| UNITED STATES 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)
October 21, 2004
CERTEGY INC.
(Exact name of registrant as specified in its charter)
| Georgia | 001-16427 | 58-2606325 | ||
| (State or Other Jurisdiction of Incorporation) |
(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) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On October 21, 2004, Certegy Inc. (“Certegy”) issued a press release to announce its financial results for the third quarter of 2004. A copy of the press release is attached as Exhibit 99.1.
The information in the Report, including the Exhibit attached hereto, is furnished solely pursuant to Item 2.02 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.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
| Exhibit No. |
Description | |
| 99.1 | Certegy Inc. press release dated October 21, 2004, announcing the Company’s financial results for the third quarter of 2004 (furnished pursuant to Item 2.02 of 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: October 21, 2004 | Michael T. Vollkommer Corporate Vice President and Chief Financial Officer | |||
Exhibit 99.1
| Press Release | Certegy Inc. | |
| 11720 Amber Park Drive | ||
| Suite 600 | ||
| Alpharetta, Georgia 30004 | ||
| Date: October 21, 2004 | Phone: 678-867-8000 | |
| Fax: 678-867-8102 | ||
| Contact: Mary Waggoner | ||
| Certegy Inc. | ||
| VP - Investor and Public Relations | ||
| 678-867-8004 | ||
FOR IMMEDIATE RELEASE
CERTEGY REPORTS THIRD QUARTER 2004 DILUTED EPS OF $0.46
PLAN APPROVED TO SELL MERCHANT ACQUIRING BUSINESS
Alpharetta, GA, October 21, 2004 – Certegy Inc. (NYSE:CEY) today reported third quarter 2004 diluted earnings per share of $0.46. The Certegy Inc. Board of Directors has approved a plan to sell the Company’s retail merchant acquiring business, which has been reclassified as a discontinued operation in the accompanying financial statements and discussion of results.
THIRD QUARTER FINANCIAL HIGHLIGHTS
Highlights of the 2004 third quarter results as compared to the prior year quarter are as follows:
| • | Revenue increased 13.2% to $262.7 million. |
| • | Operating income increased 12.6% to $47.1 million. |
| • | Interest expense of $3.3 million increased $1.2 million. |
| • | Net income increased 10.5% to $29.1 million, comprised of $27.8 million from continuing operations and $1.3 million from discontinued operations. |
| • | Diluted earnings per share increased 15.0% to $0.46 per share, comprised of $0.44 from continuing operations and $0.02 from discontinued operations. |
| • | Approximately $47.8 million was used to repurchase 1.2 million shares of common stock. |
“We are pleased to report another solid quarter of revenue and earnings growth,” stated Lee Kennedy, chairman and chief executive officer of Certegy. “We are particularly pleased with the performance of our Check Services and international card processing business.”
SEGMENT RESULTS
Card Services generated revenue of $149.5 million in the third quarter of 2004, an increase of 6.7% above the 2003 quarter. Revenue growth of 5.2% in the Company’s North American card issuing operation resulted from growth in transactions, new customer signings, sales of e-banking services and card loyalty programs, and revenue from the acquisition of Crittson Financial LLC, which closed in the first quarter. International card issuing revenue increased by 26.0%, primarily due to growth from existing customers, card re-issuance fees, and the third quarter 2004 acquisition of Caribbean CariCard Services. Card Services operating income of $36.7 million increased 5.1%, compared to $34.9 million in the third quarter of 2003. Card Services operating margin was 24.5%, compared to 24.9% in the third quarter of 2003.
Check Services generated revenue of $113.1 million in the third quarter of 2004, an increase of 23.3% above the 2003 quarter. The strong performance was driven by growth in the Company’s domestic and international customer base, and growth in cash access services, including the first quarter 2004 acquisition of Game Financial Corporation. Check Services operating income of $15.5 million increased 30.6%, compared to $11.9 million in the third quarter of 2003. Check Services operating margin was 13.7%, compared to 12.9% in the third quarter of 2003.
Corporate expense of $5.1 million increased 2.9% over the prior year quarter. The increase in corporate expense has moderated from the first half of 2004 due to favorable insurance premium renewals and the containment of discretionary costs.
Interest expense of $3.3 million increased by $1.2 million compared to the third quarter of 2003. Higher interest rates on the Company’s borrowings driven by the September 2003 issuance of 4.75% fixed rate notes, higher average outstanding revolving credit borrowings, and the impact of FIN 46 lease accounting, effective December 31, 2003, generated the increase in interest expense.
DISCONTINUED OPERATIONS
The Board of Directors of Certegy Inc has approved a plan to sell the Company’s retail merchant acquiring business. The Company will continue to provide clearing and settlement processing services to its North American financial institution customers. In the third quarters of 2004 and 2003, income from discontinued operations amounted to $0.02 per diluted share.
OUTLOOK
The Company expects revenue growth of 14% to 16% in the fourth quarter of 2004, and diluted earnings per share from continuing operations of $0.53 to $0.55. Discontinued operations could contribute an additional $0.02 per diluted share, if held for the entire quarter. The Company expects to realize an undisclosed gain upon sale of the merchant acquiring business, which is not included in these per share amounts.
TELECONFERENCE
Management will host a teleconference to discuss second quarter earnings on Thursday, October 21, 2004, at 9:00 a.m. Eastern Time. The live audio Webcast will be available at www.certegy.com. Please be advised that Microsoft’s Windows Media Player™ must be downloaded prior to accessing the Webcast. It can be downloaded from www.microsoft.com/windows/mediaplayer. A replay of the Webcast will be available in the Investor Center section of the website after the call ends.
###
Certegy (NYSE:CEY) provides credit and debit processing, check risk management and check cashing services, merchant processing and e-banking services to over 6,500 financial institutions, 117,000 retailers and 100 million consumers worldwide. Headquartered in Alpharetta, Georgia, Certegy maintains a strong global presence with operations in the United States, United Kingdom, Ireland, France, Chile, Brazil, Australia, New Zealand, Thailand and the Caribbean. As a leading payment services provider, Certegy offers a comprehensive range of transaction processing services, check risk management solutions and integrated customer support programs that facilitate the exchange of business and consumer payments. Certegy generated over $1.0 billion in revenue in 2003. For more information on Certegy, please visit www.certegy.com.
###
Forward-Looking Statements
The statements in this release include forward-looking statements that are based on current expectations, assumptions, estimates, and projections about Certegy and our industry. Without limitation, Certegy’s revenue, operating income and earnings per share projections for fiscal 2004 under the heading “Outlook” above are forward-looking statements. Forward-looking statements 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: our reliance on a small number of business segments and strategic relationships; our ability to comply with bankcard association rules and government regulations; the sensitivity of our business to the economy; the results of our acquisitions; and other factors described in 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.
