UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2020~~March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from						to

Commission File No. 001-16427

Fidelity National Information Services, Inc.

(Exact name of registrant as specified in its charter)


Georgia		37-1490331
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


601 Riverside Avenue
Jacksonville	Florida	32204
(Address of principal executive offices)		(Zip Code)

(904) 438-6000

(Registrant’s telephone number, including area code)

(Former Name or Former Address, if Changed Since Last Report)

~~Table of Contents~~

Securities registered pursuant to Section 12(b) of the Act:

Trading

Name of each exchange

Title of each class

Symbol(s)

on which registered

Common Stock, par value $0.01 per share

FIS

New York Stock Exchange

~~0.400% Senior Notes due 2021~~

~~FIS21A~~

~~New York Stock Exchange~~

Floating Rate Senior Notes due 2021

FIS21B

~~New York Stock Exchange~~

~~0.125% Senior Notes due 2021~~

~~FIS21C~~

New York Stock Exchange

1.700% Senior Notes due 2022

FIS22B

New York Stock Exchange

0.125% Senior Notes due 2022

FIS22C

New York Stock Exchange

0.750% Senior Notes due 2023

FIS23A

New York Stock Exchange

1.100% Senior Notes due 2024

FIS24A

~~New York Stock Exchange~~

~~2.602% Senior Notes due 2025~~

~~FIS25A~~

New York Stock Exchange

0.625% Senior Notes due 2025

FIS25B

New York Stock Exchange

1.500% Senior Notes due 2027

FIS27

New York Stock Exchange

1.000% Senior Notes due 2028

FIS28

New York Stock Exchange

2.250% Senior Notes due 2029

FIS29

New York Stock Exchange

2.000% Senior Notes due 2030

FIS30

New York Stock Exchange

3.360% Senior Notes due 2031

FIS31

New York Stock Exchange

2.950% Senior Notes due 2039

FIS39

New York Stock Exchange

Table of Contents

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES ☐ NO ☒

As of ~~October 28, 2020, 620,508,824~~May 5, 2021, 620,125,558 shares of the Registrant’s Common Stock were outstanding.

FORM 10-Q

QUARTERLY REPORT

Quarter Ended ~~September 30, 2020~~March 31, 2021

INDEX

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In millions, except per share amounts)

(Unaudited)


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,826	$	1,152	Cash and cash equivalents	$	1,039	$	1,959
Settlement deposits and merchant float	Settlement deposits and merchant float	2,840		2,882		Settlement deposits and merchant float	2,919		3,252
Trade receivables, net of allowance for credit losses of $66 and $60 at September 30, 2020 and December 31, 2019, respectively		3,146		3,242
Contract assets		164		124
Trade receivables, net of allowance for credit losses of $82 and $82, respectively						Trade receivables, net of allowance for credit losses of $82 and $82, respectively	3,508		3,314
Settlement receivables	Settlement receivables	774		647		Settlement receivables	703		662
Other receivables	Other receivables	361		337		Other receivables	470		317
Prepaid expenses and other current assets	Prepaid expenses and other current assets	823		308		Prepaid expenses and other current assets	466		394
Total current assets	Total current assets	9,934		8,692		Total current assets	9,105		9,898
Property and equipment, net	Property and equipment, net	914		900		Property and equipment, net	863		887
Goodwill	Goodwill	52,567		52,242		Goodwill	53,069		53,268
Intangible assets, net	Intangible assets, net	14,224		15,798		Intangible assets, net	13,315		13,928
Software, net	Software, net	3,301		3,204		Software, net	3,382		3,370
Other noncurrent assets	Other noncurrent assets	1,404		2,303		Other noncurrent assets	1,624		1,574
Deferred contract costs, net	Deferred contract costs, net	851		667		Deferred contract costs, net	959		917
Total assets	Total assets	$	83,195	$	83,806	Total assets	$	82,317	$	83,842
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY	LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY					LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable, accrued and other liabilities	Accounts payable, accrued and other liabilities	$	2,586	$	2,374	Accounts payable, accrued and other liabilities	$	2,370	$	2,482
Settlement payables	Settlement payables	4,438		4,228		Settlement payables	4,735		4,934
Deferred revenue	Deferred revenue	775		817		Deferred revenue	964		881
Short-term borrowings	Short-term borrowings	3,144		2,823		Short-term borrowings	2,537		2,750
Current portion of long-term debt	Current portion of long-term debt	1,832		140		Current portion of long-term debt	602		1,314
Total current liabilities	Total current liabilities	12,775		10,382		Total current liabilities	11,208		12,361
Long-term debt, excluding current portion	Long-term debt, excluding current portion	15,213		17,229		Long-term debt, excluding current portion	16,300		15,951
Deferred income taxes	Deferred income taxes	4,172		4,281		Deferred income taxes	4,115		4,017
Other noncurrent liabilities	Other noncurrent liabilities	1,768		2,406		Other noncurrent liabilities	1,986		1,967
Deferred revenue	Deferred revenue	46		52		Deferred revenue	59		59
Total liabilities	Total liabilities	33,974		34,350		Total liabilities	33,668		34,355

Redeemable noncontrolling interest	Redeemable noncontrolling interest	176		0		Redeemable noncontrolling interest	175		174
Equity:	Equity:					Equity:
FIS stockholders’ equity:	FIS stockholders’ equity:					FIS stockholders’ equity:
Preferred stock $0.01 par value; 200 shares authorized, NaN issued and outstanding at September 30, 2020 and December 31, 2019		0		0
Common stock $0.01 par value, 750 shares authorized, 621 and 615 shares issued at September 30, 2020 and December 31, 2019, respectively		6		6
Preferred stock $0.01 par value; 200 shares authorized, NaN issued and outstanding at March 31, 2021 and December 31, 2020						Preferred stock $0.01 par value; 200 shares authorized, NaN issued and outstanding at March 31, 2021 and December 31, 2020	0		0
Common stock $0.01 par value, 750 shares authorized, 624 and 621 shares issued as of March 31, 2021 and December 31, 2020, respectively						Common stock $0.01 par value, 750 shares authorized, 624 and 621 shares issued as of March 31, 2021 and December 31, 2020, respectively	6		6
Additional paid in capital	Additional paid in capital	45,821		45,358		Additional paid in capital	46,152		45,947
Retained earnings	Retained earnings	3,556		4,161		Retained earnings	2,823		3,440
Accumulated other comprehensive earnings (loss)	Accumulated other comprehensive earnings (loss)	(212)		(33)		Accumulated other comprehensive earnings (loss)	124		57
Treasury stock, $0.01 par value, 1 common shares as of September 30, 2020 and less than 1 as of December 31, 2019, respectively, at cost		(140)		(52)
Treasury stock, $0.01 par value, 4 and 1 common shares as of March 31, 2021 and December 31, 2020, respectively, at cost						Treasury stock, $0.01 par value, 4 and 1 common shares as of March 31, 2021 and December 31, 2020, respectively, at cost	(645)		(150)
Total FIS stockholders’ equity	Total FIS stockholders’ equity	49,031		49,440		Total FIS stockholders’ equity	48,460		49,300
Noncontrolling interest	Noncontrolling interest	14		16		Noncontrolling interest	14		13
Total equity	Total equity	49,045		49,456		Total equity	48,474		49,313
Total liabilities, redeemable noncontrolling interest and equity	Total liabilities, redeemable noncontrolling interest and equity	$	83,195	$	83,806	Total liabilities, redeemable noncontrolling interest and equity	$	82,317	$	83,842

See accompanying notes to unaudited condensed consolidated financial statements.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings (Loss)

(In millions, except per share amounts)

(Unaudited)


		Three months ended September 30,				Nine Months Ended September 30,					Three months ended March 31,
		2020		2019		2020		2019			2021		2020

Revenue	Revenue	$	3,197	$	2,822	$	9,236	$	6,991	Revenue	$	3,223	$	3,078
Cost of revenue	Cost of revenue	2,104		1,838		6,238		4,623		Cost of revenue	2,118		2,089
Gross profit	Gross profit	1,093		984		2,998		2,368		Gross profit	1,105		989
Selling, general, and administrative expenses	Selling, general, and administrative expenses	862		757		2,613		1,435		Selling, general, and administrative expenses	1,006		881
Asset impairments		0		87		0		87
Operating income	Operating income	231		140		385		846		Operating income	99		108
Other income (expense):	Other income (expense):									Other income (expense):
Interest expense, net	Interest expense, net	(84)		(95)		(252)		(242)		Interest expense, net	(74)		(80)
Other income (expense), net	Other income (expense), net	(4)		164		31		(8)		Other income (expense), net	(493)		(39)
Total other income (expense), net	Total other income (expense), net	(88)		69		(221)		(250)		Total other income (expense), net	(567)		(119)
Earnings (loss) before income taxes and equity method investment earnings (loss)	Earnings (loss) before income taxes and equity method investment earnings (loss)	143		209		164		596		Earnings (loss) before income taxes and equity method investment earnings (loss)	(468)		(11)
Provision (benefit) for income taxes	Provision (benefit) for income taxes	121		48		94		119		Provision (benefit) for income taxes	(97)		(30)
Equity method investment earnings (loss)	Equity method investment earnings (loss)	0		(5)		(9)		(18)		Equity method investment earnings (loss)	1		(1)
Net earnings		22		156		61		459
Net earnings (loss)										Net earnings (loss)	(370)		18
Net (earnings) loss attributable to noncontrolling interest	Net (earnings) loss attributable to noncontrolling interest	(2)		(2)		(7)		(3)		Net (earnings) loss attributable to noncontrolling interest	(3)		(3)
Net earnings attributable to FIS common stockholders		$	20	$	154	$	54	$	456
Net earnings (loss) attributable to FIS common stockholders										Net earnings (loss) attributable to FIS common stockholders	$	(373)	$	15

Net earnings per share-basic attributable to FIS common stockholders		$	0.03	$	0.30	$	0.09	$	1.18
Net earnings (loss) per share-basic attributable to FIS common stockholders										Net earnings (loss) per share-basic attributable to FIS common stockholders	$	(0.60)	$	0.02
Weighted average shares outstanding-basic	Weighted average shares outstanding-basic	620		516		618		388		Weighted average shares outstanding-basic	621		616
Net earnings per share-diluted attributable to FIS common stockholders		$	0.03	$	0.29	$	0.09	$	1.15
Net earnings (loss) per share-diluted attributable to FIS common stockholders										Net earnings (loss) per share-diluted attributable to FIS common stockholders	$	(0.60)	$	0.02
Weighted average shares outstanding-diluted	Weighted average shares outstanding-diluted	627		524		626		396		Weighted average shares outstanding-diluted	621		625

See accompanying notes to unaudited condensed consolidated financial statements.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Earnings (Loss)

(In millions)

(Unaudited)


		Three months ended September 30,								Nine months ended September 30,									Three months ended March 31,
		2020				2019				2020				2019					2021				2020

Net earnings				$	22			$	156			$	61			$	459
Net earnings (loss)																		Net earnings (loss)			$	(370)			$	18
Other comprehensive earnings (loss), before tax:	Other comprehensive earnings (loss), before tax:																	Other comprehensive earnings (loss), before tax:
Unrealized gain (loss) on derivatives	Unrealized gain (loss) on derivatives	$	0			$	0			$	0			$	(16)			Unrealized gain (loss) on derivatives	$	9			$	0
Adjustment for (gain) loss reclassified to net earnings		0				1				0				(3)
Unrealized gain (loss) on derivatives, net		0				1				0				(19)
Foreign currency translation adjustments	Foreign currency translation adjustments	78				81				(306)				98				Foreign currency translation adjustments	185				(208)
Minimum pension liability adjustments		1				0				2				(4)
Other adjustments																		Other adjustments	0				1
Other comprehensive earnings (loss), before tax	Other comprehensive earnings (loss), before tax	79				82				(304)				75				Other comprehensive earnings (loss), before tax	194				(207)
Provision for income tax (expense) benefit related to items of other comprehensive earnings	Provision for income tax (expense) benefit related to items of other comprehensive earnings	67				(35)				125				(36)				Provision for income tax (expense) benefit related to items of other comprehensive earnings	(127)				(8)
Other comprehensive earnings (loss), net of tax	Other comprehensive earnings (loss), net of tax	$	146	146		$	47	47		$	(179)	(179)		$	39	39		Other comprehensive earnings (loss), net of tax	$	67	67		$	(215)	(215)
Comprehensive earnings (loss)	Comprehensive earnings (loss)			168				203				(118)				498		Comprehensive earnings (loss)			(303)				(197)
Net (earnings) loss attributable to noncontrolling interest	Net (earnings) loss attributable to noncontrolling interest			(2)				(2)				(7)				(3)		Net (earnings) loss attributable to noncontrolling interest			(3)				(3)
Comprehensive earnings (loss) attributable to FIS common stockholders	Comprehensive earnings (loss) attributable to FIS common stockholders			$	166			$	201			$	(125)			$	495	Comprehensive earnings (loss) attributable to FIS common stockholders			$	(306)			$	(200)

See accompanying notes to unaudited condensed consolidated financial statements.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Equity

Three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020

(In millions, except per share amounts)

(Unaudited)


				Amount																	Amount
				FIS Stockholders																	FIS Stockholders
										Accumulated																	Accumulated
		Number of shares				Additional				other									Number of shares				Additional				other
		Common	Treasury	Common		paid in		Retained		comprehensive		Treasury		Noncontrolling		Total			Common	Treasury	Common		paid in		Retained		comprehensive		Treasury		Noncontrolling		Total
		shares	shares	stock		capital		earnings		earnings (loss)		stock		interest (1)		equity			shares	shares	stock		capital		earnings		earnings (loss)		stock		interest (1)		equity
Balances, June 30, 2020		619	(1)	$	6	$	45,736	$	3,753	$	(358)	$	(94)	$	14	$	49,057
Balances, December 31, 2020																		Balances, December 31, 2020	621	(1)	$	6	$	45,947	$	3,440	$	57	$	(150)	$	13	$	49,313
Issuance of restricted stock	Issuance of restricted stock	2	—	—		—		—		—		—		—		0		Issuance of restricted stock	3	—	—		1		—		—		—		—		1
Exercise of stock options	Exercise of stock options	0	—	—		35		—		—		—		—		35		Exercise of stock options	0	—	—		47		—		—		—		—		47
Purchases of treasury stock																		Purchases of treasury stock	—	(3)	—		—		—		—		(400)		—		(400)
Treasury shares held for taxes due upon exercise of stock options	Treasury shares held for taxes due upon exercise of stock options	—	—	—		(7)		—		—		(46)		—		(53)		Treasury shares held for taxes due upon exercise of stock options	—	—	—		—		—		—		(95)		—		(95)
Stock-based compensation	Stock-based compensation	—	—	—		57		—		—		—		—		57		Stock-based compensation	—	—	—		157		—		—		—		—		157
Cash dividends declared ($0.35 per share per quarter) and other distributions		—	—	—		—		(217)		—		—		(1)		(218)
Other		—	—	—		0		—		—		—		—		0
Net earnings		—	—	—		—		20		—		—		1		21
Cash dividends declared ($0.39 per share per quarter) and other distributions																		Cash dividends declared ($0.39 per share per quarter) and other distributions	—	—	—		—		(244)		—		—		(1)		(245)
Net earnings (loss)																		Net earnings (loss)	—	—	—		—		(373)		—		—		2		(371)
Other comprehensive earnings (loss), net of tax	Other comprehensive earnings (loss), net of tax	—	—	—		—		—		146		—		—		146		Other comprehensive earnings (loss), net of tax	—	—	—		—		—		67		—		—		67
Balances, September 30, 2020		621	(1)	$	6	$	45,821	$	3,556	$	(212)	$	(140)	$	14	$	49,045
Balances, March 31, 2021																		Balances, March 31, 2021	624	(4)	$	6	$	46,152	$	2,823	$	124	$	(645)	$	14	$	48,474


				Amount																			Amount
				FIS Stockholders																			FIS Stockholders
										Accumulated																			Accumulated
		Number of shares				Additional				other									Number of shares						Additional				other
		Common	Treasury	Common		paid in		Retained		comprehensive		Treasury		Noncontrolling		Total			Common		Treasury		Common		paid in		Retained		comprehensive		Treasury		Noncontrolling		Total
		shares	shares	stock		capital		earnings		earnings (loss)		stock		interest (1)		equity			shares		shares		stock		capital		earnings		earnings (loss)		stock		interest (1)		equity
Balances, December 31, 2019	Balances, December 31, 2019	615	0	$	6	$	45,358	$	4,161	$	(33)	$	(52)	$	16	$	49,456	Balances, December 31, 2019	615		0		$	6	$	45,358	$	4,161	$	(33)	$	(52)	$	16	$	49,456
Issuance of restricted stock	Issuance of restricted stock	2	—	—		(7)		—		—		7		—		0		Issuance of restricted stock	0		—		—		(7)		—		—		7		—		0
Exercise of stock options	Exercise of stock options	4	—	—		293		—		—		—		—		293		Exercise of stock options	2		0		—		140		—		—		—		—		140
Treasury shares held for taxes due upon exercise of stock options	Treasury shares held for taxes due upon exercise of stock options	—	(1)	—		(7)		—		—		(95)		—		(102)		Treasury shares held for taxes due upon exercise of stock options	—		(1)		—		—		—		—		(46)		—		(46)
Stock-based compensation	Stock-based compensation	—	—	—		182		—		—		—		—		182		Stock-based compensation	—		—		—		56		—		—		—		—		56
Cash dividends declared ($0.35 per share per quarter) and other distributions	Cash dividends declared ($0.35 per share per quarter) and other distributions	—	—	—		—		(653)		—		—		(5)		(658)		Cash dividends declared ($0.35 per share per quarter) and other distributions	—		—		—		—		(218)		—		—		(2)		(220)
Other	Other	—	—	—		2		(6)		—		—		—		(4)		Other	—		—		—		1		(6)		—		—		—		(5)
Net earnings	Net earnings	—	—	—		—		54		—		—		3		57		Net earnings	—		—		—		—		15		—		—		1		16
Other comprehensive earnings (loss), net of tax	Other comprehensive earnings (loss), net of tax	—	—	—		—		—		(179)		—		—		(179)		Other comprehensive earnings (loss), net of tax	—		—		—		—		—		(215)		—		—		(215)
Balances, September 30, 2020		621	(1)	$	6	$	45,821	$	3,556	$	(212)	$	(140)	$	14	$	49,045
Balances, March 31, 2020																		Balances, March 31, 2020	$	617	$	(1)	$	6	$	45,548	$	3,952	$	(248)	$	(91)	$	15	$	49,182

