News Column

MANAGEMENT'S DISCUSSION AND ANALYSIS

May 1, 2014

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

For an understanding of the significant factors that influenced our results, the following discussion should be read in conjunction with our unaudited consolidated financial statements and related notes appearing elsewhere in this report. This management's discussion and analysis should also be read in conjunction with the management's discussion and analysis and consolidated financial statements for the year ended December 31, 2013 included in our 10-K filed with the SEC on February 14, 2014.

General

We are the third largest merchant acquirer and the largest personal identification number ("PIN") debit acquirer by transaction volume, according to the Nilson Report, and a leading, integrated payment processor in the United States differentiated by a single, proprietary technology platform. This enables us to efficiently provide a suite of comprehensive services to both merchants and financial institutions of all sizes in the United States. Our technology platform offers our clients a single point of access and service that is easy to connect to and use in order to access a broad range of payment services and solutions. Our integrated business and single platform also enable us to innovate, develop and deploy new services and provide us with significant economies of scale. Our varied and broad distribution provides us with a diverse client base and channel partner relationships.

We believe our single, proprietary technology platform is differentiated from our competitors' multiple platform architectures. Because of our single point of service and ability to collect, manage and analyze data across the payment processing value chain, we can identify and develop new services more efficiently. Once developed, we can more cost-effectively deploy new solutions to our clients through our single platform. Our single scalable platform also enables us to efficiently manage, update and maintain our technology, increase capacity and speed and realize significant operating leverage.

We enable merchants of all sizes to accept and process credit, debit and prepaid payments and provide them supporting services, such as information solutions, interchange management and fraud management, as well as vertical-specific solutions in sectors such as grocery, pharmacy, retail, and restaurants/quick service restaurants. We also provide mission critical payment services to financial institutions, such as card issuer processing, payment network processing, fraud protection, card production, prepaid program management, automated teller machine ("ATM") driving and network gateway and switching services that utilize our proprietary Jeanie PIN debit payment network.

We provide small and mid-sized clients with the comprehensive solutions that we have developed to address the extensive requirements of our large clients. We then tailor these solutions to the unique needs of our small and mid-sized clients. In addition, we take a consultative approach to providing these services that helps our clients enhance their payments-related services.

We distribute our services through diversified distribution channels using a unified sales approach that enables us to efficiently and effectively target merchants and financial institutions of all sizes. These channels include national sales forces that target financial institutions and national merchants, regional and mid-market sales teams that sell solutions to merchants and third-party reseller clients and a telesales operation that targets small and mid-sized merchants. In addition, we have relationships with a broad range of merchant banks; technology partners, which include independent software vendors, or ISVs, value-added resellers, or VARs and payment facilitators; independent sales organizations, or ISOs, and trade associations that target merchants, including difficult to reach small and mid-sized merchants. We also have relationships with third-party resellers and core processors that target financial institutions.

Executive Overview

Revenue for the three months ended March 31, 2014 increased 8% to $537.6 million from $498.0 million in 2013.

Income from operations for the three months ended March 31, 2014 decreased 7% to $67.3 million from $72.0 million in 2013.

Net income for the three months ended March 31, 2014 decreased 8% to $41.1 million from $44.5 million in 2013. Net income attributable to Vantiv, Inc. for the three months ended March 31, 2014 increased 8% to $28.1 million from $26.1 million in 2013.

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In October 2013, our board of directors authorized a program to repurchase up to $137 million of our Class A common stock. During the three months ended March 31, 2014, approximately 1.1 million shares were repurchased for $34.4 million, which completed the repurchases under this authorization.

In February 2014, our board of directors authorized a program to repurchase up to an additional $300 million of our Class A common stock. No shares have been repurchased under this authorization.

In March 2014, a secondary offering took place in which Advent International Corporation sold its remaining 18.8 million shares of our Class A common stock. We did not receive any proceeds from the sale.

Recent Acquisitions

On July 31, 2013, we acquired Element Payment Services, Inc. for approximately $162.5 million in cash. This acquisition provides us the strategic capabilities to partner with ISVs and positions us to increase our presence in the integrated payments market. On November 30, 2012, we acquired Litle & Co., LLC ("Litle"), an ecommerce payment processor for approximately $361 million in cash. The acquisition of Litle has strengthened our capabilities in ecommerce, expanded our customer base of on-line merchants and enabled delivery of Litle's innovative ecommerce solutions to our merchant and financial institution clients. The operations of Litle and Element are included in our Merchant Services segment operating results.