CERTEGY INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Revenues |
$ | 262,660 | $ | 231,952 | ||||
| Operating expenses(1): |
||||||||
| Costs of services |
186,142 | 162,244 | ||||||
| Selling, general and administrative |
29,465 | 27,922 | ||||||
| 215,607 | 190,166 | |||||||
| Operating income |
47,053 | 41,786 | ||||||
| Other income, net |
294 | 474 | ||||||
| Interest expense |
(3,259 | ) | (2,045 | ) | ||||
| Income from continuing operations before income taxes |
44,088 | 40,215 | ||||||
| Provision for income taxes |
(16,313 | ) | (14,980 | ) | ||||
| Income from continuing operations |
27,775 | 25,235 | ||||||
| Income from discontinued operations, net of taxes of $0.8 million and $0.6 million, respectively |
1,325 | 1,090 | ||||||
| Net income |
$ | 29,100 | $ | 26,325 | ||||
| Basic earnings per share: |
||||||||
| Income from continuing operations |
$ | 0.44 | $ | 0.39 | ||||
| Income from discontinued operations |
0.02 | 0.02 | ||||||
| Net income |
$ | 0.46 | $ | 0.40 | ||||
| Average shares outstanding |
62,588 | 65,019 | ||||||
| Diluted earnings per share: |
||||||||
| Income from continuing operations |
$ | 0.44 | $ | 0.38 | ||||
| Income from discontinued operations |
0.02 | 0.02 | ||||||
| Net income |
$ | 0.46 | $ | 0.40 | ||||
| Average shares outstanding |
63,849 | 65,820 | ||||||
| Revenues and operating income of the Company’s reportable segments for the three months ended September 30, 2004 and 2003 are as follows: |
||||||||
| Three Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Revenues: |
||||||||
| Card Services |
$ | 149,542 | $ | 140,209 | ||||
| Check Services |
113,118 | 91,743 | ||||||
| $ | 262,660 | $ | 231,952 | |||||
| Operating income: |
||||||||
| Card Services |
$ | 36,684 | $ | 34,893 | ||||
| Check Services |
15,474 | 11,852 | ||||||
| 52,158 | 46,745 | |||||||
| General corporate expense |
(5,105 | ) | (4,959 | ) | ||||
| $ | 47,053 | $ | 41,786 | |||||
| (1) | Certain 2003 expenses have been reclassified between costs of services and selling, general and administrative to conform to the current period presentation. |
CERTEGY INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
(In thousands, except per share amounts)
(Unaudited)
| Nine Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Revenues |
$ | 757,664 | $ | 672,948 | ||||
| Operating expenses(1): |
||||||||
| Costs of services |
546,937 | 479,760 | ||||||
| Selling, general and administrative |
89,935 | 83,322 | ||||||
| Other charges(2) |
— | 12,203 | ||||||
| 636,872 | 575,285 | |||||||
| Operating income |
120,792 | 97,663 | ||||||
| Other income, net |
599 | 1,457 | ||||||
| Interest expense |
(9,388 | ) | (5,354 | ) | ||||
| Income from continuing operations before income taxes |
112,003 | 93,766 | ||||||
| Provision for income taxes |
(41,441 | ) | (34,928 | ) | ||||
| Income from continuing operations |
70,562 | 58,838 | ||||||
| Income from discontinued operations, net of taxes of $2.4 million and $1.6 million, respectively |
4,133 | 2,647 | ||||||
| Net income |
$ | 74,695 | $ | 61,485 | ||||
| Basic earnings per share: |
||||||||
| Income from continuing operations |
$ | 1.12 | $ | 0.90 | ||||
| Income from discontinued operations |
0.07 | 0.04 | ||||||
| Net income |
$ | 1.18 | $ | 0.94 | ||||
| Average shares outstanding |
63,114 | 65,462 | ||||||
| Diluted earnings per share: |
||||||||
| Income from continuing operations |
$ | 1.10 | $ | 0.89 | ||||
| Income from discontinued operations |
0.06 | 0.04 | ||||||
| Net income |
$ | 1.16 | $ | 0.93 | ||||
| Average shares outstanding |
64,283 | 66,117 | ||||||
| Revenues and operating income of the Company’s reportable segments for the nine months ended September 30, 2004 and 2003 are as follows: |
||||||||
| Nine Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Revenues: |
||||||||
| Card Services |
$ | 433,124 | $ | 411,136 | ||||
| Check Services |
324,540 | 261,812 | ||||||
| $ | 757,664 | $ | 672,948 | |||||
| Operating income: |
||||||||
| Card Services |
$ | 100,668 | $ | 84,237 | ||||
| Check Services |
36,432 | 26,825 | ||||||
| 137,100 | 111,062 | |||||||
| General corporate expense |
(16,308 | ) | (13,399 | ) | ||||
| $ | 120,792 | $ | 97,663 | |||||
| (1) | Certain 2003 expenses have been reclassified between costs of services and selling, general and administrative to conform to the current period presentation. |
| (2) | Other charges of $12.2 million in 2003 ($7.7 million after-tax) represent $9.6 million of early termination costs associated with a data processing contract and $2.6 million of other net charges primarily related to the downsizing of the Company’s Brazilian card operation. |
CERTEGY INC.
