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Table of Contents



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 25, 2006

Fidelity National Information Services, Inc.

(Exact name of Registrant as Specified in its Charter)

1-16427
(Commission File Number)

     
Georgia   58-2606325
(State or Other Jurisdiction of Incorporation or Organization)   (IRS Employer Identification Number)

601 Riverside Avenue
Jacksonville, Florida 32204

(Addresses of Principal Executive Offices)

(904) 854-8100
(Registrant’s Telephone Number, Including Area Code)


(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:
 
   
o
  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
   
o
  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
   
o
  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
   
o
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



 


TABLE OF CONTENTS

Item 2.02. Results of Operations and Financial Condition
Item 9.01. Financial Statements and Exhibits
SIGNATURE
EXHIBIT INDEX
EXHIBIT 99.1


Table of Contents

Item 2.02. Results of Operations and Financial Condition

On October 25, 2006, Fidelity National Information Services, Inc. issued an earnings release announcing its financial results for the Third Quarter of 2006. The information in this Current Report is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.

A copy of the earnings release is attached as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits

(c) Exhibits

     
Exhibit
  Description
99.1
  Press release announcing Fidelity National Information Services, Inc. Reports Third Quarter 2006 Earnings.

 


Table of Contents

SIGNATURE

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 thereunto duly authorized.

         
  Fidelity National Information Services, Inc.
 
 
Date: October 30, 2006 By:   /s/ Jeffrey S. Carbiener  
    Name: Jeffrey S. Carbiener
Title: Executive Vice President and
Chief Financial Officer
 
       
 

 


Table of Contents

EXHIBIT INDEX

     
Exhibit
  Description
99.1
  Press release announcing Fidelity National Information Services, Inc. Reports Third Quarter 2006 Earnings.

 

exv99w1
 

EXHIBIT 99.1
     
(FIS LOGO)
  PRESS RELEASE
Fidelity National Information Services, Inc. Reports Strong
Third Quarter 2006 Financial Results
Pro Forma Revenue Growth of 10.2%
Increases Full Year 2006 Revenue Growth Outlook to 7% to 8%
     Jacksonville, Fla. — October 25, 2006 — Fidelity National Information Services, Inc. (NYSE:FIS), a leading global provider of technology services to financial institutions, today announced financial results for the third quarter of 2006. Consolidated revenue increased to $1.08 billion, Net earnings increased to $78.6 million and Net earnings per diluted share was $0.41. In accordance with Generally Accepted Accounting Principles (“GAAP”), these results reflect the combination between FIS and Certegy Inc. as of February 1, 2006, the effective date of the merger.
     “FIS reported excellent third quarter results with pro forma revenue growth of 10.2%, EBITDA growth of 10.5% and adjusted cash earnings of $0.57 per diluted share,” stated FIS Chairman William P. Foley, II. “With continued strong market share gains and cross sales to existing customers, we now expect to achieve revenue growth of 7% to 8% and cash earnings per diluted share of $2.08 to $2.12.”
     FIS’ operating results are presented on a GAAP and on an adjusted pro forma basis, which management believes provides more meaningful comparisons between the periods presented. FIS’ pro forma results reflect a January 1, 2005, effective date for the merger between FIS and Certegy, the March 2005 recapitalization and the sale of minority interests by FIS. Additionally, the adjusted pro forma results exclude merger and acquisition and integration expenses. Reconciliations between GAAP and pro forma results are provided in the attachments to this press release, which are posted on the company’s website at http://www.fidelityinfoservices.com.
                 
GAAP   3rd Quarter   3rd Quarter
(amounts in millions)   2006   2005
Total Revenue
  $ 1,080.7 million   $ 698.1 million
Net Earnings
  $ 78.6 million   $ 57.9 million
Net Earnings Per Diluted Share
  $ 0.41     $ 0.45  
                         
Adjusted Pro Forma (see Appendix A)   3rd Quarter   3rd Quarter    
(amounts in millions)   2006   2005   % Chg
Total Revenue
  $ 1,080.7 million   $ 980.9 million     10.2 %
EBITDA
  $ 286.2 million   $ 259.0 million     10.5 %
Pro Forma Net Earnings
  $ 82.2 million   $ 73.4 million     11.9 %
Pro Forma Net Earnings Per Diluted Share
  $ 0.42     $ 0.38       10.5 %
Cash Earnings
  $ 110.9 million   $ 102.6 million     8.0 %
Cash Earnings Per Diluted Share
  $ 0.57     $ 0.54       5.6 %

 


 

