Table of Contents
SECURITIES AND EXCHANGE COMMISSION
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 22, 2002
CERTEGY INC.
| Georgia | 001-16427 | 58-2606325 | ||
|
|
||||
| (State or Other Jurisdiction of | (Commission File | (IRS Employer | ||
| Incorporation or Organization) | Number) | Identification No.) |
| 11720 Amber Park Drive | ||
| Alpharetta, Georgia | 30004 | |
|
|
||
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (678) 867-8000
Not Applicable
| SIGNATURES | ||||||||
| EXHIBIT INDEX | ||||||||
| PRESS RELEASE DATED 10/22/02 | ||||||||
Table of Contents
Item 5. Other Events and Regulation FD Disclosure
On October 22, 2002, Certegy Inc. issued a press release announcing its earnings for the quarter ended September 30, 2002.
A copy of the press release is attached hereto as Exhibit 99 to this Report and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits
| Exhibit 99 | Press Release issued by Certegy Inc. announcing its earnings for the quarter ended September 30, 2002, dated October 22, 2002. |
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 | ||||
| Michael T. Vollkommer | |||||
| Corporate Vice President | |||||
| Date: October 22, 2002 | and Chief Financial Officer |
Table of Contents
EXHIBIT INDEX
The following Exhibit is being filed with this Report.
| Exhibit No. | Description | |
| 99 | Press Release of Certegy Inc. dated October 22, 2002. |
EXHIBIT 99 PRESS RELEASE Certegy Inc. 11720 Amber Park Drive Suite 600 Alpharetta, Georgia 30004 Phone 678-867-8000 Date: October 22, 2002 Fax 678-867-8100 Contact: Mary K. Waggoner Vice President - Investor and Public Relations 678-867-8004 mary.waggoner@certegy.com FOR IMMEDIATE RELEASE CERTEGY REPORTS THIRD QUARTER EARNINGS ALPHARETTA, GA, OCTOBER 22, 2002 - Certegy Inc. (NYSE:CEY) today reported third quarter 2002 diluted earnings per share of $0.35 on revenue of $254.5 million, operating income of $41.3 million and net income of $24.4 million. These results include a $5.4 million, or $0.05 per diluted share, asset impairment and severance charge. Excluding this charge, diluted earnings per share was $0.40, operating income was $46.7 million and net income was $27.9 million. THIRD QUARTER FINANCIAL HIGHLIGHTS Highlights of the 2002 third quarter financial results, excluding the $5.4 million charge, as compared to pro forma 2001, are as follows: - Revenue grew 6.9 percent to $254.5 million. - Operating income of $46.7 million increased 3.7 percent. - Interest expense declined to $1.6 million, driven by low interest rates and debt reductions. - Net income increased by 7.5 percent to $27.9 million. - Diluted earnings per share of $0.40, increased by 8.1 percent. - Total debt outstanding was $166.7 million at September 30, 2002. - 1,978,000 shares of common stock were repurchased at a cost of $41.3 million between September 25 and October 8, increasing total debt outstanding to $195.0 million at October 15, 2002. "Our core business dynamics remain strong," said Lee Kennedy, Chairman, President and Chief Executive Officer. "We are focused on growing revenue, while at the same time taking steps to ensure we have the appropriate cost structure in place." (CERTEGY LOGO)
Statement of Financial Accounting Standards ("SFAS") No. 142 modifies accounting for business combinations, goodwill and identifiable intangible assets. As of January 1, 2002, all goodwill amortization ceased. In the third quarter of 2001, Certegy's operating income included $2.3 million of goodwill amortization, or approximately $0.027 per diluted share. For comparative purposes, the pro forma financial results for the third quarter of 2001 include adjustments to reflect this accounting change, as if it had been effective January 1, 2001. Attachment Page 2 of 7 provides detail pro forma financial results for third quarter of 2001. SEGMENT RESULTS Card Services generated revenue of $167.6 million in the third quarter of 2002, an increase of $4.8 million, or 2.9 percent, over the prior year quarter. Excluding nonrecurring revenue of $6.3 million