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MANAGEMENT'S DISCUSSION AND ANALYSIS
[July 31, 2014]

MANAGEMENT'S DISCUSSION AND ANALYSIS


(Edgar Glimpses Via Acquire Media NewsEdge) 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 Annual Report on Form 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 strategy 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 base of clients 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 integrated point-of-sale software developers and dealers; 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 June 30, 2014 increased 17% to $608.7 million from $519.4 million in 2013. Revenue for the six months ended June 30, 2014 increased 13% to $1,146.3 million from $1,017.4 million in 2013.

Income from operations for the three months ended June 30, 2014 decreased 52% to $46.5 million from $96.8 million in 2013. Income from operations for the six months ended June 30, 2014 decreased 33% to $113.8 million from $168.8 million in 2013.

28 -------------------------------------------------------------------------------- Table of Contents Net income for the three months ended June 30, 2014 decreased 93% to $3.3 million from $46.0 million in 2013. Net income attributable to Vantiv, Inc. for the three months ended June 30, 2014 decreased 105% to a loss of $1.4 million from income of $28.9 million in 2013. Net income for the six months ended June 30, 2014 decreased 51% to $44.4 million from $90.4 million in 2013. Net income attributable to Vantiv, Inc. for the six months ended June 30, 2014 decreased 51% to $26.7 million from $55.0 million in 2013. The decrease in net income attributable to Vantiv, Inc. for the three months and six months ended June 30, 2014 is primarily the result of a charge related to phasing out a trade name, the refinancing of our senior secured credit facilities and an increase in transition, acquisition and integration costs.

In October 2013, our board of directors authorized a program to repurchase up to $137 million of our Class A common stock. During the six months ended June 30, 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 Class A common stock. We did not receive any proceeds from the sale.

In June 2014, a secondary offering took place in which Fifth Third sold 5.8 million shares of Class A common stock. We did not receive any proceeds from the sale.

Recent Acquisitions On June 13, 2014, we acquired Mercury Payment Services, LLC ("Mercury") for approximately $1.681 billion in cash and $137.1 million in contingent consideration related to a tax receivable agreement ("TRA"). We funded the Mercury acquisition by borrowing an additional $1.7 billion through an amendment and refinancing of our senior secured credit facilities. Simultaneously and in connection with the Mercury acquisition, we entered into a Tax Receivable Agreement (the "Mercury TRA") with pre-acquisition owners of Mercury ("Mercury TRA Holders") and recorded an initial Mercury TRA liability of $137.1 million, which is considered contingent consideration.

Mercury is a payment technology and service leader whose solutions are integrated into point-of-sale software applications and brought to market through dealer and developer partners. This acquisition helps to accelerate our growth in the integrated payments channel. The operations of Mercury are included in our Merchant Services segment operating results.

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 integrated point-of-sale developers and dealers and positions us to increase our presence in the integrated payments channel.

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 500,000 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 net revenue per transaction.

29 -------------------------------------------------------------------------------- Table of Contents 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.

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: 30-------------------------------------------------------------------------------- Table of Contents • 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 acquired in connection with the acquisition of a majority interest in Vantiv Holding in June 2009 and our subsequent acquisitions. Depreciation and amortization expense in the three and six months ended June 30, 2014 also includes a charge related to phasing out a trade name.

• 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-operating expenses primarily relate to the refinancing of our senior secured credit facilities (see Note 5 - Long-Term Debt) and the change in fair value of a tax receivable agreement (see Note 4 - Tax Receivable Agreements) in June 2014. The 2013 amount relates to the refinancing of our senior secured credit facilities in May 2013.

Non-Controlling Interest As a result of the non-controlling ownership interest in Vantiv Holding held by Fifth Third Bank ("Fifth Third") and non-controlling interest in a consolidated joint venture, our results of operations include net income attributable to non-controlling interests. Net income attributable to non-controlling interests for the three months ended June 30, 2014 and 2013 was $4.7 million and $17.1 million, respectively. Net income attributable to non-controlling interests for the six months ended June 30, 2014 and 2013 was $17.7 million and $35.4 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.

31 -------------------------------------------------------------------------------- Table of Contents 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 June 30, 2014 and 2013, transition, acquisition and integration costs were $15.1 million and $2.8 million, respectively. For the six months ended June 30, 2014 and 2013, transition, acquisition and integration costs were $22.7 million and $6.0 million, respectively.