(1)Excludes redeemable noncontrolling interest that is not considered equity. ~~See Note 3,~~ ~~Virtus Acquisition,~~ ~~for additional information.~~

~~FIDELITY NATIONAL INFORMATION SERVICES, INC.~~

~~AND SUBSIDIARIES~~

~~Condensed Consolidated Statements of Equity~~

~~Three and nine months ended September 30, 2019~~

~~(In millions, except per share amounts)~~

~~(Unaudited)~~

Amount
FIS Stockholders
Accumulated
Number of shares Additional other
Common Treasury Common paid in Retained comprehensive Treasury Noncontrolling Total
shares shares stock capital earnings earnings (loss) stock interest equity
Balances, June 30, 2019 433 (109) $ 4 $ 10,887 $ 4,599 $ (438) $ (5,067) $ 7 $ 9,992
Worldpay acquisition 180 109 2 34,040 — — 5,042 11 39,095
Issuance of restricted stock 1 — — — — — 2 — 2
Exercise of stock options 1 0 — 42 — — 3 — 45
Treasury shares held for taxes due upon exercise of stock options — — — (1) — — (1) — (2)
Stock-based compensation — — — 95 — — — — 95
Cash dividends declared ($0.35 per share per quarter) and other distributions — — — — (215) — — (3) (218)
Net earnings — — — — 154 — — 2 156
Other comprehensive earnings (loss), net of tax — — — — — 47 — — 47
Balances, September 30, 2019 615 0 $ 6 $ 45,063 $ 4,538 $ (391) $ (21) $ 17 $ 49,212

Amount
FIS Stockholders
Accumulated
Number of shares Additional other
Common Treasury Common paid in Retained comprehensive Treasury Noncontrolling Total
shares shares stock capital earnings earnings (loss) stock interest equity
Balances, December 31, 2018 433 (106) $ 4 $ 10,800 $ 4,528 $ (430) $ (4,687) $ 7 $ 10,222
Worldpay acquisition 180 109 2 34,040 — — 5,042 11 39,095
Issuance of restricted stock 1 — — — — — 2 — 2
Exercise of stock options 1 1 — 86 — — 46 — 132
Treasury shares held for taxes due upon exercise of stock options — — — (1) — — (24) — (25)
Purchases of treasury stock — (4) — — — — (400) 1 (399)
Stock-based compensation — — — 138 — — — — 138
Cash dividends declared ($0.35 per share per quarter) and other distributions — — — — (441) — — (5) (446)
Other — — — — (5) — — — (5)
Net earnings — — — — 456 — — 3 459
Other comprehensive earnings (loss), net of tax — — — — — 39 — — 39
Balances, September 30, 2019 615 0 $ 6 $ 45,063 $ 4,538 $ (391) $ (21) $ 17 $ 49,212

See accompanying notes to unaudited condensed consolidated financial statements.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)


		Nine months ended September 30,					Three months ended March 31,
		2020		2019			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net earnings		$	61	$	459
Adjustment to reconcile net earnings to net cash provided by operating activities:
Net earnings (loss)						Net earnings (loss)	$	(370)	$	18
Adjustment to reconcile net earnings (loss) to net cash provided by operating activities:						Adjustment to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	2,760		1,488		Depreciation and amortization	953		914
Amortization of debt issue costs	Amortization of debt issue costs	24		17		Amortization of debt issue costs	7		8
Acquisition-related financing foreign exchange		0		(112)
Asset impairments		0		87
Loss (gain) on sale of businesses, investments and other	Loss (gain) on sale of businesses, investments and other	3		18		Loss (gain) on sale of businesses, investments and other	(1)		2
Loss on extinguishment of debt						Loss on extinguishment of debt	528		0
Stock-based compensation	Stock-based compensation	182		138		Stock-based compensation	157		56
Deferred income taxes	Deferred income taxes	(24)		(75)		Deferred income taxes	(22)		(108)
Net changes in assets and liabilities, net of effects from acquisitions and foreign currency:	Net changes in assets and liabilities, net of effects from acquisitions and foreign currency:					Net changes in assets and liabilities, net of effects from acquisitions and foreign currency:
Trade and other receivables	Trade and other receivables	78		12		Trade and other receivables	(219)		96
Contract assets		(41)		(14)
Settlement activity	Settlement activity	594		165		Settlement activity	122		(368)
Prepaid expenses and other assets	Prepaid expenses and other assets	(128)		(2)		Prepaid expenses and other assets	(129)		40
Deferred contract costs	Deferred contract costs	(354)		(258)		Deferred contract costs	(113)		(150)
Deferred revenue	Deferred revenue	(50)		(51)		Deferred revenue	89		86
Accounts payable, accrued liabilities and other liabilities	Accounts payable, accrued liabilities and other liabilities	(81)		(131)		Accounts payable, accrued liabilities and other liabilities	(166)		(211)
Net cash provided by operating activities	Net cash provided by operating activities	3,024		1,741		Net cash provided by operating activities	836		383

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Additions to property and equipment	Additions to property and equipment	(186)		(135)		Additions to property and equipment	(69)		(55)
Additions to software	Additions to software	(652)		(409)		Additions to software	(229)		(251)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(469)		(6,629)		Acquisitions, net of cash acquired	0		(402)
Net proceeds from sale of businesses and investments		0		49
Other investing activities, net	Other investing activities, net	92		(43)		Other investing activities, net	(23)		92
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(1,215)		(7,167)		Net cash provided by (used in) investing activities	(321)		(616)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Borrowings	Borrowings	37,125		25,425		Borrowings	13,858		10,958
Repayment of borrowings and other financing obligations	Repayment of borrowings and other financing obligations	(37,646)		(15,997)		Repayment of borrowings and other financing obligations	(14,364)		(10,391)
Debt issuance costs	Debt issuance costs	0		(71)		Debt issuance costs	(74)		0
Proceeds from stock issued under stock-based compensation plans	Proceeds from stock issued under stock-based compensation plans	302		136		Proceeds from stock issued under stock-based compensation plans	73		176
Treasury stock activity	Treasury stock activity	(102)		(422)		Treasury stock activity	(494)		(46)
Dividends paid	Dividends paid	(650)		(441)		Dividends paid	(244)		(216)
Other financing activities, net	Other financing activities, net	(222)		(39)		Other financing activities, net	(136)		(4)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(1,193)		8,591		Net cash provided by (used in) financing activities	(1,381)		477

Effect of foreign currency exchange rate changes on cash	Effect of foreign currency exchange rate changes on cash	8		(38)		Effect of foreign currency exchange rate changes on cash	(40)		(15)
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	624		3,127		Net increase (decrease) in cash and cash equivalents	(906)		229
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	3,211		703		Cash and cash equivalents, beginning of period	4,030		3,211
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	3,835	$	3,830	Cash and cash equivalents, end of period	$	3,124	$	3,440

Supplemental cash flow information:	Supplemental cash flow information:					Supplemental cash flow information:
Cash paid for interest	Cash paid for interest	$	305	$	208	Cash paid for interest	$	95	$	33
Cash paid for income taxes	Cash paid for income taxes	$	163	$	273	Cash paid for income taxes	$	68	$	65

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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

The unaudited financial information included in this report includes the accounts of FIS and its subsidiaries prepared in accordance with U.S. generally accepted accounting principles and the instructions to Form 10-Q and Article 10 of Regulation S-X. All adjustments considered necessary for a fair presentation have been included. This report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

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 as of the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reported periods. The inputs into management's critical and significant accounting estimates consider the economic impact of the outbreak of the novel coronavirus ("COVID-19") and the subsequently declared COVID-19 pandemic ("the pandemic") by the World Health Organization on March 11, 2020. The extent to which the pandemic further affects our results of operations and financial position will depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the duration and spread of the pandemic, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. Accordingly, our future results could be materially affected by changes in our estimates.

Certain reclassifications have been made in the ~~2019~~2020 consolidated financial statements to conform to the classifications used in ~~2020.~~2021. Amounts in tables in the financial statements and accompanying footnotes may not sum due to rounding.

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. See Note 3 for additional discussion.

FIS reports its financial performance based on the following segments: Merchant Solutions, Banking Solutions, Capital Market Solutions, and Corporate and Other. ~~As FIS continues to execute on its integration workflows and optimize~~The Company regularly assesses its portfolio of assets itand reclassified certain non-strategic businesses from the Merchant Solutions, Banking Solutions, and ~~Banking~~Capital Market Solutions segments into the Corporate and Other segment induring the ~~quarter~~year ended ~~March~~December 31, 2020, and recast all prior-period segment information presented. ~~These operations represented less than 2% of third quarter and year-to-date 2020 revenue. See Note 12 for a summary of each segment.~~

(2) ~~Summary of Significant Accounting Policies~~

~~Change in Accounting Policy~~

~~The Company adopted FASB Accounting Standards Codification ("ASC") Topic 326,~~ ~~Financial Instruments - Credit Losses~~ ~~("Topic 326"),~~with an adoption date of January 1, 2020. As a result, the Company changed its accounting policy for allowance for credit losses. The accounting policy pursuant to Topic 326 for credit losses is disclosed below. The adoption of Topic 326 resulted in an immaterial cumulative effect adjustment recorded in retained earnings as of January 1, 2020.

~~Allowance for Credit Losses~~

The Company monitors trade receivable balances including contract assets as well as other receivables and estimates the allowance for lifetime expected credit losses. Estimates of expected credit losses are based on historical collection experience and other factors, including those related to current market conditions and events. The allowance for credit losses is separate from the chargeback liability described in Note 9.

While the COVID-19 pandemic did not result in a significant increase in the Company's expected credit loss allowance recorded as of September 30, 2020, it is reasonably possible that future developments related to the economic impact of the COVID-19 pandemic could have a material impact on management's estimates.

~~Table of Contents~~

~~FIDELITY NATIONAL INFORMATION SERVICES, INC.~~

~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~(3) Acquisitions~~

~~Worldpay Acquisition~~

On July 31, 2019, FIS completed the acquisition of Worldpay by acquiring 100 percent of Worldpay's equity. The Worldpay acquisition brought an integrated technology platform with a comprehensive suite of products and services serving merchants and financial institutions and provided FIS with enhanced global payment capabilities, robust risk and fraud solutions and advanced data analytics.

~~The total purchase price was as follows (in millions):~~


~~Cash consideration~~	$	~~3,423~~
~~Value of FIS share consideration~~	~~38,635~~
~~Pay-off of Worldpay long-term debt not contractually assumed~~	~~5,738~~
~~Value of outstanding converted equity awards attributed to services already rendered~~	~~449~~
~~Total purchase price~~	$	~~48,245~~

~~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 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 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. The Company completed its assessment of the fair value of assets acquired and liabilities assumed within the one-year period from the date of acquisition. The Company recorded measurement period adjustments due to additional information received primarily related to contingencies and income taxes, resulting in a decrease in the value assigned to goodwill. There was no material impact on earnings as a result of the measurement period adjustments recorded.

~~The final purchase price allocation is as follows (in millions):~~


~~Cash acquired~~	$	~~305~~
~~Settlement deposits and merchant float (1)~~	~~2,444~~
~~Trade receivables~~	~~1,594~~
~~Goodwill~~	~~38,057~~
~~Intangible assets~~	~~13,682~~
~~Computer software~~	~~1,297~~
~~Other noncurrent assets (2)~~	~~1,641~~
~~Accounts payable, accrued and other liabilities~~	~~(1,021)~~
~~Settlement payables~~	~~(3,167)~~
~~Deferred income taxes~~	~~(2,860)~~
~~Long-term debt, subsequently repaid~~	~~(1,805)~~
~~Other liabilities and noncontrolling interest (3)~~	~~(1,922)~~
~~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 9) and $875 million contingent value rights liability (see Note 5).~~

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.

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~~FIDELITY NATIONAL INFORMATION SERVICES, INC.~~

~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

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 9 for acquired contingencies resulting from the Worldpay acquisition.~~

~~Unaudited Supplemental Pro Forma Results Giving Effect to the Worldpay Acquisition~~

Worldpay's revenues and pre-tax loss of $734 million and $162 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 September 30, 2019.

Pursuant to ASC 805, unaudited supplemental pro forma results of operations for the three and nine months ended September 30, 2019, assuming the acquisition had occurred as of January 1, 2018, are presented below (in millions, except per share amounts):

September 30, 2019
Three months ended Nine months ended
Revenue $ 3,154 $ 9,380
Net earnings (loss) attributable to FIS common stockholders $ 215 $ 348
Net earnings (loss) per share-basic attributable to FIS common stockholders $ 0.35 $ 0.57
Net earnings (loss) per share-diluted attributable to FIS common stockholders $ 0.35 $ 0.56

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 addition of borrowings of FIS in conjunction with the acquisition; and~~

•a reduction in expenses for the three and nine months ended September 30, 2019, of $149 million and $210 million, respectively, for acquisition-related transaction costs and other one-time non-recurring costs.

~~Virtus~~ ~~Acquisition~~

On January 2, 2020, FIS acquired a majority interest in Virtus Partners ("Virtus"), previously a privately held company that provides high-value managed services and technology to the credit and loan market. FIS acquired a 70% voting and financial interest in Virtus with 30% interest retained by the founders of Virtus ("Founders"). The acquisition was accounted for as a business combination under Topic 805. We recorded a provisional allocation of the $404 million cash purchase price and the $173 million fair value of redeemable noncontrolling interest to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values, consisting primarily of $254 million in customer relationships and $51 million in software assets. We also recorded $245 million in goodwill for the residual amount by which the purchase price exceeded the provisional fair value of the net assets acquired. Our purchase price allocation is provisional as of September 30, 2020, and we expect to finalize as soon as practicable, but no later than one year from the acquisition date.

We recorded the 30% interest retained by the Founders at the acquisition date as redeemable noncontrolling interest, which is reflected outside of stockholders' equity on the consolidated balance sheet, given the agreement between FIS and the Founders that provides FIS with a call option and the Founders with a put option requiring FIS to purchase all of the Founders' retained interest in Virtus at a redemption value determined pursuant to the agreement. The call option and put option are exercisable at any time after two years and three years, respectively, following the acquisition date. Changes in the estimated redemption value are accreted through equity from the acquisition date to the date the call option becomes exercisable, to the extent the estimated redemption value is greater than the initial redeemable noncontrolling interest value recorded, as adjusted for the Founders' share of the cumulative impact of net earnings (loss).