Our Segments, Revenue and Expenses

Segments

We operate as a single integrated business and report our results of operations in two segments, Merchant Services and Financial Institution Services. We evaluate segment performance based upon segment profit, which is defined as net revenue, which represents total revenue less network fees and other costs, less sales and marketing expense attributable to that segment.

Merchant Services

We provide a comprehensive suite of payment processing services, including acquiring and processing transactions, value-added services and merchant services for banks and credit unions. We authorize, clear, settle and provide reporting for electronic payment transactions for our merchant services clients at the point-of-sale and on-line. Our client base includes over 400,000 merchant locations, with a concentration in the non-discretionary everyday spend categories where spending has generally been more resilient during economic downturns.

We provide our merchant services to merchants of varying sizes, which provides us with a number of key benefits. Due to the large transaction volume that they generate, large national merchants provide us with significant operating scale efficiencies and recurring revenues. Small and mid-sized merchants are more difficult to reach on an individual basis, but generally generate higher per transaction fees.

Financial Institution Services

We provide integrated card issuer processing, payment network processing and value-added services to financial institutions. Our services include a comprehensive suite of transaction processing capabilities, including fraud protection, card production, prepaid cards, ATM driving, portfolio optimization, data analytics and card program marketing and allow financial institutions to offer electronic payments solutions to their customers on a secure and reliable technology platform at a competitive cost. We provide these services using a consultative approach that helps our financial institution clients enhance their payments-related business.

We serve a diverse set of financial institutions, including regional banks, community banks, credit unions and regional PIN debit networks. We focus on small to mid-sized institutions with less than $15 billion in assets. Smaller financial institutions, including many of our clients, generally do not have the scale or infrastructure typical of large banks and are more likely to outsource payment processing needs. We provide a turnkey solution to such institutions to enable them to offer payment processing solutions.

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Table of Contents Revenue



We generate revenue primarily by processing electronic payment transactions. Set forth below is a description of our revenues by segment and factors impacting segment revenues.

Our Merchant Services segment revenues are primarily derived from processing credit and debit card transactions. Merchant Services revenue is primarily comprised of fees charged to businesses, net of interchange fees, for payment processing services, including authorization, capture, clearing, settlement and information reporting of electronic transactions. The fees charged consist of either a percentage of the dollar volume of the transaction or a fixed fee, or both, and are recognized at the time of the transaction. Merchant Services revenue also includes a number of revenue items that are incurred by us and are reimbursable as the costs are passed through to and paid by our clients. These items primarily consist of Visa, MasterCard and other payment network fees. In addition, for sales through referral partners in which we are the primary party to the contract with the merchant, we record the full amount of the fees collected from the merchant as revenue. Associated residual payments made to referral partners are included in sales and marketing expenses. Merchant Services revenue also includes revenue from ancillary services such as fraud management, equipment sales and terminal rent. Revenue in our Merchant Services segment is impacted primarily by transaction volume, average transaction size, the mix of merchant types in our client portfolio, the performance of our merchant clients and the effectiveness of our distribution channels.

Our Financial Institution Services revenues are primarily derived from debit, credit and ATM card transaction processing, ATM driving and support, PIN debit processing services and value added services such as fraud mitigation services. Financial Institution Services revenue associated with processing transactions includes per transaction and account related fees, card production fees and fees generated from our Jeanie network. Financial Institution Services revenue is impacted by the number of financial institutions using our services as well as their transaction volume. The number of financial institutions in the United States has declined as a result of prevailing economic conditions and consolidation, as well as other market and regulatory pressures. These factors have contributed to industry-wide pricing compression of the fees that financial institutions are willing to pay for payment processing. Since 2011, pricing compression in the Financial Institution Services segment has represented on average 3% or less of net revenue on an annual basis.

Network Fees and Other Costs

Network fees and other costs consist primarily of charges incurred by us which we pass through to our clients, including Visa, MasterCard and other payment network fees, third party processing expenses, telecommunication charges, postage and card production costs.

Net Revenue

Net revenue is revenue, less network fees and other costs and reflects revenue generated from the services we provide to our clients. Management uses net revenue to assess our operating performance. We believe that net revenue, when reviewed together with revenue, is meaningful to our investors in order to understand our performance.