in the company's e-banking operations during the third quarter of 2001, Card Services' revenue increased by 7.1 percent (8.2 percent in local currency), driven by a 12.7 percent increase in merchant processing revenue and a 5.0 percent increase in North American card issuing revenue. International card revenue declined by 2.3 percent (an increase of 3.8 percent in local currency) due to unfavorable currency rates and volatile economic conditions in Brazil. Excluding Latin America, international card revenue increased by 27.3 percent (18.4 percent in local currency). Card Services' operating income of $38.9 million increased $2.0 million, or 5.4 percent, over the prior year quarter. Check Services generated revenue of $86.9 million in the third quarter of 2002, an increase of $11.7 million, or 15.6 percent (14.4 percent in local currency), over the third quarter of 2001. Check volumes increased 11.7 percent over the prior year quarter. The growth in volume and revenue are primarily attributable to new contract signings. Check Services' operating income grew to $12.1 million, or 4.1 percent over third quarter 2001. Operating income growth in the quarter was impacted by check volume mix and investment in the check cashing business. Corporate expense increased $0.8 million to $4.3 million. The corporate office was established during the prior year quarter; thus, corporate expense was lower in that initial period. The $5.4 million charge includes a $5.2 million asset impairment charge and a $0.2 million severance charge. Additional severance and related costs will be incurred in the fourth quarter of 2002. BUSINESS HIGHLIGHTS Certegy added 2.2 million cards globally during the quarter, increasing its North American card base to 22.2 million and its international card base to 24.0 million. The Company continues to gain market share in its traditional check authorization business. Significant customer signings in the third quarter included Price Chopper, Polo Ralph Lauren, Sunglass Hut, Hollywood Entertainment and several leading regional and mid-tier accounts. (CERTEGY LOGO)
OUTLOOK On September 20, 2002 the Company revised earlier revenue and earnings guidance for 2002 and 2003. In 2002, revenue is expected to increase 8 to 9 percent and diluted earnings per share is expected to be $1.39 to $1.40, before asset impairment and severance charges of approximately $0.08 to $0.09 per diluted share. The Company anticipates a fourth quarter 2002 charge of approximately $3.0 million to $4.0 million, or $0.03 to $0.04 per diluted share, to cover severance and related costs. In 2003, revenue is expected to increase 6 to 8 percent and diluted earnings per share are expected to be $1.52 to $1.55. TELECONFERENCE Management will host a teleconference to discuss third quarter earnings on Tuesday, October 22, 2002 at 9:00 a.m. Eastern Time. The live audio Webcast and replay of the speakers' presentations will be available at www.certegy.com. Please be advised that Microsoft's Windows Media Player(TM) must be downloaded prior to accessing the presentation. It can be downloaded from www.microsoft.com/windows/mediaplayer. ### The statements in this release 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. The 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 2001 Annual Report on Form 10-K filed with the SEC: Our ability to maintain or improve our competitive positions against current and potential competitors; the level of economic growth or other factors affecting demand for our products and services; loss of key customer contracts or strategic relationships; changes in regulation or industry standards applicable to our businesses or those of our customers; 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. ### Certegy (NYSE:CEY) provides credit and debit card processing, check risk management and check cashing services, and merchant processing to over 6,000 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, Canada, United Kingdom, Ireland, France, Chile, Brazil, Australia and New Zealand. 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 $936 million in revenue in 2001. For more information on Certegy, please visit www.certegy.com. (CERTEGY LOGO)