~~Table of Contents~~

~~FIDELITY NATIONAL INFORMATION SERVICES, INC.~~

~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~(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~~recast to conform to the new reportable segment presentation as discussed in Note ~~12.~~

~~For the three months ended September 30, 2020 (in millions):~~

Reportable Segments
Capital
Merchant Banking Market Corporate
Solutions Solutions Solutions and Other Total
Primary Geographical Markets:
North America $ 747 $ 1,281 $ 382 $ 35 $ 2,445
All others 270 226 244 12 752
Total $ 1,017 $ 1,507 $ 626 $ 47 $ 3,197
Type of Revenue:
Recurring revenue:
Transaction processing and services $ 996 $ 1,146 $ 305 $ 41 $ 2,488
Software maintenance 1 88 124 0 213
Other recurring 19 45 25 0 89
Total recurring 1,016 1,279 454 41 2,790
Software license 0 15 64 0 79
Professional services 0 153 108 1 262
Other non-recurring fees 1 60 0 5 66
Total $ 1,017 $ 1,507 $ 626 $ 47 $ 3,197
11.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

For the three months ended ~~September 30, 2019~~March 31, 2021 (in millions):


		Reportable Segments											Reportable Segments
						Capital											Capital
		Merchant		Banking		Market		Corporate					Merchant		Banking		Market		Corporate
		Solutions		Solutions		Solutions		and Other		Total			Solutions		Solutions		Solutions		and Other		Total
Primary Geographical Markets:	Primary Geographical Markets:											Primary Geographical Markets:
North America	North America	$	501	$	1,216	$	378	$	48	$	2,143	North America	$	681	$	1,311	$	370	$	58	$	2,420
All others	All others	204		227		233		15		679		All others	285		229		255		34		803
Total	Total	$	705	$	1,443	$	611	$	63	$	2,822	Total	$	966	$	1,540	$	625	$	92	$	3,223

Type of Revenue:	Type of Revenue:											Type of Revenue:
Recurring revenue:	Recurring revenue:											Recurring revenue:
Transaction processing and services	Transaction processing and services	$	690	$	1,052	$	278	$	57	$	2,077	Transaction processing and services	$	943	$	1,164	$	291	$	84	$	2,482
Software maintenance	Software maintenance	1		91		121		0		213		Software maintenance	1		88		127		0		216
Other recurring	Other recurring	11		44		27		0		82		Other recurring	20		38		24		3		85
Total recurring	Total recurring	702		1,187		426		57		2,372		Total recurring	964		1,290		442		87		2,783

Software license	Software license	1		53		82		0		136		Software license	1		24		68		0		93
Professional services	Professional services	0		147		103		1		251		Professional services	0		146		106		1		253
Other non-recurring fees	Other non-recurring fees	2		56		0		5		63		Other non-recurring fees	1		80		9		4		94
Total	Total	$	705	$	1,443	$	611	$	63	$	2,822	Total	$	966	$	1,540	$	625	$	92	$	3,223

For the ~~nine~~three months ended ~~September 30,~~March 31, 2020 (in millions):

Reportable Segments
Capital
Merchant Banking Market Corporate
Solutions Solutions Solutions and Other Total
Primary Geographical Markets:
North America $ 2,011 $ 3,789 $ 1,176 $ 110 $ 7,086
All others 753 658 710 29 2,150
Total $ 2,764 $ 4,447 $ 1,886 $ 139 $ 9,236
Type of Revenue:
Recurring revenue:
Transaction processing and services $ 2,697 $ 3,334 $ 922 $ 125 $ 7,078
Software maintenance 2 263 368 1 634
Other recurring 58 131 75 0 264
Total recurring 2,757 3,728 1,365 126 7,976
Software license 2 48 206 0 256
Professional services 1 441 314 3 759
Other non-recurring fees 4 230 1 10 245
Total $ 2,764 $ 4,447 $ 1,886 $ 139 $ 9,236


	Reportable Segments
					Capital
	Merchant		Banking		Market		Corporate
	Solutions		Solutions		Solutions		and Other		Total
Primary Geographical Markets:
North America	$	661	$	1,242	$	373	$	72	$	2,348
All others	274		202		224		30		730
Total	$	935	$	1,444	$	597	$	102	$	3,078

Type of Revenue:
Recurring revenue:
Transaction processing and services	$	911	$	1,078	$	278	$	97	$	2,364
Software maintenance	1		88		121		1		211
Other recurring	21		44		24		0		89
Total recurring	933		1,210		423		98		2,664

Software license	0		19		73		0		92
Professional services	0		143		101		2		246
Other non-recurring fees	2		72		0		2		76
Total	$	935	$	1,444	$	597	$	102	$	3,078

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~For the nine months ended September 30, 2019 (in millions):~~

Reportable Segments
Capital
Merchant Banking Market Corporate
Solutions Solutions Solutions and Other Total
Primary Geographical Markets:
North America $ 648 $ 3,472 $ 1,112 $ 143 $ 5,375
All others 204 701 666 45 1,616
Total $ 852 $ 4,173 $ 1,778 $ 188 $ 6,991
Type of Revenue:
Recurring revenue:
Transaction processing and services $ 829 $ 3,030 $ 824 $ 169 $ 4,852
Software maintenance 1 271 361 0 633
Other recurring 12 133 80 0 225
Total recurring 842 3,434 1,265 169 5,710
Software license 7 112 214 0 333
Professional services 0 439 299 4 742
Other non-recurring fees 3 188 0 15 206
Total $ 852 $ 4,173 $ 1,778 $ 188 $ 6,991

Contract Balances

The Company recognized revenue of ~~$216~~$327 million and ~~$128~~$338 million during the three months ended March 31, 2021 and ~~$660 million~~ ~~and $636 million during the nine months ended September 30,~~ 2020, ~~and 2019,~~ respectively, that was included in the corresponding deferred revenue balance at the beginning of the periods.

Transaction Price Allocated to the Remaining Performance Obligations

As of ~~September 30, 2020,~~March 31, 2021, approximately ~~$21~~$21.0 billion of revenue is estimated to be recognized in the future primarily 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%~~32% of the Banking Solutions and Capital Market Solutions segments' remaining performance obligations over the next 12 months, approximately another ~~20%~~22% 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.

~~Table of Contents~~

~~FIDELITY NATIONAL INFORMATION SERVICES, INC.~~

~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~(5)~~(3) Condensed Consolidated Financial Statement Details

Cash and Cash Equivalents

The Company includes restricted cash in the Cash and cash equivalents balance reported in the consolidated statements of cash flows. The reconciliation between Cash and cash equivalents in the consolidated balance sheets and the consolidated statements of cash flows is as follows (in millions):

September 30,
2020 December 31,
2019
Cash and cash equivalents on the consolidated balance sheets $ 1,826 $ 1,152
Merchant float restricted cash (in Settlement deposits and merchant float) 2,009 1,519
Other restricted cash (in Other noncurrent assets) (1) 0 540
Total Cash and cash equivalents per the consolidated statements of cash flows $ 3,835 $ 3,211

~~(1) See Visa Europe and Contingent Value Rights discussion below.~~


	March 31, 2021		December 31, 2020
Cash and cash equivalents on the consolidated balance sheets	$	1,039	$	1,959
Merchant float restricted cash (in Settlement deposits and merchant float)	2,085		2,071
Total Cash and cash equivalents per the consolidated statements of cash flows	$	3,124	$	4,030

~~Property and Equipment, Intangible Assets and Computer Software~~Allowance for Credit Losses

The ~~following table shows the Company's consolidated financial statement details as of September 30, 2020, and December 31, 2019 (in millions):~~

September 30, 2020 December 31, 2019
Cost Accumulated
depreciation and amortization Net Cost Accumulated
depreciation and amortization Net
Property and equipment $ 2,366 $ 1,452 $ 914 $ 2,177 $ 1,277 $ 900
Intangible assets $ 18,791 $ 4,567 $ 14,224 $ 18,564 $ 2,766 $ 15,798
Software $ 5,308 $ 2,007 $ 3,301 $ 4,820 $ 1,616 $ 3,204

~~As of September 30, 2020, intangible~~Company monitors trade receivables, contract assets ~~net of amortization, includes $13,840 million of customer relationships and other amortizable intangible assets, $341 million of finite-lived trademarks,~~ as well as ~~$43 million~~other receivable balances and estimates the allowance for lifetime expected credit losses. Estimates of ~~non-amortizable indefinite-lived trademarks. Amortization expense with respect~~expected credit losses are based on historical collection experience and other factors, including those related to ~~these intangible assets was $602 million~~current market conditions and ~~$481 million~~events. The allowance for credit losses is separate from the ~~three months and $1,794 million and $794 million for the nine months ended September 30, 2020 and 2019, respectively.~~chargeback liability described in Note 7.

~~Goodwill~~

~~Changes~~While the COVID-19 pandemic did not result in ~~goodwill during~~a significant increase in the ~~nine months ended September 30, 2020, are summarized below (in millions). Prior-period amounts have been reclassified to conform to the new reportable segment presentation~~Company's expected credit loss allowance recorded as ~~discussed in Note 12.~~

Capital Corporate
Merchant Banking Market And
Solutions Solutions Solutions Other Total
Balance, December 31, 2019 $ 35,543 $ 12,225 $ 4,382 $ 92 $ 52,242
Goodwill attributable to acquisitions (11) 57 245 0 291
Foreign currency adjustments 16 (21) 39 0 34
Balance, September 30, 2020 $ 35,548 $ 12,261 $ 4,666 $ 92 $ 52,567

~~We assess goodwill for impairment on an annual basis during the fourth quarter or more frequently if circumstances indicate potential impairment. We concluded as a result~~ of ~~our fourth quarter 2019 step zero annual impairment tests~~March 31, 2021, it is reasonably possible that ~~it remained more likely than not that the fair value of each of our reporting units continued to exceed their carrying amounts. Due~~future developments related to the economic impact of the COVID-19 pandemic ~~we evaluated if events and circumstances as of September 30, 2020, indicated potential impairment. We performed~~could have a ~~qualitative assessment by examining factors most likely to affect our valuations and considered the~~material impact to our business from the COVID-19 pandemic. The factors examined involve significant use of management judgment and included, among others, (1) forecasted revenue, growth rates, operating margins, and capitalon management's estimates.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Property and Equipment, Intangible Assets and Computer Software

The following table shows the Company's consolidated financial statement details as of March 31, 2021, and December 31, 2020 (in millions):


	March 31, 2021						December 31, 2020
	Cost		Accumulated depreciation and amortization		Net		Cost		Accumulated depreciation and amortization		Net
Property and equipment	$	2,319	$	1,456	$	863	$	2,292	$	1,405	$	887
Intangible assets	$	19,117	$	5,802	$	13,315	$	19,141	$	5,213	$	13,928
Software	$	5,838	$	2,456	$	3,382	$	5,535	$	2,165	$	3,370

As of March 31, 2021, intangible assets, net of amortization, includes $12,947 million of customer relationships and $368 million of trademarks and other intangible assets. Amortization expense with respect to these intangible assets was $595 million and $598 million for the three months ended March 31, 2021 and 2020, respectively.

Goodwill

Changes in goodwill during the three months ended March 31, 2021, are summarized below (in millions).


					Capital		Corporate
	Merchant		Banking		Market		And
	Solutions		Solutions		Solutions		Other		Total
Balance, December 31, 2020	$	36,267	$	12,279	$	4,702	$	20	$	53,268
Foreign currency adjustments	(164)		(19)		(16)		0		(199)
Balance, March 31, 2021	$	36,103	$	12,260	$	4,686	$	20	$	53,069

We assess goodwill for impairment on an annual basis during the fourth quarter or more frequently if circumstances indicate potential impairment. For 2020, we completed our annual assessment for the Banking Solutions and Capital Market Solutions reporting units with qualitative assessments and concluded that it remained more likely than not that the fair value of each reporting unit continued to exceed its carrying value. For Merchant Solutions, we completed our 2020 annual assessment with a quantitative assessment due to the economic impact of the COVID-19 pandemic on our Merchant Solutions business and its primary operations having been recently acquired as part of the Worldpay acquisition completed on July 31, 2019. As a result of the annual assessment, the fair value of the reporting unit was estimated to be in excess of carrying amount by approximately 4%.

Due to the continued economic impact of the COVID-19 pandemic, we evaluated if events and circumstances as of March 31, 2021, indicated potential impairment. We performed a qualitative assessment by examining factors most likely to affect our reporting units' fair values and considered the impact to our business from the COVID-19 pandemic. The factors examined involve significant use of management judgment and included, among others, (1) forecast revenue, growth rates, operating margins, and capital expenditures used to calculate estimated future cash flows, (2) future economic and market conditions and (3) FIS' market capitalization.

Based on our interim impairment assessment as of ~~September 30, 2020,~~March 31, 2021, we concluded that it remained more likely than not that the fair value ofcontinues to exceed the carrying amount for each of our reporting ~~units continued to exceed their carrying amounts;~~units; therefore, goodwill was not impaired.

However, it is reasonably possible that future developments related to the economic impact of the COVID-19 pandemic on our Merchant Solutions business, such as an extended duration of the pandemic and/or government-imposed shutdowns, prolonged economic downturn or recession, or lack of governmental support for recovery, could have a material impact on one or more of the estimates and assumptions used to evaluate goodwill impairment and could result in future goodwill impairment.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Visa Europe and Contingent Value Rights

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

On September 17, 2020, the Company executed an amendment ("the amendment") with the former Legacy Worldpay owners to pay approximately one-third of the cash consideration component of the CVR liability, or $185 million, to the former Legacy Worldpay owners upon amendment execution, and to pay the remaining, approximately two-thirds of the cash consideration on October 12, 2027, subject to reduction due to losses incurred by Visa Inc. relating to the litigation. The partial payment of the cash consideration was recorded as a reduction of the CVR liability and reflected as Other financing activities, net, on the consolidated statement of cash flows for the nine months ended September 30, 2020. The amendment also removed the segregated cash requirement resulting in 0 restricted cash recorded at September 30, 2020, as compared to $540 million recorded at December 31, 2019, reflected in Other noncurrent assets on the consolidated balance sheet. Additionally, as Visa Inc. releases preferred stock for conversion into common stock, over time and subject to any losses incurred by Visa Inc. relating to the litigation, 90% of the net-of-tax proceeds from the sale of the common stock will be paid to the former Legacy Worldpay owners in accordance with the amendment. A payment was made in the fourth quarter of 2020 related to Visa Inc.'s release of preferred stock in September 2020.sheets.

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 component of the 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, as well as the expected timing of future preferred stock releases for conversion into common stock and an estimate of the potential losses that will result from the ongoing litigation involving Visa Europe, which are unobservable. The fair value of the preferred stock was ~~$593~~$50 million and $70 million at ~~September 30, 2020, with $540 million recorded as Prepaid expenses~~March 31, 2021, and other current assets for the preferred stock that has been released to date and $53 million recorded as Other noncurrent assets for the remaining preferred stock. The fair value of the preferred stock was $400 million at December 31, ~~2019,~~2020, respectively, recorded in Other noncurrent ~~assets.~~

The Company also records the cash consideration component of the CVR liability at fair value under ASC 825. As a result of the amendment, the estimated fair value of the cash consideration component of the CVR liability is determined using Level 3-type measurements, including a discount rate basedassets on the ~~bond yield for the Company's credit rating and remaining payment term as the significant unobservable input.~~consolidated balance sheets. The fair value of the CVR liability was ~~$779~~$377 million and $401 million at ~~September 30, 2020, with $394 million recorded as Accounts payable, accrued~~March 31, 2021, and other liabilities for the preferred stock that has been released to date and $385 million recorded as Other noncurrent liabilities for the remaining preferred stock and cash consideration components. The fair value of the CVR liability was $838 million at December 31, ~~2019,~~2020, respectively, recorded in Other noncurrent liabilities on the consolidated balance ~~sheet.~~sheets. The net change in fair value was $5 million and $(20) million for the three months ended March 31, 2021 and 2020, respectively, recorded in Other income (expense), net on the consolidated statements of earnings (loss).

(4) Deferred Contract Costs

Origination and fulfillment costs from contracts with customers capitalized as of March 31, 2021, and December 31, 2020, consist of the following (in millions):


	March 31, 2021		December 31, 2020
Contract costs on implementations in progress	$	186	$	245
Contract origination costs on completed implementations, net	540		470
Contract fulfillment costs on completed implementations, net	233		202
Total Deferred contract costs, net	$	959	$	917

Amortization of deferred contract costs on completed implementations was $68 million and $51 million during the three months ended March 31, 2021 and 2020, respectively, and there were 0 significant impairment losses in relation to the costs capitalized for the periods presented.

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Pursuant to ASC 825, the Company remeasures the fair value of the preferred stock and CVR liability each reporting period. The net change in fair value was $48 million and $74 million during the three and nine months ended September 30, 2020, respectively, recorded in Other income (expense), net on the consolidated statements of earnings.

~~(6) Deferred Contract Costs~~

~~Origination and fulfillment costs from contracts with customers capitalized as of September 30, 2020, and December 31, 2019, consist of the following (in millions):~~

September 30, 2020 December 31, 2019
Contract costs on implementations in progress $ 187 $ 138
Contract origination costs on completed implementations, net 472 352
Contract fulfillment costs on completed implementations, net 192 177
Total Deferred contract costs, net $ 851 $ 667

Amortization of deferred contract costs on completed implementations was $56 million and $48 million during the three months and $162 million and $136 million during the nine months ended September 30, 2020 and 2019, respectively, and there were 0 significant impairment losses in relation to the costs capitalized for the periods presented.

~~(7)~~(5) Debt

Long-term debt as of ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, consists of the following (in millions):


		September 30, 2020								March 31, 2021
			Weighted								Weighted
			Average								Average
		Interest	Interest		September 30,		December 31,			Interest	Interest		March 31,		December 31,
		Rates	Rate	Maturities	2020		2019			Rates	Rate	Maturities	2021		2020
Fixed Rate Notes	Fixed Rate Notes								Fixed Rate Notes
Senior USD Notes	Senior USD Notes	3.0% - 5.0%	3.8%	2023 - 2048	$	4,938	$	4,938	Senior USD Notes	0.4% - 4.8%	1.9%	2023 - 2048	$	6,909	$	4,938
Senior Euro Notes	Senior Euro Notes	0.1% - 3.0%	1.0%	2021 - 2039	9,086		8,694		Senior Euro Notes	0.1% - 3.0%	1.3%	2022 - 2039	7,916		8,891
Senior GBP Notes	Senior GBP Notes	1.7% - 3.4%	2.7%	2022 - 2031	2,380		2,440		Senior GBP Notes	1.7% - 3.4%	1.5%	2022 - 2031	1,686		2,526
Senior Euro Floating Rate Notes	Senior Euro Floating Rate Notes		0.0%	2021	586		561		Senior Euro Floating Rate Notes		0.0%	2021	523		613
Revolving Credit Facility (1)	Revolving Credit Facility (1)		0%	2023	0		600		Revolving Credit Facility (1)		0%	2026	0		251
Other	Other				55		136		Other				(132)		46
Total long-term debt, including current portion	Total long-term debt, including current portion				17,045		17,369		Total long-term debt, including current portion				16,902		17,265
Current portion of long-term debt	Current portion of long-term debt				(1,832)		(140)		Current portion of long-term debt				(602)		(1,314)
Long-term debt, excluding current portion	Long-term debt, excluding current portion				$	15,213	$	17,229	Long-term debt, excluding current portion				$	16,300	$	15,951

(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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

Short-term borrowings as of ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019, consists~~2020, consist of the following (in millions):

September 30, 2020
Weighted
Average
Interest September 30, December 31,
Rate Maturities 2020 2019
Euro-commercial paper notes ("ECP Notes") (0.1) % Up to 183 days $ 3,097 $ 2,523
U.S. commercial paper notes ("USCP Notes") 0 % Up to 397 days 0 200
Other 47 100
Total Short-term borrowings $ 3,144 $ 2,823


	March 31, 2021
	Weighted
	Average
	Interest			March 31,		December 31,
	Rate		Maturities	2021		2020
Euro-commercial paper notes ("ECP Notes")	(0.5)	%	Up to 183 days	$	243	$	861
U.S. commercial paper notes ("USCP Notes")	0.3	%	Up to 397 days	2,129		1,745
Other				165		144
Total Short-term borrowings				$	2,537	$	2,750

As of ~~September 30, 2020,~~March 31, 2021, the ~~weighted-average~~weighted average interest rate of the Company's outstanding debt was ~~1.6%~~1.0%, including the impact of interest rate swaps (see Note 8)6).

