United States
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 26, 2010
Fidelity National Information Services, Inc.
1-16427
(Commission File Number)
Georgia | 37-1490331 | |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification Number) |
601 Riverside Avenue
Jacksonville, Florida 32204
(904) 854-5000
(Registrants Telephone Number, Including Area Code)
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)) |
Item 2.02. Results of Operations and Financial Condition
On October 26, 2010, Fidelity National Information Services, Inc. issued an earnings release announcing its financial results for the Third Quarter of 2010. The information included in Items 2.02 and 9.01 within this Current Report are 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 included in Items 2.02 and 9.01 within 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 and a copy of the financial results presentation is attached as Exhibit 99.2
(d) Exhibits
Exhibit |
Description |
|
99.1 |
Press release announcing Fidelity National Information Services, Inc. Reports Third Quarter 2010 Earnings. | |
99.2 |
Financial results presentation. |
Fidelity National Information
Services, Inc. |
||||
Date: October 26, 2010 | By: | /s/ Michael D. Hayford | ||
Name: Michael D. Hayford | ||||
Title: Corporate Executive Vice President
and Chief Financial Officer |
||||
Fidelity National Information
Services, Inc. |
||||
Date: October 26, 2010 | By: | /s/ James W. Woodall | ||
Name: James W. Woodall | ||||
Title: Senior
Vice President
and Chief Accounting Officer |
||||
EXHIBIT INDEX
Exhibit |
Description |
|
99.1 |
Press release announcing Fidelity National Information Services, Inc. Reports Third Quarter 2010 Earnings. | |
99.2 |
Financial results presentation. |
| Revenue of $1.29 billion, up 3.3%, as adjusted | ||
| EPS of $0.52, as adjusted | ||
| EBITDA margin of 33.1%, up 320 basis points, as adjusted | ||
| Free cash flow of $220 million, as adjusted |
| The migration of Banco Bradescos 14 million bankcard portfolio to the FIS proprietary Base2000 card processing platform, which was completed on October 2 | ||
| The signing of a memorandum of understanding (MOU) with Banco Bradesco to continue the joint venture in Brazil | ||
| A definitive agreement to acquire Capco, a global business and technology consultancy dedicated solely to the financial services industry | ||
| The commencement of a process to pursue strategic alternatives for FIS item processing and remittance services subsidiary in Brazil, Fidelity National Participacoes Ltda. (formerly known as Proservvi Empreendimentos e Servicos Ltda.) | ||
| Completion of a $2.5 billion recapitalization including the repurchase of 86.2 million shares at $29 per share |
| Financial Solutions revenue increased 10.5% to $485.5 million compared to $439.3 million in the 2009 quarter, driven by growth in professional services, software license sales and account processing revenue. Financial Solutions EBITDA increased 16.9% to $218.8 million, while the margin improved 250 basis points to 45.1% compared to 42.6% in the prior year quarter. | ||
| Payment Solutions revenue of $600.6 million declined 1.9% compared to $612.2 million in the 2009 quarter as growth in electronic payment solutions was offset by lower item |
processing and retail check activity. Payment Solutions EBITDA increased 2.3% to $230.9 million, and the margin increased 150 basis points to 38.4% compared to 36.9% in the prior year. | |||
| International Solutions revenue increased 2.3% to $199.4 million in U.S. dollars compared to $194.9 million in the 2009 quarter. The growth was driven by increased payment volumes in Brazil and Asia Pacific. Software and professional services revenue was comparable to prior year. International EBITDA decreased 4.1% to $46.5 million. The reported EBITDA margin was 23.3%, compared to 24.9% in the prior year quarter. | ||
| Corporate overhead, which included a $10 million pre-tax benefit related to the favorable resolution of a legal matter, totaled $69.6 million, compared to $89.5 million in the prior year quarter. Interest expense, net of interest income, was $60.9 million compared to $31.8 million in the 2009 quarter. The increase in interest expense was due to the recapitalization completed in the third quarter of 2010. |
Marcia Danzeisen, 904.854.5083
|
Mary Waggoner, 904.854.3282 | |
Senior Vice President
|
Senior Vice President | |
FIS Global Marketing and Communications
|
FIS Investor Relations | |
marcia.danzeisen@fisglobal.com
|
mary.waggoner@fisglobal.com |
Exhibit A
|
Consolidated Statements of Earnings Unaudited for the three and nine months ended September 30, 2010 and 2009 | |
Exhibit B
|
Consolidated Balance Sheets Unaudited as of September 30, 2010 and December 31, 2009 | |
Exhibit C
|
Consolidated Statements of Cash Flows Unaudited for the nine months ended September 30, 2010 and 2009 | |
Exhibit D
|
Supplemental Non-GAAP Financial Information Unaudited for the three and nine months ended September 30, 2010 and 2009 | |
Exhibit E
|
Supplemental GAAP to Non-GAAP Reconciliation Unaudited for the three and nine months ended September 30, 2010 and 2009 |
1
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Processing and services revenues |
$ | 1,367.2 | $ | 828.7 | $ | 3,873.2 | $ | 2,428.1 | ||||||||
Cost of revenues |
897.3 | 605.4 | 2,680.9 | 1,822.2 | ||||||||||||
Selling, general and administrative expenses |
138.9 | 89.4 | 489.8 | 275.7 | ||||||||||||
Impairment charges |
154.9 | | 154.9 | | ||||||||||||
Operating income |
176.1 | 133.9 | 547.6 | 330.2 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest expense, net |
(60.9 | ) | (31.8 | ) | (108.4 | ) | (94.3 | ) | ||||||||
Other income (expense), net |
17.9 | 1.4 | | 8.0 | ||||||||||||
Total other income (expense) |
(43.0 | ) | (30.4 | ) | (108.4 | ) | (86.3 | ) | ||||||||
Earnings from continuing operations before income taxes |