Share-Based Compensation 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 June 30, 2014 and 2013, we incurred share-based compensation expense of $11.1 million and $7.2 million, respectively. During the six months ended June 30, 2014 and 2013, we incurred share-based compensation expense of $20.0 million and $13.9 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. For the three and six months ended June 30, 2014, intangible amortization expense also included a $34.3 million charge related to phasing out a trade name.

Non-operating Expenses For the three and six months ended June 30, 2014, we recorded $27.7 million within non-operating expenses related to the refinancing of our senior secured credit facilities and the change in fair value of the Mercury TRA. For the three and six months ended June 30, 2013, we recorded $20.0 million within non-operating expenses related to the refinancing of our senior secured credit facilities in May 2013.

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 Fifth Third's non-controlling interest 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 and six months ended June 30, 2014 and 2013 was 36.5% and 38.5%, respectively. The 2014 adjusted effective tax rate was primarily impacted favorably by deductions related to Internal Revenue Code 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 established at the time of 32 -------------------------------------------------------------------------------- Table of Contents our IPO and in connection with our acquisition of Mercury. 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 June 30, 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 and six months ended June 30, 2014 and 2013: Three Months Ended June 30, Six Months Ended June 30, 2014 2013 2014 2013 (in thousands) (in thousands) Income before applicable taxes $ 5,333 $ 66,914 $ 62,046 $ 129,190 Non-GAAP Adjustments: Transition, acquisition and integration costs 15,065 2,799 22,666 6,020 Share-based compensation 11,105 7,190 20,044 13,930 Intangible amortization 70,101 30,446 102,349 60,906 Non-operating expenses 27,656 20,000 27,656 20,000 Non-GAAP Adjusted Income Before Applicable Taxes 129,260 127,349 234,761 230,046 Pro Forma Adjustments: Income tax expense adjustment (47,180 ) (49,029 ) (85,688 ) (88,567 ) Tax adjustments 10,958 4,394 21,587 8,636 Less: JV non-controlling interest (301 ) - (301 ) - Pro Forma Adjusted Net Income $ 92,737 $ 82,714 $ 170,359 $ 150,115 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 June 30, 2014 2013 $ Change % Change (dollars in thousands) Revenue $ 608,731 $ 519,409 $ 89,322 17 % Network fees and other costs 277,392 222,502 54,890 25 Net revenue 331,339 296,907 34,432 12 Sales and marketing 90,507 76,436 14,071 18 Other operating costs 56,754 49,268 7,486 15 General and administrative 48,552 29,862 18,690 63 Depreciation and amortization 89,041 44,528 44,513 100 Income from operations $ 46,485 $ 96,813 $ (50,328 ) (52 )% Non-financial data: Transactions (in millions) 4,843 4,195 15 % 33 -------------------------------------------------------------------------------- Table of Contents Three Months EndedAs a Percentage of Net Revenue June 30, 2014 2013 Net revenue 100.0 % 100.0 % Sales and marketing 27.3 25.7 Other operating costs 17.1 16.6 General and administrative 14.7 10.1 Depreciation and amortization 26.9 15.0 Income from operations 14.0 % 32.6 % Six Months Ended June 30, 2014 2013 $ Change % Change (dollars in thousands) Revenue $ 1,146,309 $ 1,017,375 $ 128,934 13 % Network fees and other costs 526,438 447,567 78,871 18 Net revenue 619,871 569,808 50,063 9 Sales and marketing 168,951 152,412 16,539 11 Other operating costs 117,123 99,828 17,295 17 General and administrative 81,158 60,961 20,197 33 Depreciation and amortization 138,887 87,824 51,063 58 Income from operations $ 113,752 $ 168,783 $ (55,031 ) (33 )% Non-financial data: Transactions (in millions) 9,060 8,169 11 % As a Percentage of Net Revenue Six Months Ended June 30, 2014 2013 Net revenue 100.0 % 100.0 % Sales and marketing 27.3 26.8 Other operating costs 18.9 17.5 General and administrative 13.1 10.7 Depreciation and amortization 22.4 15.4 Income from operations 18.4 % 29.6 % Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013 and Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013 Revenue Revenue increased 17% to $608.7 million for the three months ended June 30, 2014 from $519.4 million for the three months ended June 30, 2013. The increase during the three months ended June 30, 2014 was due primarily to transaction growth of 15%, including the impact of our recent acquisitions.

Revenue increased 13% to $1,146.3 million for the six months ended June 30, 2014 from $1,017.4 million for the six months ended June 30, 2013. The increase during the six months ended June 30, 2014 was due primarily to transaction growth of 11%, including the impact of our recent acquisitions.