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~~swaps discussed below and net unamortized non-cash bond premiums and discounts of ~~$24~~$(141) million as of ~~September 30, 2020~~March 31, 2021 (in millions):


		Total			Total
2020 remaining period		$	19
2021		1,834
2021 remaining period				2021 remaining period	$	578
2022	2022	1,595		2022	1,623
2023	2023	2,189		2023	2,234
2024	2024	993		2024	1,343
2025				2025	739
Thereafter	Thereafter	10,534		Thereafter	10,646
Total principal payments	Total principal payments	17,164		Total principal payments	17,163
Debt issuance costs, net of accumulated amortization	Debt issuance costs, net of accumulated amortization	(95)		Debt issuance costs, net of accumulated amortization	(120)
Total long-term debt	Total long-term debt	$	17,069	Total long-term debt	$	17,043

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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 on March 2, 2026.

Senior Notes

In March 2021, pursuant to cash tender offers and make-whole redemptions, FIS purchased and redeemed an aggregate principal amount of $5.1 billion in Senior Notes, comprised of $3,529 million in Senior USD Notes, $600 million in Senior Euro Notes, $871 million in Senior GBP Notes, and $66 million in Senior Euro Floating Rate Notes, with interest rates ranging from 0.0% to 5.0% and maturities ranging from 2021 to 2029, resulting in a loss on extinguishment of debt of approximately $528 million, recorded in Other income (expense), net on the consolidated statement of earnings (loss), relating to tender premiums, make-whole amounts, and fees; the write-off of unamortized bond discounts and debt issuance costs; and losses on related derivative instruments. The Company funded the purchase and redemption of the Senior Notes with proceeds on borrowings from the issuance and sale of Senior USD Notes on March 2, 2021.

On March 2, 2021, FIS completed the issuance and sale of Senior USD Notes with an aggregate principal amount of $5.5 billion with interest rates ranging from 0.4% to 3.1% and maturities ranging from 2023 to 2041 ("new Senior USD Notes"). The proceeds from the debt issuance were subsequently used to purchase and redeem the Senior Notes discussed above with the remainder used to repay a portion of our commercial paper notes. The new Senior USD Notes are subject to customary covenants, including, among others, customary events of default. The new Senior USD Notes also include redemption provisions at ~~September 21, 2023.~~the option of FIS, similar to the other Senior Notes.

Revolving Credit Facility

On March 2, 2021, FIS entered into an amendment to the Restated Credit Agreement to amend certain covenant provisions, revise lender commitments for certain counterparties, and extend the scheduled maturity date to March 2, 2026. As of ~~September 30, 2020,~~March 31, 2021, the borrowing capacity ~~remaining~~ under the Revolving Credit Facility was ~~$2,401~~$3,126 million (net of ~~$3,097~~$2,372 million of capacity backstopping our commercial paper notes and $2 million in outstanding letters of credit issued under the Revolving Credit Facility).

Fair Value of Debt

The fair value of the Company's long-term debt ~~using Level 2-type measurements~~ is estimated to be approximately ~~$1,422~~$650 million and ~~$900~~$1,640 million higher than the carrying value, excluding the fair value of the interest rate ~~swap~~swaps and unamortized discounts, ~~at September 30, 2020,~~as of March 31, 2021, and December 31, ~~2019,~~2020, respectively.

~~(8)~~(6) Financial Instruments

Fair Value ~~Hedge~~Hedges

The Company holds an interest rate ~~swap~~swaps with aaggregate notional amounts of $1,604 million, £925 million and €500 million ~~notional value~~at March 31, 2021, and $1,000 million and €500 million at December 31, 2020, converting the interest rate exposure on certain of the Company's Senior USD Notes, Senior GBP Notes and Senior Euro Notes, ~~due 2024~~as applicable, from fixed to variable. ~~This swap is~~These swaps are designated as a fair value ~~hedge~~hedges for accounting purposes with ana net liability fair value of $96 million reflected as a decrease in the long-term debt balance at March 31, 2021, and a net asset fair value of ~~$15 million and~~ $10 million ~~at September 30, 2020, and December 31, 2019, respectively,~~ reflected as an increase in the ~~hedged~~long-term debt balance at December 31, 2020 (see Note 7)5).

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

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 and related income tax (expense) benefit within Other comprehensive earnings (loss), net of tax, on the consolidated statements of comprehensive earnings (loss) of ~~$(597)~~$321 million and ~~$185~~$535 million during the three months ended March 31, 2021 and ~~$(263) million and $198 million, during the nine months ended September 30,~~ 2020, ~~and 2019,~~ respectively. No ineffectiveness has been recorded on the net investment hedges.

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Foreign Currency-Denominated Debt Designations

The Company designates certain foreign currency-denominated debt as net investment hedges of its investment in Euro- and Pound Sterling-denominated operations. As of ~~September 30,~~March 31, 2021, and December 31, 2020, an aggregate ~~€10,904~~€6,968 million and €7,466 million, respectively, was designated as a net investment hedge of the Company's investment in Euro-denominated operations related to Senior Euro Notes with maturities ranging from 2022 to 2039 and ECP Notes. As of December 31, 2020, an additional €1,000 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 and Senior Euro Notes with ~~maturities ranging from~~a 2021 ~~to 2039~~maturity. As of March 31, 2021, and ~~ECP Notes, and~~December 31, 2020, an aggregate £1,203 million and £1,850 million, respectively, 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

The Company holds cross-currency interest rate swaps and designates them as net investment hedges of its investment in Euro- and Pound Sterling-denominated operations.

As of ~~September 30,~~March 31, 2021, and December 31, 2020, an aggregate notional ~~amount~~amounts of ~~€2,006~~€5,906 million ~~was~~and €4,508 million, respectively, were designated as a net investment ~~hedge~~hedges of the Company's investment in Euro-denominated operations, and an aggregate notional ~~amount~~amounts of ~~£556~~£2,045 million ~~was~~and £565 million, respectively, were designated as a net investment ~~hedge~~hedges of the Company's Pound Sterling-denominated operations. The ~~fair value of the~~ cross-currency interest rate ~~swaps was a~~swap fair values were net ~~$76~~liabilities of $206 million and ~~$167~~$306 million ~~liability~~ at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, respectively.

~~(9)~~(7) Commitments and Contingencies

Reliance Trust Claims

Reliance Trust Company ("Reliance"), the Company's subsidiary, is 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. On behalf of the Plan participants, plaintiffs in the action, which was filed in December 2015, ~~seek~~sought damages and attorneys' fees, as well as equitable relief, against Reliance and the Plan's sponsor and record-keeper for alleged breaches of fiduciary duty under the Employee Retirement Income Security Act of 1974 ("ERISA"). At a non-jury trial conducted in March 2020, Reliance vigorously defended the action and contended that no breaches of fiduciary duty or prohibited transactions occurred and that Plan participants suffered no damages. At trial, Plaintiffs claimed damages of approximately $127 million against all defendants. On October 12, 2020, Reliance and plaintiffs entered into a settlement agreement, which iswas subject to final court approval, to settle all allegations and claims asserted in the action for $39.8 million without equitable relief. On October 14, 2020, the Court preliminarily approved the settlement agreement. In the settlement agreement, Reliance admitted no wrongdoing or liability with respect to any of the allegations or claims and maintains that the Plan was managed, operated, and administered during its tenure as the Plan's discretionary trustee in full compliance with ERISA and applicable regulations. ~~Upon final court approval, all allegations and claims will be settled and released with prejudice.~~ The Company recorded a liability for the agreed settlement amount of $39.8 million and a corresponding loss in Other income (expense), net on the consolidated statement of earnings ~~for~~during the ~~three and nine months~~quarter ended September 30, 2020. On March 8, 2021, the Court entered an order approving the settlement and entered a final judgment dismissing the action with prejudice. Reliance paid the full settlement amount in April 2021 and has met its monetary obligations under the settlement agreement.

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.

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

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 14 claims against Servicos asserting potential tax liabilities of approximately $11 million. There are potentially 24 additional claims against Transpev/Prosegur for which Servicos is named

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as a co-defendant or may be named but for which Servicos has not yet been served. These additional claims amount to approximately ~~$34~~$30 million, making the total potential exposure for all 38 claims approximately ~~$45~~$41 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~~Tax Receivable Agreement

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 TRA obligations not subject to the Amendment 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.

Obligations recorded in our consolidated financial statements pursuant to the TRA are based on estimates of future deductions and future tax rates and, in the case of the obligations subject to the Amendment, reflect management's expectation that the options will be exercised. ~~In January 2020, the Company exercised its first call option pursuant to the Amendment, which results in fixed cash payments to Fifth Third of $42 million.~~ 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.

The consolidated balance ~~sheet~~sheets as of ~~September 30,~~March 31, 2021, and December 31, 2020, ~~includes~~include a total liability of ~~$543~~$448 million and $532 million, respectively, relating to the TRA. ~~The following table summarizes our estimated payment obligation timing under the TRA as of September 30, 2020 (in millions):~~

Payments Due in
Type of Obligation Total 2020 Remaining Period 1-3 Years 3-5 Years More than 5 Years
Obligations under TRA $ 543 $ 11 $ 267 $ 252 $ 13

Chargeback Liability

Through services offered in our Merchant Solutions segment, the Company is exposed to potential losses from merchant-related chargebacks. A chargeback occurs when a dispute between a cardholder and a merchant, including a claim for non-delivery of the product or service by the merchant, is not resolved in favor of the merchant and the transaction is charged back to the merchant resulting in a refund of the purchase price to the cardholder. If the Company is unable to collect this chargeback amount from the merchant due to closure, bankruptcy or other reasons, the Company bears the loss for the refund paid to the cardholder. The risk of chargebacks is typically greater for those merchants that promise future delivery of goods and services rather than delivering goods or rendering services at the time of payment. The economic impact of the COVID-19 pandemic has not resulted in material chargeback losses as of ~~September 30, 2020;~~March 31, 2021; however, it is reasonably possible that the Company has incurred or may incur significant losses related to future chargebacks. Due to the unprecedented nature of the pandemic and the numerous current and future uncertainties that may impact any potential chargeback losses, and considering that the Company has no historical experience with similar uncertainties, a reasonable estimate of the possible accrual for future chargeback losses or range of losses cannot be made.

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

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, in which case it 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.

~~(10)~~(8) Stock Compensation Plans

On January 1, 2021, the Company established a Qualified Retirement Equity Program that modified our existing stock compensation plans. The modification implemented a new retirement policy that permits retirees that meet certain eligibility

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criteria to continue vesting in unvested equity awards in accordance with the terms of the respective grant agreements, resulting in accelerated stock compensation expense for those employees meeting the definition of retirement eligible. During the quarter ended March 31, 2021, the Company recorded $104 million in accelerated stock compensation expense included in Selling, general, and administrative expenses in the consolidated statement of earnings (loss) to reflect the impact of the modification on unvested equity awards outstanding at January 1, 2021.

(9) Related-Party Transactions

The Company holds a noncontrolling ownership stake in Cardinal Holdings ("Cardinal"), which operates the Capco consulting business. FIS' ownership stake in Cardinal was 36% at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019, was 37%.~~2020. The ownership stake in Cardinal is recorded as an equity method investment included within Other noncurrent assets on the consolidated balance sheets. The carrying value of this equity method investment was $140 million and $137 million, at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019, was $134 million and $142 million,~~2020, respectively. FIS provides ongoing management consulting services and other services to Cardinal. FIS also purchases services and software licenses from Cardinal from time to time. Amounts transacted through these agreements were not significant to the ~~2020~~2021 and ~~2019~~2020 periods presented.

On April 29, 2021, we sold our ownership stake in Cardinal for net cash proceeds of approximately $367 million resulting from an acquisition transaction of the Capco consulting business by Wipro Ltd. We will record the sale transaction during the second quarter of 2021.

~~(11)~~

(10) Net Earnings (Loss) per Share

The basic weighted average shares and common stock equivalents for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ were computed using the treasury stock method.

The following table summarizes net earnings (loss) and net earnings (loss) per share attributable to FIS common stockholders for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (in millions, except per share amounts):

Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
Net earnings attributable to FIS common stockholders $ 20 $ 154 $ 54 $ 456
Weighted average shares outstanding — basic 620 516 618 388
Plus: Common stock equivalent shares 7 8 8 8
Weighted average shares outstanding — diluted 627 524 626 396
Net earnings per share-basic attributable to FIS common stockholders $ 0.03 $ 0.30 $ 0.09 $ 1.18
Net earnings per share-diluted attributable to FIS common stockholders $ 0.03 $ 0.29 $ 0.09 $ 1.15


	Three months ended March 31,
	2021		2020
Net earnings (loss) attributable to FIS common stockholders	$	(373)	$	15
Weighted average shares outstanding-basic	621		616
Plus: Common stock equivalent shares	0		9
Weighted average shares outstanding- diluted	621		625
Net earnings (loss) per share-basic attributable to FIS common stockholders	$	(0.60)	$	0.02
Net earnings (loss) per share-diluted attributable to FIS common stockholders	$	(0.60)	$	0.02

~~Options~~The diluted net loss per share for the three months ended March 31, 2021, did not include the effect of common stock equivalent shares of 5 million because the effect would have been anti-dilutive. The diluted net earnings per share for the three months ended March 31, 2021 and 2020, did not include options to purchase less than 1 million shares of our common stock for the three months and approximately 2 million and 1 million shares for the nine months ended September 30, 2020 and 2019, respectively, were not included in the computation of diluted earnings per share because they were anti-dilutive.

~~On July 20, 2017,~~In January 2021, our Board of Directors approved a ~~plan authorizing repurchases of~~new share repurchase program under which it authorized the Company to repurchase up to ~~$4.0 billion~~100 million shares of our ~~outstanding~~ common stock inat management's discretion from time to time on the open market ~~at prevailing market prices~~ or in privately negotiated transactions and through ~~December 31, 2020. This~~Rule 10b5-1 plans. The new repurchase program has no expiration date and may be suspended for periods, amended or discontinued at any time. Under the new share repurchase ~~authorization replaced any existing share repurchase authorization. Approximately $2.3 billion of plan capacity remained~~program approximately 97 million shares remain available for ~~repurchases~~repurchase as of ~~September 30, 2020. Management temporarily suspended share repurchases as a result of the Worldpay transaction to accelerate debt repayment.~~March 31, 2021.

~~(12)~~(11) Segment Information

FIS reports its financial performance based on the following segments: Merchant Solutions, Banking Solutions, Capital Market Solutions and Corporate and Other. ~~As the~~The Company ~~continues to execute on its integration workflows and optimize~~regularly assesses its portfolio of assets ~~the Company~~and reclassified certain non-strategic businesses from the Merchant Solutions, Banking Solutions, and ~~Banking~~Capital Market Solutions segments into the Corporate ~~and Other segment in the quarter ended March 31, 2020, and recast all prior-period segment information presented. Below is a summary of each segment.~~

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FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

and Other segment during the year ended December 31, 2020, and recast all prior-period segment information presented. 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~~card-based payments, contactless card and ~~prepaid payments~~mobile wallet, originated at a physical point of sale, as well as ~~contactless card, mobile wallet, and card-not present~~card-not-present payments in eCommerce and mobile environments. Merchant services include all aspects of payment processing, including authorization and settlement, customer service, chargeback and retrieval processing, ~~reporting for~~ electronic payment ~~transactions~~transaction reporting and network 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~~global enterprises, 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~~with core processing software, transaction processing software and ~~ancillary~~complementary applications ~~solutions; digital solutions; fraud, risk management~~ and ~~compliance solutions; electronic funds transfer and network~~ services, ~~solutions; payment solutions; wealth and retirement solutions; item~~many of which interact directly with the core processing ~~and output services~~applications. We sell these solutions and services ~~capitalizing~~ on ~~the continuing trend to outsource these solutions.~~either a bundled or stand-alone basis. 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~~100 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.

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 recordkeeping, 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 procuring fully outsourced end-to-end solutions. Our long-established relationships with many of these financial and commercial institutions 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.

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.~~businesses that we plan to wind down or sell. 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~~During the three months ended March 31, 2021 and 2020, the Company recorded acquisition and integration costs primarily related to the Worldpay acquisition, as well as certain other costs associated with data center consolidation activities totaling ~~$20~~$15 million and ~~$25~~$18 million, ~~for the three months ended and $60 million and $50 million for the nine months ended September 30, 2020 and 2019,~~ respectively, and incremental ~~charges~~costs directly related to COVID-19 of ~~$41~~$9 million and ~~$56~~$3 million, ~~for~~respectively. For the three ~~and nine~~ months ended ~~September 30, 2020, respectively.~~March 31, 2021, we also recorded $104 million in accelerated stock compensation expense to reflect the impact of establishing a Qualified Retirement Equity Program that modified unvested equity awards outstanding at January 1, 2021 (see Note 8).