     FIS presents its financial results in accordance with GAAP. However, in order to provide the investment community with a broader means of evaluating the operating performance of its operations, FIS also reports several non-GAAP measures, including earnings before interest, taxes, depreciation and amortization (“EBITDA”), net earnings plus depreciation and amortization less capital expenditures (“Free Cash Flow”) and net earnings plus other intangible amortization, net of income tax (“Cash Earnings”). Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP net earnings.
Pro Forma Segment Information
     FIS’ Transaction Processing Services generated revenue of $650.4 million, or 14.1% over the prior-year period, driven by 36.8% growth in International, 10.0% growth in Enterprise Solutions and 9.8% growth in Integrated Financial Solutions. The company’s new item processing operation in Brazil, new account wins and deeper penetration of the existing customer base contributed to the strong growth rate. EBITDA increased 14.7% to $157.2 million, and the EBITDA margin increased to 24.2%.
     Lender Processing Services revenue increased 4.7% to $432.9 million, driven by a 5.5% increase in the number of mortgage loans processed, and strong results within the Default Solutions and Appraisal product lines. The $4.5 million, or 2.9% decrease in EBITDA is attributable to strong results in the comparable prior year quarter, a change in product mix and a longer deferral period for the company’s life of loan tax services. The 34.5% EBITDA margin was comparable to the second quarter 2006 margin.
     Additional segment and pro forma information is provided in the following table:
                         
Segment Revenues   3rd Quarter     3rd Quarter        
(amounts in millions)   2006     2005     % Chg.  
Transaction Processing Services:
                       
Integrated Financial Solutions
  $ 280.7     $ 255.5       9.8 %
Enterprise Solutions
    253.6       230.4       10.0 %
International
    118.8       86.9       36.8 %
Other
    (2.7 )     (2.8 )     4.5 %
 
                 
 
  $ 650.4     $ 570.0       14.1 %
 
                 
Lender Processing Services:
                       
Mortgage Processing
  $ 93.6     $ 91.1       2.7 %
Information Outsourcing
    339.4       321.6       5.5 %
Other
    (0.1 )     0.9       (11.1 )%
 
                 
 
  $ 432.9     $ 413.6       4.7 %
 
                 
Corporate
  $ (2.6 )   $ (2.7 )      
 
                 
Total FIS
  $ 1,080.7     $ 980.9       10.2 %
 
                 

 


 

     Pro forma corporate expense for the third quarter of 2006 totaled $20.3 million. The $11.6 million, or 36.3%, decline from the prior-year quarter was primarily attributable to the consolidation of duplicate administrative functions. Pro forma interest expense for the quarter increased $9.0 million to $49.7 million, due primarily to higher interest rates. The increase in interest expense was partially offset by a lower effective tax rate of 35.8%.
Outlook
     Management updated its full year 2006 outlook as follows:
    Revenue growth of 7% to 8% compared to its previous outlook for 5% to 7%;
 
    Pro forma earnings per diluted share of $1.51 to $1.55;
 
    Pro forma cash earnings per diluted share of $2.08 to $2.12;
 
    Pro forma EBITDA growth of 10% to 12%;
 
    Capital expenditures of approximately $300 million, including anticipated investments in the Brazilian credit card processing joint venture and the newly launched item processing and business process outsourcing operation;
 
    Pro forma free cash flow of $440 million to $470 million, which includes the aforementioned capital investments in Brazil.
     This guidance excludes pre-tax merger and acquisition and integration costs associated with the February 1, 2006, combination of FIS and Certegy Inc.; pre-tax expense associated with the accelerated vesting of performance based options in the first quarter of 2006; and merger and acquisition costs associated with the completion of the merger with Fidelity National Financial, Inc., in November 2006.
     FIS will host a call with investors and analysts to discuss first quarter results on Thursday, October 26, 2006, beginning at 8:00 a.m. Eastern daylight time. Those wishing to participate via the webcast should access the call through FIS’ Investor Relations website at http://www.fidelityinfoservices.com. Those wishing to participate via the telephone may do so by calling 800-230-1092 (USA) or 612-288-0318 (International). The webcast replay will be available on FIS’ Investor Relations website. The telephone replay will be available through November 2, 2006, by dialing 800-475-6701 (USA) or 320-365-3844 (International). The access code will be 844664.
About Fidelity National Information Services, Inc.
     Fidelity National Information Services, Inc. (NYSE:FIS) is a leading provider of core processing for financial institutions; card issuer and transaction processing services; mortgage loan processing and mortgage-related information products; and outsourcing services to financial institutions, retailers, mortgage lenders and real estate professionals. FIS has processing and technology relationships with 35 of the top 50 global banks, including nine of the top ten. Approximately 50 percent of all U.S. residential mortgages are processed using FIS software. Headquartered in Jacksonville, Florida, FIS maintains a strong global presence, serving over 7,800 financial institutions in more than 60 countries worldwide. For more information on Fidelity National Information Services, please visit www.fidelityinfoservices.com.