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2004 AND DECEMBER 31, 2003
(In thousands)
| September 30, 2004 |
December 31, 2003 |
|||||||
| (Unaudited) | ||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 43,458 | $ | 22,280 | ||||
| Settlement deposits |
40,873 | 26,128 | ||||||
| Trade accounts receivable, net of allowance for doubtful accounts of $2,160 and $1,883, respectively |
99,895 | 103,285 | ||||||
| Settlement receivables |
48,349 | 59,196 | ||||||
| Claims recoverable |
28,747 | 46,478 | ||||||
| Other receivables |
36,235 | 26,907 | ||||||
| Other current assets |
20,682 | 22,995 | ||||||
| Assets held for sale |
40,705 | 35,826 | ||||||
| Total current assets |
358,944 | 343,095 | ||||||
| Property and equipment, net |
61,089 | 58,897 | ||||||
| Goodwill, net |
224,635 | 187,627 | ||||||
| Other intangible assets, net |
26,685 | 10,332 | ||||||
| Systems development and other deferred costs, net |
120,337 | 118,788 | ||||||
| Other assets, net |
71,930 | 66,308 | ||||||
| Total assets |
$ | 863,620 | $ | 785,047 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable and other accrued expenses |
$ | 55,662 | $ | 40,237 | ||||
| Settlement payables |
89,222 | 85,324 | ||||||
| Claims payable |
21,057 | 38,270 | ||||||
| Compensation and benefit liabilities |
20,775 | 20,535 | ||||||
| Income taxes payable |
13,767 | 8,887 | ||||||
| Other payables |
16,374 | 10,855 | ||||||
| Other current liabilities |
32,148 | 29,496 | ||||||
| Liabilities related to assets held for sale |
16,927 | 11,536 | ||||||
| Total current liabilities |
265,932 | 245,140 | ||||||
| Long-term debt |
287,165 | 222,399 | ||||||
| Deferred income taxes |
44,057 | 42,892 | ||||||
| Other long-term liabilities |
16,755 | 13,477 | ||||||
| Total liabilities |
613,909 | 523,908 | ||||||
| Shareholders’ equity: |
||||||||
| Common stock |
695 | 695 | ||||||
| Paid-in capital |
250,899 | 249,351 | ||||||
| Retained earnings |
291,683 | 226,495 | ||||||
| Deferred compensation |
(10,848 | ) | (10,187 | ) | ||||
| Accumulated other comprehensive loss |
(76,972 | ) | (75,854 | ) | ||||
| Treasury stock |
(205,746 | ) | (129,361 | ) | ||||
| Total shareholders’ equity |
249,711 | 261,139 | ||||||
| Total liabilities and shareholders’ equity |
$ | 863,620 | $ | 785,047 | ||||
CERTEGY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
(In thousands)
(Unaudited)
| Nine Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 74,695 | $ | 61,485 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities of continuing operations: |
||||||||
| Income from discontinued operations |
(4,133 | ) | (2,647 | ) | ||||
| Depreciation and amortization |
34,643 | 31,118 | ||||||
| Amortization of deferred compensation and financing costs |
4,718 | 4,057 | ||||||
| Other non-cash items |
3,403 | 1,893 | ||||||
| Deferred income taxes |
607 | (543 | ) | |||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable, net |
6,946 | 17,370 | ||||||
| Current liabilities, excluding settlement and claims payables |
(5,186 | ) | 11,085 | |||||
| Claims accounts, net |
646 | (3,429 | ) | |||||
| Other current assets |
1,967 | (460 | ) | |||||
| Other long-term liabilities |
3,060 | 1,956 | ||||||
| Other assets |
(4,392 | ) | (6,910 | ) | ||||
| Net cash provided by operating activities |
116,974 | 114,975 | ||||||
| Cash flows from investing activities: |
||||||||
| Capital expenditures |
(28,482 | ) | (34,292 | ) | ||||
| Acquisitions, net of $25,071 of cash acquired |
(41,021 | ) | — | |||||
| Net cash used in investing activities |
(69,503 | ) | (34,292 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Net borrowings (repayments) on revolving credit facility |
61,540 | (214,200 | ) | |||||
| Proceeds from bond issuance, net of discount and payment of debt issue costs |
— | 196,680 | ||||||
| Treasury stock purchases |
(87,797 | ) | (39,838 | ) | ||||
| Dividends paid |
(9,598 | ) | — | |||||
| Proceeds from exercise of stock options |
8,466 | 2,879 | ||||||
| Other |
(417 | ) | (5 | ) | ||||
| Net cash used in financing activities |
(27,806 | ) | (54,484 | ) | ||||
| Effect of foreign currency exchange rates on cash |
(3,134 | ) | 4,719 | |||||
| Cash provided by (used in) discontinued operations |
4,647 | (418 | ) | |||||
| Net cash provided |
21,178 | 30,500 | ||||||
| Cash and cash equivalents, beginning of period |
22,280 | 14,166 | ||||||
| Cash and cash equivalents, end of period |
$ | 43,458 | $ | 44,666 | ||||
CERTEGY INC.
SUPPLEMENTAL INFORMATION
(Unaudited)
| 1. | Revenues by product and service offering are as follows (in thousands): |
| 2003 |
2004 | |||||||||||||||||||||||
| 1st Qtr |
2nd Qtr |
3rd Qtr |
4th Qtr |
Year |
1st Qtr |
2nd Qtr |
3rd Qtr | |||||||||||||||||
| Card Issuer Services |
$ | 113,470 | $ | 114,298 | $ | 116,408 | $ | 118,346 | $ | 462,522 | $ | 117,862 | $ | 123,410 | $ | 126,762 | ||||||||
| Check Services |
82,993 | 87,076 | 91,743 | 109,189 | 371,001 | 100,686 | 110,736 | 113,118 | ||||||||||||||||
| Merchant Processing |
18,040 | 19,459 | 20,377 | 18,742 | 76,618 | 19,294 | 20,225 | 21,232 | ||||||||||||||||
| Software and Support |
3,321 | 2,339 | 3,424 | 2,509 | 11,593 | 1,498 | 1,293 | 1,548 | ||||||||||||||||
| $ | 217,824 | $ | 223,172 | $ | 231,952 | $ | 248,786 | $ | 921,734 | $ | 239,340 | $ | 255,664 | $ | 262,660 | |||||||||
| Revenues from discontinued operations not reflected above are as follows (in thousands): | ||||||||||||||||||||||||
| 2003 |
2004 | |||||||||||||||||||||||
| 1st Qtr |
2nd Qtr |
3rd Qtr |
4th Qtr |
Year |
1st Qtr |
2nd Qtr |
3rd Qtr | |||||||||||||||||
| Discontinued Operations |
$ | 22,345 | $ | 24,220 | $ | 23,839 | $ | 23,326 | $ | 93,730 | $ | 24,069 | $ | 28,460 | $ | 27,667 | ||||||||
| 2. | Revenues by geographic area (based on location of customer) are as follows (in thousands): |
| 2003 |
2004 | |||||||||||||||||||||||
| 1st Qtr |
2nd Qtr |
3rd Qtr |
4th Qtr |
Year |
1st Qtr |
2nd Qtr |
3rd Qtr | |||||||||||||||||
| Domestic |
$ | 172,745 | $ | 183,949 | $ | 192,966 | $ | 204,463 | $ | 754,123 | $ | 197,478 | $ | 215,295 | $ | 217,183 | ||||||||
| International |
45,079 | 39,223 | 38,986 | 44,323 | 167,611 | 41,862 | 40,369 | 45,477 | ||||||||||||||||
| $ | 217,824 | $ | 223,172 | $ | 231,952 | $ | 248,786 | $ | 921,734 | $ | 239,340 | $ | 255,664 | $ | 262,660 | |||||||||
| 3. | Revenues are comprised of the following (in thousands): |
| 2003 |
2004 | |||||||||||||||||||||||
| 1st Qtr |
2nd Qtr |
3rd Qtr |
4th Qtr |
Year |
1st Qtr |
2nd Qtr |
3rd Qtr | |||||||||||||||||
| Product and Service Fees |
$ | 185,958 | $ | 187,995 | $ | 197,957 | $ | 215,725 | $ | 787,635 | $ | 204,509 | $ | 217,713 | $ | 225,440 | ||||||||
| Interchange Fees |
14,923 | 15,950 | 16,715 | 15,248 | 62,836 | 16,054 | 16,917 | 17,978 | ||||||||||||||||
| Reimbursable Expenses |
16,943 | 19,227 | 17,280 | 17,813 | 71,263 | 18,777 | 21,034 | 19,242 | ||||||||||||||||
| $ | 217,824 | $ | 223,172 | $ | 231,952 | $ | 248,786 | $ | 921,734 | $ | 239,340 | $ | 255,664 | $ | 262,660 | |||||||||
| Revenues from discontinued operations not reflected above are comprised of the following (in thousands): | ||||||||||||||||||||||||
| 2003 |
2004 | |||||||||||||||||||||||
| 1st Qtr |
2nd Qtr |
3rd Qtr |
4th Qtr |
Year |
1st Qtr |
2nd Qtr |
3rd Qtr | |||||||||||||||||
| Product and Service Fees |
$ | 5,569 | $ | 5,662 | $ | 5,972 | $ | 6,363 | $ | 23,566 | $ | 6,475 | $ | 7,629 | $ | 7,249 | ||||||||
| Interchange Fees |
16,776 | 18,558 | 17,867 | 16,963 | 70,164 | 17,594 | 20,831 | 20,418 | ||||||||||||||||
| Reimbursable Expenses |
— | — | — | — | — | — | — | — | ||||||||||||||||
| $ | 22,345 | $ | 24,220 | $ | 23,839 | $ | 23,326 | $ | 93,730 | $ | 24,069 | $ | 28,460 | $ | 27,667 | |||||||||
| 4. | Currency translation increased (decreased) revenues and operating income for the third quarter and the first nine months of 2004 as compared with the prior year as follows (in thousands): |
| Revenues |
||||||||||||||
| 1st Qtr |
2nd Qtr |
3rd Qtr |
YTD |
|||||||||||
| Card Services |
$ | 3,298 | $ | 1,407 | $ | 1,685 | $ | 6,390 | ||||||
| Check Services |
2,211 | 1,810 | 2,066 | 6,087 | ||||||||||
| $ | 5,509 | $ | 3,217 | $ | 3,751 | $ | 12,477 | |||||||
| Operating Income |
||||||||||||||
| 1st Qtr |
2nd Qtr |
3rd Qtr |
YTD |
|||||||||||
| Card Services |
$ | (329 | ) | $ | 158 | $ | 165 | $ | (6 | ) | ||||
| Check Services |
398 | 374 | 482 | 1,254 | ||||||||||
| $ | 69 | $ | 532 | $ | 647 | $ | 1,248 | |||||||
CERTEGY INC.