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FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Adjusted EBITDA

Adjusted EBITDA is a measure of segment profit or loss that 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 net earnings (loss) before net interest expense, net other income (expense), income tax provision (benefit), equity method investment earnings (loss), and depreciation and amortization, and excludes certain ~~non-operating items.~~costs and other transactions that management deems non-operational in nature. The ~~non-operating~~non-operational items affecting the segment profit measure generally include purchase accounting adjustments as well as acquisition, integration and certain other costs. Adjusted EBITDA also excludes incremental and direct costs resulting from the COVID-19 pandemic. 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.

For the three months ended ~~September 30, 2020~~March 31, 2021 (in millions):


						Capital											Capital
		Merchant		Banking		Market		Corporate					Merchant		Banking		Market		Corporate
		Solutions		Solutions		Solutions		and Other		Total			Solutions		Solutions		Solutions		and Other		Total
Revenue	Revenue	$	1,017	$	1,507	$	626	$	47	$	3,197	Revenue	$	966	$	1,540	$	625	$	92	$	3,223
Operating expenses	Operating expenses	(604)		(986)		(411)		(965)		(2,966)		Operating expenses	(603)		(1,018)		(419)		(1,084)		(3,124)
Depreciation and amortization (including purchase accounting amortization)	Depreciation and amortization (including purchase accounting amortization)	74		132		71		654		931		Depreciation and amortization (including purchase accounting amortization)	88		145		82		638		953
Acquisition, integration and other costs	Acquisition, integration and other costs	0		0		0		195		195		Acquisition, integration and other costs	0		0		0		256		256
Adjusted EBITDA	Adjusted EBITDA	$	487	$	653	$	286	$	(69)	$	1,357	Adjusted EBITDA	$	451	$	667	$	288	$	(98)	$	1,308

Adjusted EBITDA	Adjusted EBITDA									$	1,357	Adjusted EBITDA									$	1,308
Depreciation and amortization	Depreciation and amortization									(238)		Depreciation and amortization									(279)
Purchase accounting amortization	Purchase accounting amortization									(693)		Purchase accounting amortization									(674)
Acquisition, integration and other costs	Acquisition, integration and other costs									(195)		Acquisition, integration and other costs									(256)
Interest expense, net	Interest expense, net									(84)		Interest expense, net									(74)
Other income (expense), net	Other income (expense), net									(4)		Other income (expense), net									(493)
(Provision) benefit for income taxes	(Provision) benefit for income taxes									(121)		(Provision) benefit for income taxes									97
Equity method investment earnings (loss)	Equity method investment earnings (loss)									0		Equity method investment earnings (loss)									1
Net earnings attributable to noncontrolling interest	Net earnings attributable to noncontrolling interest									(2)		Net earnings attributable to noncontrolling interest									(3)
Net earnings attributable to FIS common stockholders										$	20
Net earnings (loss) attributable to FIS common stockholders												Net earnings (loss) attributable to FIS common stockholders									$	(373)
Capital expenditures	Capital expenditures	$	92	$	130	$	61	$	10	$	293	Capital expenditures	$	104	$	106	$	54	$	34	$	298

~~(1)Capital expenditures for the three months ended September 30, 2020, include $21 million in other financing obligations for certain hardware and software.~~

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FIDELITY NATIONAL INFORMATION SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

For the three months ended ~~September 30, 2019 (in millions):~~

Capital
Merchant Banking Market Corporate
Solutions Solutions Solutions and Other Total
Revenue $ 705 $ 1,443 $ 611 $ 63 $ 2,822
Operating expenses (383) (943) (388) (968) (2,682)
Depreciation and amortization (including purchase accounting amortization) 43 127 57 525 752
Acquisition, integration and other costs 0 0 0 213 213
Asset impairments 0 0 0 87 87
Adjusted EBITDA $ 365 $ 627 $ 280 $ (80) $ 1,192
Adjusted EBITDA $ 1,192
Depreciation and amortization (206)
Purchase accounting amortization (546)
Acquisition, integration and other costs (213)
Asset impairments (87)
Interest expense, net (95)
Other income (expense), net 164
(Provision) benefit for income taxes (48)
Equity method investment earnings (loss) (5)
Net earnings attributable to noncontrolling interest (2)
Net earnings attributable to FIS common stockholders $ 154
Capital expenditures (1) $ 47 $ 156 $ 59 $ 21 $ 283

~~(1)Capital expenditures for the three months ended September 30, 2019, include $24 million in other financing obligations for certain hardware and software.~~

~~For the nine months ended September 30,~~March 31, 2020 (in millions):


						Capital											Capital
		Merchant		Banking		Market		Corporate					Merchant		Banking		Market		Corporate
		Solutions		Solutions		Solutions		and Other		Total			Solutions		Solutions		Solutions		and Other		Total
Revenue	Revenue	$	2,764	$	4,447	$	1,886	$	139	$	9,236	Revenue	$	935	$	1,444	$	597	$	102	$	3,078
Operating expenses	Operating expenses	(1,747)		(2,963)		(1,236)		(2,905)		(8,851)		Operating expenses	(597)		(961)		(392)		(1,020)		(2,970)
Depreciation and amortization (including purchase accounting amortization)	Depreciation and amortization (including purchase accounting amortization)	224		392		203		1,941		2,760		Depreciation and amortization (including purchase accounting amortization)	85		129		62		638		914
Acquisition, integration and other costs	Acquisition, integration and other costs	0		0		0		616		616		Acquisition, integration and other costs	0		0		0		225		225
Adjusted EBITDA	Adjusted EBITDA	$	1,241	$	1,876	$	853	$	(209)	$	3,761	Adjusted EBITDA	$	423	$	612	$	267	$	(55)	$	1,247

Adjusted EBITDA	Adjusted EBITDA									$	3,761	Adjusted EBITDA									$	1,247
Depreciation and amortization	Depreciation and amortization									(705)		Depreciation and amortization									(230)
Purchase accounting amortization	Purchase accounting amortization									(2,055)		Purchase accounting amortization									(684)
Acquisition, integration and other costs	Acquisition, integration and other costs									(616)		Acquisition, integration and other costs									(225)
Interest expense										(252)
Interest expense, net												Interest expense, net									(80)
Other income (expense), net	Other income (expense), net									31		Other income (expense), net									(39)
(Provision) benefit for income taxes	(Provision) benefit for income taxes									(94)		(Provision) benefit for income taxes									30
Equity method investment earnings (loss)	Equity method investment earnings (loss)									(9)		Equity method investment earnings (loss)									(1)
Net earnings attributable to noncontrolling interest	Net earnings attributable to noncontrolling interest									(7)		Net earnings attributable to noncontrolling interest									(3)
Net earnings attributable to FIS common stockholders	Net earnings attributable to FIS common stockholders									$	54	Net earnings attributable to FIS common stockholders									$	15
Capital expenditures(1)	Capital expenditures(1)	$	272	$	383	$	165	$	39	$	859	Capital expenditures(1)	$	106	$	132	$	58	$	10	$	306

~~(1)Capital expenditures for the nine months ended September 30, 2020, include $21 million in other financing obligations for certain hardware and software.~~

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~~FIDELITY NATIONAL INFORMATION SERVICES, INC.~~

~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~For the nine months ended September 30, 2019 (in millions):~~

Capital
Merchant Banking Market Corporate
Solutions Solutions Solutions and Other Total
Revenue $ 852 $ 4,173 $ 1,778 $ 188 $ 6,991
Operating expenses (503) (2,810) (1,149) (1,683) (6,145)
Depreciation and amortization (including purchase accounting amortization) 48 375 161 904 1,488
Acquisition, integration and other costs 0 0 0 293 293
Asset impairments 87 87
Adjusted EBITDA $ 397 $ 1,738 $ 790 $ (211) $ 2,714
Adjusted EBITDA $ 2,714
Depreciation and amortization (594)
Purchase accounting amortization (894)
Acquisition, integration and other costs (293)
Asset impairments (87)
Interest expense, net (242)
Other income (expense), net (8)
(Provision) benefit for income taxes (119)
Equity method investment earnings (loss) (18)
Net earnings attributable to noncontrolling interest (3)
Net earnings attributable to FIS common stockholders $ 456
Capital expenditures (1) $ 50 $ 358 $ 167 $ 28 $ 603

~~(1)Capital expenditures for the nine months ended September 30, 2019, include $59 million in other financing obligations for certain hardware and software.~~

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with Item 1. Condensed Consolidated Financial Statements (Unaudited) and the Notes thereto included elsewhere in this report. The statements contained in this Form 10-Q or in our other documents or in oral presentations or other management statements that are not purely historical are forward-looking statements within the meaning of the U.S. federal securities laws. Statements that are not historical facts, including statements about anticipated financial outcomes, including any earnings guidance or projections of the Company, projected revenue or expense synergies, business and market conditions, outlook, foreign currency exchange rates, deleveraging plans, expected dividends and share repurchases, the Company's sales pipeline and anticipated profitability and growth, as well as other statements about our expectations, beliefs, intentions, or strategies regarding the future, or other characterizations of future events or circumstances, are forward-looking statements. In many cases, forward-looking statements can be identified by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," or "continue," or the negative of these terms and other comparable terminology. These statements relate to future events and our future results and involve a number of risks and uncertainties. Forward-looking statements are based on management’s beliefs as well as assumptions made by, and information currently available to, management.

Actual results, performance or achievement could differ materially from those contained in these forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include the following, without limitation:

•the outbreak or recurrence of the novel coronavirus ("COVID-19") and measures to reduce its spread, including the impact of governmental or voluntary actions such as business shutdowns and stay-at-home orders;

•the duration, including any recurrence, of the COVID-19 pandemic and its impacts, including the ~~general~~ impact of an economic recession in certain markets, reductions in consumer and business spending, and instability of the financial markets in heavily impacted areas across the globe;

•the economic and other impacts of COVID-19 on our clients which affect the sales of our solutions and services and the implementation of such solutions;

•the risk of losses in the event of defaults by merchants (or other parties) to which we extend credit in our card settlement operations or in respect of any chargeback liability, either of which could adversely impact liquidity and results of operations;

•changes in general economic, business and political conditions, including those resulting from COVID-19 or other pandemics, intensified international hostilities, acts of terrorism, changes in either or both the U.S. and international lending, capital and financial markets and currency fluctuations;

•the risk that the Worldpay transaction will not provide the expected benefits or that we will not be able to achieve the ~~cost or~~ revenue synergies ~~anticipated;~~

•~~the risk that the integration of FIS and Worldpay will be more difficult, time-consuming or expensive than~~ anticipated;

•the risk that other acquired businesses will not be integrated successfully or that the integration will be more costly or more time-consuming and complex than anticipated;

•the risk that cost savings and other synergies anticipated to be realized from other acquisitions may not be fully realized or may take longer to realize than expected;

•the risks of doing business internationally;

•the effect of legislative initiatives or proposals, statutory changes, governmental or other applicable regulations and/or changes in industry requirements, including privacy and cybersecurity laws and regulations;

•the risks of reduction in revenue from the elimination of existing and potential customers due to consolidation in, or new laws or regulations affecting, the banking, retail and financial services industries or due to financial failures or other setbacks suffered by firms in those industries;

•changes in the growth rates of the markets for our solutions;

•failures to adapt our solutions to changes in technology or in the marketplace;

•internal or external security breaches of our systems, including those relating to unauthorized access, theft, corruption or loss of personal information and computer viruses and other malware affecting our software or platforms, and the reactions of customers, card associations, government regulators and others to any such events;

•the risk that implementation of software, including software updates, for customers or at customer locations or employee error in monitoring our software and platforms may result in the corruption or loss of data or customer information, interruption of business operations, outages, exposure to liability claims or loss of customers;

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•the reaction of current and potential customers to communications from us or regulators regarding information security, risk management, internal audit or other matters;

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•the risk that ~~election results~~policies and resulting actions of the current administration in the U.S. may result in additional ~~regulation~~regulations and executive orders, as well as additional regulatory and tax costs;

•competitive pressures on pricing related to the decreasing number of community banks in the U.S., the development of new disruptive technologies competing with one or more of our solutions, increasing presence of international competitors in the U.S. market and the entry into the market by global banks and global companies with respect to certain competitive solutions, each of which may have the impact of unbundling individual solutions from a comprehensive suite of solutions we provide to many of our customers;

•the failure to innovate in order to keep up with new emerging technologies, which could impact our solutions and our ability to attract new, or retain existing, customers;

•an operational or natural disaster at one of our major operations centers;

•failure to comply with applicable requirements of payment networks or changes in those requirements;

•fraud by merchants or bad actors; and

•other risks detailed elsewhere in the Risk Factors and other sections of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020, in our Quarterly Reports on Form 10-Q and in our other filings with the Securities and Exchange Commission.

Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition, results of operations and prospects. Accordingly, readers should not place undue reliance on our forward-looking statements. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Except as required by applicable law or regulation, we do not undertake (and expressly disclaim) any obligation and do not intend to publicly update or review any of our forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

FIS is a leading provider of technology solutions for merchants, banks, and capital markets firms globally. Our employees are dedicated to advancing the way the world pays, banks and invests by applying our scale, deep expertise and data-driven insights. We help our clients use technology in innovative ways to solve business-critical challenges and deliver superior experiences for their customers. Headquartered in Jacksonville, Florida, FIS is a Fortune 500® company and is a member of Standard & Poor's 500® Index.

We have grown organically as well as through acquisitions which have contributed critical solutions and services that complement or enhance our existing offerings, diversifying our revenue by ~~customer,~~client, geography and service ~~offering.~~offering, and opening new and profitable adjacent markets that align with our core solution's strengths. FIS evaluates possible acquisitions that might contribute to our growth or performance on an ongoing basis. We also develop new solutions ~~which~~that enhance our client offerings. Through our acquisition of Worldpay on July 31, 2019, FIS is now a global leader in financial technology solutions and services for merchants, as well as for banks and capital markets. See Note 3 to the consolidated financial statements for additional discussion of the Worldpay acquisition.

FIS reports its financial performance based on the following segments: Merchant Solutions ("Merchant"), Banking Solutions ("Banking"), Capital Market Solutions ("Capital Markets") and Corporate and Other. A description of our segments is included in Note 1211 to the consolidated financial statements. Revenue by segment and the Adjusted EBITDA of our segments are discussed below in Segment Results of Operations.

Business Trends and Conditions

Our revenue is primarily derived from a combination of technology and processing services, ~~payment~~ transaction fees, professional services and software license fees. While we are a global company and do business around the world, the majority of our revenue is generated by clients in the U.S. The majority of our international revenue is generated by clients in the U.K., Germany, Australia, France, Canada, Brazil and India. In addition, the majority of our revenue has historically been recurring and has been provided under multi-year Banking and Capital Markets contracts that contribute relative stability to our revenue stream. These services, in general, are considered critical to our clients' operations. Although Merchant has a lesser percentage of multi-year contracts, substantially all of ~~its~~our Merchant revenue is ~~recurring. A considerable portion of our Merchant~~also recurring, ~~revenue, and to a lesser extent a portion of our Banking recurring revenue, is~~ derived from transaction processing fees that fluctuate with the number or value of transactions processed, among other variable measures, associated with consumer ~~commercial and capital markets~~ activity. Professional services revenue is typically non-recurring, though recognition often occurs over time rather than at a point in time. Sales of software licenses are typically non-recurring with point-in-time recognition and are less predictable.

~~COVID-19 continued~~COVID-19's impact to ~~impact~~ our financial results in the ~~third~~first quarter of ~~2020.~~2021 lessened due to the gradual opening of markets, especially where accelerated by the accessibility and effective rollout of vaccines. In certain locations, where government lockdowns and shelter-in-place orders have been ~~loosened,~~tightened, particularly in certain areas of Europe and Brazil, reduced consumer spending ~~impacting~~continues to adversely impact our Merchant ~~Solutions~~ payments volume and related transaction ~~revenue has partially recovered, while~~revenue. In addition, certain ~~verticals like travel, entertainment and hospitality~~

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discretionary spending verticals, including travel, airlines and restaurants, continue to be ~~significantly impacted. The Company's revenue continues~~impacted, although the impact has lessened due to ~~be impacted by reduced payment processing volumes within our Merchant Solutions segment and,~~the gradual opening of markets with access to ~~a lesser extent, transaction volume within our Banking Solutions segment, but both have improved in the third quarter of 2020.~~vaccines.

~~We have seen some slowdown~~As the impact of COVID-19 lessens in ~~customer decision-making on~~certain areas with access to vaccines, including the U.S., consumer spending and sales ~~and implementation~~ of our solutions ~~as well as on software licenses and professional services. These delays, due largely to client caution,~~ have adversely affected our business, results of operations and financial condition in the third quarter of 2020 and could continue, although the magnitude and duration of their ultimate effect is not possible to predict and has not been material to date.increased. We have continued to prioritize investments in solutions that help address the needs of our clients in order to increase the Company's potential to resume strong revenue growth following the pandemic.

