SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 25, 2004
CERTEGY INC.
(Exact name of Registrant as Specified in its Charter)
| Georgia | 001-16427 | 58-2606325 | ||
| (State or other Jurisdiction of Incorporation or Organization) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 11720 Amber Park Drive Suite 600 Alpharetta, Georgia |
30004 | |
| (Address of principal executive offices) | (Zip code) |
Registrant’s telephone number, including area code: (678) 867-8000
Not Applicable
(Former name or former address, if changed since last report)
| ITEM 7. | Financial Statements and Exhibits |
(c) Exhibits:
| Exhibit No. |
Description | |
| 99.1 | Certegy Inc. slideshow presentation for the Robert W. Baird & Co. 2004 Business Solutions Conference in New York City on February 25, 2004 (furnished pursuant to Item 9 of Form 8-K). | |
| ITEM 9. | Regulation FD Disclosure |
Certegy Inc. (“Certegy”) is furnishing the following information and Exhibit pursuant to Item 9 of Form 8-K.
On February 25, 2004, Certegy will present a slideshow presentation at the Robert W. Baird & Co. 2004 Business Solutions Conference in New York City. A copy of the slideshow presentation, which, among other things, contains revised projections of Certegy’s financial results for fiscal year 2004, is attached as Exhibit 99.1. A live Webcast of the presentation will be available at Certegy’s website www.certegy.com. Replays of the Webcast presentation will be available for 14 days following the event, usually within 24 hours of the presentation.
The information in the Report, including the Exhibit attached hereto, is furnished solely pursuant to Item 9 of this Form 8-K. Consequently, it is not deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section. It may only be incorporated by reference in another filing under the Exchange Act or Securities Act of 1933 if such subsequent filing specifically references this Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CERTEGY INC. | ||||||||
| By: | /s/ Michael T. Vollkommer | |||||||
| Date: February 25, 2004 | Michael T. Vollkommer Corporate Vice President and Chief Financial Officer | |||||||
EXHIBIT 99.1
Robert W. Baird & Co. Business Solutions Conference February 25, 2004
Forward-Looking Statements
The statements in this presentation include forward-looking statements that are based on current expectations, assumptions, estimates, and projections about Certegy and our industry.
They are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Certegy’s control, that may cause actual results to differ significantly from what is expressed in those statements.
Factors that could, either individually or in the aggregate, affect our performance include the following, which are described in greater detail in the section entitled “Certain Factors Affecting Forward-Looking Statements” in our 2003 Annual Report on Form 10-K filed on February 17, 2004, with the SEC: Our reliance on a small number of financial industries for the majority of our revenues; our reliance on key strategic relationships; the necessity to maintain qualifications set by bank card associations in order to continue to provide transaction processing services; potential liability when merchant customers cannot or do not reimburse us for charge-backs resolved in favor of cardholders, or when checks we guarantee are dishonored by the check writer’s bank; potential loss of customers from continued consolidation in the financial services and in retail industries; a prolonged and permanent decline in check writing; changes in regulation or industry standards applicable to our businesses or those of our customers; the level of economic growth or other factors affecting demand for our products and services; ability to maintain or improve our competitive positions against current and potential competitors; database security and reliability of our information technology systems; risks associated with investments and operations in foreign countries, including exchange rate fluctuations and local political, social, and economic factors; and those other risks listed in the above-referenced section of our Form 10-K.
Business Overview
Global provider of . . .
Card
Processing & Support Services
Check
Risk Management Services
To . . .