 


 

     FIS is a majority-owned subsidiary of Fidelity National Financial Inc. (NYSE:FNF), number 248 on the Fortune 500 and a provider of outsourced products and services to a variety of industries. More information about FNF can be found at www.fnf.com.
Forward-Looking Statements
     This press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future economic performance and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: changes in general economic, business and political conditions, including changes in the financial markets; the risk that the recent merger between Fidelity National Information Services, Inc. and Certegy Inc. may fail to achieve beneficial synergies or that it may take longer than expected to do so; the effects of our substantial leverage, which may limit the funds available to make acquisitions and invest in our business; the risks of reduction in revenue from the elimination of existing and potential customers due to consolidation in the banking, retail and financial services industries; failures to adapt our services to changes in technology or in the marketplace; adverse changes in the level of real estate activity, which would adversely affect certain of our businesses; our potential inability to find suitable acquisition candidates or difficulties in integrating acquisitions; significant competition that our operating subsidiaries face; and other risks detailed in the “Statement Regarding Forward-Looking Information,” “Risk Factors” and other sections of the Company’s Form 10-K and other filings with the Securities and Exchange Commission.
SOURCE: Fidelity National Information Services, Inc.
CONTACT: Mary Waggoner, Senior Vice President, Investor Relations, 904-854-3282, mary.waggoner@fnf.com
###

 


 

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
UNAUDITED CONSOLIDATED AND COMBINED RESULTS FOR THE THREE AND NINE MONTHS ENDING SEPTEMBER 30, 2006 AND 2005
(In thousands)
                                 
    Three months ended September 30,     Nine months ended September 30,  
    2006     2005     2006     2005  
 
                               
Processing and services revenues
  $ 1,080,651     $ 698,109     $ 3,003,533     $ 2,058,402  
 
                               
Cost of revenues
    772,580       447,794       2,114,635       1,331,373  
Selling, general, and administrative expenses
    112,724       93,047       384,319       312,921  
Research and development costs
    25,855       33,545       77,561       85,784  
 
                       
 
                               
Operating income
    169,492       123,723       427,018       328,324  
Other income (expense)
                               
Interest income
    477       1,790       3,901       4,826  
Realized gains and losses
    (593 )     821       (1,837 )     (2,391 )
Interest expense
    (49,717 )     (37,548 )     (142,018 )     (87,357 )
 
                       
Total other income (expense)
    (49,833 )     (34,937 )     (139,954 )     (84,922 )
 
                       
 
                               
Earnings before income taxes, equity earnings and minority interest
    119,659       88,786       287,064       243,402  
Income tax expense
    42,799       31,112       106,915       90,546  
Equity in earnings of unconsolidated entities
    (1,686 )     (2,135 )     (3,778 )     (4,379 )
Minority interest
    (34 )     1,917       (40 )     6,171  
 
                       
 
                               
Net earnings
  $ 78,580     $ 57,892     $ 183,967     $ 151,064  
 
                       
 
                               
Net earnings per share-basic
  $ 0.41     $ 0.45     $ 1.00     $ 1.18  
 
                       
Weighted average shares outstanding-basic
    190,690       127,920       184,373       127,920  
 
                       
Net earnings per share-diluted
  $ 0.41     $ 0.45     $ 0.98     $ 1.18  
 
                       
Weighted average shares outstanding-diluted
    193,626       127,920       187,405       127,920  
 
                       


 

Appendix A- Historical Detail and Reconciliation of Non-GAAP Measures
    NOTE: The Adjustments Column represents pro forma adjustments relating to the merger transaction between CEY and FIS, the recapitalization transaction at FIS in March 2005, and the purchase of the remaining minority interest in Kordoba in September 2005 to reflect such transactions as if they occurred January 1, 2005

EBITDA Detail
         
2006 Q3   FIS  
Net Earnings
  $ 78,580  
+ Interest Expense
    49,717  
+ Minority Interest
    (34 )
+ Income Taxes
    42,799  
+ Depreciation/Amort
    111,135  
- Interest Income
    (477 )
 
       
- Equity in (Earnings) Loss of Unconsolidated Entities, net of tax
    (1,686 )
- Other (Income) Expense
    593  
 
     
EBITDA
  $ 280,627  
 
     
EBITDA Margin
         
2006 Q3   FIS
EBITDA
  $ 280,627  
Revenue
  $ 1,080,651  
EBITDA Margin
    26.0 %
EBIT Detail
         
2006 Q3   FIS  
Net Earnings
  $ 78,580  
+ Interest Expense
    49,717  
+ Minority Interest
    (34 )
+ Income Taxes
    42,799  
- Interest Income
    (477 )
 