SUPPLEMENTAL INFORMATION, CONTINUED
(Unaudited)
| 5. | Check volumes in dollars are as follows (in millions): |
| 2003 |
2004 | |||||||||||||||||||||||
| 1st Qtr |
2nd Qtr |
3rd Qtr |
4th Qtr |
Year |
1st Qtr |
2nd Qtr |
3rd Qtr | |||||||||||||||||
| Domestic |
$ | 7,145 | $ | 7,499 | $ | 7,783 | $ | 9,368 | $ | 31,795 | $ | 8,206 | $ | 8,623 | $ | 8,719 | ||||||||
| International |
761 | 811 | 830 | 995 | 3,397 | 925 | 904 | 917 | ||||||||||||||||
| $ | 7,906 | $ | 8,310 | $ | 8,613 | $ | 10,363 | $ | 35,192 | $ | 9,131 | $ | 9,527 | $ | 9,636 | |||||||||
| Guarantee |
$ | 6,251 | $ | 6,606 | $ | 6,962 | $ | 8,220 | $ | 28,039 | $ | 7,048 | $ | 7,248 | $ | 7,207 | ||||||||
| Verification |
1,655 | 1,704 | 1,651 | 2,143 | 7,153 | 2,083 | 2,279 | 2,429 | ||||||||||||||||
| $ | 7,906 | $ | 8,310 | $ | 8,613 | $ | 10,363 | $ | 35,192 | $ | 9,131 | $ | 9,527 | $ | 9,636 | |||||||||
| 6. | Number of cards and accounts processed (end of period) are as follows (in thousands): |
| 2003 |
2004 | |||||||||||||
| 1st Qtr |
2nd Qtr |
3rd Qtr |
4th Qtr |
1st Qtr |
2nd Qtr |
3rd Qtr | ||||||||
| Cards: |
||||||||||||||
| Domestic |
22,695 | 22,969 | 23,304 | 23,364 | 23,466 | 23,843 | 23,846 | |||||||
| International |
23,148 | 22,095 | 21,914 | 23,083 | 23,359 | 24,244 | 23,763 | |||||||
| 45,843 | 45,064 | 45,218 | 46,447 | 46,825 | 48,087 | 47,609 | ||||||||
| Accounts: |
||||||||||||||
| Domestic |
17,372 | 17,601 | 17,860 | 17,957 | 18,069 | 18,254 | 17,033 | |||||||
| International |
20,016 | 19,055 | 18,917 | 20,075 | 20,282 | 21,044 | 20,620 | |||||||
| 37,388 | 36,656 | 36,777 | 38,032 | 38,351 | 39,298 | 37,653 | ||||||||
American Express cards and accounts processed in the Caribbean in 2003 have been reclassified from domestic to international.
| 7. | Merchant volumes in dollars and number of transactions are as follows: |
| 2003 |
2004 | |||||||||||||||||||||||
| 1st Qtr |
2nd Qtr |
3rd Qtr |
4th Qtr |
Year |
1st Qtr |
2nd Qtr |
3rd Qtr | |||||||||||||||||
| Dollars (in millions) |
$ | 845 | $ | 886 | $ | 946 | $ | 841 | $ | 3,518 | $ | 864 | $ | 931 | $ | 989 | ||||||||
| Number of Transactions (in thousands) |
8,709 | 9,448 | 10,510 | 9,691 | 38,358 | 9,291 | 10,385 | 10,777 | ||||||||||||||||
Merchant volumes and number of transactions from discontinued operations not reflected above are as follows:
| 2003 |
2004 | |||||||||||||||||||||||
| 1st Qtr |
2nd Qtr |
3rd Qtr |
4th Qtr |
Year |
1st Qtr |
2nd Qtr |
3rd Qtr | |||||||||||||||||
| Dollars (in millions) |
$ | 918 | $ | 996 | $ | 1,014 | $ | 1,020 | $ | 3,948 | $ | 1,005 | $ | 1,158 | $ | 1,127 | ||||||||
| Number of Transactions (in thousands) |
11,907 | 12,295 | 12,214 | 11,842 | 48,258 | 11,464 | 12,463 | 12,153 | ||||||||||||||||
| 8. | Depreciation and amortization by segment is as follows (in thousands): |
| 2003 |
2004 | |||||||||||||||||||||||
| 1st Qtr |
2nd Qtr |
3rd Qtr |
4th Qtr |
Year |
1st Qtr |
2nd Qtr |
3rd Qtr | |||||||||||||||||
| Card Services |
$ | 7,715 | $ | 7,999 | $ | 8,400 | $ | 8,106 | $ | 32,220 | $ | 7,985 | $ | 8,067 | $ | 8,722 | ||||||||
| Check Services |
1,801 | 2,001 | 2,384 | 2,502 | 8,688 | 2,784 | 2,953 | 3,175 | ||||||||||||||||
| Corporate |
296 | 250 | 272 | 304 | 1,122 | 315 | 322 | 320 | ||||||||||||||||
| $ | 9,812 | $ | 10,250 | $ | 11,056 | $ | 10,912 | $ | 42,030 | $ | 11,084 | $ | 11,342 | $ | 12,217 | |||||||||
Amortization of acquired merchant portfolios from discontinued operations not reflected above is as follows (in thousands):
| 2003 |
2004 | |||||||||||||||||||||||
| 1st Qtr |
2nd Qtr |
3rd Qtr |
4th Qtr |
Year |
1st Qtr |
2nd Qtr |
3rd Qtr | |||||||||||||||||
| Discontinued Operations |
$ | 562 | $ | 563 | $ | 563 | $ | 741 | $ | 2,429 | $ | 753 | $ | 789 | $ | 785 | ||||||||
CERTEGY INC.