Community Banks
Credit Unions
Multinational Banks
Private Label Issuers
Retailers
Gaming
Supermarkets
. . . with operations in high growth markets throughout the world…
Global Presence
Canada
United States
United Kingdom
Ireland
France
Dominican Republic
Chile
Brazil
Thailand
Australia
New Zealand
Card
Check
Both
Broad Reach in Key Geographic Regions
2003 Revenue Composition
By Segment
Card
63%
37%
Check
By Region
Domestic
84%
16%
Int’l
Over $1.0 Billion Total Revenue in 2003
Card Services
Card Services
Transaction Processing
Credit
Debit
Stored Value
E-Banking
Loyalty Programs
Cardholder Support Services
Comprehensive Products and Services
U.S. Market Summary
• Strong, Stable Niche Market
• High Barriers to Entry
• Exclusive Association Relationships
• Strong Growth Opportunity
U.S. Community Bank & Credit Union Credit Card Market
18,700 Financial Institutions
Non-Issuing 9,700
52%
Certegy 6,800 Crittson
36%
12%
Competition 2,200
Source: NCUA, ICBA, Company Estimates
Significant Growth Opportunity
Crittson Financial LLC
• Full service card issuing and merchant processing services
– 275 issuing institutions
– 450,000 cardholders
– 8,500 merchants
• Excellent strategic fit
• Leverages existing operation
• Significant cross selling opportunities
International Card Market
• Issuer Globalization
• Card Issuer Challenges
– Outdated Technology
– Scale Limitations
– Product Limitations
• Portfolio Profit Pressures
Trend Toward Outsourcing
Certegy Advantages
• Strategically Located Operating Centers
• World Class Technology and Services
– Feature Function Rich
– Scalable
– Cost Effective
– Broadest Range of Products and Services
– Tested and Proven
• Low Capital Investment Requirements
Best In Class Card Processing
Global Card Growth
(cards, in millions)
24.3
1998
29.9
1999
35.1
2000
41.7
2001
46.7
2002
46.4
2003
International
North America
Vast Market Opportunity
Check Services
Competitive Position
Superior Productsand Services
• Comprehensive
• Flexible
• Speed-to-Market
Industry Leader
Proprietary Technology
• Superior Models
• Flexible
• Cost Effective
Leading Provider of Risk Management Services
Check Services
Risk Management
Collections
Data Sales
Verification
Guarantee
Check Cashing
E-Check
Broadest Range of Services
Market Dynamics
Available Market
Outsourcing
Check Fraud
Check Usage
% Outsourced
53%
2001
80%
2010
Source: Nilson
Trend Toward Outsourcing
Risk Decisioning Evolution
Competitive Advantage
Rules Based Decisioning
1970
Artificial Intelligence Modeling
1997
Proprietary Fraud Modeling
2002
Consumer Based Decisioning
2004
Technological Innovation
Best in Class Decisioning Models
Leveraging Core Competencies
New Products andServices
• Cash Access
– Cash Advance
– ATM Services
– Check Cashing
New VerticalIndustries
• International
• Grocery
• Gaming
Growth Opportunities
Game Financial
• Strategic fit for fastest growing segment of Check Services
• A leading provider of cash access services
• Satisfies gaming industry demand for single source cash access provider:
– Cash Advance
– ATM Services
– Check Cashing
Over $400 Million Gaming Market Opportunity
Financial Summary
2004 Guidance – Revised for Acquisitions
Growth*
2004 Previous Revised
Revenue $1.148B-$1.168B + 7% to 9% + 13% to 15%
Operating Income $186.0M to $191.6M +9% to 12% + 12% to 15%
Interest/Other $ 11.6M to $12.0M + 5.3M to $5.7M +$6.0M to $6.4M
EPS $1.67 to $ 1.73 + 8% to 12% + 8% to 12%
Cap Ex $49 Million + $ 1 Million + $ 5 Million
*Growth rates compared with 2003 Non-GAAP results, which exclude other charges and accounting change, to provide a more meaningful comparison.
2003 GAAP to Non-GAAP Reconciliation
Operating
Income EPS Description
GAAP $154.4M $ 1.40 As reported
Charges 12.2M 0.12 Contract termination and other charges
Acct’g Change — 0.02 Cumulative effect of FIN 46 adoption
Non-GAAP $166.6M $ 1.54