       
- Equity in (Earnings) Loss of Unconsolidated Entities, net of tax
    (1,686 )
- Other (Income) Expense
    593  
 
     
EBIT
  $ 169,492  
 
     
EBIT Margin
         
2006 Q3   FIS
EBIT
  $ 169,492  
Revenue
  $ 1,080,651  
EBIT Margin
    15.7 %
Adjusted Diluted EPS
         
2006 Q3   FIS
Net Earnings
  $ 78,580  
Adjusted EPS
  $ 0.41  
Diluted Shares Outstanding
    193,626  
Cash Earnings
         
2006 Q3   FIS  
Net Earnings
  $ 78,580  
+ Tax Adjusted Purchase Price Amortization
    28,749  
 
     
Cash Earnings
  $ 107,329  
 
     
 
       
Diluted Cash EPS
  $ 0.55  
Diluted Shares Outstanding
    193,626  
Free Cash Flow
         
2006 Q3   FIS  
Net Earnings
  $ 78,580  
+ Depreciation/Amort
    111,135  
- Capital Expenditures
    (67,114 )
 
     
Free Cash Flow
  $ 122,601  
         
2006 Q3        
Stock Compensation
  $ 4,434  
Financial Measures Excluding Selected Items
         
EBITDA
  $ 280,627  
M&A and Integration costs
    5,621  
 
     
EBITDA, excluding selected items
  $ 286,248  
 
     
 
       
Net Earnings
  $ 78,580  
M&A and Integration Costs, net of tax
    3,575  
 
     
Net Earnings, excluding selected items
  $ 82,155  
 
     
 
       
Net Earnings per diluted share
  $ 0.41  
M&A and Integration costs per share
    0.01  
 
     
Net Earnings per diluted share, excluding selected items
  $ 0.42  
 
     
 
       
Net Earnings, excluding selected items
  $ 82,155  
+ Tax Adjusted Purchase Price Amortization
    28,749  
 
     
Cash Earnings, excluding selected items
  $ 110,904  
 
     
 
       
Net Earnings per diluted share, excluding selected items
  $ 0.42  
+ Tax Adjusted Purchase Price Amortization-per share
    0.15  
 
     
Cash Earnings per diluted share, excluding selected items
  $ 0.57  
 
     
 
       
Net Earnings, excluding selected items
  $ 82,155  
+ Depreciation/Amort
  $ 111,135  
- Capital Expenditures
    (67,114 )
 
     
Free Cash Flow, excluding selected items
  $ 126,176  
 
     
 
                                 
2005 Q3   FIS   CEY   ADJ   Pro Forma
Net Earnings
  $ 57,892     $ 22,667     $ (7,142 )   $ 73,417  
+ Interest Expense
    37,548       3,122             40,670  
+ Minority Interest
    1,917             (740 )     1,177  
+ Income Taxes
    31,112       17,900       (4,669 )     44,343  
+ Depreciation/Amort
    70,783       12,939       21,133       104,855  
- Interest Income
    (1,790 )                 (1,790 )
- Equity in (Earnings) Loss of Non-Consolidated Entities, net of tax
    (2,135 )                 (2,135 )
- Other (Income) Expense
    (821 )     (671 )           (1,492 )
     
EBITDA
  $ 194,506     $ 55,957     $ 8,582     $ 259,045  
     
 
                                 
2005 Q3   FIS   CEY   ADJ   Pro Forma
EBITDA
  $ 194,506     $ 55,957     $ 8,582     $ 259,045  
Revenue
  $ 698,109     $ 282,774     $     $ 980,883  
EBITDA Margin
    27.9 %     19.8 %             26.4 %
 
                                 
2005 Q3   FIS   CEY   ADJ   Pro Forma
Net Earnings
  $ 57,892     $ 22,667     $ (7,142 )   $ 73,417  
+ Interest Expense
    37,548       3,122             40,670  
+ Minority Interest
    1,917             (740 )     1,177  
+ Income Taxes
    31,112       17,900       (4,669 )     44,343  
- Interest Income
    (1,790 )                 (1,790 )
- Equity in (Earnings) Loss of Non-Consolidated Entities, net of tax
    (2,135 )                 (2,135 )
- Other (Income) Expense
    (821 )     (671 )           (1,492 )
     
EBIT
  $ 123,723     $ 43,018     $ (12,551 )   $ 154,190  
     
 
                                 
2005 Q3   FIS   CEY   ADJ   Pro Forma
EBIT
  $ 123,723     $ 43,018     $ (12,551 )   $ 154,190  
Revenue
  $ 698,109     $ 282,774     $     $ 980,883  
EBIT Margin
    17.7 %     15.2 %             15.7 %
 