~~In response to COVID-19,~~ Additionally, we are continuing to take several actions to manage discretionary expenses, including reducing office space and prohibiting most travel, ~~and reducing incentive compensation,~~ as well as accelerating automation and functional alignment across the organization. These actions are expected to reduce such expenses by approximately $300 million in 2020. Of this amount, approximately $220 million relates to reducing incentive compensation for 2020, which is not an action we expect to take with respect to 2021 incentive compensation.

~~Our extension of~~We extended higher-than-usual levels of credit to our merchant clients during 2020 as part of funds settlement in connection with payments to their customers, for, among other things, refunds for cancelled trips ~~and events, lessened~~ as cases of COVID-19 spread across the ~~third quarter progressed and~~globe. The level of credit extended to our merchant clients has since normalized, although there is risk that increased government lockdown orders ~~continue to be relaxed or moderated.~~could adversely impact credit extensions and chargebacks in affected areas. We are exposed to losses if our merchant customers are unable to repay the credit we have extended or to fund their liability for chargebacks due to closure, insolvency, bankruptcy or other reasons. ~~This increase in extended credit or~~Our potential liability for chargebacks did not have a material impact on our liquidity for the ~~three- and nine-month periods~~three-month period ended ~~September 30, 2020, although certain of our merchant clients have ceased doing business, at least for a period of time,~~March 31, 2021, and we continue to monitor ~~their~~for impact on our liquidity, results of operations and financial condition.

We continue to assist financial institutions in migrating to outsourced integrated technology solutions to improve their profitability and address increasing and ongoing regulatory requirements. As a provider of outsourcing solutions, we benefit from multi-year recurring revenue streams, which help moderate the effects of broader year-to-year economic and market changes that otherwise might have a larger impact on our results of operations. We believe our integrated solutions and outsourced services are well-positioned to address this outsourcing trend across the markets we serve. ~~However, delays in implementation of our solutions caused by the uncertainty of the COVID-19 pandemic may temporarily slow revenue growth to an extent not yet determined.~~

Over the last ~~four~~five years, we have moved approximately ~~73%~~76% of our server compute, primarily in North America, to our FIS cloud located in our strategic data centers, and our goal is to increase that percentage to 80% by the end of 2021. This allows us to further enhance security for our clients' data and increases the flexibility and speed with which we can provide ~~services~~solutions and ~~solutions~~services to our clients, eventually at lesser cost. Concurrently, we have continued to consolidate our data centers, ~~closing seven data centers in 2019 and an additional five data centers during the nine months ended September 30, 2020. Our consolidation has generated~~generating a savings for the Company ~~as of the end of the third quarter of 2020~~ of approximately ~~$230~~$245 million in run-rate annual expense ~~reduction~~ since the program's inception in mid-2016. We plan to close and consolidate approximately 8five more data centers by the end of 2021, which should result in additional run-rate annual expense reduction of approximately ~~$20~~$5 million.

We continue to invest in modernization, innovation and integrated solutions and services to meet the demands of the markets we serve and compete with global banks, financial and other technology providers, and emerging technology innovators. We invest both organically and through investment opportunities in companies building complementary technologies in the financial services space. Our internal efforts in research and development activities have related primarily to the modernization of our proprietary core systems in each of our segments, design and development of next generation digital and innovative solutions and development of processing systems and related software applications and risk management platforms. We have increased our investments in these areas in each of the last three years. Our innovation efforts have

recently resulted in bringing to market our Modern Banking Platform that is among the first cloud-native core banking

solutions. We expect to continue our practice of investing an appropriate level of resources to maintain, enhance and extend the functionality of our proprietary systems and existing software applications, to develop new and innovative software applications and systems to address emerging technology trends in response to the needs of our clients and to enhance the capabilities of our outsourcing infrastructure.

In addition, we are investing in the development of new solutions and venture opportunities by establishing FIS Impact Ventures. This group prioritizes development of, and investment in, next-generation technology and innovation.

FIS continues to carefully monitor the effects of the ongoing COVID-19 pandemic as conditions continue to evolve. Since the beginning of the pandemic, the Company has taken several actions to protect its employees while maintaining business

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continuity, including implementing its comprehensive Pandemic Plan. The Pandemic Plan includes site-specific plans as well as travel restrictions, medical response protocols, work-from-home strategies and enhanced cleaning within our locations. As a critical infrastructure provider for the global economy, FIS continues to operate around the world to serve our clients.

The spread of COVID-19 has caused us to modify our business practices (including restricting employee travel, developing social distancing plans for our employees and cancelling physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or as we determine are in the best interests of our employees, clients and business partners. Where government lockdowns have prohibited or slowed down certain functions at specific locations, FIS has outfitted employees to provide services from home or transferred work to other locations. ~~Nearly 95%~~The

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majority of our employees remain in a work-from-home status and have been effectively outfitted to continue to provide all necessary services to our clients. We ~~will continue~~continued this work-from-home status in most locations ~~this year,~~since the impact of the pandemic began in mid-March 2020 through the end of the first quarter of 2021, as the safety of our employees is a top priority. ~~Additionally, for its employees,~~We recently began a limited opening of offices in certain locations where the Company has expanded sick leave for employees affected by COVID-19, expanded telemedicine internationally, provided special pay for certain employees involved in critical infrastructure who could not work from home, and expanded its FIS Cares program to benefit employees in need around the world.COVD-19 infection rates have been significantly reduced.

Consumer preference continues to shift from traditional branch banking services to digital banking solutions, and our clients seek to provide a single integrated banking experience through their branch, mobile, internet and voice banking channels. The COVID-19 pandemic ~~appears to be~~has resulted in accelerating digitization of banking and payment services by requiring, in many cases, banks and bank customers to transact through digital channels. We have been providing our large regional banking customers in the U.S. with Digital One, an integrated digital banking platform, and are now adding functionality and offering Digital One to our community bank clients to provide a consistent, omnichannel experience for consumers of banking services across self-service channels like mobile banking and online banking, as well as supporting channels for bank staff operating in bank branches and contact centers. The uniform customer experience extends to support a broad range of financial services including opening new accounts, servicing of existing accounts, ~~providing~~ money movement, ~~services,~~ and personal financial management, as well as other consumer, small business and commercial banking capabilities. Digital One is integrated into several of the core banking platforms offered by FIS and is also offered to customers of non-FIS core banking systems.

We anticipate consolidation within the banking industry will continue, primarily in the form of merger and acquisition activity among financial institutions, which we believe as a whole is detrimental to the profitability of the financial technology industry. However, consolidation resulting from specific merger and acquisition transactions may be beneficial to our business. When consolidations of financial institutions occur, merger partners often operate systems obtained from competing service providers. The newly formed entity generally makes a determination to migrate its core and payments systems to a single platform. When a financial institution processing client is involved in a consolidation, we may benefit by their expanding the use of our services if such services are chosen to survive the consolidation and to support the newly combined entity. Conversely, we may lose revenue if we are providing services to both entities, or if a client of ours is involved in a consolidation and our services are not chosen to survive the consolidation and to support the newly combined entity. It is also possible that larger financial institutions resulting from consolidation may have greater leverage in negotiating terms or could decide to perform ~~inhouse~~in-house some or all of the services that we currently provide or could provide. We seek to mitigate the risks of consolidations by offering other competitive services to take advantage of specific opportunities at the surviving company.

~~In certain of the international markets in which we do business, we continue to experience growth on a constant currency basis.~~ Demand for our solutions may also continue to be driven in developing countries by government-led financial inclusion policies aiming to reduce the unbanked population and by growth in the middle classes in these markets driving the need for more sophisticated banking solutions. The majority of our international revenue is generated by clients in the U.K., Germany, Brazil, India, Canada and Australia.

~~As a result of the Worldpay acquisition completed on July 31, 2019,~~ FIS is ~~now~~ a global leader in the merchant solutions industry, with differentiated solutions throughout the payments market, including capabilities in global eCommerce, integrated payments, and enterprise payments and data security solutions in business-to-business ("B2B") payments. These solutions bring ~~together~~ advanced payments technologies at each stage of the transaction life cycle. ~~The Worldpay acquisition broadened our~~We have a broad solution portfolio, enabling us to significantly expand our merchant acquiring solutions, including our capabilities in the growing eCommerce and integrated ~~payments~~payment segments of the market, which are in demand among our merchant clients as they look for ways to integrate technology into their business models. The combination also favorably impacts our business mix with a greater concentration in higher growth and higher margin services. The Worldpay acquisition significantly increased our revenue as well as our amortization expense for acquired intangibles and our acquisition, integration and other costs. However, due

Due to the COVID-19 pandemic, our merchant processing revenue has been adversely impacted, particularly in the discretionary spending areas of travel, ~~entertainment~~airlines and ~~hospitality,~~restaurants, although it has improved in the first quarter of 2021 in locations where the vaccine rollout has been more accessible and wemore effectively rolled out. We expect revenue will continue to be adversely impacted until the economic effects ~~and~~of the pandemic, including those caused by government, company, and public travel restrictions ~~due to the pandemic~~ subside around the ~~world.~~

~~Table of Contents~~world, but that revenue will continue to increase in areas where the vaccine rollout effectively continues.

Following the Worldpay acquisition completed on July 31, 2019, we are focused on completing post-merger integration to achieve potential incremental revenue opportunities and expense efficiencies created by the combination of the two companies. We have a history of successfully integrating the operations and technology platforms of acquired companies, including winding down legacy environments and consolidating platforms from other acquisitions into our environment. Based on prior integration experience, we developed integration plans to achieve the potential benefits created by the Worldpay acquisition. As of the end of the ~~third~~first quarter of ~~2020,~~2021, our achievement of revenue ~~and expense~~ synergies ~~remain~~remains on track to meet or exceed our ~~previously announced targets.~~current targets driven by successful cross-sell of our heritage FIS solutions into heritage Worldpay clients and by leveraging our heritage Worldpay sales and distribution teams, expanding on our existing relationships with financial institutions to establish merchant referral agreements and optimizing our network routing capabilities. We have also exceeded our original target for expense synergies, as we have successfully integrated organizational structures, reduced corporate overhead and achieved cost savings within our operating environment, and expect to continue to achieve additional expense synergies during 2021.

We continue to see demand for innovative solutions in the payments market that will deliver faster, more convenient payment solutions in mobile channels, internet applications and cards. The payment processing industry is adopting new

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technologies, developing new ~~products~~solutions and services, evolving new business models and being affected by new market entrants and by an evolving regulatory environment. As merchants and financial institutions respond to these changes by seeking services to help them enhance their own offerings to consumers, including the ability to accept card-not-present ("CNP") payments in eCommerce and mobile environments as well as contactless cards and mobile wallets at the ~~point of sale,~~point-of-sale, FIS believes that payment processors will seek to develop additional capabilities in order to serve clients' evolving needs. To facilitate this expansion, we believe that payment processors will need to enhance their technology platforms so they can deliver these capabilities and differentiate their offerings from other providers. ~~The~~We have found that the COVID-19 pandemic ~~appears to be accelerating~~has accelerated digitization of payment services by requiring, in many cases, businesses and consumers to transact through digital channels.

We believe that these market changes present both an opportunity and a risk for us, and we cannot predict which emerging technologies or solutions will be successful. However, FIS believes that payment processors, like FIS, that have scalable, integrated business models, provide solutions across the payment processing value chain and utilize broad distribution capabilities will be best positioned to enable emerging alternative electronic payment technologies. Further, FIS believes that its depth of capabilities and breadth of distribution will enhance its position as emerging payment technologies are adopted by merchants and other businesses. FIS' ability to partner with non-financial institution enterprises, such as mobile payment providers and internet, retail and social media companies, ~~could~~continues to create attractive growth opportunities as these new entrants seek to become more active participants in the development of alternative electronic payment technologies and to facilitate the convergence of retail, online, mobile and social commerce applications.

Globally, attacks on information technology systems continue to grow in frequency, complexity and sophistication. This is a trend we expect to continue. Such attacks have become a point of focus for individuals, businesses and governmental entities. The objectives of these attacks include, among other things, gaining unauthorized access to systems to facilitate financial fraud, disrupt operations, cause denial of service events, corrupt data, and steal non-public information. These circumstances present both a threat and an opportunity for FIS. As part of our business, we electronically receive, process, store and transmit a wide range of confidential information, including sensitive customer information and personal consumer data. We also operate payment, cash access and prepaid card systems.

FIS remains focused on making strategic investments in information security to protect our clients and our information systems. These investments include both capital expenditures and operating expense related to hardware, software, personnel and consulting services. We also participate in industry and governmental initiatives to improve information security for our clients. Through the expertise we have gained with this ongoing focus and involvement, we have developed fraud, security, risk management and compliance solutions to target this growth opportunity in the financial services industry.

Critical Accounting Policies and Estimates

There have been no significant changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. For discussion regarding the impact of the COVID-19 pandemic on our critical and significant accounting estimates subject to risk and uncertainties, see Notes 1, ~~2, 5~~3 and 97 to the consolidated financial statements.

Transactions with Related Parties

See Note 109 to the consolidated financial statements for a ~~detailed~~ description of transactions with related parties.

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Consolidated Results of Operations

~~(in millions, except per share amounts)~~

Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
Revenue $ 3,197 $ 2,822 $ 9,236 $ 6,991
Cost of revenue 2,104 1,838 6,238 4,623
Gross profit 1,093 984 2,998 2,368
Selling, general and administrative expenses 862 757 2,613 1,435
Asset impairments — 87 — 87
Operating income 231 140 385 846
Other income (expense):
Interest expense, net (84) (95) (252) (242)
Other income (expense), net (4) 164 31 (8)
Total other income (expense), net (88) 69 (221) (250)
Earnings before income taxes and equity method investment earnings (loss) 143 209 164 596
Provision (benefit) for income taxes 121 48 94 119
Equity method investment earnings (loss) — (5) (9) (18)
Net earnings 22 156 61 459
Net (earnings) loss attributable to noncontrolling interest (2) (2) (7) (3)
Net earnings attributable to FIS common stockholders $ 20 $ 154 $ 54 $ 456
Net earnings per share — basic attributable to FIS common stockholders $ 0.03 $ 0.30 $ 0.09 $ 1.18
Weighted average shares outstanding — basic 620 516 618 388
Net earnings per share — diluted attributable to FIS common stockholders $ 0.03 $ 0.29 $ 0.09 $ 1.15
Weighted average shares outstanding — diluted 627 524 626 396

- Comparisons of three-month ~~and nine-month~~ periods ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~


	Three months ended March 31,
	2021			2020			$ Change		% Change
	(In millions)
Revenue	$	3,223		$	3,078		$	145	5	%
Cost of revenue	(2,118)			(2,089)			(29)		1
Gross profit	1,105			989			116		12
Gross profit margin	34		%	32		%
Selling, general and administrative expenses	(1,006)			(881)			(125)		14
Operating income	99			108			(9)		(8)
Operating margin	3		%	4		%

Revenue

Revenue increased ~~$375 million, or 13%, for the three-month period ended September 30, 2020 as compared to 2019~~ primarily due to ~~incremental~~increased Merchant CNP volumes, increased demand for our newly developed offerings in Banking, and strong new sales driving Capital Markets managed services and other recurring revenue growth during the first quarter of 2021. Revenue also benefited from ~~the Worldpay acquisition. Revenue~~a favorable foreign currency impact, which was ~~adversely impacted by reduced payment processing volumes within our Merchant Solutions segment in certain verticals,~~ primarily ~~travel, entertainment and hospitality, and,~~related to a ~~lesser extent, transaction volume within our Banking Solutions segment, each as a result of~~weaker U.S. Dollar versus the ~~COVID-19 pandemic.~~

~~Revenue increased $2,245 million, or 32%, for~~Euro and the nine-month period ended September 30, 2020 as compared to 2019 primarily due to incremental revenue from the Worldpay acquisition. Revenue was adversely impacted by reduced payment processing volumes within our Merchant Solutions segment and, to a lesser extent, transaction volume within our Banking Solutions segment, as a result of the COVID-19 pandemic.

British Pound Sterling. See Segment Results of Operations below for more detailed explanation.

Cost of Revenue, Gross Profit and Gross Profit Margin

~~Cost of revenue totaled $2,104 million and $1,838 million for the three-month periods and $6,238 million and $4,623 million for the nine-month periods ended September 30, 2020 and 2019, respectively.~~ Gross profit totaled $1,093 million and $984 million for the three-month periods and $2,998 million and $2,368 million for the nine-month periods ended September 30, 2020 and 2019, respectively. Gross profit as a percentage of revenue ("gross margin") was 34% and 35% for the three-month periods and 32% and 34% for the nine-month periods ended September 30, 2020 and 2019, respectively. The increase in gross profit for 2020 as comparedincreased primarily due to ~~2019 primarily resulted from~~ the revenue variances noted above. ~~The decrease~~

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~~in gross~~Gross profit margin ~~during the 2020 periods as compared~~increased primarily due to ~~2019 primarily resulted from higher acquired intangible asset amortization~~revenue growth and continued expense ~~partially offset by higher margin revenue from the Worldpay acquisition.~~management.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased ~~$105 million, or 14%, for the three-month period and $1,178 million, or 82%, for the nine-month period ended September 30, 2020 as compared to 2019~~ primarily due to ~~incremental Worldpay corporate and infrastructure expenses and~~accelerated stock compensation expense associated with the establishment of the Qualified Retirement Equity Program that modified our existing stock compensation plans as described in Note 8 to the consolidated financial statements, as well as higher ~~acquisition, integration and other costs~~incentive compensation expense during the ~~nine month period~~first quarter of ~~2020.~~2021. These ~~expenses~~increases were partially offset by lower discretionary spending during the COVID-19 pandemic.