SUPPLEMENTAL INFORMATION, CONTINUED
(Unaudited)
| 9. | Capital expenditures and acquisitions are as follows (in thousands): |
| 2003 |
2004 | ||||||||||||||||||||||||
| 1st Qtr |
2nd Qtr |
3rd Qtr |
4th Qtr |
Year |
1st Qtr |
2nd Qtr |
3rd Qtr | ||||||||||||||||||
| Capital expenditures |
$ | 8,432 | $ | 15,138 | $ | 10,722 | $ | 9,455 | $ | 43,747 | $ | 7,026 | $ | 10,083 | $ | 11,373 | |||||||||
| Acquisitions, net of cash acquired |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | 33,391 | $ | (433 | ) | $ | 8,063 | ||||||||
| In the third quarter of 2004, Certegy paid $1.1 million for purchase price adjustments related to prior acquisitions and $7.0 million for the Caribbean CariCard Services acquisition. In the second quarter of 2004, Certegy received $433 thousand for purchase price adjustments related to prior acquisitions. | |||||||||||||||||||||||||
| Capital expenditures and acquisitions from discontinued operations not reflected above are as follows (in thousands): | |||||||||||||||||||||||||
| 2003 |
2004 | ||||||||||||||||||||||||
| 1st Qtr |
2nd Qtr |
3rd Qtr |
4th Qtr |
Year |
1st Qtr |
2nd Qtr |
3rd Qtr | ||||||||||||||||||
| Capital expenditures |
$ | — | $ | — | $ | — | $ | 208 | $ | 208 | $ | 85 | $ | 31 | $ | 40 | |||||||||
| Acquisitions, net of cash acquired |
$ | — | $ | — | $ | 4,521 | $ | — | $ | 4,521 | $ | 5,800 | $ | — | $ | — | |||||||||
| 10. | Long-term debt at September 30, 2004 and December 31, 2003 consists of (in thousands): |
| September 30, 2004 |
December 31, 2003 | |||||
| Unsecured notes, 4.75%, due 2008, net of unamortized discount |
$ | 199,512 | $ | 199,420 | ||
| Borrowings under revolving credit facility |
61,540 | — | ||||
| Notes payable, variable rate, due 2009 |
22,364 | 22,364 | ||||
| Capital lease obligations |
3,749 | 615 | ||||
| $ | 287,165 | $ | 222,399 | |||
| 11. | Stock repurchase activity: |
We repurchased 2,395,073 shares of common stock during the first nine months of 2004 at a total cost of $87.8 million. In May 2004, the Board of Directors of Certegy Inc. approved a $100 million share repurchase program. As of September 30, 2004, the Company had $52.0 million remaining under this program.
CERTEGY INC.
SUPPLEMENTAL INFORMATION, CONTINUED
(Unaudited)
| 12. | Discontinued Operations: |
These financial statements reflect the results of operations and cash flows of our retail merchant acquiring business as discontinued operations. The balance sheets reflect preliminary reclassifications of the assets and liabilities of our merchant acquiring business to be sold under the captions “Assets held for sale” and “Liabilities related to assets held for sale.” All historical statements have been reclassified to conform to this presentation.
Results of Operations:
Reconciliations of current and prior period results of operations, adjusted for discontinued operations, are as follows (in thousands):
| 1st Qtr 2004 |
1st Qtr 2003 |
|||||||||||||||||||||||
| Previously Reported |
Disc Opers |
Reclassified |
Previously Reported |
Disc Opers |
Reclassified |
|||||||||||||||||||
| Revenues |
$ | 263,409 | $ | (24,069 | ) | $ | 239,340 | $ | 240,169 | $ | (22,345 | ) | $ | 217,824 | ||||||||||
| Operating expenses |
227,863 | (22,050 | ) | 205,813 | 219,213 | (21,424 | ) | 197,789 | ||||||||||||||||
| Operating income |
35,546 | (2,019 | ) | 33,527 | 20,956 | (921 | ) | 20,035 | ||||||||||||||||
| Other income, net |
220 | — | 220 | 155 | — | 155 | ||||||||||||||||||
| Interest expense |
(2,976 | ) | — | (2,976 | ) | (1,681 | ) | — | (1,681 | ) | ||||||||||||||
| Income from continuing operations before taxes |
32,790 | (2,019 | ) | 30,771 | 19,430 | (921 | ) | 18,509 | ||||||||||||||||
| Provision for income taxes |
(12,132 | ) | 747 | (11,385 | ) | (7,238 | ) | 343 | (6,895 | ) | ||||||||||||||
| Income from continuing operations |
20,658 | (1,272 | ) | 19,386 | 12,192 | (578 | ) | 11,614 | ||||||||||||||||
| Discontinued operations |
— | 1,272 | 1,272 | — | 578 | 578 | ||||||||||||||||||
| Net income |
$ | 20,658 | $ | — | $ | 20,658 | $ | 12,192 | $ | — | $ | 12,192 | ||||||||||||
| Basic EPS: |
||||||||||||||||||||||||
| Continuing operations |
$ | 0.32 | $ | (0.02 | ) | $ | 0.30 | $ | 0.19 | $ | (0.01 | ) | $ | 0.18 | ||||||||||
| Discontinued operations |
— | 0.02 | 0.02 | — | 0.01 | 0.01 | ||||||||||||||||||
| $ | 0.32 | $ | — | $ | 0.32 | $ | 0.19 | $ | — | $ | 0.19 | |||||||||||||
| Diluted EPS: |
||||||||||||||||||||||||
| Continuing operations |
$ | 0.32 | $ | (0.02 | ) | $ | 0.30 | $ | 0.18 | $ | (0.01 | ) | $ | 0.18 | ||||||||||
| Discontinued operations |
— | 0.02 | 0.02 | — | 0.01 | 0.01 | ||||||||||||||||||
| $ | 0.32 | $ | — | $ | 0.32 | $ | 0.18 | $ | — | $ | 0.18 | |||||||||||||
| 2nd Qtr 2004 |
2nd Qtr 2003 |
|||||||||||||||||||||||
| Previously Reported |
Disc Opers |
Reclassified |
Previously Reported |
Disc Opers |
Reclassified |
|||||||||||||||||||
| Revenues |
$ | 284,124 | $ | (28,460 | ) | $ | 255,664 | $ | 247,392 | $ | (24,220 | ) | $ | 223,172 | ||||||||||
| Operating expenses |
241,474 | (26,022 | ) | 215,452 | 209,990 | (22,660 | ) | 187,330 | ||||||||||||||||
| Operating income |