133.1 | 103.5 | 439.2 | 243.9 | ||||||||||||
Provision for income taxes |
48.2 | 35.5 | 161.2 | 83.8 | ||||||||||||
Earnings from continuing operations, net of tax |
84.9 | 68.0 | 278.0 | 160.1 | ||||||||||||
Earnings (losses) from discontinued operations, net of tax |
(23.9 | ) | 1.0 | (32.4 | ) | 1.2 | ||||||||||
Net earnings |
61.0 | 69.0 | 245.6 | 161.3 | ||||||||||||
Net (earnings) loss attributable to noncontrolling interest |
49.4 | (1.4 | ) | 48.3 | (1.5 | ) | ||||||||||
Net earnings attributable to FIS common stockholders |
$ | 110.4 | $ | 67.6 | $ | 293.9 | $ | 159.8 | ||||||||
Net earnings per share-basic from continuing operations attributable to FIS common stockholders * |
$ | 0.40 | $ | 0.35 | $ | 0.91 | $ | 0.83 | ||||||||
Net earnings per share-basic from discontinued operations attributable to FIS common stockholders * |
(0.07 | ) | 0.01 | (0.09 | ) | 0.01 | ||||||||||
Net earnings per share-basic attributable to FIS common stockholders * |
$ | 0.33 | $ | 0.35 | $ | 0.82 | $ | 0.84 | ||||||||
Weighted average shares outstanding-basic |
332.2 | 191.1 | 360.5 | 190.5 | ||||||||||||
Net earnings per share-diluted from continuing operations attributable to FIS common stockholders * |
$ | 0.40 | $ | 0.34 | $ | 0.89 | $ | 0.82 | ||||||||
Net earnings per share-diluted from discontinued operations attributable to FIS common stockholders * |
(0.07 | ) | 0.01 | (0.09 | ) | 0.01 | ||||||||||
Net earnings per share-diluted attributable to FIS common stockholders * |
$ | 0.33 | $ | 0.35 | $ | 0.80 | $ | 0.83 | ||||||||
Weighted average shares outstanding-diluted |
339.2 | 194.6 | 367.7 | 193.0 | ||||||||||||
Amounts attributable to FIS common stockholders: |
||||||||||||||||
Earnings from continuing operations, net of tax |
$ | 134.3 | $ | 66.6 | $ | 326.3 | $ | 158.6 | ||||||||
Earnings (losses) from discontinued operations, net of tax |
(23.9 | ) | 1.0 | (32.4 | ) | 1.2 | ||||||||||
Net earnings attributable to FIS common stockholders |
$ | 110.4 | $ | 67.6 | $ | 293.9 | $ | 159.8 | ||||||||
* | Amounts may not sum due to rounding. |
2
As of | As of | |||||||
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 389.4 | $ | 430.9 | ||||
Settlement deposits |
48.5 | 50.8 | ||||||
Trade receivables, net |
736.6 | 765.4 | ||||||
Settlement receivables |
40.3 | 62.5 | ||||||
Other receivables |
26.8 | 30.9 | ||||||
Receivable from related parties |
28.0 | 32.0 | ||||||
Prepaid expenses and other current assets |
123.8 | 141.2 | ||||||
Deferred income taxes |
75.1 | 80.9 | ||||||
Assets held for sale |
15.0 | 71.5 | ||||||
Total current assets |
1,483.5 | 1,666.1 | ||||||
Property and equipment, net |
371.9 | 375.9 | ||||||
Goodwill |
8,222.5 | 8,232.9 | ||||||
Intangible assets, net |
2,105.3 | 2,396.8 | ||||||
Computer software, net |
911.5 | 932.7 | ||||||
Deferred contract costs |
252.5 | 261.4 | ||||||
Other noncurrent assets |
208.5 | 131.8 | ||||||
Total assets |
$ | 13,555.7 | $ | 13,997.6 | ||||
Liabilities and Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued liabilities |
$ | 481.1 | $ | 523.2 | ||||
Due to Brazilian venture partners |
57.9 | 73.0 | ||||||
Settlement payables |
103.3 | 122.3 | ||||||
Current portion of long-term debt |
267.5 | 236.7 | ||||||
Deferred revenues |
248.4 | 279.5 | ||||||
Liabilities held for sale |
28.8 | | ||||||
Total current liabilities |
1,187.0 | 1,234.7 | ||||||
Deferred revenues |
92.9 | 104.8 | ||||||
Deferred income taxes |
800.2 | 915.9 | ||||||
Long-term debt, excluding current portion |
4,828.8 | 3,016.6 | ||||||
Other long-term liabilities |
225.9 | 207.0 | ||||||
Total liabilities |
7,134.8 | 5,479.0 | ||||||
Equity: |
||||||||
FIS stockholders equity: |
||||||||
Preferred stock $0.01 par value |
| | ||||||
Common stock $0.01 par value |
3.8 | 3.8 | ||||||
Additional paid in capital |
7,194.1 | 7,345.1 | ||||||
Retained earnings |
1,375.8 | 1,134.6 | ||||||
Accumulated other comprehensive earnings |
70.2 | 82.2 | ||||||
Treasury stock |
(2,383.2 | ) | (256.8 | ) | ||||
Total FIS stockholders equity |
6,260.7 | 8,308.9 | ||||||
Noncontrolling interest |
160.2 | 209.7 | ||||||
Total equity |
6,420.9 | 8,518.6 | ||||||
Total liabilities and equity |
$ | 13,555.7 | $ | 13,997.6 | ||||
3
Nine months ended September 30, | ||||||||
2010 | 2009 | |||||||
Cash flows from operating activities: |
||||||||
Net earnings |
$ | 245.6 | $ | 161.3 | ||||
Adjustment to reconcile net earnings to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
459.8 | 278.4 | ||||||
Asset impairment charges |
179.9 | | ||||||
Stock-based compensation |
40.7 | 27.3 | ||||||
Deferred income taxes |
(107.8 | ) | (24.6 | ) | ||||
Excess income tax benefit from exercise of stock options |
(20.8 | ) | (4.5 | ) | ||||
Other operating activities, net |
(5.8 | ) | 2.5 | |||||
Net changes in assets and liabilities, net of effects from acquisitions: |
||||||||
Trade receivables |
33.7 | 134.4 | ||||||
Settlement receivables |
5.4 | 4.7 | ||||||
Prepaid expenses and other assets |
(3.4 | ) | 27.2 | |||||
Deferred contract costs |
(36.7 | ) | (40.7 | ) | ||||
Deferred revenue |
(37.3 | ) | (13.7 | ) | ||||
Accounts payable, accrued liabilities and other liabilities |
32.6 | (47.3 | ) | |||||
Net cash provided by operating activities |
785.9 | 505.0 | ||||||
Cash flows from investing activities: |
||||||||
Additions to property and equipment |
(89.9 | ) | (34.5 | ) | ||||
Additions to computer software |
(137.4 | ) | (111.1 | ) | ||||
Net proceeds from sale of assets |
71.5 | | ||||||
Acquisitions, net of cash acquired |
(66.6 | ) | (3.8 | ) | ||||
Other investing activities |
1.5 | 5.9 | ||||||
Net cash used in investing activities |
(220.9 | ) | (143.5 | ) | ||||
Cash flows from financing activities: |
||||||||
Borrowings |
8,067.0 | 2,147.2 | ||||||
Repayment of borrowings |
(6,229.5 | ) | (2,517.0 | ) | ||||
Capitalized debt issuance costs |
(70.3 | ) | | |||||
Dividends paid and other distributions |
(55.1 | ) | (30.6 | ) | ||||