CERTEGY INC. CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (PRO FORMA) (In thousands, except per share amounts) (Unaudited) Three Months Ended September 30, --------------------------------- Pro Forma 2002 2001(1) --------- --------- Revenues .................................... $ 254,506 $ 237,982 --------- --------- Operating expenses: Costs of services ....................... 179,132 168,375 Selling, general and administrative ..... 28,718 24,611 Asset impairment and severance charge ... 5,390 -- --------- --------- 213,240 192,986 --------- --------- Operating income ............................ 41,266 44,996 Other income, net ........................... 151 383 Interest expense ............................ (1,619) (3,664) --------- --------- Income before income taxes .................. 39,798 41,715 Provision for income taxes .................. (15,360) (15,759) --------- --------- Net income .................................. $ 24,438 $ 25,956 ========= ========= Basic earnings per share .................... $ 0.35 $ 0.38 ========= ========= Average shares outstanding .................. 68,850 68,618 ========= ========= Diluted earnings per share .................. $ 0.35 $ 0.37 ========= ========= Average shares outstanding .................. 69,451 69,368 ========= ========= Revenues and operating income of the Company's reportable segments for the three months ended September 30, 2002 and 2001 (pro forma) are as follows: Three Months Ended September 30, ------------------------------- Pro Forma 2002 2001(1) --------- --------- Revenues: Card Services ............................ $ 167,609 $ 162,814 Check Services ........................... 86,897 75,168 --------- --------- $ 254,506 $ 237,982 ========= ========= Operating income: Card Services ............................ $ 38,876 $ 36,892 Check Services ........................... 12,085 11,606 --------- --------- 50,961 48,498 General corporate expense ................ (4,305) (3,502) Asset impairment and severance charge .... (5,390) -- --------- --------- $ 41,266 $ 44,996 ========= ========= (1) See Attachment Page 2 of 7 for pro forma adjustments to historical amounts. ATTACHMENT PAGE 1 OF 7
CERTEGY INC. PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 (In thousands, except per share amounts) (Unaudited) SFAS 142 Historical Adjustment(1) Pro Forma ---------- ------------- --------- Revenues .................................... $ 237,982 $ -- $ 237,982 --------- --------- --------- Operating expenses: Costs of services ...................... 170,650 (2,275) 168,375 Selling, general and administrative .... 24,611 -- 24,611 --------- --------- --------- 195,261 (2,275) 192,986 --------- --------- --------- Operating income ............................ 42,721 2,275 44,996 Other income, net ........................... 383 -- 383 Interest expense ............................ (3,664) -- (3,664) --------- --------- --------- Income before income taxes .................. 39,440 2,275 41,715 Provision for income taxes .................. (15,381) (378) (15,759) --------- --------- --------- Net income .................................. $ 24,059 $ 1,897 $ 25,956 ========= ========= ========= Basic earnings per share .................... $ 0.35 $ 0.38 ========= ========= Average shares outstanding .................. 68,618 68,618 ========= ========= Diluted earnings per share .................. $ 0.35 $ 0.37 ========= ========= Average shares outstanding .................. 69,368 69,368 ========= ========= Operating income of the Company's reportable segments for the three months ended September 30, 2001 on a pro forma basis is as follows: SFAS 142 Historical Adjustment(1) Pro Forma ---------- ------------- --------- Operating income: Card Services .................. $ 34,837 $ 2,055 $ 36,892 Check Services ................. 11,386 220 11,606 -------- ------- -------- 46,223 2,275 48,498 General Corporate Expense ...... (3,502) -- (3,502) -------- ------- -------- $ 42,721 $ 2,275 $ 44,996 ======== ======= ======== (1) Pro forma adjustment to exclude goodwill amortization expense in accordance with SFAS 142, "Goodwill and Other Intangible Assets," as if the standard had been effective January 1, 2001. ATTACHMENT PAGE 2 OF 7