Expenses

Set forth below is a brief description of the components of our expenses, aside from the network fees and other costs discussed above:

Sales and marketing expense primarily consists of salaries and benefits paid to sales personnel, sales management and other sales and marketing personnel, residual payments made to referral partners and advertising and promotional costs. Other operating costs primarily consist of salaries and benefits paid to operational and IT personnel, costs associated with operating our technology platform and data centers, information technology costs for processing transactions, product development costs, software consulting fees and maintenance costs. General and administrative expenses primarily consist of salaries and benefits paid to executive management and administrative employees, including finance, human resources, product development, legal and risk management, share-based compensation costs, equipment and occupancy costs and consulting costs. Depreciation and amortization expense consists of our depreciation expense related to investments in property, equipment and software as well as our amortization of intangible assets, principally customer relationships 24



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acquired in connection with the acquisition of a majority interest in Vantiv Holding in June 2009 and our subsequent acquisitions.

Interest expense-net consists primarily of interest on borrowings under our senior secured credit facilities less interest income earned on our cash and cash equivalents. Income tax expense represents federal, state and local taxes based on income in multiple jurisdictions.



Non-Controlling Interest

As a result of the non-controlling ownership interests in Vantiv Holding held by Fifth Third Bank ("Fifth Third"), our results of operations include net income attributable to non-controlling interests. Net income attributable to non-controlling interests for the three months ended March 31, 2014 and 2013 was $13.0 million and $18.3 million, respectively. Future sales or redemptions of ownership interests in Vantiv Holding by Fifth Third will continue to reduce the amount recorded as non-controlling interest and increase net earnings attributable to our Class A stockholders.

Factors and Trends Impacting Our Business and Results of Operations

We expect a number of factors will impact our business, results of operations and financial condition. In general, our revenue is impacted by the number and dollar volume of card based transactions which in turn are impacted by general economic conditions, consumer spending and the emergence of new technologies and payment types, such as ecommerce, mobile payments, and prepaid cards. In our Merchant Services segment, our net revenues are impacted by the mix of the size of merchants that we provide services to as well as the mix of transaction volume by merchant category. In our Financial Institution Services segment, our net revenues are also impacted by the mix of the size of financial institutions to which we provide services as well as consolidation and market and industry pressures, which have contributed and are expected to continue to contribute to pricing compression of payment processing fees in this segment. We also expect our results of operations to be impacted by the factors discussed below.

Pro Forma Adjusted Net Income

We use pro forma adjusted net income for financial and operational decision making as a means to evaluate period-to-period comparisons of our performance and results of operations. Pro forma adjusted net income is also incorporated into performance metrics underlying certain share-based payments issued under the 2012 Vantiv, Inc. Equity Incentive Plan and our variable compensation plan. We believe pro forma adjusted net income provides useful information about our performance and operating results, enhances the overall understanding of past financial performance and future prospects and allows for greater transparency with respect to key metrics used by management in its financial and operational decision making.

In calculating pro forma adjusted net income, we make certain non-GAAP adjustments, as well as pro forma adjustments, to adjust our GAAP operating results for the items discussed below. This measure should be considered together with GAAP operating results.

Non-GAAP Adjustments

Transition, Acquisition and Integration Costs

In connection with our acquisitions, we incurred costs associated with the acquisitions and related integration activities, consisting primarily of consulting fees for advisory and integration services and related personnel costs. Additionally, our expenses include costs associated with a one-time signing bonus issued to certain employees that transferred to us from Fifth Third in connection with our separation from Fifth Third in June 2009. This signing bonus contained a five-year vesting period beginning on the date of the separation. Also included are charges related to employee termination benefits. These transition, acquisition and integration costs are included in other operating costs and general and administrative expenses. For the three months ended March 31, 2014 and 2013, transition, acquisition and integration costs were $7.6 million and $3.2 million, respectively.

Share-Based Compensation

Prior to our initial public offering ("IPO") in March 2012, certain employees and directors of Vantiv Holding participated in the Vantiv Holding Management Phantom Equity Plan. In connection with the IPO, outstanding awards under the Vantiv Holding Management Phantom Equity Plan were converted into unrestricted and restricted stock,

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issued under the 2012 Vantiv, Inc. Equity Incentive Plan. Subsequent to the IPO, we have granted share-based awards to certain employees and members of our board of directors and intend to continue to grant additional share-based awards in the future. During the three months ended March 31, 2014 and 2013, we incurred share-based compensation expense of $8.9 million and $6.7 million, respectively. Share-based compensation is included in general and administrative expense.