Excess income tax benefit from exercise of stock options |
20.8 | 4.5 | ||||||
Proceeds from exercise of stock options |
198.8 | 11.6 | ||||||
Treasury stock purchases |
(2,539.4 | ) | | |||||
Other financing activity |
3.3 | | ||||||
Net cash used in financing activities |
(604.4 | ) | (384.3 | ) | ||||
Effect of foreign currency exchange rate changes on cash |
(2.1 | ) | 7.5 | |||||
Net increase in cash and cash equivalents |
(41.5 | ) | (15.3 | ) | ||||
Cash and cash equivalents, at beginning of period |
430.9 | 220.9 | ||||||
Cash and cash equivalents, at end of period |
$ | 389.4 | $ | 205.6 | ||||
4
Three months ended September 30, 2010 | ||||||||||||||||||||
Financial | Payment | International | Corporate | |||||||||||||||||
Solutions | Solutions | Solutions | and Other | Consolidated | ||||||||||||||||
Revenue from continuing operations, as adjusted |
$ | 485.5 | $ | 600.6 | $ | 199.4 | $ | 1.6 | $ | 1,287.1 | ||||||||||
Operating income (loss) |
$ | 179.8 | $ | 206.8 | $ | (38.6 | ) | $ | (171.9 | ) | $ | 176.1 | ||||||||
M&A, restructuring, integration and recapitalization costs |
| | | 22.5 | 22.5 | |||||||||||||||
Brazil joint venture |
| 71.6 | | 71.6 | ||||||||||||||||
Acquisition deferred revenue adjustments |
| | | 3.2 | 3.2 | |||||||||||||||
Purchase price amortization |
| 0.2 | 0.1 | 65.9 | 66.2 | |||||||||||||||
Non GAAP operating income (loss) |
$ | 179.8 | $ | 207.0 | $ | 33.1 | $ | (80.3 | ) | $ | 339.6 | |||||||||
Depreciation and amortization from continuing |
||||||||||||||||||||
Operations, as adjusted |
39.0 | 23.9 | 13.4 | 10.7 | 87.0 | |||||||||||||||
EBITDA, as adjusted |
$ | 218.8 | $ | 230.9 | $ | 46.5 | $ | (69.6 | ) | $ | 426.6 | |||||||||
Non GAAP operating margin, as adjusted |
37.0 | % | 34.5 | % | 16.6 | % | N/M | % | 26.4 | % | ||||||||||
EBITDA margin, as adjusted |
45.1 | % | 38.4 | % | 23.3 | % | N/M | % | 33.1 | % | ||||||||||
Three months ended September 30, 2009 | ||||||||||||||||||||
Financial | Payment | International | Corporate | |||||||||||||||||
Solutions | Solutions | Solutions | and Other | Consolidated | ||||||||||||||||
Revenue from continuing operations |
$ | 271.4 | $ | 368.8 | $ | 189.0 | $ | (0.5 | ) | $ | 828.7 | |||||||||
Pro forma Metavante revenue and adjustments |
167.9 | 243.4 | 5.9 | (0.1 | ) | 417.1 | ||||||||||||||
Pro forma revenue from continuing operations |
$ | 439.3 | $ | 612.2 | $ | 194.9 | $ | (0.6 | ) | $ | 1,245.8 | |||||||||
Operating income (loss) |
$ | 97.1 | $ | 99.6 | $ | 32.8 | $ | (95.6 | ) | $ | 133.9 | |||||||||
Pro forma Metavante operating income and adjustments |
52.4 | 98.0 | 1.9 | (82.0 | ) | 70.3 | ||||||||||||||
Pro forma operating Income (loss) |
149.5 | 197.6 | 34.7 | (177.6 | ) | 204.2 | ||||||||||||||
M&A, restructuring and integration costs |
| | | 10.2 | 10.2 | |||||||||||||||
Purchase price amortization |
| | | 67.5 | 67.5 | |||||||||||||||
Non GAAP operating income (loss) |
$ | 149.5 | $ | 197.6 | $ | 34.7 | $ | (99.9 | ) | $ | 281.9 | |||||||||
Depreciation and amortization from continuing |
||||||||||||||||||||
Operations, as adjusted |
37.7 | 28.1 | 13.8 | 10.4 | 90.0 | |||||||||||||||
EBITDA, as adjusted |
$ | 187.2 | $ | 225.7 | $ | 48.5 | $ | (89.5 | ) | $ | 371.9 | |||||||||
Non GAAP operating margin, as adjusted |
34.0 | % | 32.3 | % | 17.8 | % | N/M | % | 22.6 | % | ||||||||||
EBITDA margin, as adjusted |
42.6 | % | 36.9 | % | 24.9 | % | N/M | % | 29.9 | % | ||||||||||
Total Revenue Growth from Prior Year Period |
||||||||||||||||||||
Three months ended September 30,2010 |
10.5 | % | -1.9 | % | 2.3 | % | N/M | % | 3.3 | % | ||||||||||
5
Nine months ended September 30, 2010 | ||||||||||||||||||||
Financial | Payment | International | Corporate | |||||||||||||||||
Solutions | Solutions | Solutions | and Other | Consolidated | ||||||||||||||||
Revenue from continuing operations, as adjusted |
$ | 1,387.3 | $ | 1,850.0 | $ | 565.5 | $ | 4.7 | $ | 3,807.5 | ||||||||||
Operating income (loss) |
$ | 490.2 | $ | 619.2 | $ | 9.4 | $ | (571.2 | ) | $ | 547.6 | |||||||||
M&A, restructuring, integration and recapitalization costs |
| | | 91.5 | 91.5 | |||||||||||||||
Brazil joint venture |
| | 71.6 | | 71.6 | |||||||||||||||
Acquisition deferred revenue adjustments |
| | | 17.4 | 17.4 | |||||||||||||||
Purchase price amortization |
| 0.7 | 0.4 | 196.1 | 197.2 | |||||||||||||||
Non GAAP operating income (loss) |
$ | 490.2 | $ | 619.9 | $ | 81.4 | $ | (266.2 | ) | $ | 925.3 | |||||||||
Depreciation and amortization from continuing |
||||||||||||||||||||
Operations, as adjusted |
114.7 | 72.8 | 41.4 | 29.0 | 257.9 | |||||||||||||||
EBITDA, as adjusted |
$ | 604.9 | $ | 692.7 | $ | 122.8 | $ | (237.2 | ) | $ | 1,183.2 | |||||||||
Non GAAP operating margin, as adjusted |
35.3 | % | 33.5 | % | 14.4 | % | N/M | % | 24.3 | % | ||||||||||
EBITDA margin, as adjusted |
43.6 | % | 37.4 | % | 21.7 | % | N/M | % | 31.1 | % | ||||||||||
Nine months ended September 30, 2009 | ||||||||||||||||||||
Financial | Payment | International | Corporate | |||||||||||||||||
Solutions | Solutions | Solutions | and Other | Consolidated | ||||||||||||||||
Revenue from continuing operations |
$ | 807.5 | $ | 1,112.3 | $ | 509.8 | $ | (1.5 | ) | $ | 2,428.1 | |||||||||
Pro forma Metavante revenue and adjustments |
506.7 | 743.8 | 16.7 | (0.2 | ) | 1,267.0 | ||||||||||||||
Pro forma revenue from continuing operations |
$ | 1,314.2 | $ | 1,856.1 | $ | 526.5 | $ | (1.7 | ) | $ | 3,695.1 | |||||||||
Operating income (loss) |
$ | 259.6 | $ | 281.8 | $ | 70.1 | $ | (281.3 | ) | $ | 330.2 | |||||||||
Pro forma Metavante operating income and adjustments |
166.7 | 288.2 | 6.3 | (246.9 | ) | 214.3 | ||||||||||||||
Pro forma operating Income (loss) |
426.3 | 570.0 | 76.4 | (528.2 | ) | 544.5 | ||||||||||||||
M&A, restructuring and integration costs |
| | | 26.1 | 26.1 | |||||||||||||||
Purchase price amortization |
| | | 203.3 | 203.3 | |||||||||||||||
