporate and Other segment. The reorganization primarily consisted of adding a new Merchant Solutions segment, renaming the former Integrated Financial Solutions segment to Banking Solutions and the former Global Financial Solutions segment to Capital Market Solutions, and moving certain of the Company's existing business lines to align with these new segments. Below is a summary of each segment.

Merchant Solutions ("Merchant")

The Merchant segment is focused on serving merchants of all sizes globally, enabling them to accept electronic payments, including credit, debit and prepaid payments originated at a physical point of sale as well as in card-not-present environments such as eCommerce and mobile. Merchant services include all aspects of payment processing, including authorization and settlement, customer service, chargeback and retrieval processing, reporting for electronic payment transactions and network

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fee and interchange management. Merchant also includes value-added services, such as security and fraud prevention solutions, advanced data analytics and information management solutions, foreign currency management and numerous funding options. Merchant serves clients in over 140 countries. Our Merchant clients are highly-diversified, including non-discretionary everyday spend categories, such as grocery and pharmacy, and include national retailers, as well as global enterprises and small- to medium-sized businesses. The Merchant segment utilizes broad and varied distribution channels, including direct sales forces and multiple referral partner relationships that provide us with a growing and diverse client base.

Banking Solutions ("Banking")

The Banking segment is focused on serving all sizes of financial institutions for core processing and ancillary applications solutions; digital solutions; fraud, risk management and compliance solutions; electronic funds transfer and network services solutions; payment solutions; wealth and retirement solutions; item processing and output services solutions; and services capitalizing on the continuing trend to outsource these solutions. Clients in this segment include global financial institutions, U.S. regional and community banks, credit unions and commercial lenders, as well as government institutions, and other commercial organizations. Banking serves clients in more than 130 countries. Our applications include core processing software, which clients use to maintain the primary records of their customer accounts, and complementary applications and services that interact directly with the core processing applications. We provide our clients integrated solutions characterized by multi-year processing contracts that generate highly recurring revenue. The predictable nature of cash flows generated from the Banking segment provides opportunities for further investments in innovation, integration, information and security, and compliance in a cost-effective manner. The results in this segment included the Reliance Trust Company of Delaware business through its divestiture on December 31, 2018, the Company's Brazilian Venture business through its divestiture as part of the joint venture unwinding transaction on December 31, 2018 and the risk and compliance consulting business through its divestiture on July 31, 2017 (see Note 19).

Capital Market Solutions ("Capital Markets")

The Capital Markets segment is focused on serving global financial services clients with a broad array of buy- and sell-side solutions. Clients in this segment operate in more than 100 countries and include asset managers, buy-and sell-side securities, brokerage and trading firms, insurers, private equity firms, and other commercial organizations. Our buy- and sell-side solutions include a variety of mission critical applications for record keeping, data and analytics, trading, financing and risk management. Capital Markets clients purchase our solutions and services in various ways including licensing and managing technology "in-house," using consulting and third-party service providers, as well as fully outsourced end-to-end solutions. We have long-established relationships with many of these financial and commercial institutions that generate significant recurring revenue. We have made, and continue to make, investments in modern platforms; advanced technologies, such as cloud delivery, open APIs, machine learning and artificial intelligence; and regulatory technology to support our Capital Markets clients. The business solutions in this segment included the Capco consulting business through its divestiture on July 31, 2017 (see Note 19).

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 overhead and leveraged costs relate to corporate marketing, corporate finance and accounting, human resources, legal, and amortization of acquisition-related intangibles and other costs, such as acquisition and integration expenses, that are not considered when management evaluates revenue-generating segment performance. The Corporate and Other segment also includes the impact on revenue for 2018 and 2017 of adjusting deferred revenue to fair value from the SunGard acquisition. Additionally, the Corporate and Other segment also included the Certegy Check Services business unit in North America divested on August 31, 2018 (see Note 6) and the PS&E business divested on February 1, 2017 (see Note 19).