Intangible Amortization Expense

These expenses represent amortization of intangible assets acquired through business combinations and customer portfolio and related asset acquisitions.

Pro Forma Adjustments

Income Tax Expense Adjustments

Our effective tax rate reported in our results of operations reflects the impact of our non-controlling interest not being taxed at the statutory corporate tax rate. For purposes of calculating pro forma adjusted net income, income tax expense is adjusted to reflect an effective tax rate assuming conversion of non-controlling interests into shares of Class A common stock, including the income tax effect of the non-GAAP adjustments described above. The adjusted effective tax rate for the three months ended March 31, 2014 and 2013 was 36.5% and 38.5%, respectively. The adjusted effective tax rate was primarily impacted favorably by deductions related to the federal IRC Section 199, which allows for the deduction of a portion of the income related to domestically produced computer software.

Tax Adjustments

In addition to the adjustment described above, income tax expense is also adjusted for the cash tax benefits resulting from certain tax attributes, primarily the amortization of tax intangible assets resulting from or acquired with our acquisitions, the tax basis step up associated with our separation from Fifth Third and the purchase or exchange of Class B units of Vantiv Holding, net of payment obligations under tax receivable agreements ("TRAs") established at the time of our IPO. The estimate of the cash tax benefits is based on the consistent and highly predictable realization of the underlying tax attributes.

In the fourth quarter of 2013, we entered into an agreement to terminate and settle in full our obligations to Advent International Corporation ("Advent") and JPDN Enterprises, LLC ("JPDN") under the TRAs. As a result, the full amount of the cash tax benefits resulting from the realization of the tax attributes underlying the respective TRAs is reflected in the March 31, 2014 pro forma adjusted net income.

The table below provides a reconciliation of pro forma adjusted net income to GAAP net income for the three months ended March 31, 2014 and 2013:

Three Months Ended March 31, 2014 2013 (in thousands) Income before applicable taxes $ 56,713$ 62,276 Non-GAAP Adjustments: Transition, acquisition and integration costs 7,601 3,221 Share-based compensation 8,939 6,740 Intangible amortization 32,248 30,460 Non-GAAP Adjusted Income Before Applicable Taxes 105,501 102,697 Pro Forma Adjustments: Income tax expense adjustment (38,508 ) (39,538 ) Tax adjustments 10,629 4,242 Pro Forma Adjusted Net Income $ 77,622$ 67,401 26



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Table of Contents Results of Operations



The following tables set forth our statements of income in dollars and as a percentage of net revenue for the periods presented.

Three Months Ended March 31, 2014 2013 $ Change % Change (dollars in thousands) Revenue $ 537,578$ 497,966$ 39,612 8 %



Network fees and other costs 249,046 225,065 23,981 11 Net revenue

288,532 272,901 15,631 6 Sales and marketing 78,444 75,976 2,468 3 Other operating costs 60,369 50,560 9,809 19



General and administrative 32,606 31,099 1,507 5 Depreciation and amortization 49,846 43,296 6,550 15 Income from operations $ 67,267$ 71,970$ (4,703 ) (7 )% Non-financial data: Transactions (in millions) 4,217 3,974

6 % Three Months Ended



As a Percentage of Net Revenue March 31,

2014 2013 Net revenue 100.0 % 100.0 % Sales and marketing 27.2 27.8 Other operating costs 20.9 18.5



General and administrative 11.3 11.4 Depreciation and amortization 17.3 15.9 Income from operations

23.3 % 26.4 %



Three Months Ended March 31, 2014 Compared to Three Months Ended March 31, 2013

Revenue

Revenue increased 8% to $537.6 million for the three months ended March 31, 2014 from $498.0 million for the three months ended March 31, 2013. The increase was due primarily to transaction growth of 6%. Our recent acquisition has expanded our technology partner channels and continued growth in our ecommerce channel has led to higher revenue per transaction.

Network Fees and Other Costs

Network fees and other costs increased 11% to $249.0 million for the three months ended March 31, 2014 from $225.1 million for the three months ended March 31, 2013. The increase was due primarily to transaction growth of 6% and higher network fees due to a shift in transaction mix as a result of our recent acquisitions, partially offset by debit routing benefits.

Net Revenue

Net revenue increased 6% to $288.5 million for the three months ended March 31, 2014 from $272.9 million for the three months ended March 31, 2013. The increase in net revenue was due primarily to transaction growth of 6%.