~~Asset Impairments~~Operating Income and Operating Margin

During the three months ended September 30, 2019, the Company recorded pre-tax asset impairments totaling $87 million, primarily related to certain computer software resulting from the Company's net realizable value analysis.

~~Operating Income~~

Operating income increased $91 million, or 65%, for the three-month period and decreased $461 million, or 54%, for the nine-month period ended September 30, 2020 as compared to 2019, respectively. Operating income as a percentage of revenue ("operating margin") was 7% and 5% for the three-month periods and 4% and 12% for the nine-month periods ended September 30, 2020 and 2019, respectively. The ~~changes~~change in operating income ~~for the three-month and nine-month periods of 2020 as compared to 2019, and the change in operating margin during the 2020 periods as compared to 2019,~~ resulted from the revenue and cost variances noted above. The operating margin during 2021 was negatively impacted by the increase in selling, general, and administrative expenses noted above.

Total Other Income (Expense), Net


	Three months ended March 31,
	2021		2020		$ Change		% Change
Other income (expense):	(In millions)
Interest expense, net	$	(74)	$	(80)	$	6	(8)	%
Other income (expense), net	(493)		(39)		(454)		1164	%
Total other income (expense), net	$	(567)	$	(119)	(448)		376	%

The decrease ~~of $11 million~~ in interest expense, net ~~for the three-month period ended September 30, 2020, as compared to 2019~~ is primarily due to a lower ~~weighted-average~~outstanding debt and lower weighted average interest rate on the outstanding ~~debt. The increase of $10 million in interest expense, net for~~debt throughout the nine-month period ended September 30, 2020 as compared to 2019, is primarily due to higher outstanding debt due to the Worldpay acquisition, mostly offset by a lower weighted-average interest rate on the outstanding debt.quarter.

Other income (expense), net decreased $168 million to $4 million expense for the three-month period ended September 30, 2020, as compared to $164 million income for the three-month period ended September 30, 2019. Other income (expense), net increased $39 million to $31 million income for the nine-month period ended September 30, 2020, as compared to $(8) million expense for the nine-month period ended September 30, 2019. Other income (expense), net for three months ended March 31, 2021, primarily represents loss on extinguishment of debt of approximately $528 million relating to tender premiums, make-whole amounts, and fees; the ~~three-~~write-off of unamortized bond discounts and ~~nine-month periods ended September 30, 2020, primarily includes~~debt issuance costs; and losses on related derivative instruments. The foregoing loss resulted from the debt refinancing activity we undertook in the first quarter of 2021 (see Note 5 to the consolidated financial statements), which will substantially reduce our ongoing interest expense. This loss was partially offset by fair value ~~adjustment~~adjustments on certain non-operating assets and liabilities ~~offset by~~and foreign currency transaction remeasurement losses and the pending settlement recorded for the Reliance Trust claims, which is further described in Note 9 to the consolidated financial statements. Other income (expense), net for the three- and nine-month periods ended September 30, 2019, primarily includes acquisition financing costs and the non-cash foreign currency impact of non-hedged Euro- and Pound Sterling-denominated notes issued to finance the Worldpay acquisition, during the period from the date of issue of the notes to the date of the acquisition.

~~Provision (Benefit) for Income Taxes~~

Provision (benefit) for income taxes totaled $121 million and $48 million for the three-month periods and $94 million and $119 million for the nine-month periods ended September 30, 2020 and 2019, respectively, resulting in effective tax rates of 85% and 23% for the three-month periods and 57% and 20% for the nine-month periods ended September 30, 2020 and 2019, respectively. The three and nine months ended September 30, 2020, include a one-time net remeasurement of certain deferred tax liabilities due to the increase in the U.K. corporate statutory tax rate from 17% to 19% enacted on July 22, 2020.

~~Equity Method Investment Earnings (Loss)~~

FIS holds a 37% ownership stake in Cardinal, as further described in Note 10 to the consolidated financial statements. As a result, we recorded equity method investment losses of $0 million and $5 million for the three-month periods and $9 million and $18 million for the nine-month periods ended September 30, 2020 and 2019, respectively.

gains.

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~~Net (Earnings) Loss Attributable to Noncontrolling Interest~~Other income (expense), net for the three months ended March 31, 2020, includes foreign currency transaction remeasurement losses and a fair value adjustment on convertible Visa Inc. Series B preferred stock and related contingent value rights liability acquired from Worldpay.

~~Net (earnings) loss attributable to noncontrolling interest includes Virtus operations subsequent to acquisition in January 2020 and totaled $(2) million and $(2) million~~Provision (Benefit) for ~~the three-month periods and $(7) million and $(3) million for the nine-month periods ended September 30, 2020 and 2019, respectively.~~Income Taxes


	Three months ended March 31,
	2021			2020			$ Change		% Change
	(In millions)
Provision (benefit) for income taxes	$	(97)		$	(30)		$	(67)	223	%
Effective tax rate	21		%	273		%

~~Net Earnings Attributable~~The decrease in the effective tax rate is primarily due to ~~FIS Common Stockholders~~

~~Net~~the difference in pre-tax earnings ~~attributable~~relative to ~~FIS common stockholders totaled $20 million and $154 million resulting in earnings per diluted share of $0.03 and $0.29~~the benefit for the three-month periods ended September 30, 2020 and 2019, respectively, and $54 million and $456 million resulting in earnings per diluted share of $0.09 and $1.15 for the nine-month periods ended September 30, 2020 and 2019, respectively. These results reflect the variances described above.income taxes.

Segment Results of Operations - Comparisons of three-month periods ended March 31, 2021 and 2020

FIS reports its financial performance based on the following segments: Merchant Solutions, Banking Solutions, Capital

Market Solutions, and Corporate and Other. The Company reclassified certain non-strategic businesses from Merchant Solutions, Banking Solutions, and Capital Market Solutions into Corporate and Other during the year ended December 31, 2020, and recast all prior-period segment information presented.

Adjusted EBITDA is defined as net earnings (loss) before net interest expense, net other income (expense), income tax provision (benefit), equity method investment earnings (loss), depreciation and amortization, and excludes certain ~~non-operating items.~~costs and other transactions that management deems non-operational in nature. 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. The ~~non-operating~~non-operational items affecting the segment profit measure generally include purchase accounting adjustments, and acquisition, integration and certain other costs. Adjusted EBITDA also excludes incremental and direct costs resulting from the COVID-19 pandemic. 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. Financial information, including details of Adjusted EBITDA, for each of our segments is set forth in Note 1211 to the consolidated financial statements.

As the Company continues to execute on its integration workflows and optimize its portfolio of assets, the Company reclassified certain non-strategic businesses from Merchant and Banking into Corporate and Other in the quarter ended March 31, 2020, and recast all prior-period segment information presented. These operations represented less than 2% of third quarter and year-to-date 2020 revenue. A description of these segments is included in Note 12 to the consolidated financial statements. Revenue by segment and the Adjusted EBITDA of our segments are discussed below in Segment Results of Operations.

Merchant Solutions

Three months ended Nine months ended
September 30, September 30,
2020 2019 2020 2019
(In millions) (In millions)
Revenue $ 1,017 $ 705 $ 2,764 $ 852
Adjusted EBITDA $ 487 $ 365 $ 1,241 $ 397

~~Three months ended September 30:~~


	Three months ended March 31,						$ Change		% Change
							2021 vs		2021 vs
	2021			2020			2020		2020
	(In millions)
Revenue	$	966		$	935		$	31	3	%
Adjusted EBITDA	$	451		$	423		28		7
Adjusted EBITDA margin	46.7		%	45.2		%
Adjusted EBITDA margin basis points change	150

Revenue increased ~~$312 million due to incremental revenue~~primarily from ~~the Worldpay acquisition totaling $278 million, including~~strong CNP volumes, excluding travel and airlines, contributing 5% as well as from a favorable foreign currency impact of $12 million driven by a weaker U.S. Dollar versus the British Pound Sterling. Revenue was also positively impacted by $54 million due primarily to the shifted timing of the U.S.tax filing deadline from the second to the third quarter of 2020. Revenue was adversely impacted by declines in payment processing volumes in certain verticals, primarily travel, entertainment and hospitality, as a result of the COVID-19 pandemic.

Adjusted EBITDA increased $122 million, and adjusted EBITDA margin decreased 390 basis points to 47.9%. The increase in Adjusted EBITDA primarily resulted from the incremental revenue from the Worldpay acquisition. The decrease in adjusted EBITDA margin2%, which was primarily ~~due~~related to ~~decreasing volumes of high-margin services as a result of the COVID-19 pandemic.~~

~~Nine months ended September 30:~~

~~Revenue increased $1,912 million due to incremental revenue from the Worldpay acquisition totaling $1,928 million, including a favorable foreign currency impact of $3 million driven by~~ a weaker U.S. Dollar versus the British Pound Sterling. Revenue was adversely impacted by ~~declines in payment processing volumes as a result of~~ the COVID-19 ~~pandemic.~~pandemic including depressed volumes in the U.K. and within our travel, airlines and restaurant verticals.

The increase in adjusted EBITDA primarily resulted from revenue drivers listed above. The increase in adjusted EBITDA margin was due to a higher-margin revenue mix and continued expense management.

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Adjusted EBITDA increased $844 million, and adjusted EBITDA margin decreased 170 basis points to 44.9%. The increase in Adjusted EBITDA primarily resulted from the incremental revenue from the Worldpay acquisition. The decrease in adjusted EBITDA margin was due to decreasing volumes of high-margin services as a result of the COVID-19 pandemic.Banking Solutions


	Three months ended March 31,						$ Change		% Change
							2021 vs		2021 vs
	2021			2020			2020		2020
	(In millions)
Revenue	$	1,540		$	1,444		$	96	7	%
Adjusted EBITDA	$	667		$	612		55		9
Adjusted EBITDA margin	43.3		%	42.4		%
Adjusted EBITDA margin basis points change	90

~~Banking Solutions~~

Three months ended Nine months ended
September 30, September 30,
2020 2019 2020 2019
(In millions) (In millions)
Revenue $ 1,507 $ 1,443 $ 4,447 $ 4,173
Adjusted EBITDA $ 653 $ 627 $ 1,876 $ 1,738

~~Three months ended September 30:~~

Revenue increased ~~$64 million, or 4.4%,~~ primarily due to ~~incremental revenue from the Worldpay acquisition contributing 1.9%~~increased demand for our newly developed offerings, such as modern banking platform and other items contributing an aggregate of 2.9%. Other items in Banking Solutions revenue were positively impacted by increased recurring revenue, including card production and prepaid card services driven by COVID-19 pandemic-related programs, partially offset by lower license revenue. Banking Solutions revenue was also adversely impacted by lower issuer processing due to the COVID-19 pandemic and an unfavorable foreign currency impact to growth contributing (0.5%), or approximately $7 million, primarily driven by a stronger U.S. Dollar versus the Brazilian Real.programs.

Adjusted EBITDA increased ~~$26 million, or 4.1%, and adjusted EBITDA margin decreased 20 basis points to 43.3%, primarily due to COVID-19 pandemic impacts to revenue mix.~~

~~Nine months ended September 30:~~

Revenue increased $274 million, or 6.6%, primarily due to incremental revenue from the Worldpay acquisition contributing 5.1% and other items contributing an aggregate of 3.4%. Other items in Banking Solutions revenue were positively impacted by COVID-19 pandemic-related programs including recurring revenue due to card production and prepaid card services and increased demand for digital banking offerings and non-recurring revenue due to Paycheck Protection Program (“PPP”) loan processing, partially offset by lower license revenue. Banking Solutions revenue was also adversely impacted by lower issuer processing due to the COVID-19 pandemic. These items were partially offset by (1) a decrease in non-recurring revenue from Latin America payments contributing (0.8%); (2) a decrease in termination fees contributing (0.4%); and (3) an unfavorable foreign currency impact to growth contributing (0.8%), or approximately $31 million, primarily driven by a stronger U.S. Dollar versus the Brazilian Real and Indian Rupee.

~~Adjusted EBITDA increased $138 million, or 7.9%, and adjusted EBITDA margin increased 60 basis points to 42.2%,~~ primarily due to the ~~addition of higher~~revenue variances noted above. Adjusted EBITDA margin increased primarily due to revenue ~~from the Worldpay acquisition.~~growth and continued expense management.

Capital Market Solutions

Three months ended Nine months ended
September 30, September 30,
2020 2019 2020 2019
(In millions) (In millions)
Revenue $ 626 $ 611 $ 1,886 $ 1,778
Adjusted EBITDA $ 286 $ 280 $ 853 $ 790

~~Three months ended September 30:~~


	Three months ended March 31,						$ Change		% Change
							2021 vs		2021 vs
	2021			2020			2020		2020
	(In millions)
Revenue	$	625		$	597		$	28	5	%
Adjusted EBITDA	$	288		$	267		21		8
Adjusted EBITDA margin	46.1		%	44.7		%
Adjusted EBITDA margin basis points change	140

Revenue increased ~~$15 million, or 2.5%,~~ primarily due to strong new sales driving managed services and other recurring revenue and professional services growth across the ~~purchase of a majority interest in Virtus Partners contributing 3.1% offset by other items contributing an aggregate of (1.5%) mainly driven by timing of software license renewals. Capital Markets had~~product portfolio. Revenue also benefited from a favorable foreign currency impact ~~to growth~~ contributing ~~0.7%~~2%, ~~or approximately $5 million,~~which primarily ~~driven by~~related to a weaker U.S. Dollar versus the Euro and the British Pound Sterling. Revenue was adversely impacted by the timing of license renewals compared to prior year contributing approximately (1%).

Adjusted EBITDA increased ~~$6 million, or 2.1%, due to the revenue impacts mentioned above. Adjusted EBITDA margin decreased 10 basis points to 45.7%~~ primarily as ~~a result of revenue mix.~~

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~~Nine months ended September 30:~~

Revenue increased $108 million, or 6.1%, primarily due to the purchase of a majority interest in Virtus Partners contributing 3.4% and strong managed services growth and trading volumes contributing 2.8%. Capital Markets had an unfavorable foreign currency impact to growth contributing (0.1%), or approximately $2 million, primarily driven by a stronger U.S. Dollar versus the Brazilian Real.

~~Adjusted EBITDA increased $63 million, or 8.0%,~~ due to the revenue impacts mentioned above. Adjusted EBITDA margin increased ~~80 basis points to 45.2% primaril~~yprimarily due to ~~ongoing~~revenue growth and continued expense ~~initiatives and discretionary expense~~ management.

Corporate and Other


		Three months ended				Nine months ended					Three months ended March 31,				$ Change		% Change
		September 30,				September 30,									2021 vs		2021 vs
		2020		2019		2020		2019			2021		2020		2020		2020
		(In millions)				(In millions)					(In millions)
Revenue	Revenue	$	47	$	63	$	139	$	188	Revenue	$	92	$	102	$	(10)	(10)	%
Adjusted EBITDA	Adjusted EBITDA	$	(69)	$	(80)	$	(209)	$	(211)	Adjusted EBITDA	$	(98)	$	(55)	(43)		78

The Corporate and Other segment results consist of selling, general and administrative expenses and depreciation and intangible asset amortization not otherwise allocated to the reportable segments. Corporate and Other also includes operations from certain non-strategic businesses.

~~Three months ended September 30:~~

Revenue decreased ~~$16 million, or 25.4%,~~primarily due to client attrition in certain of our non-strategic businesses.

Adjusted EBITDA ~~increased $11 million, or 13.8%,~~decreased primarily due to ~~lower discretionary expenses during~~ the ~~COVID-19 pandemic and operating~~revenue impact mentioned above as well as higher incentive compensation expense ~~synergy cost actions, partially offset by Adjusted EBITDA decline in non-strategic businesses.~~compared to prior year.

~~Nine months ended September 30:~~

~~Revenue decreased $49 million, or 26.1%, due to client attrition in non-strategic businesses.~~

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Adjusted EBITDA increased $2 million, or 0.9%, primarily due to lower discretionary expenses during the COVID-19 pandemic and operating expense synergy cost actions, partially offset by Adjusted EBITDA decline in non-strategic businesses.

Liquidity and Capital Resources

Cash Requirements

Our ongoing cash requirements include operating expenses, income taxes, tax receivable obligations, mandatory debt service payments, capital expenditures, stockholder dividends, regulatory requirements, working capital and timing differences in settlement-related assets and liabilities, and may include discretionary debt repayments, share repurchases and business acquisitions. Our principal sources of funds are cash generated by operations and borrowings, including the capacity under our Revolving Credit Facility, the U.S. commercial paper program and the Euro-commercial paper program discussed in Note 75 to the consolidated financial statements.

As of ~~September 30, 2020,~~March 31, 2021, the Company had ~~$4,227~~$4,165 million of available liquidity, including ~~$1,826~~$1,039 million of cash and cash equivalents and ~~$2,401~~$3,126 million of capacity available under its Revolving Credit Facility. Approximately ~~$1,227~~$508 million of cash and cash equivalents is held by our foreign entities. The majority of our cash and cash equivalents represents net deposits-in-transit at the balance sheet dates and relates to daily settlement activity and regulatory requirements. Debt outstanding totaled ~~$20.2~~$19.4 billion, with an effective weighted average interest rate of ~~1.6%~~1.0%. ~~Third quarter net cash provided by operating activities was $1,411 million.~~

The Company's liquidity continued to improve in the ~~third~~first quarter as compared to the onset of the pandemic as reduced government lockdowns and shelter-in-place orders allowed for an increase in consumer spending, positively affecting our transaction volumes. Additionally, the volume of consumer refunds continued to decline, thereby reducing the higher-than-usual levels of credit that were extended at the onset of the ~~pandemic to~~pandemic. However, our ~~merchant clients as part of the funds settlement process. Our~~ liquidity could be impacted if economic conditions deteriorate or as a result of governmental measures that might be imposed in response to the COVID-19 pandemic.