CERTEGY INC. CONSOLIDATED STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (PRO FORMA) (In thousands, except per share amounts) (Unaudited) Nine Months Ended September 30, --------------------------------- Pro Forma 2002 2001(1) --------- --------- Revenues ........................................... $ 744,717 $ 681,361 --------- --------- Operating expenses: Costs of services .............................. 547,176 497,522 Selling, general and administrative ............ 84,786 75,640 Asset impairment and severance charge .......... 5,390 -- --------- --------- 637,352 573,162 --------- --------- Operating income ................................... 107,365 108,199 Other income (expense), net ........................ 922 (123) Interest expense ................................... (5,345) (12,512) --------- --------- Income before income taxes and minority interests ............................. 102,942 95,564 Provision for income taxes ......................... (39,513) (35,751) Minority interests in earnings, net of tax ......... -- (945) --------- --------- Net income ......................................... $ 63,429 $ 58,868 ========= ========= Basic earnings per share ........................... $ 0.92 $ 0.86 ========= ========= Average shares outstanding ......................... 68,913 68,231 ========= ========= Diluted earnings per share ......................... $ 0.91 $ 0.85 ========= ========= Average shares outstanding ......................... 69,830 68,949 ========= ========= Revenues and operating income of the Company's reportable segments for the nine months ended September 30, 2002 and 2001 (pro forma) are as follows: Nine Months Ended September 30, --------------------------------- Pro Forma 2002 2001(1) --------- --------- Revenues: Card Services ................................... $ 497,340 $ 469,052 Check Services .................................. 247,377 212,309 --------- --------- $ 744,717 $ 681,361 ========= ========= Operating income: Card Services ................................... $ 94,666 $ 90,720 Check Services .................................. 30,647 28,658 --------- --------- 125,313 119,378 General corporate expense ....................... (12,558) (11,179) Asset impairment and severance charge ........... (5,390) -- --------- --------- $ 107,365 $ 108,199 ========= ========= (1) See Attachment Page 4 of 7 for pro forma adjustments to historical amounts. ATTACHMENT PAGE 3 OF 7
CERTEGY INC. PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 (In thousands, except per share amounts) (Unaudited) Pro Forma Adjustments -------------------------- Historical Spin(1) SFAS 142(2) Pro Forma ---------- -------- ---------- --------- Revenues .................................... $ 681,361 $ -- $ -- $ 681,361 --------- -------- --------- --------- Operating expenses: Costs of services ....................... 501,560 2,350 (6,388) 497,522 Selling, general and administrative ..... 74,740 900 -- 75,640 --------- -------- --------- --------- 576,300 3,250 (6,388) 573,162 --------- -------- --------- --------- Operating income ............................ 105,061 (3,250) 6,388 108,199 Other expense, net .......................... (123) -- -- (123) Interest expense ............................ (4,099) (8,413) -- (12,512) --------- -------- --------- --------- Income before income taxes and minority interests ...................... 100,839 (11,663) 6,388 95,564 Provision for income taxes .................. (39,327) 4,549 (973) (35,751) Minority interests in earnings, net of tax .. (945) -- -- (945) --------- -------- --------- --------- Net income .................................. $ 60,567 $ (7,114) $ 5,415 $ 58,868 ========= ======== ========= ========= Basic earnings per share .................... $ 0.89 $ 0.86 ========= ========= Average shares outstanding .................. 