Sales and Marketing

Sales and marketing expense increased 3% to $78.4 million for the three months ended March 31, 2014 from $76.0 million for the three months ended March 31, 2013. The increase was primarily attributable to our recent acquisitions.

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Table of Contents Other Operating Costs



Other operating costs increased 19% to $60.4 million for the three months ended March 31, 2014 from $50.6 million for the three months ended March 31, 2013. The increase was primarily attributable to our recent acquisitions and an increase in information technology infrastructure in support of growth initiatives. Also contributing to the increase was a $4.4 million increase in acquisition and integration costs.

General and Administrative

General and administrative expenses increased 5% to $32.6 million for the three months ended March 31, 2014 from $31.1 million for the three months ended March 31, 2013. The increase was primarily attributable to an increase in share-based compensation of $2.2 million.

Depreciation and Amortization

Depreciation and amortization expense increased 15% to $49.8 million for the three months ended March 31, 2014 from $43.3 million for the three months ended March 31, 2013. The increase was due primarily to an increase in capital expenditures largely related to our information technology infrastructure in support of growth initiatives, as well as depreciation and amortization expense related to assets acquired in connection with our recent acquisitions, primarily consisting of amortization of customer relationship intangible assets.

Income from Operations

Income from operations decreased 7% to $67.3 million for the three months ended March 31, 2014 from $72.0 million for the three months ended March 31, 2013.

Interest Expense-Net

Interest expense - net was $10.6 million for the three months ended March 31, 2014, reflecting a slight increase compared to $9.7 million for the three months ended March 31, 2013. The increase reflects our May 2013 debt refinancing, which resulted in an increase in the amount of debt by approximately $650 million, the impact of which was substantially offset be the reduction in applicable interest rates.

Income Tax Expense

Income tax expense for the three months ended March 31, 2014 was $15.6 million compared to $17.8 million for the three months ended March 31, 2013, reflecting effective tax rates of 27.5% and 28.6%, respectively. Our effective tax rate reflects the impact of our non-controlling interest not being taxed at the statutory corporate tax rate. Further, as our non-controlling interest declines to the point Vantiv Holding is a wholly-owned subsidiary, we expect our effective rate to increase to approximately 36.5%.

As a result of the acquisition of Litle, we generated tax benefits to be recognized over a period of 15 years from the date of the acquisition. During the three months ended March 31, 2014, these benefits were approximately $2.6 million. This benefit does not have an impact on our effective tax rate; however, savings retained by us are reflected in pro forma adjusted net income discussed above.

We are currently party to two TRAs with our pre-IPO investors. The TRAs obligate us to make payments to such investors equal to 85% of the amount of cash savings, if any, in income taxes that we realize as a result of certain tax basis increases and net operating losses. We will retain the remaining 15% of cash savings. As we purchase units of Vantiv Holding from Fifth Third or as Fifth Third exchanges units of Vantiv Holding for cash or shares of Vantiv, Inc. Class A common stock in the future, we expect the associated cash savings to increase as a result of additional tax basis increases.

In the fourth quarter of 2013, we entered into an agreement to terminate and settle in full our obligations to Advent and JPDN under the TRAs. As a result, the full amount of the cash tax benefits resulting from the realization of the tax attributes underlying the respective TRAs is reflected in the March 31, 2014 pro forma adjusted net income.

During the three months ended March 31, 2014, the cash savings retained by us were approximately $8.0 million. The TRAs do not have an impact on our effective tax rate; however, savings retained by us are reflected in pro forma adjusted net income discussed above.

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Table of Contents Segment Results



The following tables provide a summary of the components of segment profit for our two segments for the three months ended March 31, 2014 and 2013.

Three Months Ended March 31, 2014 2013 $ Change % Change (dollars in thousands) Merchant Services Total revenue $ 418,766$ 385,584$ 33,182 9 % Network fees and other costs 213,440 193,996 19,444 10 Net revenue 205,326 191,588 13,738 7 Sales and marketing 71,751 70,150 1,601 2 Segment profit $ 133,575$ 121,438$ 12,137 10 % Non-financial data: Transactions (in millions) 3,310 3,123 6 % Net Revenue



Net revenue in this segment increased 7% to $205.3 million for the three months ended March 31, 2014 from $191.6 million for the three months ended March 31, 2013. The increase during the three months ended March 31, 2014 was due primarily to transaction growth of 6%. Our recent acquisition has expanded our technology partner channels and continued growth in our ecommerce channel has led to higher net revenue per transaction.