42,650 | (2,438 | ) | 40,212 | 37,402 | (1,560 | ) | 35,842 | ||||||||||||||||
| Other income, net |
85 | — | 85 | 828 | — | 828 | ||||||||||||||||||
| Interest expense |
(3,153 | ) | — | (3,153 | ) | (1,628 | ) | — | (1,628 | ) | ||||||||||||||
| Income from continuing operations before taxes |
39,582 | (2,438 | ) | 37,144 | 36,602 | (1,560 | ) | 35,042 | ||||||||||||||||
| Provision for income taxes |
(14,645 | ) | 902 | (13,743 | ) | (13,634 | ) | 581 | (13,053 | ) | ||||||||||||||
| Income from continuing operations |
24,937 | (1,536 | ) | 23,401 | 22,968 | (979 | ) | 21,989 | ||||||||||||||||
| Discontinued operations |
— | 1,536 | 1,536 | — | 979 | 979 | ||||||||||||||||||
| Net income |
$ | 24,937 | $ | — | $ | 24,937 | $ | 22,968 | $ | — | $ | 22,968 | ||||||||||||
| Basic EPS: |
||||||||||||||||||||||||
| Continuing operations |
$ | 0.40 | $ | (0.02 | ) | $ | 0.37 | $ | 0.35 | $ | (0.01 | ) | $ | 0.34 | ||||||||||
| Discontinued operations |
— | 0.02 | 0.02 | — | 0.01 | 0.01 | ||||||||||||||||||
| $ | 0.40 | $ | — | $ | 0.40 | $ | 0.35 | $ | — | $ | 0.35 | |||||||||||||
| Diluted EPS: |
||||||||||||||||||||||||
| Continuing operations |
$ | 0.39 | $ | (0.02 | ) | $ | 0.36 | $ | 0.35 | $ | (0.01 | ) | $ | 0.33 | ||||||||||
| Discontinued operations |
— | 0.02 | 0.02 | — | 0.01 | 0.01 | ||||||||||||||||||
| $ | 0.39 | $ | — | $ | 0.39 | $ | 0.35 | $ | — | $ | 0.35 | |||||||||||||
CERTEGY INC.
SUPPLEMENTAL INFORMATION, CONTINUED
(Unaudited)
| 12. | Discontinued Operations, continued: |
| 3rd Qtr 2004 |
3rd Qtr 2003 |
|||||||||||||||||||||||
| Total |
Disc Opers |
Reclassified |
Previously Reported |
Disc Opers |
Reclassified |
|||||||||||||||||||
| Revenues |
$ | 290,327 | $ | (27,667 | ) | $ | 262,660 | $ | 255,791 | $ | (23,839 | ) | $ | 231,952 | ||||||||||
| Operating expenses |
241,171 | (25,564 | ) | 215,607 | 212,268 | (22,102 | ) | 190,166 | ||||||||||||||||
| Operating income |
49,156 | (2,103 | ) | 47,053 | 43,523 | (1,737 | ) | 41,786 | ||||||||||||||||
| Other income, net |
294 | — | 294 | 474 | — | 474 | ||||||||||||||||||
| Interest expense |
(3,259 | ) | — | (3,259 | ) | (2,045 | ) | — | (2,045 | ) | ||||||||||||||
| Income from continuing |
||||||||||||||||||||||||
| operations before taxes |
46,191 | (2,103 | ) | 44,088 | 41,952 | (1,737 | ) | 40,215 | ||||||||||||||||
| Provision for income taxes |
(17,091 | ) | 778 | (16,313 | ) | (15,627 | ) | 647 | (14,980 | ) | ||||||||||||||
| Income from continuing operations |
29,100 | (1,325 | ) | 27,775 | 26,325 | (1,090 | ) | 25,235 | ||||||||||||||||
| Discontinued operations |
— | 1,325 | 1,325 | — | 1,090 | 1,090 | ||||||||||||||||||
| Net income |
$ | 29,100 | $ | — | $ | 29,100 | $ | 26,325 | $ | — | $ | 26,325 | ||||||||||||
| Basic EPS: |
||||||||||||||||||||||||
| Continuing operations |
$ | 0.46 | $ | (0.02 | ) | $ | 0.44 | $ | 0.40 | $ | (0.02 | ) | $ | 0.39 | ||||||||||
| Discontinued operations |
— | 0.02 | 0.02 | — | 0.02 | 0.02 | ||||||||||||||||||
| $ | 0.46 | $ | — | $ | 0.46 | $ | 0.40 | $ | — | $ | 0.40 | |||||||||||||
| Diluted EPS: |
||||||||||||||||||||||||
| Continuing operations |
$ | 0.46 | $ | (0.02 | ) | $ | 0.44 | $ | 0.40 | $ | (0.02 | ) | $ | 0.38 | ||||||||||
| Discontinued operations |
— | 0.02 | 0.02 | — | 0.02 | 0.02 | ||||||||||||||||||
| $ | 0.46 | $ | — | $ | 0.46 | $ | 0.40 | $ | — | $ | 0.40 | |||||||||||||
| YTD 2004 |
YTD 2003 |
|||||||||||||||||||||||
| Total |
Disc Opers |
Reclassified |
Previously Reported |
Disc Opers |
Reclassified |
|||||||||||||||||||
| Revenues |
$ | 837,860 | $ | (80,196 | ) | $ | 757,664 | $ | 743,352 | $ | (70,404 | ) | $ | 672,948 | ||||||||||
| Operating expenses |
710,508 | (73,636 | ) | 636,872 | 641,471 | (66,186 | ) | 575,285 | ||||||||||||||||
| Operating income |
127,352 | (6,560 | ) | 120,792 | 101,881 | (4,218 | ) | 97,663 | ||||||||||||||||
| Other income, net |
599 | — | 599 | 1,457 | — | 1,457 | ||||||||||||||||||
| Interest expense |
(9,388 | ) | — | (9,388 | ) | (5,354 | ) | — | (5,354 | ) | ||||||||||||||
| Income from continuing operations before taxes |
118,563 | (6,560 | ) | 112,003 | 97,984 | (4,218 | ) | 93,766 | ||||||||||||||||
| Provision for income taxes |
(43,868 | ) | 2,427 | (41,441 | ) | (36,499 | ) | 1,571 | (34,928 | ) | ||||||||||||||
| Income from continuing operations |
74,695 | (4,133 | ) | 70,562 | 61,485 | (2,647 | ) | 58,838 | ||||||||||||||||
| Discontinued operations |
— | 4,133 | 4,133 | — | 2,647 | 2,647 | ||||||||||||||||||
| Net income |
$ | 74,695 | $ | — | $ | 74,695 | $ | 61,485 | $ | — | $ | 61,485 | ||||||||||||
| Basic EPS: |
||||||||||||||||||||||||
| Continuing operations |
$ | 1.18 | $ | (0.07 | ) | $ | 1.12 | $ | 0.94 | $ | (0.04 | ) | $ | 0.90 | ||||||||||
| Discontinued operations |
— | 0.07 | 0.07 | — | 0.04 | 0.04 | ||||||||||||||||||
| $ | 1.18 | $ | — | $ | 1.18 | $ | 0.94 | $ | — | $ | 0.94 | |||||||||||||
| Diluted EPS: |
||||||||||||||||||||||||
| Continuing operations |
$ | 1.16 | $ | (0.06 | ) | $ | 1.10 | $ | 0.93 | $ | (0.04 | ) | $ | 0.89 | ||||||||||
| Discontinued operations |
— | 0.06 | 0.06 | — | 0.04 | 0.04 | ||||||||||||||||||
| $ | 1.16 | $ | — | $ | 1.16 | $ | 0.93 | $ | — | $ | 0.93 | |||||||||||||
CERTEGY INC.