Non GAAP operating income (loss) |
$ | 426.3 | $ | 570.0 | $ | 76.4 | $ | (298.8 | ) | $ | 773.9 | |||||||||
Depreciation and amortization from continuing |
||||||||||||||||||||
Operations, as adjusted |
114.8 | 85.6 | 39.6 | 27.1 | 267.1 | |||||||||||||||
EBITDA, as adjusted |
$ | 541.1 | $ | 655.6 | $ | 116.0 | $ | (271.7 | ) | $ | 1,041.0 | |||||||||
Non GAAP operating margin, as adjusted |
32.4 | % | 30.7 | % | 14.5 | % | N/M | % | 20.9 | % | ||||||||||
EBITDA margin, as adjusted |
41.2 | % | 35.3 | % | 22.0 | % | N/M | % | 28.2 | % | ||||||||||
Total Revenue Growth from Prior Year Period |
||||||||||||||||||||
Nine months ended September 30, 2010 |
5.6 | % | -0.3 | % | 7.4 | % | N/M | % | 3.0 | % | ||||||||||
6
Three months ended September 30, 2010 | Nine months ended September 30, 2010 | |||||||||||||||||||||||
GAAP | Adj | Adjusted | GAAP | Adj | Adjusted | |||||||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||||||||
Net earnings (1) |
$ | 61.0 | $ | 92.5 | $ | 153.5 | $ | 245.6 | $ | 238.2 | $ | 483.8 | ||||||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||||||||||||||||||
Non-cash adjustments (2) |
253.2 | (132.9 | ) | 120.3 | 546.0 | (209.4 | ) | 336.6 | ||||||||||||||||
Working capital adjustments (3) |
26.5 | 13.2 | 39.7 | (5.7 | ) | (18.2 | ) | (23.9 | ) | |||||||||||||||
Net cash provided by operating activities |
340.7 | (27.2 | ) | 313.5 | 785.9 | 10.6 | 796.5 | |||||||||||||||||
Capital expenditures |
(93.1 | ) | | (93.1 | ) | (227.3 | ) | | (227.3 | ) | ||||||||||||||
Free cash flow |
$ | 247.6 | $ | (27.2 | ) | $ | 220.4 | $ | 558.6 | $ | 10.6 | $ | 569.2 | |||||||||||
Three months ended September 30, 2009 | Nine months ended September 30, 2009 | |||||||||||||||||||||||
GAAP | Adj | Adjusted | GAAP | Adj | Adjusted | |||||||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||||||||
Net earnings (1) |
$ | 69.0 | $ | 3.5 | $ | 72.5 | $ | 161.3 | $ | 9.7 | $ | 171.0 | ||||||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||||||||||||||||||
Non-cash adjustments (2) |
106.9 | | 106.9 | 279.1 | | 279.1 | ||||||||||||||||||
Working capital adjustments (3) |
3.8 | (1.0 | ) | 2.8 | 64.6 | 2.0 | 66.6 | |||||||||||||||||
Net cash provided by operating activities |
179.7 | 2.5 | 182.2 | 505.0 | 11.7 | 516.7 | ||||||||||||||||||
Capital expenditures |
(49.4 | ) | | (49.4 | ) | (145.6 | ) | | (145.6 | ) | ||||||||||||||
Free cash flow |
$ | 130.3 | $ | 2.5 | $ | 132.8 | $ | 359.4 | $ | 11.7 | $ | 371.1 | ||||||||||||
(1) | Adjustments to Net Earnings reflect the elimination of the after-tax impact of M&A and related integration costs, 2010 leveraged recapitalization plan costs, as well as, non-cash impairment, stock acceleration charges and purchase price amortization. For the 2010 periods, the adjustment also includes the removal of the impact of Santanders exit from our Brazilian card processing venture. | |
(2) | Adjustments to Non Cash Adjustments reflects the after-tax impact of stock acceleration charges and purchase price amortization. For the 2010 periods, the adjustment also includes the removal of the impact of Santanders exit from our Brazilian card processing venture. | |
(3) | Adjustments to working capital reflect elimination of settlement of various acquisition related liabilities and for the 2009 period, the elimination of accruals related to the acquisition of Metavante. |
7
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net earnings from continuing operations attributable to FIS |
$ | 134.3 | $ | 66.6 | $ | 326.3 | $ | 158.6 | ||||||||
Provision for income taxes |
48.2 | 35.5 | 161.2 | 83.8 | ||||||||||||
Earnings from continuing operations before income taxes |
182.5 | 102.1 | 487.5 | 242.4 | ||||||||||||
Other, net |
(6.4 | ) | 31.8 | 60.1 | 87.8 | |||||||||||
Operating income |
176.1 | 133.9 | 547.6 | 330.2 | ||||||||||||
Pro forma Metavante operating income and adjustments |
| 70.3 | | 214.3 | ||||||||||||
M&A, restructuring and integration costs |
22.5 | 10.2 | 91.5 | 26.1 | ||||||||||||
Brazil joint venture |
71.6 | | 71.6 | | ||||||||||||
Acquisition deferred revenue adjustments |
3.2 | | 17.4 | | ||||||||||||
Purchase price amortization |
66.2 | 67.5 | 197.2 | 203.3 | ||||||||||||
Non GAAP operating income |
339.6 | 281.9 | 925.3 | 773.9 | ||||||||||||
Depreciation and amortization from continuing operations,
as adjusted |
87.0 | 90.0 | 257.9 | 267.1 | ||||||||||||
EBITDA, as adjusted |
$ | 426.6 | $ | 371.9 | $ | 1,183.2 | $ | 1,041.0 | ||||||||
8
GAAP | M&A | Non-GAAP | ||||||||||||||||||||||||||
Three Months | Restructuring, | Acquisition | Three Months | |||||||||||||||||||||||||
Ended | Integration & | Brazil | Deferred | Purchase | Ended | |||||||||||||||||||||||
September 30, 2010 | Recapitalization | Joint | Revenue | Price | September 30, 2010 | |||||||||||||||||||||||
(Unaudited) | Costs (1) | Venture (2) | Adjustments (3) | Subtotal | Amortization (4) | (Unaudited) | ||||||||||||||||||||||
Processing and services revenue |
$ | 1,367.2 | $ | | $ | (83.3 | ) | $ | 3.2 | $ | 1,287.1 | $ | | $ | 1,287.1 | |||||||||||||
Cost of revenues |
897.3 | | | | 897.3 | (66.2 | ) | 831.1 | ||||||||||||||||||||
Gross profit |
469.9 | | (83.3 | ) | 3.2 | 389.8 | 66.2 | 456.0 | ||||||||||||||||||||
Selling, general and administrative |
138.9 | (22.5 | ) | | | 116.4 | | 116.4 | ||||||||||||||||||||
Impairment charges |
154.9 | | (154.9 | ) | | | | | ||||||||||||||||||||
Operating income |
176.1 | 22.5 | 71.6 | 3.2 | 273.4 | 66.2 | 339.6 | |||||||||||||||||||||
Other income (expense): |
||||||||||||||||||||||||||||
Interest income (expense), net |
(60.9 | ) | | | | (60.9 | ) | | (60.9 | ) | ||||||||||||||||||
Other income (expense), net |
17.9 | 2.7 | (19.4 | ) | | 1.2 | | 1.2 | ||||||||||||||||||||
Total other income (expense) |
(43.0 | ) | 2.7 | (19.4 | ) | | (59.7 | ) | | (59.7 | ) | |||||||||||||||||
Earnings from continuing operations before income taxes |