Sales and Marketing

Sales and marketing expense increased 2% to $71.8 million for the three months ended March 31, 2014 from $70.2 million for the three months ended March 31, 2013. The increase was primarily attributable to our recent acquisitions.

Three Months Ended March 31, 2014 2013 $ Change % Change (dollars in thousands) Financial Institution Services Total revenue $ 118,812$ 112,382$ 6,430 6 % Network fees and other costs 35,606 31,069 4,537 15 Net revenue 83,206 81,313 1,893 2 Sales and marketing 6,693 5,826 867 15 Segment profit $ 76,513$ 75,487$ 1,026 1 % Non-financial data: Transactions (in millions) 907 851 7 % Net Revenue



Net revenue in this segment increased 2% to $83.2 million for the three months ended March 31, 2014 from $81.3 million for the three months ended March 31, 2013. The increase during the three months ended March 31, 2014 was due primarily to an increase in transactions and higher value added services revenue. This increase was partially offset by a decrease in net revenue per transaction, which was driven by a shift in the mix of our client portfolio, resulting in a lower rate per transaction.

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Table of Contents Sales and Marketing



Sales and marketing expense increased 15% to $6.7 million for the three months ended March 31, 2014 from $5.8 million for the three months ended March 31, 2013, due primarily to personnel related costs associated with our product initiatives.

Liquidity and Capital Resources

Our liquidity is funded primarily through cash provided by operations, debt and a line of credit, which is generally sufficient to fund our operations, planned capital expenditures, tax distributions made to our non-controlling interest holders, required payments under TRAs, debt service and acquisitions. However, because payments under the TRAs are determined based on realized cash savings resulting from the underlying tax attributes, a period of declining profitability would result in a corresponding reduction in our TRA payments, thus resulting in the TRA having a minimal effect on our liquidity and capital resources. As of March 31, 2014, our principal sources of liquidity consisted of $137.0 million of cash and cash equivalents and $250.0 million of availability under the revolving portion of our senior secured credit facilities. Our total indebtedness, including capital leases, was $1.8 billion as of March 31, 2014.

In October 2013, our board of directors authorized a program to repurchase up to $137 million of our Class A common stock. During the three months ended March 31, 2014, approximately 1.1 million shares were repurchased for $34.4 million, which completed the repurchases under this authorization.

In February 2014, our board of directors authorized a program to repurchase up to an additional $300 million of our Class A common stock. No shares have been repurchased under this authorization.

In connection with our IPO, we entered into an Exchange Agreement with Fifth Third, under which Fifth Third has the right, from time to time, to exchange their units in Vantiv Holding for shares of our Class A common stock or, at our option, cash. If we choose to satisfy the exchange in cash, we anticipate that we will fund such exchange through cash from operations, funds available under the revolving portion of our senior secured credit facilities, equity financings or a combination thereof.

In addition to principal needs for liquidity discussed above, our strategy includes expansion into high growth segments and verticals, entry into new geographic markets and development of additional payment processing services.

We anticipate that to the extent that we require additional liquidity, it will be funded through the incurrence of other indebtedness, equity financings or a combination. We cannot assure you that we will be able to obtain this additional liquidity on reasonable terms, or at all. Additionally, our liquidity and our ability to meet our obligations and fund our capital requirements are also dependent on our future financial performance, which is subject to general economic, financial and other factors that are beyond our control. Accordingly, we cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available under our credit facilities or otherwise to meet our liquidity needs. If we decide to pursue one or more significant acquisitions, we may incur additional debt or sell additional equity to finance such acquisitions.

Cash Flows

The following table presents a summary of cash flows from operating, investing and financing activities for the three months ended March 31, 2014 and 2013 (in thousands).

Three Months Ended March 31, 2014 2013



Net cash provided by operating activities $ 84,696$ 156,452 Net cash used in investing activities

(46,335 ) (12,498 ) Net cash used in financing activities (72,820 ) (69,272 )



Cash Flow from Operating Activities

Net cash provided by operating activities was $84.7 million for the three months ended March 31, 2014 as compared to $156.5 million for the three months ended March 31, 2013. The decrease is primarily due to changes in net settlement assets and obligations. Settlement assets and obligations can fluctuate due to seasonality as well as the day of the month end.