                                 
2005 Q3   FIS   CEY   ADJ   Pro Forma
Net Earnings
  $ 57,892     $ 22,667     $ (7,142 )   $ 73,417  
Adjusted EPS
  $ 0.45                     $ 0.38  
Diluted Shares Outstanding
    127,920                       191,233  
 
                                 
2005 Q3   FIS   CEY   ADJ   Pro Forma
Net Earnings
  $ 57,892     $ 22,667     $ (7,142 )   $ 73,417  
+ Tax Adjusted Purchase Price Amortization
    17,941       680       10,606       29,227  
     
Cash Earnings
  $ 75,833     $ 23,347     $ 3,464     $ 102,644  
     
 
                               
Diluted Cash EPS
  $ 0.59                     $ 0.54  
Diluted Shares Outstanding
    127,920                   191,233  
 
                                 
2005 Q3   FIS   CEY   ADJ   Pro Forma
Net Earnings
  $ 57,892     $ 22,667     $ (7,142 )   $ 73,417  
+ Depreciation/Amort
    70,783       12,939       21,133       104,855  
- Capital Expenditures
    (74,602 )     (14,764 )           (89,366 )
     
Free Cash Flow
  $ 54,073     $ 20,842     $ 13,991     $ 88,906  
 
                               
2005 Q3                                
Stock Compensation
  $ 4,562     $ 2,900     $ (2,900 )   $ 4,562  


 


 

Appendix A- Historical Detail and Reconciliation of Non-GAAP Measures
    NOTE: The Adjustments Column represents pro forma adjustments relating to the merger transaction between CEY and FIS, the recapitalization transaction at FIS in March 2005, and the purchase of the remaining minority interest in Kordoba in September 2005 to reflect such transactions as if they occurred January 1, 2005

EBITDA Detail
                                 
2006 Nine Months   FIS   CEY-Jan   ADJ   Pro Forma
Net Earnings
  $ 183,967     $ (42,523 )     (3,708 )   $ 137,736  
+ Interest Expense
    142,018       1,081             143,099  
+ Minority Interest
    (40 )                 (40 )
+ Income Taxes
    106,915       (26,396 )     (2,626 )     77,893  
+ Depreciation/Amort
    318,304       4,274       6,856       329,434  
- Interest Income
    (3,901 )                 (3,901 )
- Equity in (Earnings) Loss of Unconsolidated Entities, net of tax
            (3,778 )           (3,778 )
- Other (Income) Expense
            1,837       123       1,960  
     
EBITDA
  $ 745,322     $ (63,441 )   $ 522     $ 682,403  
     
EBITDA Margin
                                 
2006 Nine Months   FIS   CEY-Jan   ADJ   Pro Forma
EBITDA
  $ 745,322     $ (63,441 )   $ 522     $ 682,403  
Revenue
  $ 3,003,533     $ 92,915     $     $ 3,096,448  
EBITDA Margin
            24.8 %     -68.3 %     22.0 %
EBIT Detail
                                 
2006 Nine Months   FIS   CEY-Jan   ADJ   Pro Forma
Net Earnings
  $ 183,967     $ (42,523 )   $ (3,708 )   $ 137,736  
+ Interest Expense
    142,018       1,081             143,099  
+ Minority Interest
    (40 )                 (40 )
+ Income Taxes
    106,915       (26,396 )     (2,626 )     77,893  
- Interest Income
    (3,901 )                 (3,901 )
- Equity in (Earnings) Loss of Unconsolidated Entities, net of tax
    (3,778 )                 (3,778 )
- Other (Income) Expense
    1,837       123             1,960  
     
EBIT
  $ 427,018     $ (67,715 )   $ (6,334 )   $ 352,969  
     
EBIT Margin
                                 
2006 Nine Months   FIS   CEY-Jan   ADJ   Pro Forma
EBIT
  $ 427,018     $ (67,715 )   $ (6,334 )   $ 352,969  
Revenue
  $ 3,003,533     $ 92,915     $     $ 3,096,448  
EBIT Margin
    14.2 %     -72.9 %             11.4 %
Adjusted Diluted EPS
                                 
2006 Nine Months   FIS   CEY-Jan   ADJ   Pro Forma
Net Earnings
  $ 183,967     $ (42,523 )   $ (3,708 )   $ 137,736  
Adjusted EPS
  $ 0.98                     $ 0.71  
Diluted Shares Outstanding
    187,405                       194,700  
Cash Earnings
                                 
2006 Nine Months   FIS   CEY-Jan   ADJ   Pro Forma
Net Earnings
  $ 183,967     $ (42,523 )   $ (3,708 )   $ 137,736  
+ Tax Adjusted Purchase Price Amortization
    81,866       233       3,524       85,623  
     
Cash Earnings
  $ 265,833     $ (42,290 )   $ (184 )   $ 223,359  
     
 
                               