133.1 | 25.2 | 52.2 | 3.2 | 213.7 | 66.2 | 279.9 | |||||||||||||||||||||
Provision for income taxes |
48.2 | 9.3 | 19.3 | 1.2 | 78.0 | 24.5 | 102.5 | |||||||||||||||||||||
Earnings from continuing operations, net of tax |
84.9 | 15.9 | 32.9 | 2.0 | 135.7 | 41.7 | 177.4 | |||||||||||||||||||||
Earnings (losses) from discontinued operations, net of tax (5) |
(23.9 | ) | | | | (23.9 | ) | | (23.9 | ) | ||||||||||||||||||
Net earnings |
61.0 | 15.9 | 32.9 | 2.0 | 111.8 | 41.7 | 153.5 | |||||||||||||||||||||
Net (earnings) loss attributable to noncontrolling interest |
49.4 | | (50.1 | ) | | (0.7 | ) | | (0.7 | ) | ||||||||||||||||||
Net earnings attributable to FIS common stockholders |
$ | 110.4 | $ | 15.9 | $ | (17.2 | ) | $ | 2.0 | $ | 111.1 | $ | 41.7 | $ | 152.8 | |||||||||||||
Amounts attributable to FIS common stockholders |
||||||||||||||||||||||||||||
Earnings from continuing operations, net of tax |
$ | 134.3 | $ | 15.9 | $ | (17.2 | ) | $ | 2.0 | $ | 135.0 | $ | 41.7 | $ | 176.7 | |||||||||||||
Earnings (losses) from discontinued operations, net of tax |
(23.9 | ) | | | | (23.9 | ) | | (23.9 | ) | ||||||||||||||||||
Net earnings attributable to FIS common stockholders |
$ | 110.4 | $ | 15.9 | $ | (17.2 | ) | $ | 2.0 | $ | 111.1 | $ | 41.7 | $ | 152.8 | |||||||||||||
Net earnings per share diluted from continuing operations
attributable to FIS common stockholders* |
$ | 0.40 | $ | 0.05 | $ | (0.05 | ) | $ | 0.01 | $ | 0.40 | $ | 0.12 | $ | 0.52 | |||||||||||||
Weighted average shares outstanding diluted |
339.2 | 339.2 | 339.2 | 339.2 | 339.2 | 339.2 | 339.2 | |||||||||||||||||||||
Effective tax rate |
36 | % | 37 | % | ||||||||||||||||||||||||
Supplemental Information: |
||||||||||||||||||||||||||||
Depreciation and amortization from continuing operations |
$ | 153.2 | (66.2 | ) | $ | 87.0 | ||||||||||||||||||||||
Stock compensation expense from continuing operations,
excluding acceleration charges |
$ | 13.9 | ||||||||||||||||||||||||||
Stock acceleration charges |
0.4 | |||||||||||||||||||||||||||
Total stock compensation expense from continuing operations |
$ | 14.3 | ||||||||||||||||||||||||||
* | Amounts may not sum due to rounding. |
9
GAAP | M&A | Non-GAAP | ||||||||||||||||||||||||||
Nine Months | Restructuring, | Acquisition | Nine Months | |||||||||||||||||||||||||
Ended | Integration & | Brazil | Deferred | Purchase | Ended | |||||||||||||||||||||||
September 30, 2010 | Recapitalization | Joint | Revenue | Price | September 30, 2010 | |||||||||||||||||||||||
(Unaudited) | Costs (1) | Venture (2) | Adjustments (3) | Subtotal | Amortization (4) | (Unaudited) | ||||||||||||||||||||||
Processing and services revenue |
$ | 3,873.2 | $ | | $ | (83.3 | ) | $ | 17.4 | $ | 3,807.3 | $ | | $ | 3,807.3 | |||||||||||||
Cost of revenues |
2,680.9 | | | | 2,680.9 | (197.2 | ) | 2,483.7 | ||||||||||||||||||||
Gross profit |
1,192.3 | | (83.3 | ) | 17.4 | 1,126.4 | 197.2 | 1,323.6 | ||||||||||||||||||||
Selling, general and administrative |
489.8 | (91.5 | ) | | | 398.3 | | 398.3 | ||||||||||||||||||||
Impairment charges |
154.9 | | (154.9 | ) | | | | | ||||||||||||||||||||
Operating income |
547.6 | 91.5 | 71.6 | 17.4 | 728.1 | 197.2 | 925.3 | |||||||||||||||||||||
Other income (expense): |
||||||||||||||||||||||||||||
Interest income (expense), net |
(108.4 | ) | | | | (108.4 | ) | | (108.4 | ) | ||||||||||||||||||
Other income (expense), net |
| 19.5 | (19.4 | ) | | 0.1 | | 0.1 | ||||||||||||||||||||
Total other income (expense) |
(108.4 | ) | 19.5 | (19.4 | ) | | (108.3 | ) | | (108.3 | ) | |||||||||||||||||
Earnings from continuing operations before income taxes |
439.2 | 111.0 | 52.2 | 17.4 | 619.8 | 197.2 | 817.0 | |||||||||||||||||||||
Provision for income taxes |
161.2 | 41.0 | 19.3 | 6.5 | 228.0 | 73.0 | 301.0 | |||||||||||||||||||||
Earnings from continuing operations, net of tax |
278.0 | 70.0 | 32.9 | 10.9 | 391.8 | 124.2 | 516.0 | |||||||||||||||||||||
Earnings (losses) from discontinued operations, net of tax (5) |
(32.4 | ) | | | | (32.4 | ) | | (32.4 | ) | ||||||||||||||||||
Net earnings |
245.6 | 70.0 | 32.9 | 10.9 | 359.4 | 124.2 | 483.6 | |||||||||||||||||||||
Net (earnings) loss attributable to noncontrolling interest |
48.3 | | (50.1 | ) | | (1.8 | ) | | (1.8 | ) | ||||||||||||||||||
Net earnings attributable to FIS common stockholders |
$ | 293.9 | $ | 70.0 | $ | (17.2 | ) | $ | 10.9 | $ | 357.6 | $ | 124.2 | $ | 481.8 | |||||||||||||
Amounts attributable to FIS common stockholders |
||||||||||||||||||||||||||||
Earnings from continuing operations, net of tax |
$ | 326.3 | $ | 70.0 | $ | (17.2 | ) | $ | 10.9 | $ | 390.0 | $ | 124.2 | $ | 514.2 | |||||||||||||
Earnings (losses) from discontinued operations, net of tax |
(32.4 | ) | | | | (32.4 | ) | | (32.4 | ) | ||||||||||||||||||
Net earnings attributable to FIS common stockholders |
$ | 293.9 | $ | 70.0 | $ | (17.2 | ) | $ | 10.9 | $ | 357.6 | $ | 124.2 | $ | 481.8 | |||||||||||||
Net earnings per share diluted from continuing operations
attributable to FIS common stockholders* |
$ | 0.89 | $ | 0.19 | $ | (0.05 | ) | $ | 0.03 | $ | 1.06 | $ | 0.34 | $ | 1.40 | |||||||||||||
Weighted average shares outstanding diluted |
367.7 | 367.7 | 367.7 | 367.7 | 367.7 | 367.7 | 367.7 | |||||||||||||||||||||
Effective tax rate |
37 | % | 37 | % | ||||||||||||||||||||||||
Supplemental Information: |
||||||||||||||||||||||||||||
Depreciation and amortization from continuing operations |
$ | 455.1 | (197.2 | ) | $ | 257.9 | ||||||||||||||||||||||
Stock compensation expense from continuing operations,
excluding acceleration charges |
$ | 34.9 | ||||||||||||||||||||||||||
Stock acceleration charges |
5.8 | |||||||||||||||||||||||||||
Total stock compensation expense from continuing operations |
$ | 40.7 | ||||||||||||||||||||||||||
* | Amounts may not sum due to rounding. |
10
GAAP | M&A | Non-GAAP | ||||||||||||||||||
Three Months | Restructuring | Three Months | ||||||||||||||||||