SUPPLEMENTAL INFORMATION, CONTINUED
(Unaudited)
| 12. | Discontinued Operations, continued: |
| 4th Qtr 2003 |
Full Year 2003 |
|||||||||||||||||||||||
| Previously Reported |
Disc Opers |
Reclassified |
Previously Reported |
Disc Opers |
Reclassified |
|||||||||||||||||||
| Revenues |
$ | 272,112 | $ | (23,326 | ) | $ | 248,786 | $ | 1,015,464 | $ | (93,730 | ) | $ | 921,734 | ||||||||||
| Operating expenses |
219,593 | (21,359 | ) | 198,234 | 861,064 | (87,545 | ) | 773,519 | ||||||||||||||||
| Operating income |
52,519 | (1,967 | ) | 50,552 | 154,400 | (6,185 | ) | 148,215 | ||||||||||||||||
| Other income, net |
882 | — | 882 | 2,339 | — | 2,339 | ||||||||||||||||||
| Interest expense |
(2,596 | ) | — | (2,596 | ) | (7,950 | ) | — | (7,950 | ) | ||||||||||||||
| Income from continuing operations before taxes |
50,805 | (1,967 | ) | 48,838 | 148,789 | (6,185 | ) | 142,604 | ||||||||||||||||
| Provision for income taxes |
(18,553 | ) | 717 | (17,836 | ) | (55,052 | ) | 2,288 | (52,764 | ) | ||||||||||||||
| Income from continuing operations |
32,252 | (1,250 | ) | 31,002 | 93,737 | (3,897 | ) | 89,840 | ||||||||||||||||
| Discontinued operations |
— | 1,250 | 1,250 | — | 3,897 | 3,897 | ||||||||||||||||||
| Net income |
$ | 32,252 | $ | — | $ | 32,252 | $ | 93,737 | $ | — | $ | 93,737 | ||||||||||||
| Basic EPS: |
||||||||||||||||||||||||
| Continuing operations |
$ | 0.50 | $ | (0.02 | ) | $ | 0.48 | $ | 1.44 | $ | (0.06 | ) | $ | 1.38 | ||||||||||
| Discontinued operations |
— | 0.02 | 0.02 | — | 0.06 | 0.06 | ||||||||||||||||||
| $ | 0.50 | $ | — | $ | 0.50 | $ | 1.44 | $ | — | $ | 1.44 | |||||||||||||
| Diluted EPS: |
||||||||||||||||||||||||
| Continuing operations |
$ | 0.50 | $ | (0.02 | ) | $ | 0.48 | $ | 1.42 | $ | (0.06 | ) | $ | 1.36 | ||||||||||
| Discontinued operations |
— | 0.02 | 0.02 | — | 0.06 | 0.06 | ||||||||||||||||||
| $ | 0.50 | $ | — | $ | 0.50 | $ | 1.42 | $ | — | $ | 1.42 | |||||||||||||
CERTEGY INC.
SUPPLEMENTAL INFORMATION, CONTINUED
(Unaudited)
| 12. | Discontinued Operations, continued: |
Balance Sheets:
Reconciliations of current and prior period balance sheets, adjusted for discontinued operations, are as follows (in thousands):
| September 30, 2004 |
December 31, 2003 |
|||||||||||||||||||||||
| Total |
Disc Opers |
Reclassified |
Previously Reported |
Disc Opers |
Reclassified |
|||||||||||||||||||
| ASSETS |
||||||||||||||||||||||||
| Current assets: |
||||||||||||||||||||||||
| Cash and cash equivalents |
$ | 43,458 | $ | 43,458 | $ | 22,280 | $ | 22,280 | ||||||||||||||||
| Settlement deposits |
43,950 | $ | (3,077 | ) | 40,873 | 29,638 | $ | (3,510 | ) | 26,128 | ||||||||||||||
| Trade accounts receivable, net of allowance for doubtful accounts |
105,630 | (5,735 | ) | 99,895 | 108,158 | (4,873 | ) | 103,285 | ||||||||||||||||
| Settlement receivables |
55,606 | (7,257 | ) | 48,349 | 65,172 | (5,976 | ) | 59,196 | ||||||||||||||||
| Claims recoverable |
28,747 | 28,747 | 46,478 | 46,478 | ||||||||||||||||||||
| Other receivables |
36,235 | 36,235 | 26,907 | 26,907 | ||||||||||||||||||||
| Other current assets |
20,781 | (99 | ) | 20,682 | 22,995 | 22,995 | ||||||||||||||||||
| Assets held for sale |
— | 40,705 | 40,705 | — | 35,826 | 35,826 | ||||||||||||||||||
| Total current assets |
334,407 | 24,537 | 358,944 | 321,628 | 21,467 | 343,095 | ||||||||||||||||||
| Property and equipment, net |
61,089 | 61,089 | 58,897 | 58,897 | ||||||||||||||||||||
| Goodwill, net |
228,640 | (4,005 | ) | 224,635 | 187,627 | 187,627 | ||||||||||||||||||
| Other intangible assets, net |
47,217 | (20,532 | ) | 26,685 | 31,799 | (21,467 | ) | 10,332 | ||||||||||||||||
| Systems development and other deferred costs, net |
120,337 | 120,337 | 118,788 | 118,788 | ||||||||||||||||||||
| Other assets, net |
71,930 | 71,930 | 66,308 | 66,308 | ||||||||||||||||||||
| Total assets |
$ | 863,620 | $ | — | $ | 863,620 | $ | 785,047 | $ | — | $ | 785,047 | ||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||||||||||||||
| Current liabilities: |
||||||||||||||||||||||||
| Accounts payable and other accrued expenses |
$ | 56,995 | $ | (1,333 | ) | $ | 55,662 | $ | 41,600 | $ | (1,363 | ) | $ | 40,237 | ||||||||||
| Settlement payables |
99,556 | (10,334 | ) | 89,222 | 94,810 | (9,486 | ) | 85,324 | ||||||||||||||||
| Claims payable |
21,057 | 21,057 | 38,270 | 38,270 | ||||||||||||||||||||
| Compensation and benefit liabilities |
20,775 | 20,775 | 20,535 | 20,535 | ||||||||||||||||||||
| Income taxes payable |
13,767 | 13,767 | 8,887 | 8,887 | ||||||||||||||||||||
| Other payables |
16,374 | 16,374 | 10,855 | 10,855 | ||||||||||||||||||||
| Other current liabilities |
31,808 | 340 | 32,148 | 29,136 | 360 | 29,496 | ||||||||||||||||||
| Liabilities related to assets held for sale |
— | 16,927 | 16,927 | — | 11,536 | 11,536 | ||||||||||||||||||
| Total current liabilities |
260,332 | 5,600 | 265,932 | 244,093 | 1,047 | 245,140 | ||||||||||||||||||
| Long-term debt |