68,231 68,231 ========= ========= Diluted earnings per share .................. $ 0.88 $ 0.85 ========= ========= Average shares outstanding .................. 68,949 68,949 ========= ========= Operating income of the Company's reportable segments for the nine months ended September 30, 2001 on a pro forma basis is as follows: Pro Forma Adjustments -------------------------- Historical Spin(1) SFAS 142(2) Pro Forma ---------- -------- ---------- --------- Operating income: Card Services ............................ $ 85,017 $ -- $ 5,703 $ 90,720 Check Services ........................... 27,973 -- 685 28,658 --------- -------- --------- --------- 112,990 -- 6,388 119,378 General Corporate Expense ................ (7,929) (3,250) -- (11,179) --------- -------- --------- --------- $ 105,061 $ (3,250) $ 6,388 $ 108,199 ========= ======== ========= ========= (1) Pro forma adjustments include a) additional operating expenses of $3.3 million, which specifically relate to incremental pension expense, insurance costs, corporate headquarters rent, and stand-alone public company costs for audit, director, and stock exchange fees; b) interest expense on the $275 million of debt used to fund a cash payment to Equifax in conjunction with the spin-off, at an annual rate of LIBOR plus 100 basis points (5.76% for the six months ended June 30, 2001), plus amortization of financing costs over the three-year term of the debt; and c) the income tax benefit resulting from the pro forma adjustments using the Company's effective tax rate for the period. (2) Pro forma adjustment to exclude goodwill amortization expense in accordance with SFAS 142, "Goodwill and Other Intangible Assets," as if the standard had been effective January 1, 2001. ATTACHMENT PAGE 4 OF 7
CERTEGY INC. SUPPLEMENTAL INFORMATION (Unaudited) 1. ADOPTION OF EMERGING ISSUES TASK FORCE ISSUE NO. 01-14 ("EITF 01-14"): In January 2002, the Company adopted Emerging Issues Task Force Issue No. 01-14 ("EITF 01-14"), "Income Statement Characterization of Reimbursements Received for 'Out-of-Pocket' Expenses Incurred," which requires that reimbursements received for out-of-pocket expenses be reclassified as revenues. Historically, the Company has netted such reimbursements against its costs in the consolidated statements of income. As a result of this required adoption and certain similar reclassifications, revenues reported for the third quarters of 2002 and 2001 have increased by $22.0 million and $20.0 million, respectively, for reimbursed out-of-pocket expenses that include postage, delivery, telecommunication, and other costs. These reclassifications, which have no impact on operating income or net income, increased segment revenues and costs of services as follows (in millions): 2001 2002 ---------------------------------------------------------- --------------------------------- 1ST QTR 2ND QTR 3RD QTR 4TH QTR YEAR 1ST QTR 2ND QTR 3RD QTR ------- ------- ------- ------- ------ ------- ------- ------- Card Services $ 17.7 $ 18.6 $ 16.2 $ 16.4 $ 68.9 $ 16.9 $ 20.1 $ 17.2 Check Services 3.0 3.7 3.8 5.4 15.9 4.0 4.3 4.8 ------ ------ ------ ------ ------ ------ ------ ------ $ 20.7 $ 22.3 $ 20.0 $ 21.8 $ 84.8 $ 20.9 $ 24.4 $ 22.0 ====== ====== ====== ====== ====== ====== ====== ====== 2. REVENUES BY PRODUCT AND SERVICE OFFERING ARE AS FOLLOWS (IN MILLIONS): 2001 2002 ---------------------------------------------------------- --------------------------------- 1ST QTR 2ND QTR 3RD QTR 4TH QTR YEAR 1ST QTR 2ND QTR 3RD QTR ------- ------- ------- ------- ------ ------- ------- ------- Card Issuer Services $102.5 $106.1 $113.6 $111.9 $434.1 $107.7 $116.1 $110.6 Check Services 66.7 70.5 75.2 92.0 304.4 77.6 82.9 86.9 Merchant Processing Services 44.6 46.8 48.0 48.2 187.6 48.5 54.3 54.1 Software and Support 1.9 4.3 1.2 2.4 9.8 1.0 2.1 2.9 ------ ------ ------ ------ ------ ------ ------ ------ $215.7 $227.7 $238.0 $254.5 $935.9 $234.8 $255.4 $254.5 ====== ====== ====== ====== ====== ====== ====== ====== Reclassifications required by EITF 01-14 increased revenues by product and service offering as follows: 2001 2002 ---------------------------------------------------------- --------------------------------- 1ST QTR 2ND QTR 3RD QTR 4TH QTR YEAR 1ST QTR 2ND QTR 3RD QTR ------- ------- ------- ------- ------ ------- ------- ------- Card Issuer Services $ 16.5 $ 17.3 $ 15.0 $ 15.3 $ 64.1 $ 15.8 $ 19.0 $ 16.0 Check Services 3.0 3.7 3.8 5.4 15.9 4.0 4.3 4.8 Merchant Processing Services 1.1 1.3 1.2 1.1 4.7 1.0 1.0 1.1 Software and Support 0.1 -- -- -- 0.1 0.1 0.1 0.1 ------ ------ ------ ------ ------ ------ ------ ------ $ 20.7 $ 22.3 $ 20.0 $ 21.8 $ 84.8 $ 20.9 $ 24.4 $ 22.0 ====== ====== ====== ====== ====== ====== ====== ====== 3. REVENUES BY GEOGRAPHIC AREA (BASED ON LOCATION OF CUSTOMER) ARE AS FOLLOWS (IN MILLIONS): 2001 2002 ---------------------------------------------------------- --------------------------------- 1ST QTR 2ND QTR 3RD QTR 4TH QTR YEAR 1ST QTR 2ND QTR 3RD QTR ------- ------- ------- ------- ------ ------- ------- ------- Domestic $176.0 $186.9 $196.9 $207.2 $767.0 $190.0 $208.7 $210.0 International 39.7 40.8 41.1 47.3 168.9 44.8 46.7 44.5 ------ ------ ------ ------ ------ ------ ------ ------ $215.7 $227.7 $238.0 $254.5 $935.9 $234.8 $255.4 $254.5 ====== ====== ====== ====== ====== ====== ====== ====== Reclassifications required by EITF 01-14 increased revenues by geographic area as follows: 2001 2002 ---------------------------------------------------------- --------------------------------- 1ST QTR 2ND QTR 3RD QTR 4TH QTR YEAR 1ST QTR 2ND QTR 3RD QTR ------- ------- ------- ------- ------ ------- ------- ------- Domestic $ 19.2 $ 20.8 $ 18.3 $ 19.6 $ 77.9 $ 18.6 $ 22.6 $ 20.7 International 1.5 1.5 1.7 2.2 6.9 2.3 1.8 1.3 ------ ------ ------ ------ ------ ------ ------ ------ $ 20.7 $ 22.3 $ 20.0 $ 21.8 $ 84.8 $ 20.9 $ 24.4 $ 22.0 ====== ====== ====== ====== ====== ====== ====== ====== ATTACHMENT PAGE 5 OF 7
CERTEGY INC. SUPPLEMENTAL INFORMATION, CONTINUED (Unaudited) 4. INTERCHANGE FEES INCLUDED IN MERCHANT PROCESSING SERVICES REVENUES AND COSTS OF SERVICES ARE AS FOLLOWS (IN MILLIONS): The Company's Card Services segment includes merchant processing contracts directly with merchants and with merchants' financial institutions. When the Company has a direct relationship with the merchant, revenues collected are primarily based on a discount rate, which considers the cost of interchange fees (processing fees paid to credit card associations). When the merchant relationship is with the financial institution, the Company collects transaction fees plus the interchange fees. In both instances, the Company is responsible for collecting the interchange fees from the merchant after settling with the credit card associations. Interchange fees are recorded as a component of revenues and costs of services. Interchange fees included in revenues and costs of services are as follows: 2001 2002 ---------------------------------------------------------- --------------------------------- 1ST QTR 2ND QTR 3RD QTR 4TH QTR YEAR 1ST QTR 2ND QTR 3RD QTR ------- ------- ------- ------- ------ ------- ------- ------- Interchange Fees $ 34.7 $ 36.4 $ 37.2 $ 37.8 $146.1 $ 39.5 $ 43.9 $ 43.8 ====== ====== ====== ====== ====== ====== ====== ====== 5. CHECK VOLUMES IN DOLLARS ARE AS FOLLOWS (IN BILLIONS): 2001 2002 ---------------------------------------------------------- --------------------------------- 1ST QTR 2ND QTR 3RD QTR 4TH QTR YEAR 1ST QTR 2ND QTR 3RD QTR ------- ------- ------- ------- ------ ------- ------- ------- Domestic $ 6.1 $ 6.8 $ 7.0 $ 9.1 $ 29.0 $ 7.1 $ 7.7 $ 7.7 International 0.8 0.8 0.7 0.8 3.1 0.8 0.8 0.9 ------ ------ ------ ------ ------ ------ ------ ------ $ 6.9 $ 7.6 $ 7.7 $ 9.9 $ 32.1 $ 7.9 $ 8.5 $ 8.6 ====== ====== ====== ====== ====== ====== ====== ====== Guarantee $ 5.0 $ 5.4 $ 5.6 $ 7.3 $ 23.3 $ 6.0 $ 6.4 $ 6.6 