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Cash Flow from Investing Activities

Net cash used in investing activities was $46.3 million for the three months ended March 31, 2014 as compared to $12.5 million for the three months ended March 31, 2013. The increase was primarily due to an increase in capital expenditures and the acquisition of customer portfolios and related assets.

Cash Flow from Financing Activities

Net cash used in financing activities was $72.8 million for the three months ended March 31, 2014 as compared to $69.3 million for the year ended March 31, 2013. Cash used in financing activities during the three months ended March 31, 2014 consists of the repayment of debt and capital leases, repurchases of Class A common stock, and payments made under the tax receivable agreements. During the three months ended March 31, 2013, net cash used in financing activities consisted primarily of debt and capital lease payments, funds used to repurchase Class A common stock to satisfy tax withholding obligations in connection with vestings of stock awards and distributions to non-controlling interests.

Credit Facilities

As of March 31, 2014, our debt consisted of the following:

March 31, 2014 (in thousands)



$1,850.0 million term A loan, maturing on May 15, 2018, and bearing interest at a variable base rate (LIBOR) plus a spread rate (175 basis points) (total rate of 1.90% at March 31, 2014) and amortizing on a basis of 1.25% during each of the first eight quarters, 1.875% during each of the second eight quarters and 2.5% during each of the following three quarters with a balloon payment due at maturity

$ 1,780,625



$10.1 million leasehold mortgage, expiring on August 10, 2021 and bearing interest payable monthly at a fixed rate (rate of 6.22% at March 31, 2014)

10,131



Less: Current portion of note payable and current portion of note payable to related party

(92,500 ) Less: Original issue discount (2,481 ) Total Long-Term Debt $ 1,695,775



In addition to the debt information in the table above, we have a $250 million revolving credit facility. This revolving credit facility matures in May 2018 and includes a $75 million swing line facility and a $40 million letter of credit facility. The commitment fee rate for the unused portion of the revolving credit facility is 0.375% per year.

As of March 31, 2014, Fifth Third held $339.2 million of the term A loans.

The loan agreement requires us to maintain a maximum leverage ratio (based upon the ratio of total funded debt to consolidated EBITDA, as defined in the loan agreement) and a minimum interest coverage ratio (based upon the ratio of consolidated EBITDA to interest expense), which are tested quarterly based on the last four fiscal quarters. The required financial ratios become more restrictive over time, with the specific ratios required by period set forth in the below table.

Leverage Interest Coverage Ratio Ratio Period (must not exceed) (must exceed)



September 30, 2013 to September 30, 2014 4.75 to 1.00 3.50 to 1.00 December 31, 2014 to September 30, 2015 4.25 to 1.00 4.00 to 1.00 December 31, 2015 to September 30, 2016 4.00 to 1.00 4.00 to 1.00 December 31, 2016 and thereafter

3.75 to 1.00 4.00 to 1.00



As of March 31, 2014, we were in compliance with these covenants with a leverage ratio of 3.03 to 1.00 and an interest coverage ratio of 16.67 to 1.00.

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Table of Contents Interest Rate Swaps



As of March 31, 2014, we had 16 outstanding interest rate swaps with a combined notional balance of $1.4 billion (amortizing to $1.1 billion) covering an exposure period from June 2013 through June 2017 that were designated as cash flow hedges of interest rate risk.

Building Loan

On July 12, 2011, we entered into a term loan agreement for approximately $10.1 million for the purchase of our corporate headquarters facility. The interest rate is fixed at 6.22%, with interest only payments required for the first 84 months. Thereafter, and until maturity, we will pay interest and principal based upon a 30 year amortization schedule, with the remaining principal amount due at maturity, August 2021.

Contractual Obligations

There have been no significant changes to contractual obligations and commitments compared to those disclosed in our Annual Report on Form 10-K as of December 31, 2013.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our audited consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate our estimates including those related to revenue recognition, goodwill and intangible assets, derivative financial instruments, income taxes and share-based compensation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

During the three months ended March 31, 2014, we have not adopted any new critical accounting policies, have not changed any critical accounting policies and have not changed the application of any critical accounting policies from the year ended December 31, 2013. Our critical accounting estimates are described fully within Management's Discussion and Analysis of Financial Condition and Results of Operations included within our Annual Report on Form 10-K filed with the SEC on February 14, 2014.

Off-Balance Sheet Arrangements

We have no off-balance sheet financing arrangements.


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Source: Edgar Glimpses