During 2019 the Company recorded acquisition and integration costs primarily related to the Worldpay acquisition and certain other costs associated with data center consolidation activities totaling $704 million. During 2018, the Company recorded acquisition and integration costs primarily related to the SunGard acquisition and certain other costs including those associated with data center consolidation activities totaling $156 million. During 2017, the Company recorded acquisition and integration costs primarily related to the SunGard acquisition totaling $178 million.

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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 FASB ASC Topic 280, Segment Reporting. Adjusted EBITDA is defined as EBITDA (defined as net earnings (loss) before net interest expense, income tax provision (benefit) and depreciation and amortization) plus certain non-operating items. The non-operating items affecting the segment profit measure generally include acquisition accounting adjustments; acquisition, integration and certain other costs; and asset impairments. 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. The Company does not evaluate performance or allocate resources based on segment asset data; therefore, such information is not presented.

As of and for the year ended December 31, 2019 (in millions):

Merchant SolutionsBanking SolutionsCapital Market SolutionsCorporate and OtherTotal
Revenue$2,013$5,873$2,447$—$10,333
Operating expenses1,1373,9421,5352,7509,364
Depreciation and amortization (including purchase accounting amortization)1185232171,5862,444
EBITDA9942,4541,129(1,164)3,413
Acquisition, integration and other costs———704704
Asset impairments———8787
Adjusted EBITDA$994$2,454$1,129$(373)$4,204
EBITDA$3,413
Interest expense, net337
Depreciation and amortization809
Purchase accounting amortization1,635
Other income (expense) unallocated(229)
Provision (benefit) for income taxes100
Net earnings attributable to noncontrolling interest5
Net earnings attributable to FIS common stockholders$298
Capital expenditures (1)$144$617$269$13$1,043

(1) Capital expenditures include $215 million in other financing obligations for certain hardware and software.

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As of and for the year ended December 31, 2018 (in millions):

Merchant SolutionsBanking SolutionsCapital Market SolutionsCorporate and OtherTotal
Revenue$276$5,712$2,391$44$8,423
Operating expenses2273,9501,4681,3206,965
Depreciation and amortization (including purchase accounting amortization)104941587581,420
EBITDA592,2561,081(518)2,878
Acquisition deferred revenue adjustment———44
Acquisition, integration and other costs———156156
Asset impairments———9595
Adjusted EBITDA$59$2,256$1,081$(263)$3,133
EBITDA$2,878
Interest expense, net297
Depreciation and amortization688
Purchase accounting amortization732
Other income (expense) unallocated(72)
Provision (benefit) for income taxes208
Net earnings attributable to noncontrolling interest35
Net earnings attributable to FIS common stockholders$846
Capital expenditures (1)$11$485$206$11$713

(1) Capital expenditures include $91 million in other financing obligations for certain hardware and software.

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

Merchant SolutionsBanking SolutionsCapital Market SolutionsCorporate and OtherTotal
Revenue$261$5,552$2,749$106$8,668
Operating expenses2013,8841,8201,3317,236
Depreciation and amortization (including purchase accounting amortization)84331517751,367
EBITDA682,1011,080(450)2,799
Acquisition deferred revenue adjustment———77
Acquisition, integration and other costs———178178
Adjusted EBITDA$68$2,101$1,080$(265)2,984
EBITDA$2,799
Interest expense, net337
Depreciation and amortization636
Purchase accounting amortization731
Other income (expense) unallocated(122)
Provision (benefit) for income taxes(321)
Net earnings attributable to noncontrolling interest33
Net earnings attributable to FIS common stockholders$1,261
Capital expenditures (1)$14$475$198$10$697

(1) Capital expenditures include $84 million in other financing obligations for certain hardware and software.

Clients in the United Kingdom, Germany, Brazil, India and Australia accounted for the majority of the revenue from clients based outside of North America for all periods presented. FIS conducts business in over 140 countries, with no individual country outside of North America accounting for more than 10% of total revenue for the years ended December 31, 2019, 2018 and 2017.

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Long-term assets, excluding goodwill and other intangible assets, located outside of the United States totaled $1,646 million and $560 million as of December 31, 2019 and 2018, respectively. These assets are predominantly located in the United Kingdom, India, France, Belgium, Germany and Brazil.

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