Diluted Cash EPS
  $ 1.42                     $ 1.15  
Diluted Shares Outstanding
    187,405                       194,700  
Free Cash Flow
                                 
2006 Nine Months   FIS   CEY-Jan   ADJ   Pro Forma
Net Earnings
  $ 183,967     $ (42,523 )   $ (3,708 )   $ 137,736  
+ Depreciation/Amort
    318,304       4,274       6,856       329,434  
- Capital Expenditures
    (216,534 )     (5,200 )           (221,734 )
     
Free Cash Flow
  $ 285,737     $ (43,449 )   $ 3,148     $ 245,436  
                                 
2006 Nine Months                                
Stock
  Compensation
  $ 37,222     $ 552     $ (552 )   $ 37,222  
Pro Forma Measures Excluding Selected Items
         
Pro Forma EBITDA
  $ 682,403  
M&A and Integration costs
    94,350  
Performance Based Stock Option Costs
    24,130  
 
     
Pro Forma EBITDA, excluding selected items
  $ 800,883  
 
     
 
       
Pro Forma Net Earnings
    137,736  
M&A and Integration Costs, net of tax
    58,489  
Performance Based Stock Option Costs, net of tax
    14,888  
 
     
Pro Forma Net Earnings, excluding selected items
  $ 211,113  
 
     
 
       
Weighted Average Shares
    187,405  
Adjustment as if transaction took place 1/1/2005
    7,295  
 
     
Pro Forma Weighted Average Shares
    194,700  
 
     
 
       
Pro Forma Net Earnings per diluted share
  $ 0.71  
M&A and Integration costs per share
    0.29  
Performance Based Stock Option Costs per share
    0.08  
 
     
Pro Forma Net Earnings per diluted share, excluding selected items
  $ 1.08  
 
     
 
       
Net Earnings, excluding selected items
    211,113  
+ Tax Adjusted Purchase Price Amortization
    85,623  
 
     
Cash Earnings, excluding selected items
    296,736  
 
     
 
       
Net Earnings per diluted share, excluding selected items
    1.08  
+ Tax Adjusted Purchase Price Amortization—per share
    0.44  
 
     
Cash Earnings per diluted share, excluding selected items
  $ 1.52  
 
     
 
       
Net Earnings, excluding selected items
  $ 211,113  
+ Depreciation/Amort
    329,434  
- Capital Expenditures
    (221,734 )
 
     
Free Cash Flow, excluding selected items
  $ 318,813  
 
     
 
                                 
2005 Nine Months   FIS   CEY   ADJ   Pro Forma
Net Earnings
  $ 151,064     $ 69,213     $ (42,481 )   $ 177,796  
+ Interest Expense
    87,357       9,677       21,031       118,065  
+ Minority Interest
    6,171             (2,368 )     3,803  
+ Income Taxes
    90,546       45,969       (26,568 )     109,947  
+ Depreciation/Amort
    221,886       38,352       63,399       323,637  
- Interest Income
    (4,826 )                 (4,826 )
- Equity in (Earnings) Loss of Non-Consolidated Entities, net of tax
    (4,379 )                 (4,379 )
- Other (Income) Expense
    2,391       (1,412 )           979  
     
EBITDA
  $ 550,210     $ 161,799     $ 13,013     $ 725,022  
     
 
                                 
2005 Nine Months   FIS   CEY   ADJ   Pro Forma
EBITDA
  $ 550,210     $ 161,799     $ 13,013     $ 725,022  
Revenue
  $ 2,058,402     $ 821,255     $     $ 2,879,657  
EBITDA Margin
    26.7 %     19.7 %             25.2 %
 
                                 
2005 Nine Months   FIS   CEY   ADJ   Pro Forma
Net Earnings
  $ 151,064     $ 69,213     $ (42,481 )   $ 177,796  
+ Interest Expense
    87,357       9,677       21,031       118,065  
+ Minority Interest
    6,171             (2,368 )     3,803  
+ Income Taxes
    90,546       45,969       (26,568 )     109,947  
- Interest Income
    (4,826 )                 (4,826 )
- Equity in (Earnings) Loss of Non-Consolidated Entities, net of tax
    (4,379 )                 (4,379 )
- Other (Income) Expense
    2,391       (1,412 )           979  
     
EBIT
  $ 328,324     $ 123,447     $ (50,386 )   $ 401,385  
     
 
                                 
2005 Nine Months   FIS   CEY   ADJ   Pro Forma
EBIT
  $ 328,324     $ 123,447     $ (50,386 )   $ 401,385  
Revenue
  $ 2,058,402     $ 821,255     $     $ 2,879,657  
EBIT Margin
    16.0 %     15.0 %             13.9 %
 