34 -------------------------------------------------------------------------------- Table of Contents Network Fees and Other Costs Network fees and other costs increased 25% to $277.4 million for the three months ended June 30, 2014 from $222.5 million for the three months ended June 30, 2013. The increase was due primarily to transaction growth of 15%, including the impact of our recent acquisitions, and to a lesser extent an increase in third party processing costs.

Network fees and other costs increased 18% to $526.4 million for the six months ended June 30, 2014 from $447.6 million for the six months ended June 30, 2013.

The increase was due primarily to transaction growth of 11%, including the impact of our recent acquisitions, and to a lesser extent an increase in third party processing costs.

Net Revenue Net revenue increased 12% to $331.3 million for the three months ended June 30, 2014 from $296.9 million for the three months ended June 30, 2013. The increase in net revenue was due to the factors discussed above.

Net revenue increased 9% to $619.9 million for the six months ended June 30, 2014 from $569.8 million for the six months ended June 30, 2013. The increase in net revenue was due to the factors discussed above.

Sales and Marketing Sales and marketing expense increased 18% to $90.5 million for the three months ended June 30, 2014 from $76.4 million for the three months ended June 30, 2013.

The increase was largely attributable to our recent acquisitions and personnel related costs.

Sales and marketing expense increased 11% to $169.0 million for the six months ended June 30, 2014 from $152.4 million for the six months ended June 30, 2013.

The increase was largely attributable to our recent acquisitions and personnel related costs.

Other Operating Costs Other operating costs increased 15% to $56.8 million for the three months ended June 30, 2014 from $49.3 million for the three months ended June 30, 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 $1.3 million increase in acquisition and integration costs.

Other operating costs increased 17% to $117.1 million for the six months ended June 30, 2014 from $99.8 million for the six months ended June 30, 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 $5.8 million increase in acquisition and integration costs.

General and Administrative General and administrative expenses increased 63% to $48.6 million for the three months ended June 30, 2014 from $29.9 million for the three months ended June 30, 2013. The increase was primarily attributable to our recent acquisitions and increases in acquisition and integration costs and share-based compensation of $10.9 million and $3.9 million, respectively.

General and administrative expenses increased 33% to $81.2 million for the six months ended June 30, 2014 from $61.0 million for the six months ended June 30, 2013. The increase was primarily attributable to our recent acquisitions and increases in acquisition and integration costs and share-based compensation of $10.9 million and $6.1 million, respectively.

Depreciation and Amortization Depreciation and amortization expense increased 100% to $89.0 million for the three months ended June 30, 2014 from $44.5 million for the three months ended June 30, 2013. The increase was due primarily to a $34.3 million charge related to phasing out a trade name, 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.

35 -------------------------------------------------------------------------------- Table of Contents Depreciation and amortization expense increased 58% to $138.9 million for the six months ended June 30, 2014 from $87.8 million for the six months ended June 30, 2013. The increase was due primarily to a $34.3 million charge related to phasing out a trade name, 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 52% to $46.5 million for the three months ended June 30, 2014 from $96.8 million for the three months ended June 30, 2013.

Income from operations decreased 33% to $113.8 million for the six months ended June 30, 2014 from $168.8 million for the six months ended June 30, 2013.

Interest Expense-Net Interest expense - net was $13.5 million for the three months ended June 30, 2014, reflecting an increase compared to $9.9 million for the three months ended June 30, 2013. Interest expense - net was $24.1 million for the six months ended June 30, 2014, reflecting an increase compared to $19.6 million for the six months ended June 30, 2013. Interest expense - net for the three and six months ended June 30, 2014 reflects our May 2013 and June 2014 debt refinancings, which resulted in increases in the amount of debt of approximately $650 million and $1.7 billion, respectively.

Non-Operating Expenses Non-operating expenses were $27.7 million for the three months and six months ended June 30, 2014, which consisted of a charge related to the refinancing of our senior secured credit facilities and the change in fair value of the Mercury TRA entered into in June 2014.

Non-operating expenses were $20.0 million for the three months and six months ended June 30, 2013, which consisted of a charge related to the refinancing of our senior credit facilities in May 2013.

Income Tax Expense Income tax expense for the three months ended June 30, 2014 was $2.0 million compared to $20.9 million for the three months ended June 30, 2013, reflecting effective tax rates of 37.9% and 31.3%, respectively. Income tax expense for the six months ended June 30, 2014 was $17.6 million compared to $38.8 million for the six months ended June 30, 2013, reflecting effective tax rates of 28.4% and 30.0%, 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 & Co., LLC in 2012, we generated tax benefits to be recognized over a period of 15 years from the date of the acquisition. During the six months ended June 30, 2014, these benefits were approximately $5.3 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 Fifth Third. 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 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 June 30, 2014 pro forma adjusted net income.