Ended | And | Purchase | Ended | |||||||||||||||||
September 30, 2009 | Integration | Price | September 30, 2009 | |||||||||||||||||
(Unaudited) | Costs (1) | Subtotal | Amortization (4) | (Unaudited) | ||||||||||||||||
Processing and services revenue |
$ | 828.7 | $ | | $ | 828.7 | $ | | $ | 828.7 | ||||||||||
Cost of revenues |
605.4 | | 605.4 | (28.9 | ) | 576.5 | ||||||||||||||
Gross profit |
223.3 | | 223.3 | 28.9 | 252.2 | |||||||||||||||
Selling, general and administrative |
89.4 | (5.3 | ) | 84.1 | | 84.1 | ||||||||||||||
Operating income |
133.9 | 5.3 | 139.2 | 28.9 | 168.1 | |||||||||||||||
Other income (expense): |
||||||||||||||||||||
Interest income (expense), net |
(31.8 | ) | | (31.8 | ) | | (31.8 | ) | ||||||||||||
Other income, net |
1.4 | | 1.4 | | 1.4 | |||||||||||||||
Total other income (expense) |
(30.4 | ) | | (30.4 | ) | | (30.4 | ) | ||||||||||||
Earnings from continuing operations before income taxes |
103.5 | 5.3 | 108.8 | 28.9 | 137.7 | |||||||||||||||
Provision for income taxes |
35.5 | 1.8 | 37.3 | 9.8 | 47.1 | |||||||||||||||
Earnings from continuing operations, net of tax |
68.0 | 3.5 | 71.5 | 19.1 | 90.6 | |||||||||||||||
Earnings (losses) from discontinued operations, net of tax (5) |
1.0 | | 1.0 | | 1.0 | |||||||||||||||
Net earnings |
69.0 | 3.5 | 72.5 | 19.1 | 91.6 | |||||||||||||||
Net (earnings) loss attributable to noncontrolling interest |
(1.4 | ) | | (1.4 | ) | | (1.4 | ) | ||||||||||||
Net earnings attributable to FIS common stockholders |
$ | 67.6 | $ | 3.5 | $ | 71.1 | $ | 19.1 | $ | 90.2 | ||||||||||
Amounts attributable to FIS common stockholders |
||||||||||||||||||||
Earnings from continuing operations, net of tax |
$ | 66.6 | $ | 3.5 | $ | 70.1 | $ | 19.1 | $ | 89.2 | ||||||||||
Earnings (losses) from discontinued operations, net of tax |
1.0 | | 1.0 | | 1.0 | |||||||||||||||
Net earnings attributable to FIS common stockholders |
$ | 67.6 | $ | 3.5 | $ | 71.1 | $ | 19.1 | $ | 90.2 | ||||||||||
Net earnings per share diluted from continuing operations
attributable to FIS common stockholders* |
$ | 0.34 | $ | 0.02 | $ | 0.36 | $ | 0.10 | $ | 0.46 | ||||||||||
Weighted average shares outstanding diluted |
194.6 | 194.6 | 194.6 | 194.6 | 194.6 | |||||||||||||||
Effective tax rate |
34 | % | 34 | % | ||||||||||||||||
Supplemental Information: |
||||||||||||||||||||
Depreciation and amortization from continuing operations |
$ | 91.9 | $ | (28.9 | ) | $ | 63.0 | |||||||||||||
Stock compensation expense from continuing operations,
excluding acceleration charges |
$ | 9.0 | ||||||||||||||||||
Stock acceleration charges |
| |||||||||||||||||||
Total stock compensation expense from continuing operations |
$ | 9.0 | ||||||||||||||||||
* | Amounts may not sum due to rounding. |
11
GAAP | M&A | Non-GAAP | ||||||||||||||||||
Nine months | Restructuring | Nine months | ||||||||||||||||||
Ended | And | Purchase | Ended | |||||||||||||||||
September 30, 2009 | Integration | Price | September 30, 2009 | |||||||||||||||||
(Unaudited) | Costs (1) | Subtotal | Amortization (4) | (Unaudited) | ||||||||||||||||
Processing and services revenue |
$ | 2,428.1 | $ | | $ | 2,428.1 | $ | | $ | 2,428.1 | ||||||||||
Cost of revenues |
1,822.2 | | 1,822.2 | (88.0 | ) | 1,734.2 | ||||||||||||||
Gross profit |
605.9 | | 605.9 | 88.0 | 693.9 | |||||||||||||||
Selling, general and administrative |
275.7 | (14.8 | ) | 260.9 | | 260.9 | ||||||||||||||
Operating income |
330.2 | 14.8 | 345.0 | 88.0 | 433.0 | |||||||||||||||
Other income (expense): |
||||||||||||||||||||
Interest income (expense), net |
(94.3 | ) | | (94.3 | ) | | (94.3 | ) | ||||||||||||
Other income, net |
8.0 | | 8.0 | | 8.0 | |||||||||||||||
Total other income (expense) |
(86.3 | ) | | (86.3 | ) | | (86.3 | ) | ||||||||||||
Earnings from continuing operations before income taxes |
243.9 | 14.8 | 258.7 | 88.0 | 346.7 | |||||||||||||||
Provision for income taxes |
83.8 | 5.1 | 88.9 | 30.1 | 119.0 | |||||||||||||||
Earnings from continuing operations, net of tax |
160.1 | 9.7 | 169.8 | 57.9 | 227.7 | |||||||||||||||
Earnings (losses) from discontinued operations, net of tax (5) |
1.2 | | 1.2 | | 1.2 | |||||||||||||||
Net earnings |
161.3 | 9.7 | 171.0 | 57.9 | 228.9 | |||||||||||||||
Net (earnings) loss attributable to noncontrolling interest |
(1.5 | ) | | (1.5 | ) | | (1.5 | ) | ||||||||||||
Net earnings attributable to FIS common stockholders |
$ | 159.8 | $ | 9.7 | $ | 169.5 | $ | 57.9 | $ | 227.4 | ||||||||||
Amounts attributable to FIS common stockholders |
||||||||||||||||||||
Earnings from continuing operations, net of tax |
$ | 158.6 | $ | 9.7 | $ | 168.3 | $ | 57.9 | $ | 226.2 | ||||||||||
Earnings (losses) from discontinued operations, net of tax |
1.2 | | 1.2 | | 1.2 | |||||||||||||||
Net earnings attributable to FIS common stockholders |
$ | 159.8 | $ | 9.7 | $ | 169.5 | $ | 57.9 | $ | 227.4 | ||||||||||
Net earnings per share diluted from continuing operations
attributable to FIS common stockholders* |
$ | 0.82 | $ | 0.05 | $ | 0.87 | $ | 0.30 | $ | 1.17 | ||||||||||
Weighted average shares outstanding diluted |
193.0 | 193.0 | 193.0 | 193.0 | 193.0 | |||||||||||||||
Effective tax rate |
34 | % | 34 | % | ||||||||||||||||
Supplemental Information: |
||||||||||||||||||||
Depreciation and amortization from continuing operations |
$ | 273.8 | $ | (88.0 | ) | $ | 185.8 | |||||||||||||
Stock compensation expense from continuing operations,
excluding acceleration charges |
$ | 27.3 | ||||||||||||||||||
Stock acceleration charges |
| |||||||||||||||||||
Total stock compensation expense from continuing operations |
$ | 27.3 | ||||||||||||||||||
* | Amounts may not sum due to rounding. |
12