                                 
2005 Nine Months   FIS   CEY   ADJ   Pro Forma
Net Earnings
  $ 151,064     $ 69,213     $ (42,481 )   $ 177,796  
Adjusted EPS
  $ 1.18                     $ 0.93  
Diluted Shares Outstanding
    127,920                       190,864  
 
                                 
2005 Nine Months   FIS   CEY   ADJ   Pro Forma
Net Earnings
  $ 151,064     $ 69,213     $ (42,481 )   $ 177,796  
+ Tax Adjusted Purchase Price Amortization
    60,857       1,361       31,819       94,037  
     
Cash Earnings
  $ 211,921     $ 70,574     $ (10,662 )   $ 271,833  
     
 
                               
Diluted Cash EPS
  $ 1.66                     $ 1.42  
Diluted Shares Outstanding
    127,920                   190,864  
 
                                 
2005 Nine Months   FIS   CEY   ADJ   Pro Forma
Net Earnings
  $ 151,064     $ 69,213     $ (42,481 )   $ 177,796  
+ Depreciation/Amort
    221,886       38,352       63,399       323,637  
- Capital Expenditures
    (180,497 )     (42,883 )           (223,380 )
     
Free Cash Flow
  $ 192,453     $ 64,682     $ 20,918     $ 278,053  
 
                               
2005 Nine Months                                
Stock Compensation
  $ 16,017     $ 9,200     $ (9,200 )   $ 16,017  


 


 

Appendix B
Unaudited Pro Forma Combined Statement of Continuing Operations
for the Nine Months Ended September 30, 2006
(In thousands Except Per Share Data)
                                                 
                                    Tax Adjusted        
                    Pro Forma             Purchase Price     Cash  
    Certegy-Jan     FIS     Adjustments     Pro Forma     Amortization     Earnings  
Total revenue
  $ 92,915     $ 3,003,533             $ 3,096,448                  
Total cost of revenue
    73,218       2,114,635       6,856       2,194,709                  
 
                                       
Gross profit (loss)
    19,697       888,898       (6,856 )     901,739                  
General and administrative
    7,645       369,736       (522 )     376,859                  
Research and development costs
          77,561               77,561                  
Merger and Acquisition costs
    79,767       14,583               94,350                  
 
                                       
Income (loss) from operations
    (67,715 )     427,018       (6,334 )     352,969                  
Interest income (expense) and other
    (1,204 )     (139,954 )           (141,158 )                
 
                                       
Income from continuing operations before tax and min. int
    (68,919 )     287,064       (6,334 )     211,811                  
Provision for income tax
    (26,396 )     106,915       (2,626 )     77,893                  
 
                                       
Income from continuing operations
    (42,523 )     180,149       (3,708 )     133,918                  
 
                                               
Equity in earnings (loss) of unconsolidated entities, net
          3,778             3,778                  
Minority interests in earnings, net of tax
          40             40                  
 
                                   
Net income
  $ (42,523 )   $ 183,967     $ (3,708 )   $ 137,736     $ 85,623     $ 223,359  
 
                                   
 
                                               
 
                                       
Net income per share-basic
  $ (0.68 )   $ 1.00             $ 0.72             $ 1.17  
 
                                       
Pro forma Weighted average shares-basic
    62,326       184,373               191,567               191,567  
 
                                       
 
                                               
 
                                       
Net income per share-diluted
  $ (0.67 )   $ 0.98             $ 0.71             $ 1.15  
 
                                       
Pro forma Weighted average shares-diluted
    63,796       187,405               194,700               194,700  
 
                                       
         
Pro Forma Net Earnings
  $ 137,736  
Merger and Acquisition and Integration Costs, net of tax
    58,489  
Performance Based Stock Option Costs, net of tax
    14,888  
 
     
Pro Forma Net Earnings, excluding selected items
  $ 211,113  

 


 

Appendix C
Unaudited Pro Forma and Historical Segment Information
for the Quarters and Nine Month Periods Ended September 30, 2006 and 2005
(In thousands Except Per Share Data)
                                                                 
2006- Quarter 3   Pro Forma     Historical  
    Transaction     Lender                     Transaction     Lender              
    Processing     Processing     Corporate             Processing     Processing     Corporate        
    Services     Services     and Other     Total     Services     Services     and Other     Total  
Processing and services revenue
    650,406       432,891       (2,646 )     1,080,651       650,406       432,891       (2,646 )     1,080,651  
Cost of revenues
    514,390       258,190             772,580       514,390       258,190             772,580  
 
                                               
Gross profit
    136,016       174,701       (2,646 )     308,071       136,016       174,701       (2,646 )     308,071  
Selling, general and admin costs
    39,736       52,338       20,650       112,724       39,736       52,338       20,650       112,724  
Research development costs
    17,838       8,017             25,855       17,838       8,017             25,855  
 