Simultaneously and in connection with the Mercury acquisition, we entered into a tax receivable agreement with pre-acquisition owners of Mercury. The Mercury TRA obligates us to make payments to the Mercury TRA Holders 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.

36-------------------------------------------------------------------------------- Table of Contents During the six months ended June 30, 2014, the cash savings retained by us were approximately $16.3 million for these TRAs. These 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.

Segment Results The following tables provide a summary of the components of segment profit for our two segments for the three months and six months ended June 30, 2014 and 2013.

Three Months Ended June 30, 2014 2013 $ Change % Change (dollars in thousands) Merchant Services Total revenue $ 488,143 $ 398,553 $ 89,590 22 % Network fees and other costs 242,569 187,726 54,843 29 Net revenue 245,574 210,827 34,747 16 Sales and marketing 84,014 70,350 13,664 19 Segment profit $ 161,560 $ 140,477 $ 21,083 15 % Non-financial data: Transactions (in millions) 3,866 3,273 18 % Six Months Ended June 30, 2014 2013 $ Change $ Change (dollars in thousands) Merchant Services Total revenue $ 906,909 $ 784,137 $ 122,772 16 % Network fees and other costs 456,009 381,722 74,287 19 Net revenue 450,900 402,415 48,485 12 Sales and marketing 155,765 140,500 15,265 11 Segment profit $ 295,135 $ 261,915 $ 33,220 13 % Non-financial data: Transactions (in millions) 7,177 6,396 12 % Net Revenue Net revenue in this segment increased 16% to $245.6 million for the three months ended June 30, 2014 from $210.8 million for the three months ended June 30, 2013. The increase during the three months ended June 30, 2014 was due primarily to transaction growth of 18%, including the impact of our recent acquisitions.

Net revenue in this segment increased 12% to $450.9 million for the six months ended June 30, 2014 from $402.4 million for the six months ended June 30, 2013.

The increase during the six months ended June 30, 2014 was due primarily to transaction growth of 12%, including the impact of our recent acquisitions.

Sales and Marketing Sales and marketing expense increased 19% to $84.0 million for the three months ended June 30, 2014 from $70.4 million for the three months ended June 30, 2013.

The increase was primarily attributable to our recent acquisitions and investments in high growth channels.

Sales and marketing expense increased 11% to $155.8 million for the six months ended June 30, 2014 from $140.5 million for the six months ended June 30, 2013.

The increase was primarily attributable to our recent acquisitions and investments in high growth channels.

37-------------------------------------------------------------------------------- Table of Contents Three Months Ended June 30, 2014 2013 $ Change % Change (dollars in thousands) Financial Institution Services Total revenue $ 120,588 $ 120,856 $ (268 ) - % Network fees and other costs 34,823 34,776 47 - Net revenue 85,765 86,080 (315 ) - Sales and marketing 6,493 6,086 407 7 Segment profit $ 79,272 $ 79,994 $ (722 ) (1 )% Non-financial data: Transactions (in millions) 977 922 6 % Six Months Ended June 30, 2014 2013 $ Change % Change Financial Institution Services Total revenue $ 239,400 $ 233,238 $ 6,162 3 % Network fees and other costs 70,429 65,845 4,584 7 Net revenue 168,971 167,393 1,578 1 Sales and marketing 13,186 11,912 1,274 11 Segment profit $ 155,785 $ 155,481 304 - % Non-financial data: Transactions (in millions) 1,883 1,773 6 % Net Revenue Net revenue in this segment decreased slightly to $85.8 million for the three months ended June 30, 2014 from $86.1 million for the three months ended June 30, 2013.

Net revenue in this segment increased 1% to $169.0 million for the six months ended June 30, 2014 from $167.4 million for the six months ended June 30, 2013.

The increase during the six months ended June 30, 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.

Sales and Marketing Sales and marketing expense increased 7% to $6.5 million for the three months ended June 30, 2014 from $6.1 million for the three months ended June 30, 2013, due primarily to personnel related costs associated with our product initiatives.

Sales and marketing expense increased 11% to $13.2 million for the six months ended June 30, 2014 from $11.9 million for the six months ended June 30, 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 June 30, 2014, our principal sources of liquidity consisted of $230.7 million of cash and cash equivalents and $425.0 million of availability under the revolving portion of our senior secured credit facilities. Our total indebtedness, including capital leases, was $3.5 billion as of June 30, 2014.