(1) | This column represents (1) charges for restructuring and integration costs relating to merger and acquisition activities and (2) costs associated with the 2010 leveraged recapitalization plan. For the three and nine months ended September 30, 2010 and 2009, the adjustments to Selling, general and administrative expenses primarily represent incremental transaction costs incurred by the Company related to the acquisition of Metavante Technologies, Inc., completed on October 1, 2009. The adjustments to Other income (expense), net represent certain costs associated with the leveraged recapitalization, the write-off of certain previously deferred debt issue costs associated with the amended and extended debt facility and the write-off of unamortized discount associated with the portion of the Metavante debt that was paid with the proceeds thereof. | |
(2) | In August 2010, all documents required to affect a mutually agreeable exit for Banco Santander from the Brazil card processing Joint Venture were executed. Banco Santander paid a termination fee of approximately $83.3 million directly to FIS, which is included in Processing and Services Revenues for the three months ended September 30, 2010. Notes payable representing additional consideration which was to be paid to the banks upon migration of their card portfolios were forgiven and reduced by $19.4 million, representing Banco Santanders proportionate interest therein. Certain capitalized software development costs exclusively for use in processing Banco Santander card activity with a net unamortized balance of $14.6 million were written off. In addition, $140.3 million, representing the portion of the unamortized contract intangible asset recorded at the initiation of the Brazilian Venture that was attributable to Banco Santander was deemed impaired as a result of Santanders exit and charged to amortization expense. | |
(3) | This column represents the impact of the purchase accounting adjustment to reduce Metavantes deferred revenues to estimated fair value, determined as fulfillment cost plus a normal profit margin. The deferred revenue adjustment represents revenue that would have been recognized in the normal course of business by Metavante but was not recognized due to GAAP purchase accounting requirements. | |
(4) | This column represents purchase price amortization expense on intangibles assets acquired through various Company acquisitions. | |
(5) | During the 2010 and 2009 periods certain operations are classified as discontinued operations. Reporting for discontinued operations classifies revenues and expenses as one line item net of tax in the statement of operations. During the third quarter 2010, we determined that we will pursue strategic alternatives for our item processing business in Brazil. In January 2010, we closed on the sale of ClearPar. The table below outlines the components of discontinued operations for the periods presented, net of tax: |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Impairment charges Brazil item processing |
$ | (16.6 | ) | $ | | $ | (16.6 | ) | $ | | ||||||
Brazil item processing operations |
(7.3 | ) | (1.2 | ) | (14.5 | ) | (3.2 | ) | ||||||||
ClearPar and other |
| 2.2 | (1.3 | ) | 4.4 | |||||||||||
Total discontinued operations |
$ | (23.9 | ) | $ | 1.0 | $ | (32.4 | ) | $ | 1.2 | ||||||
13
Third Quarter 2010 EARNINGS CALL Supplemental Materials OCTOBER 26, 2010 |
Forward Looking Statements Today's news release and this conference call contain "forward-looking statements" within the meaning of the U.S. federal securities laws. Statements that are not historical facts, including statements about 2010 adjusted revenue, earnings per share, margin expansion and cash flow, as well as other statements about our expectations, hopes, intentions, or strategies regarding the future, are forward-looking statements. These statements relate to future events and our future results, and involve a number of risks and uncertainties. Forward-looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. Any statements that refer to beliefs, expectations, projections or other characterizations of future events or circumstances and other statements that are not historical facts are forward-looking statements. Actual results, performance or achievement could differ materially from those contained in these forward-looking statements. The risks and uncertainties that forward-looking statements are subject to include without limitation: changes and conditions in general economic, business and political conditions, including the possibility of intensified international hostilities, acts of terrorism, and changes and conditions in either or both the United States and international lending, capital and financial markets; the effect of legislative initiatives or proposals, statutory changes, governmental or other applicable regulations and/or changes in industry requirements, including privacy regulations; 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 or new laws or regulations affecting the banking, retail and financial services industries or due to financial failures or other setbacks suffered by firms in those industries; changes in the growth rates of the markets for core processing, card issuer, and transaction processing services; failures to adapt our services and products to changes in technology or in the marketplace; internal or external security breaches of our systems, including those relating to the theft of personal information and computer viruses affecting our software; the failure to achieve some or all of the benefits that we expect from the Metavante acquisition, including the possibility that the Metavante acquisition may not be accretive to our earnings due to undisclosed liabilities, management or integration issues, loss of customers, the inability to achieve targeted cost savings, or other factors; our potential inability to find suitable acquisition candidates or finance such acquisitions, which depends upon the availability of adequate cash reserves from operations or of acceptable financing terms and the variability of our stock price, or difficulties in integrating past and future acquired technology or business' operations, services, clients and personnel; competitive pressures on product pricing and services including the ability to attract new, or retain existing, customers; an operational or natural disaster at one of our major operations centers; and other risks detailed in "Risk Factors" and other sections of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and other filings with the SEC. Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition, results of operations and prospects. Accordingly, readers should not place undue reliance on these forward-looking statements. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Except as required by applicable law or regulation, we do not undertake (and expressly disclaim) any obligation and do not intend to publicly update or review any of these forward-looking statements, whether as a result of new information, future events or otherwise. 2 |
Use of Non-GAAP Measures Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, the company has provided non-GAAP financial measures, which it believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. These non-GAAP measures include adjusted revenue, adjusted earnings before interest, taxes and depreciation and amortization (EBITDA), adjusted net earnings, and adjusted free cash flow. Adjusted revenue excludes a settlement related to the card processing joint venture in Brazil and the impact of deferred revenue purchase accounting. Adjusted EBITDA excludes the impact of merger and acquisition and integration expenses, accelerated stock compensation charges associated with merger and acquisition activity, costs associated with the 2010 recapitalization plan, settlement revenue and an impairment charge related to the card processing joint venture in Brazil, deferred revenue purchase accounting and certain other costs. Adjusted net earnings exclude the after-tax impact of merger and acquisition and integration expenses, accelerated stock compensation charges associated with merger and acquisition activity, costs associated with the 2010 recapitalization plan, an impairment charge and settlement related to the card processing joint venture in Brazil, acquisition related amortization, deferred revenue purchase accounting and certain other costs. Adjusted free cash flow is GAAP operating cash flow less capital expenditures, acquisition related cash items and cash items associated with the 2010 recapitalization plan. 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. Further, FIS' non-GAAP measures may be calculated differently from similarly titled measures of other companies. Reconciliations of these non-GAAP measures to related GAAP measures are provided in the attachments to the press release dated 10/26/2010 and in the Investor Relations section of the FIS Web site, www.fisglobal.com. 3 |
Pro Forma Financial Highlights 3rd Quarter 2010 Adjusted revenue of $1.3 billion, up 3.3% Adjusted EBITDA margin of 33.1%, up 320 bps Achieved targeted cost synergies Adjusted EPS of $0.52 Adjusted free cash flow of $220 million 4 |
Consolidated Results ($ millions) 5 Pro forma revenue increased 3.3% Increased professional services and software sales No significant currency impact Adjusted EBITDA increased 14.7% Adjusted margin expanded 320 bps to 33.1% Prior year results reflect the inclusion of Metavante results on a pro forma basis. Excludes $83 million for Brazil joint venture settlement and $3 million purchase accounting adjustment for deferred revenues. Note: Calculations may differ due to rounding. (2) Revenue EBITDA (1) (1) |
Financial Solutions ($ millions) 6 Financial Solutions revenue increased 10.5% Increase in professional services, software sales and account processing revenue Adjusted EBITDA increased 16.9% Adjusted margin expanded 250 bps to 45.1% Prior year results reflect the inclusion of Metavante results on a pro forma basis. Note: Calculations may differ due to rounding. Revenue EBITDA (1) (1) |
Payment Solutions ($ millions) 7 Payment Solutions revenue decreased 1.9% Increased 1.8% excluding check businesses Adjusted EBITDA increased 2.3% Adjusted margin expanded 150 bps to 38.4% Prior year results reflect the inclusion of Metavante results on a pro forma basis. Note: Calculations may differ due to rounding. Revenue EBITDA (1) (1) |
International Solutions ($ millions) 8 International Solutions revenue increased 2.3% Santander portfolio deconverted in January Banco Bradesco conversion completed October 2 No significant currency impact Adjusted EBITDA decreased 4.1% Adjusted margin decreased 160 bps to 23.3% Incremental costs related to Banco Bradesco conversion Santander portfolio deconversion Prior year results reflect the inclusion of Metavante results on a pro forma basis. Note: Calculations may differ due to rounding. Revenue EBITDA (1) (1) |
Results Summary ($ millions) 9 Includes net impact of termination fee, impairment charge, debt extinguishment and non-controlling interest. Note: Calculations may differ due to rounding. |
Cash Flows ($ millions) 10 Strong earnings growth Disciplined working capital management Targeted capital investment Note: Calculations may differ due to rounding. |
Updated 2010 Outlook 11 Assumes 36% full year tax rate Anticipated 307 million diluted shares in Q4. |
Third Quarter 2010 EARNINGS CALL Supplemental Materials OCTOBER 26, 2010 Appendix |
Total Debt ($ millions) 13 LIBOR floor of 150 bps. Note: Calculations may differ due to rounding. |
Note: Calculations may differ due to rounding. International Solutions 14 2010 Foreign Currency Exchange Rates 2010 Foreign Currency Exchange Rates 2010 Foreign Currency Exchange Rates LC/$ Budget(1) Forecast(2) Euro 1.48 1.34 Brazil 0.57 0.58 UK 1.65 1.55 Assumed currency rates included in 2010 guidance ($60 million full year revenue benefit) Current forecast assumes full year currency revenue benefit of 50 bps versus original guidance of 100 bps |