287,165 | 287,165 | 222,399 | 222,399 | ||||||||||||||||||||
| Deferred income taxes |
49,657 | (5,600 | ) | 44,057 | 43,939 | (1,047 | ) | 42,892 | ||||||||||||||||
| Other long-term liabilities |
16,755 | 16,755 | 13,477 | 13,477 | ||||||||||||||||||||
| Total liabilities |
613,909 | — | 613,909 | 523,908 | — | 523,908 | ||||||||||||||||||
| Shareholders’ equity: |
||||||||||||||||||||||||
| Common stock |
695 | 695 | 695 | 695 | ||||||||||||||||||||
| Paid-in capital |
250,899 | 250,899 | 249,351 | 249,351 | ||||||||||||||||||||
| Retained earnings |
291,683 | 291,683 | 226,495 | 226,495 | ||||||||||||||||||||
| Deferred compensation |
(10,848 | ) | (10,848 | ) | (10,187 | ) | (10,187 | ) | ||||||||||||||||
| Accumulated other comprehensive loss |
(76,972 | ) | (76,972 | ) | (75,854 | ) | (75,854 | ) | ||||||||||||||||
| Treasury stock |
(205,746 | ) | (205,746 | ) | (129,361 | ) | (129,361 | ) | ||||||||||||||||
| Total shareholders’ equity |
249,711 | — | 249,711 | 261,139 | — | 261,139 | ||||||||||||||||||
| Total liabilities and shareholders’ equity |
$ | 863,620 | $ | — | $ | 863,620 | $ | 785,047 | $ | — | $ | 785,047 | ||||||||||||
CERTEGY INC.
SUPPLEMENTAL INFORMATION, CONTINUED
(Unaudited)
| 12. | Discontinued Operations, continued: |
Cash Flows:
Reconciliations of current and prior period cash flows, adjusted for discontinued operations, are as follows (in thousands):
| Nine Months Ended September 30, 2004 |
Nine Months Ended September 30, 2003 |
|||||||||||||||||||||||
| Total |
Disc Opers |
Reclassified |
Previously Reported |
Disc Opers |
Reclassified |
|||||||||||||||||||
| Cash flows from operating activities: |
||||||||||||||||||||||||
| Net income |
$ | 74,695 | $ | 74,695 | $ | 61,485 | $ | 61,485 | ||||||||||||||||
| Adjustments to reconcile net income to net cash |
||||||||||||||||||||||||
| provided by operating activities of continuing operations: |
||||||||||||||||||||||||
| Income from discontinued operations |
$ | (4,133 | ) | (4,133 | ) | — | $ | (2,647 | ) | (2,647 | ) | |||||||||||||
| Depreciation and amortization |
34,643 | 34,643 | 31,118 | 31,118 | ||||||||||||||||||||
| Amortization of deferred compensation and financing costs |
4,718 | 4,718 | 4,057 | 4,057 | ||||||||||||||||||||
| Other non-cash items |
3,403 | 3,403 | 1,893 | 1,893 | ||||||||||||||||||||
| Deferred income taxes |
5,180 | (4,573 | ) | 607 | (4 | ) | (539 | ) | (543 | ) | ||||||||||||||
| Changes in assets and liabilities: |
||||||||||||||||||||||||
| Accounts receivable, net |
6,667 | 279 | 6,946 | 16,753 | 617 | 17,370 | ||||||||||||||||||
| Current liabilities, excluding settlement and claims payables |
(5,324 | ) | 138 | (5,186 | ) | 10,931 | 154 | 11,085 | ||||||||||||||||
| Claims accounts, net |
646 | 646 | (3,429 | ) | (3,429 | ) | ||||||||||||||||||
| Other current assets |
1,954 | 13 | 1,967 | (460 | ) | (460 | ) | |||||||||||||||||
| Other long-term liabilities |
3,060 | 3,060 | 1,956 | 1,956 | ||||||||||||||||||||
| Other assets |
(2,065 | ) | (2,327 | ) | (4,392 | ) | (5,222 | ) | (1,688 | ) | (6,910 | ) | ||||||||||||
| Net cash provided by operating activities |
127,577 | (10,603 | ) | 116,974 | 119,078 | (4,103 | ) | 114,975 | ||||||||||||||||
| Cash flows from investing activities: |
||||||||||||||||||||||||
| Capital expenditures |
(28,638 | ) | 156 | (28,482 | ) | (34,292 | ) | (34,292 | ) | |||||||||||||||
| Acquisitions, net of cash acquired |
(46,821 | ) | 5,800 | (41,021 | ) | (4,521 | ) | 4,521 | — | |||||||||||||||
| Net cash used in investing activities |
(75,459 | ) | 5,956 | (69,503 | ) | (38,813 | ) | 4,521 | (34,292 | ) | ||||||||||||||
| Cash flows from financing activities: |
||||||||||||||||||||||||
| Net borrowings (repayments) on revolving credit facility |
61,540 | 61,540 | (214,200 | ) | (214,200 | ) | ||||||||||||||||||
| Proceeds from bond issuance, net of discount and payment of debt issue costs |
— | — | 196,680 | 196,680 | ||||||||||||||||||||
| Treasury stock purchases |
(87,797 | ) | (87,797 | ) | (39,838 | ) | (39,838 | ) | ||||||||||||||||
| Dividends paid |
(9,598 | ) | (9,598 | ) | — | — | ||||||||||||||||||
| Proceeds from exercise of stock options |
8,466 | 8,466 | 2,879 | 2,879 | ||||||||||||||||||||
| Other |
(417 | ) | (417 | ) | (5 | ) | (5 | ) | ||||||||||||||||
| Net cash used in financing activities |
(27,806 | ) | — | (27,806 | ) | (54,484 | ) | — | (54,484 | ) | ||||||||||||||
| Effect of foreign currency exchange rates on cash |
(3,134 | ) | (3,134 | ) | 4,719 | 4,719 | ||||||||||||||||||
| Cash provided by (used in) discontinued operations |
— | 4,647 | 4,647 | — | (418 | ) | (418 | ) | ||||||||||||||||
| Net cash provided |
21,178 | — | 21,178 | 30,500 | — | 30,500 | ||||||||||||||||||
| Cash and cash equivalents, beginning of period |
22,280 | 22,280 | 14,166 | 14,166 | ||||||||||||||||||||
| Cash and cash equivalents, end of period |
$ | 43,458 | $ | — | $ | 43,458 | $ | 44,666 | $ | — | $ | 44,666 | ||||||||||||