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425
FIDELITY NATIONAL INFORMATION SERVICES, INC. filed this Form 425 on 05/13/2019
Entire Document
 


Worldpay, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

     Balance as of
December 31, 2017
     2018 TRA
Payment
    2018 TRA
Settlements
    2018 Fifth Third
Share Purchase
     Change in Value      Balance as of
December 31, 2018
 

TRA with Fifth Third Bank

   $ 680.0      $ (44.3   $ (145.9   $ 120.9      $ —        $ 610.7  

Mercury TRA

     100.5        (17.4     (38.0     —          8.1        53.2  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total

   $ 780.5      $ (61.7   $ (183.9   $ 120.9      $ 8.1      $ 663.9  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

As a result of a Fifth Third share repurchase, secondary offerings and exchange of units of Worldpay Holding by Fifth Third Bank discussed in Note 10—Capital Stock and Controlling and Non-controlling Interests, the Company recorded the following (in millions):

 

Share Repurchase and Secondary Offerings by Year

   TRA Liability      Deferred Tax Asset      Net Equity  

2018

   $ 120.9      $ 87.0      $ 33.9  

2017

     647.5        627.8        19.7  

2016

     171.2        175.3        (4.1

The timing and/or amount of aggregate payments due under the TRAs outside of the call/put structures may vary based on a number of factors, including the amount and timing of the taxable income the Company generates in the future and the tax rate then applicable, the use of loss carryovers and amortizable basis. Payments under the TRAs, if necessary, are required to be made no later than January 5 th of the second year immediately following the taxable year in which the obligation occurred. The contractually obligated payments under the TRA obligations paid in January 2016, 2017 and 2018 are in the tables above. The Company made a payment under the TRA obligations of approximately $31.7 million in January 2019. The January 2019 payment is recorded as current portion of tax receivable agreement obligations on the accompanying Consolidated Statements of Financial Position. Unless settled under the terms of the repurchase addenda, the term of the TRAs will continue until all the underlying tax benefits have been utilized or expired.

9. DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

The Company enters into derivative financial instruments to manage differences in the amount, timing and duration of its known or expected cash payments related to its variable-rate debt. As of December 31, 2018 and 2017, the Company’s interest rate derivative instruments for this purpose consist of interest rate swaps and interest rate cap agreements. The interest rate swaps hedge the variable rate debt by effectively converting floating-rate payments to fixed-rate payments. The interest rate cap agreements cap a portion of the Company’s variable rate debt if interest rates rise above the strike rate on the contract.

In May 2018, the Company entered into additional interest rate cap and swap agreements and the Company paid an upfront premium of approximately $8.1 million for the interest rate caps. As of December 31, 2018, the Company’s interest rate cap agreements had a fair value of $24.3 million, classified within other current and non-current assets on the Company’s Consolidated Statements of Financial Position. The interest rate swaps and caps (collectively “interest rate contracts”) are designated as cash flow hedges for accounting purposes.

Additionally, during 2017, the Company entered into a deal contingent foreign currency forward contract. The foreign currency forward served as an economic hedge of the pound sterling denominated portion of the purchase price relating to the Legacy Worldpay acquisition. The foreign currency forward was not designated as a hedge for accounting purposes and, as discussed below, was settled in connection with the closing of the Legacy Worldpay acquisition.

 

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