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The Company remains committed to reducing its leverage incurred in the Worldpay acquisition while ensuring ample liquidity and ~~continues to expect~~expects to reach its target leverage inby the end of 2021.

We expect that cash and cash equivalents plus cash flows from operations over the next 12 months will be sufficient to fund our operating cash requirements, capital expenditures and mandatory debt ~~service.~~service payments.

We currently expect to continue to pay quarterly dividends. ~~The Company paid dividends of $217 million during the quarter.~~ However, the amount, declaration and payment of future dividends is at the discretion of our Board of Directors and depends on, among other things, our investment opportunities, results of operations, financial condition, cash requirements, future prospects, the duration and impact of the COVID-19 pandemic, and other factors that may be considered relevant by our Board of Directors, including legal and contractual restrictions. Additionally, the payment of cash dividends may be limited by covenants in certain debt agreements. A regular quarterly dividend of ~~$0.35~~$0.39 per common share is payable on ~~December 28, 2020,~~June 25, 2021, to shareholders of record as of the close of business on ~~December 14, 2020.~~June 11, 2021.

~~On July 20, 2017,~~In January 2021, our Board of Directors approved a ~~plan authorizing repurchases of~~new share repurchase program under which it authorized the Company to repurchase up to ~~$4.0 billion~~100 million shares of our ~~outstanding~~ common stock inat management's discretion from time to time on the open market ~~at prevailing market prices~~ or in privately negotiated transactions and through ~~December 31, 2020. This~~Rule 10b5-1 plans. The new share repurchase ~~authorization replaced~~program has no expiration date and may be suspended for periods, amended or discontinued at any ~~existing~~time. Under the new share repurchase ~~authorization. Approximately $2.3 billion of plan capacity remained~~program, approximately 97 million shares remain available for ~~repurchases~~repurchase as of ~~September 30, 2020. Management temporarily suspended share repurchases as a result of the Worldpay transaction to accelerate debt repayment.~~March 31, 2021.

Cash Flows from Operations

Cash flows from operations were ~~$3,024~~$836 million and ~~$1,741~~$383 million for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. Our net cash provided by operating activities consists primarily of net earnings (loss), adjusted to add back depreciation and amortization. Cash flows from operations ~~were $1,283~~increased $453 million ~~higher~~ in the ~~2020~~2021 period primarily due to ~~increased cash flow due to the Worldpay acquisition,~~settlement timing, partially offset by ~~lower net earnings from the COVID-19 pandemic and Worldpay integration-related expenses.~~working capital.

Capital Expenditures and Other Investing Activities

Our principal capital expenditures are for software (purchased and internally developed) and additions to property and equipment. We invested approximately ~~$838~~$298 million and ~~$544~~$306 million in capital expenditures (excluding other financing obligations for certain hardware and software) during the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. We expect to continue investing in property and equipment, purchased software and internally developed software to support our ~~core business initiatives.~~business.

We used ~~$469 million and $6,629~~$402 million of cash (net of cash acquired) during the ~~nine~~three months ended ~~September 30,~~March 31, 2020, ~~and 2019, respectively,~~ primarily for the Virtus ~~and Worldpay acquisitions, respectively. See Note 3 to the consolidated financial statements.~~acquisition completed on January 2, 2020.

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Financing

For more information regarding the Company's debt and financing activity see Note 75 to the consolidated financial statements.

Contractual Obligations

There were no material changes in our contractual obligations through the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, in comparison to the table included in our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, except as disclosed in ~~Notes~~Note 5 ~~and 7~~ to the consolidated financial statements.

Off-Balance Sheet Arrangements

FIS does not have any material off-balance sheet arrangements.

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Recent Accounting Pronouncements

~~Recently Adopted Accounting Guidance~~

~~In August 2018, the FASB issued ASU No. 2018-15 ("ASU 2018-15"),~~ ~~Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~. This ASU clarifies that implementation costs incurred by customers in cloud computing arrangements should be deferred and recognized over the term of the arrangement if those costs would be capitalized by the customer in a software licensing arrangement under the internal-use software guidance. FIS adopted ASU 2018-05 on January 1, 2020, using the prospective approach. The adoption of this new standard did not have a material impact on the Company's consolidated financial statements.

~~In June 2016, the FASB issued ASU No. 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurements on Credit Losses of Financial Instruments. This ASU was subsequently amended by ASU No. 2018-19,~~ ~~Codification Improvements to Topic 326, Financial Instruments - Credit Losses~~ (collectively, "Topic 326"). The primary objectives of Topic 326 are to implement new methodology for calculating credit losses on financial instruments, such as trade receivables, based on lifetime expected credit losses and to broaden the types of information companies must use when calculating the estimated losses. The new guidance also applies to contract assets arising from contracts with customers. FIS adopted Topic 326 on January 1, 2020, using the modified retrospective approach and recorded an immaterial cumulative effect adjustment in retained earnings as of January 1, 2020.

~~Recently Accounting Guidance Not Yet Adopted~~

No ~~other~~ new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on our consolidated financial statements or disclosures.

Item 3. Quantitative and Qualitative Disclosure About Market Risks

Market Risk

We are exposed to market risks primarily from changes in interest rates and foreign currency exchange rates. Such risks may be exacerbated by the effects of the COVID-19 pandemic. We periodically use certain derivative financial instruments, including interest rate swaps and foreign currency forward contracts, to manage interest rate and foreign currency risk. We do not use derivatives for trading purposes, to generate income or to engage in speculative activity.

Interest Rate Risk

In addition to existing cash balances and cash provided by operating activities, we use fixed-rate and variable-rate debt to finance our operations. We are exposed to interest rate risk on these debt obligations and related interest rate swaps.

Our fixed rate senior notes (as included in Note 75 to the consolidated financial statements) represent the majority of our fixed-rate long-term debt obligations as of ~~September 30, 2020.~~March 31, 2021. The carrying value, excluding the fair value of the interest rate ~~swap~~swaps described below and unamortized discounts, of our senior notes was $17.0 billion as of ~~September 30, 2020.~~March 31, 2021. The fair value of our senior notes was approximately ~~$18.4~~$17.7 billion as of ~~September 30, 2020.~~March 31, 2021. The potential reduction in fair value of the senior notes from a hypothetical 10 percent increase in market interest rates would not be material to the overall fair value of the debt.

Our variable-rate risk principally relates to borrowings under our U.S. commercial paper program, Euro-commercial paper program, Revolving Credit Facility, Senior Euro Floating Rate Notes (as included in Note 75 to the consolidated financial statements) and an interest rate ~~swap~~swaps on our fixed-rate long-term ~~debt.~~debt (collectively, "variable-rate debt"). At ~~September 30, 2020,~~March 31, 2021, our weighted-average cost of debt was ~~1.6%~~1.0% with a weighted-average maturity of ~~5.4~~6.3 years; ~~79%~~68% of our debt was fixed rate, and the remaining ~~21%~~32% of our debt was variable rate. A 100 ~~basis point~~basis-point increase in the weighted-average interest rate on our variable-rate debt would have increased our annual interest expense by ~~$43~~$64 million. We performed the foregoing sensitivity analysis based solely on the principal amount of our variable-rate debt as of ~~September 30, 2020.~~March 31, 2021. This sensitivity analysis does not take into account any changes that occurred in the prior 12 months or that may take place in the next 12 months in the amount of our outstanding debt. Further, this sensitivity analysis assumes the change in interest rates is applicable for an entire year. For comparison purposes, based on principal amounts of variable-rate debt outstanding as of ~~September 30, 2019,~~March 31, 2020, and calculated in the same manner as set forth above, an increase of 100 basis points in the weighted-average interest rate would have increased our annual interest expense by approximately ~~$47~~$50 million.

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As of ~~September 30, 2020,~~March 31, 2021, the following interest rate ~~swap~~swaps converting the interest rate exposure on certain of our ~~Senior Euro Notes due July 2024~~senior notes from fixed to variable isare outstanding (in millions):

Bank pays FIS pays
Effective Date Maturity Date Notional fixed rate of variable rate of
December 21, 2018 July 15, 2024 € 500 1.100 % 3-month Euribor + 0.878% (1)

~~(1) 0.443% in effect as of September 30, 2020.~~


			Weighted		Weighted
Notional Amount by			Average		Average
Currency		Maturities	Receive Rate		Pay Rate
$	1,604	2029 - 2031	2.81	%	1.85	%
£	925	2029 - 2031	3.00	%	2.24	%
€	500	2024	1.10	%	0.33	%

By entering into the aforementioned swap agreements, we have assumed risks associated with variable interest rates based upon LIBOR. Changes in the overall level of interest rates affect the interest expense that we recognize. We designated the interest rate ~~swap~~swaps as a fair value ~~hedge~~hedges for accounting purposes as described in Note 86 to the consolidated financial statements. A 100 ~~basis point~~basis-point increase in the 3-month USD LIBOR rate, 6-month GBP LIBOR rate, and 3-month Euribor rate, as applicable, for the interest rate swaps outstanding as of March 31, 2021 and 2020, would increase our annual interest expense ~~on this swap~~ by approximately $35 million and $6 ~~million.~~million, respectively.

Foreign Currency Risk

We are exposed to foreign currency risks that arise from normal business operations. These risks include the translation of local currency balances of foreign subsidiaries, transaction gains and losses associated with intercompany loans with foreign subsidiaries and transactions denominated in currencies other than a location's functional currency. We manage the exposure to these risks through a combination of normal operating activities and the use of foreign currency forward contracts and non-derivative and derivative investment hedges.

Our exposure to foreign currency exchange risks generally arises from our non-U.S. operations, to the extent they are conducted in local currency. Changes in foreign currency exchange rates affect translations of revenue denominated in currencies other than the U.S. Dollar. We generated approximately ~~$612~~$641 million and ~~$535~~$593 million during the three months ended March 31, 2021 and ~~$1,740 million and $1,162 million during the nine months ended September 30,~~ 2020, ~~and 2019,~~ respectively, in revenue denominated in currencies other than the U.S. Dollar. The major currencies to which our revenue is exposed are the British Pound Sterling, Euro, Brazilian Real, Australian Dollar, and Indian Rupee. A 10% movement in average exchange rates for these currencies (assuming a simultaneous and immediate 10% change in all of such rates for the relevant period) would have resulted in the following increase or decrease in our reported revenue for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (in millions):


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
Currency	Currency	2020		2019		2020		2019		Currency	2021		2020
Pound Sterling	Pound Sterling	$	35	$	27	$	100	$	44	Pound Sterling	$	38	$	35
Euro	Euro	8		8		24		22		Euro	10		8
Real	Real	3		4		9		12		Real	3		3
Australian Dollar										Australian Dollar	3		1
Rupee	Rupee	3		3		7		9		Rupee	3		3
Total increase or decrease	Total increase or decrease	$	49	$	42	$	140	$	87	Total increase or decrease	$	57	$	50

While our results of operations have been impacted by the effects of currency fluctuations, our international operations' revenue and expenses are generally denominated in local currency, which reduces our economic exposure to foreign exchange risk in those jurisdictions.

Our foreign exchange risk management policy permits the use of derivative instruments, such as forward contracts and options, to reduce volatility in our results of operations and/or cash flows resulting from foreign exchange rate fluctuations. We do not enter into foreign currency derivative instruments for trading purposes or to engage in speculative activity. We do periodically enter into foreign currency forward contracts to hedge foreign currency exposure to intercompany loans and other balance sheet items. The Company also utilizes foreign currency-denominated debt and cross-currency interest rate swaps designated as net investment hedges in order to reduce the volatility of the net investment value of certain of its Euro and Pound Sterling functional subsidiaries (see Note 86 to the consolidated financial statements).

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Item 4. Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in

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the reports that we file or submit under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms and (b) accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

In the third quarter of 2019, we completed the acquisition of Worldpay (see Note 3 to the consolidated financial statements). We are in the process of integrating Worldpay into our overall internal controls over financial reporting program. Other than this ongoing integration, thereThere have been no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Due to the COVID-19 pandemic, a significant portion of our employees are now working from home. We leveraged our established business continuity plans as well as implemented a comprehensive Pandemic Plan in order to mitigate potential impacts to our control environment. Existing technology and procedures allow for the remote operation of controls.

Part II: OTHER INFORMATION

Item 1A. Risk Factors

See Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2019, as updated in our Quarterly Report on Form 10-Q for the quarter ended March 31,~~ 2020, for a detailed discussion of risk factors affecting the Company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table summarizes purchases of equity securities by the issuer during the three-month period ended March 31, 2021:


						Maximum number
						of shares that
				Total cost of shares		may yet be
				purchased as part of		purchased under
	Total number of			publicly announced		the plans or
	shares purchased (1)	Average price		plans or programs (1)		programs (1)
Period	(in millions)	paid per share		(in millions)		(in millions)
January 1-31, 2021	—	$	—	$	—	—
February 1-28, 2021	0.1	$	138.39	$	15.0	99.9
March 1-31, 2021	2.7	$	143.20	$	385.0	97.2
	2.8			$	400.0

(1)In January 2021, our Board of Directors approved a new share repurchase program under which it authorized the Company to repurchase up to 100 million shares of our common stock at management's discretion from time to time on the open market or in privately negotiated transactions and through Rule 10b5-1 plans. The new share repurchase program has no expiration date and may be suspended for periods, amended or discontinued at any time. Under the new share repurchase program, approximately 97.2 million shares remain available for repurchases as of March 31, 2021.

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Item 6. Exhibits

Incorporated by Reference

Exhibit

SEC File

Filed/ Furnished

No.

Exhibit Description

Form

Number

Exhibit

Filing Date

Herewith

10.1

~~Separation Agreement, Waiver and Release effective as of September 2, 2020, by and between~~ Fidelity National Information Services, Inc.~~, and Stephanie Ferris.~~ Qualified Retirement Equity Program effective January 1, 2021. (1)

10.2

~~Amendment to~~Form of Stock Option Grant under Fidelity National Information Services, Inc. amended and restated 2008 Omnibus Incentive ~~Plan.~~Plan for grants made beginning in March 2021. (1)

10.3

Form of Restricted Stock Unit Grant under Fidelity National Information Services, Inc. amended and restated 2008 Omnibus Incentive Plan for grants made beginning in March 2021. (1)

10.4

Form of Performance Stock Unit Grant under Fidelity National Information Services, Inc. amended and restated 2008 Omnibus Incentive Plan for grants made beginning in March 2021. (1)

31.1

Certification of Gary A. Norcross, President and Chief Executive Officer of Fidelity National Information Services, Inc., pursuant to rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of James W. Woodall, Corporate Executive Vice President and Chief Financial Officer of Fidelity National Information Services, Inc., pursuant to rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Gary A. Norcross, President and and Chief Executive Officer of Fidelity National Information Services, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of James W. Woodall, Corporate Executive Vice President and Chief Financial Officer of Fidelity National Information Services, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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Incorporated by Reference

Exhibit

SEC File

Filed/ Furnished

No.

Exhibit Description

Form

Number

Exhibit

Filing Date

Herewith

101.INS

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

(1) Management contract or compensatory plan or arrangement.

* Filed or furnished herewith

3933

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	FIDELITY NATIONAL INFORMATION SERVICES, INC.
Date: ~~October 29, 2020~~May 6, 2021	By:	/s/ JAMES W. WOODALL
		James W. Woodall
		Corporate Executive Vice President and Chief Financial Officer (Principal Financial Officer )


	FIDELITY NATIONAL INFORMATION SERVICES, INC.
Date: ~~October 29, 2020~~May 6, 2021	By:	/s/ CHRISTOPHER THOMPSON
		Christopher Thompson
		Chief Accounting Officer (Principal Accounting Officer)

4034


			Page
Part I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets			2
Condensed Consolidated Statements of Earnings (Loss)			3
Condensed Consolidated Statements of Comprehensive Earnings (Loss)			4
Condensed Consolidated Statements of Equity			5
Condensed Consolidated Statements of Cash Flows			76
Notes to Condensed Consolidated Financial Statements			87
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2520
Item 3. Quantitative and Qualitative Disclosure About Market Risks			3629
Item 4. Controls and Procedures			3731
Part II: OTHER INFORMATION
Item 1A. Risk Factors			3831
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			31
Item 6. Exhibits			3932
Signatures			4034


	September 30, 2019
	Three months ended		Nine months ended
Revenue	$	3,154	$	9,380
Net earnings (loss) attributable to FIS common stockholders	$	215	$	348
Net earnings (loss) per share-basic attributable to FIS common stockholders	$	0.35	$	0.57
Net earnings (loss) per share-diluted attributable to FIS common stockholders	$	0.35	$	0.56


	September 30, 2020		December 31, 2019
Cash and cash equivalents on the consolidated balance sheets	$	1,826	$	1,152
Merchant float restricted cash (in Settlement deposits and merchant float)	2,009		1,519
Other restricted cash (in Other noncurrent assets) (1)	0		540
Total Cash and cash equivalents per the consolidated statements of cash flows	$	3,835	$	3,211


			Payments Due in
Type of Obligation	Total		2020 Remaining Period		1-3 Years		3-5 Years		More than 5 Years
Obligations under TRA	$	543	$	11	$	267	$	252	$	13