38 -------------------------------------------------------------------------------- Table of Contents 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 its 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 six months ended June 30, 2014 and 2013 (in thousands).

Six Months Ended June 30, 2014 2013 Net cash provided by operating activities $ 256,460 $ 299,029 Net cash used in investing activities (1,742,099 ) (38,227 ) Net cash provided by financing activities 1,544,867 144,731 Cash Flow from Operating Activities Net cash provided by operating activities was $256.5 million for the six months ended June 30, 2014 as compared to $299.0 million for the six months ended June 30, 2013. The decrease is due primarily to changes in working capital, principally related 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.

Cash Flow from Investing Activities Net cash used in investing activities was $1,742.1 million for the six months ended June 30, 2014 as compared to $38.2 million for the six months ended June 30, 2013. The increase was primarily due to the acquisition of Mercury as well as an increase in capital expenditures and the acquisition of customer portfolios and related assets.

Cash Flow from Financing Activities Net cash provided by financing activities was $1,544.9 million for the six months ended June 30, 2014 as compared to $144.7 million for the six months ended June 30, 2013. Cash provided by financing activities during the six months ended June 30, 2014 consisted primarily of proceeds from the June 2014 refinancing, partially offset by the repayment of existing debt, related debt issuance costs and capital leases, the net impact of which was an inflow of $1,598.7 million. Additional financing activities included repurchases of Class A common stock, payments made under the tax receivable agreements and tax distributions of $5.5 million to our non-controlling interest holders. During the six months ended June 30, 2013, net cash provided by financing activities consisted primarily of proceeds from the May 2013 debt refinancing, partially offset by the repayment of existing debt, related debt issuance costs, the repurchase of Class A common stock, and tax distributions to our non-controlling interest holders.

Credit Facilities 39 -------------------------------------------------------------------------------- Table of Contents On June 13, 2014, the Company completed a debt refinancing by entering into an amended and restated loan agreement. The amended loan agreement provides for senior secured credit facilities comprised of a $2.05 billion term A loan, a $1.4 billion term B loan and a $425 million revolving credit facility. Proceeds from the refinancing were primarily used to fund the Mercury acquisition and repay the existing term A loan with an outstanding balance of approximately $1.8 billion. At June 30, 2014, the Company had $2.05 billion and $1.4 billion outstanding under the term A and term B loans, respectively, and there were no outstanding borrowings on the Company's revolving credit facility. See additional discussion in Note 5 - Long-Term Debt to the Notes to Unaudited Consolidated Financial Statements.

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 will be tested quarterly based on the last four fiscal quarters, commencing on September 30, 2014. 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, 2014 to March 31, 2015 6.50 to 1.00 4.00 to 1.00 June 30, 2015 to September 30, 2016 6.25 to 1.00 4.00 to 1.00 December 31, 2016 to September 30, 2017 5.50 to 1.00 4.00 to 1.00 December 31, 2017 to September 30, 2018 4.75 to 1.00 4.00 to 1.00 December 31, 2018 and thereafter 4.25 to 1.00 4.00 to 1.00 Interest Rate Swaps As of June 30, 2014, we had 12 outstanding interest rate swaps with a combined notional balance of $1.3 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.

Contractual Obligations The following describes significant additional contractual obligations and commitments that have arisen subsequent to those disclosed in our Annual Report on Form 10-K as of December 31, 2013.

Tax Receivable Agreements In connection with a secondary offering in June 2014, Fifth Third exchanged Class B units of Vantiv Holding for shares of Vantiv, Inc. Class A common stock, resulting in an additional liability of $109.4 million under a TRA with Fifth Third. In connection with the acquisition of Mercury in June 2014, the Company entered into a TRA with pre-acquisition owners of Mercury resulting in an initial TRA liability of $137.1 million. There are no payment obligations due on any of our TRAs during the remainder of 2014. Payment obligations subsequent to 2014 are $74.1 million during 2015 and 2016, $134.6 million during 2017 and 2018, and $1,065.8 million thereafter.

Borrowings As a result of our debt refinancing in June 2014 discussed above, total principal and variable interest payments due under our senior secured credit facilities and our loan agreement for our corporate headquarters facility are as follows: $112.6 million during the remainder of 2014, $422.8 million during 2015 and 2016, $512.9 million during 2017 and 2018, and $2,978.9 million thereafter.

Variable interest payments were calculated using interest rates as of June 30, 2014.

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 40-------------------------------------------------------------------------------- Table of Contents 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 six months ended June 30, 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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