                                               
Operating income
    78,442       114,346       (23,296 )     169,492       78,442       114,346       (23,296 )     169,492  
 
                                                               
Depreciation and amortization
    75,158       33,658       2,319       111,135       75,158       33,658       2,319       111,135  
 
                                               
EBITDA
    153,600       148,004       (20,977 )     280,627       153,600       148,004       (20,977 )     280,627  
 
                                               
 
                                                               
ProForma EBITDA
    153,600       148,004       (20,977 )     280,627                                  
Merger and Acquisition and Integration costs
    3,568       1,337       716       5,621                                  
 
                                                       
ProForma EBITDA, excluding selected items
    157,168       149,341       (20,261 )     286,248                                  
                                                                 
2006- 9mths YTD   Pro Forma     Historical  
    Transaction     Lender                     Transaction     Lender              
    Processing     Processing     Corporate             Processing     Processing     Corporate        
    Services     Services     and Other     Total     Services     Services     and Other     Total  
Processing and services revenue
    1,854,993       1,241,472       (17 )     3,096,448       1,764,030       1,241,472       (1,969 )     3,003,533  
Cost of revenues
    1,456,928       737,781             2,194,709       1,376,854       737,781             2,114,635  
 
                                               
Gross profit
    398,065       503,691       (17 )     901,739       387,176       503,691       (1,969 )     888,898  
Selling, general and admin costs
    134,751       161,574       174,884       471,209       130,341       161,574       92,404       384,319  
Research development costs
    52,183       25,378             77,561       52,183       25,378             77,561  
 
                                               
Operating income
    211,131       316,739       (174,901 )     352,969       204,652       316,739       (94,373 )     427,018  
Depreciation and amortization
    218,698       104,882       5,854       329,434       207,658       104,882       5,764       318,304  
 
                                               
EBITDA
    429,829       421,621       (169,047 )     682,403       412,310       421,621       (88,609 )     745,322  
 
                                               
 
                                                               
ProForma EBITDA
    429,829       421,621       (169,047 )     682,403                                  
Merger and Acquisition and Integration costs
    7,851       3,349       83,150       94,350                                  
Acceleration of performance-based shares
                24,130       24,130                                  
 
                                                       
ProForma EBITDA, excluding selected items
    437,680       424,970       (61,767 )     800,883                                  
                                                                 
2005 - Quarter 3   Pro Forma     Historical  
    Transaction     Lender                     Transaction     Lender              
    Processing     Processing     Corporate             Processing     Processing     Corporate        
    Services     Services     and Other     Total     Services     Services     and Other     Total  
Processing and services revenue
    570,015       413,591       (2,723 )     980,883       287,241       413,591       (2,723 )     698,109  
Cost of revenues
    439,483       231,179             670,662       216,615       231,179             447,794  
 
                                               
Gross profit
    130,532       182,412       (2,723 )     310,221       70,626       182,412       (2,723 )     250,315  
Selling, general and admin costs
    35,315       55,693       31,478       122,486       13,312       55,693       24,042       93,047  
Research development costs
    26,294       7,251             33,545       26,294       7,251             33,545  
 
                                               
Operating income
    68,923       119,468       (34,201 )     154,190       31,020       119,468       (26,765 )     123,723  
Depreciation and amortization
    68,145       34,334       2,376       104,855       34,360       34,334       2,089       70,783  
 
                                               
EBITDA
    137,068       153,802       (31,825 )     259,045       65,380       153,802       (24,676 )     194,506  
 
                                               
                                                                 
2005 - 9 mths YTD   Pro Forma     Historical  
    Transaction     Lender                     Transaction     Lender              
    Processing     Processing     Corporate             Processing     Processing     Corporate        
    Services     Services     and Other     Total     Services     Services     and Other     Total  
Processing and services revenue
    1,726,995       1,156,848       (4,186 )     2,879,657       905,740       1,156,848       (4,186 )     2,058,402  
Cost of revenues
    1,323,088       659,657             1,982,745       671,716       659,657             1,331,373  
 
                                               
Gross profit
    403,907       497,191       (4,186 )     896,912       234,024       497,191       (4,186 )     727,029  
Selling, general and admin costs
    141,618       171,593       96,532       409,743       71,016       171,593       70,312       312,921  
Research development costs
    66,530       19,254             85,784       66,530       19,254             85,784  
 
                                               
Operating income
    195,759       306,344       (100,718 )     401,385       96,478       306,344       (74,498 )     328,324  
Depreciation and amortization
    209,155       109,235       5,247       323,637       108,328       109,235       4,323       221,886  
 
                                               
EBITDA
    404,914       415,579       (95,471 )     725,022       204,806       415,579       (70,175 )     550,210