Verification 1.9 2.2 2.1 2.6 8.8 1.9 2.1 2.0 ------ ------ ------ ------ ------ ------ ------ ------ $ 6.9 $ 7.6 $ 7.7 $ 9.9 $ 32.1 $ 7.9 $ 8.5 $ 8.6 ====== ====== ====== ====== ====== ====== ====== ====== 6. NUMBER OF CARDS AND ACCOUNTS PROCESSED (END OF PERIOD) ARE AS FOLLOWS (IN MILLIONS): 2001 2002 ------------------------------------------------ ----------------------------------- 1ST QTR 2ND QTR 3RD QTR 4TH QTR 1ST QTR 2ND QTR 3RD QTR ------- ------- ------- ------- ------- ------- ------- Cards: Domestic 20.9 21.4 21.7 21.5 21.9 22.0 22.2 International 14.0 16.0 19.3 20.2 21.3 22.0 24.0 ---- ---- ---- ---- ---- ---- ---- 34.9 37.4 41.0 41.7 43.2 44.0 46.2 ==== ==== ==== ==== ==== ==== ==== Accounts: Domestic 16.0 16.4 16.6 16.5 16.7 16.9 17.1 International 12.5 14.3 17.1 17.9 18.9 19.3 20.5 ---- ---- ---- ---- ---- ---- ---- 28.5 30.7 33.7 34.4 35.6 36.2 37.6 ==== ==== ==== ==== ==== ==== ==== 7. MERCHANT VOLUMES IN DOLLARS AND NUMBER OF TRANSACTIONS ARE AS FOLLOWS: 2001 2002 ---------------------------------------------------------- --------------------------------- 1ST QTR 2ND QTR 3RD QTR 4TH QTR YEAR 1ST QTR 2ND QTR 3RD QTR ------- ------- ------- ------- ------ ------- ------- ------- Dollars (in billions) $ 1.9 $ 2.1 $ 2.1 $ 2.1 $ 8.2 $ 2.2 $ 2.4 $ 2.4 ====== ====== ====== ====== ====== ====== ====== ====== Number of Transactions (in millions) 25.0 27.4 28.1 28.7 109.2 30.9 33.7 33.6 ====== ====== ====== ====== ====== ====== ====== ====== ATTACHMENT PAGE 6 OF 7
CERTEGY INC. SUPPLEMENTAL INFORMATION, CONTINUED (Unaudited) 8. CURRENCY TRANSLATION INCREASED (DECREASED) REVENUES AND OPERATING INCOME IN 2002 AS FOLLOWS (IN MILLIONS): REVENUES ---------------------------------------------- 1ST QTR 2ND QTR 3RD QTR YTD ------- ------- ------- ------ Card Services $(2.9) $(0.7) $(1.7) $(5.3) Check Services (0.3) 0.3 0.9 0.9 ----- ----- ----- ----- $(3.2) $(0.4) $(0.8) $(4.4) ===== ===== ===== ===== OPERATING INCOME ---------------------------------------------- 1ST QTR 2ND QTR 3RD QTR YTD ------- ------- ------- ------ Card Services $(0.2) $ -- $(0.4) $(0.6) Check Services -- 0.1 0.2 0.3 ----- ----- ----- ----- $(0.2) $ 0.1 $(0.2) $(0.3) ===== ===== ===== ===== 9. DEPRECIATION AND AMORTIZATION BY SEGMENT IS AS FOLLOWS (IN MILLIONS): 2001 (HISTORICAL) 2002 ---------------------------------------------------------- --------------------------------- 1ST QTR 2ND QTR 3RD QTR 4TH QTR YEAR 1ST QTR 2ND QTR 3RD QTR ------- ------- ------- ------- ------ ------- ------- ------- Card Services $ 8.9 $ 9.5 $ 10.1 $ 10.3 $ 38.8 $ 8.1 $ 7.9 $ 8.0 Check Services 1.5 1.5 1.7 2.1 6.8 1.8 1.6 1.7 Corporate -- -- -- 0.1 0.1 0.1 0.1 0.1 ------ ------ ------ ------ ------ ------ ------ ------ $ 10.4 $ 11.0 $ 11.8 $ 12.5 $ 45.7 $ 10.0 $ 9.6 $ 9.8 ====== ====== ====== ====== ====== ====== ====== ====== In accordance with SFAS 142, "Goodwill and Other Intangible Assets," amortization of goodwill ceased effective January 1, 2002. The pro forma 2001 depreciation and amortization amounts presented below exclude goodwill amortization expense as if the standard had been effective January 1, 2001. 2001 (PRO FORMA) ------------------------------------------------------ 1ST QTR 2ND QTR 3RD QTR 4TH QTR YEAR ------- ------- ------- ------- ----- Card Services $ 7.1 $ 7.6 $ 8.0 $ 8.2 $30.9 Check Services 1.3 1.3 1.5 1.9 6.0 Corporate -- -- -- 0.1 0.1 ----- ----- ----- ----- ----- $ 8.4 $ 8.9 $ 9.5 $10.2 $37.0 ===== ===== ===== ===== ===== 10. CAPITAL EXPENDITURES AND ACQUISITIONS ARE AS FOLLOWS (IN MILLIONS): 2001 2002 ---------------------------------------------------------- --------------------------------- 1ST QTR 2ND QTR 3RD QTR 4TH QTR YEAR 1ST QTR 2ND QTR 3RD QTR ------- ------- ------- ------- ------ ------- ------- ------- Capital expenditures $ 12.3 $ 14.4 $ 14.0 $ 8.6 $ 49.3 $ 12.1 $ 14.7 $ 12.8 ====== ====== ====== ====== ====== ====== ====== ====== Acquisitions, net of cash acquired $ -- $ 55.5 $ 23.5 $ -- $ 79.0 $ -- $ -- $ -- ====== ====== ====== ====== ====== ====== ====== ====== ATTACHMENT PAGE 7 OF 7