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):
February 10, 2009
Fidelity National Information Services, Inc.
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
(904) 854-8100
(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 | ||
Item 9.01 Financial Statements and Exhibits | ||
SIGNATURE | ||
EXHIBIT INDEX | ||
EXHIBIT 99.1 | ||
EXHIBIT 99.2 |
Item 2.02. Results of Operations and Financial Condition
On February 10, 2009, Fidelity National Information Services, Inc. issued an earnings release announcing its financial results for the Fourth Quarter of 2008. 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
Item 9.01. Financial Statements and Exhibits
(c) Exhibits
Exhibit |
Description |
|
99.1 |
Press release announcing Fidelity National Information Services, Inc. Reports Fourth Quarter 2008 Earnings. | |
99.2 |
Financial results presentation. |
Fidelity National Information
Services, Inc. |
||||
Date: February 11, 2009 | By: | /s/ George P. Scanlon | ||
Name: George P. Scanlon | ||||
Title: Executive Vice President
and Chief Financial Officer |
||||
EXHIBIT INDEX
Exhibit |
Description |
|
99.1 |
Press release announcing Fidelity National Information Services, Inc. Reports Fourth Quarter 2008 Earnings. | |
99.2 |
Financial results presentation. |
FIS provided full year guidance for 2009 as follows: | |||
| Reported revenue growth of 0 to 2%, and 3 to 5% in constant currency. | ||
| Adjusted net earnings of $1.60 to $1.66 per share, representing approximately 7 to 11% growth on a reported basis, and 10 to 14% growth in constant currency | ||
| Free cash flow of $410 to $430 million |
Exhibit A
|
Consolidated Statements of Earnings for the Three and Twelve-Month Periods ended December 31, 2008 and 2007 | |
Exhibit B
|
Consolidated Balance Sheets as of December 31, 2008 and 2007 | |
Exhibit C
|
Consolidated Statements of Cash Flows for the years ended December 31, 2008 and 2007 | |
Exhibit D
|
Supplemental Financial Information for the Three and Twelve-Month Periods ended December 31, 2008 and 2007 | |
Exhibit E
|
Supplemental Non-GAAP Financial Information for the Three and Twelve-Month Periods ended December 31, 2008 and 2007 | |
Exhibit F
|
Recast Reporting Segment Bridge for the Year Ending December 31, 2008 | |
Exhibit G
|
Supplemental GAAP to Non-GAAP Reconciliation Unaudited for the Three and Twelve-Month Periods ended December 31, 2008 and 2007 |
1
Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Processing and services revenues |
$ | 862.0 | $ | 855.3 | $ | 3,446.0 | $ | 2,921.0 | ||||||||
Cost of revenues |
652.4 | 648.4 | 2,636.9 | 2,265.8 | ||||||||||||
Selling, general and administrative expenses |
80.5 | 86.3 | 389.4 | 302.9 | ||||||||||||
Research and development costs |
23.1 | 20.4 | 84.8 | 70.4 | ||||||||||||
Operating income |
106.0 | 100.2 | 334.9 | 281.9 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest income |
1.0 | 1.9 | 6.3 | 3.0 | ||||||||||||
Gain on sale of Covansys stock |
| | | 274.5 | ||||||||||||
Other income |
1.5 | 11.2 | 1.5 | 14.8 | ||||||||||||
Interest expense |
(33.4 | ) | (39.4 | ) | (163.5 | ) | (190.2 | ) | ||||||||
Total other income (expense) |
(30.9 | ) | (26.3 | ) | (155.7 | ) | 102.1 | |||||||||
Earnings from continuing operations before income taxes,
equity earnings and minority interest |
75.1 | 73.9 | 179.2 | 384.0 | ||||||||||||
Provision for income taxes |
24.0 | 26.0 | 57.6 | 136.2 | ||||||||||||
Equity in (losses) earnings of unconsolidated entities |
| | (0.2 | ) | 2.8 | |||||||||||
Minority interest (expense) income |
(1.2 | ) | (0.3 | ) | (4.0 | ) | 0.1 | |||||||||
Net earnings from continuing operations |
49.9 | 47.6 | 117.4 | 250.7 | ||||||||||||
(Loss) earnings from discontinued operations, net of tax |
(21.1 | ) | 60.8 | 97.4 | 310.5 | |||||||||||
Net earnings |
$ | 28.8 | $ | 108.4 | $ | 214.8 | $ | 561.2 | ||||||||
Net earnings per share-basic from continuing operations* |
$ | 0.26 | $ | 0.24 | $ | 0.61 | $ | 1.30 | ||||||||
Net (loss) earnings per share-basic from discontinued operations* |
(0.11 | ) | 0.31 | 0.51 | 1.61 | |||||||||||
Net earnings per share-basic* |
$ | 0.15 | $ | 0.56 | $ | 1.12 | $ | 2.91 | ||||||||
Weighted average shares outstanding-basic |
189.8 | 194.5 | 191.6 | 193.1 | ||||||||||||
Net earnings per share-diluted from continuing operations* |
$ | 0.26 | $ | 0.24 | $ | 0.61 | $ | 1.28 | ||||||||
Net (loss) earnings per share-diluted from discontinued operations* |
(0.11 | ) | 0.31 | 0.50 | 1.58 | |||||||||||
Net earnings per share-diluted* |
$ | 0.15 | $ | 0.55 | $ | 1.11 | $ | 2.86 | ||||||||
Weighted average shares outstanding-diluted |
191.1 | 196.7 | 193.5 | 196.5 | ||||||||||||
* | Amounts may not sum due to rounding. |
2
As of | As of | |||||||
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
(Unaudited) | ||||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 220.9 | $ | 355.3 | ||||
Settlement deposits |
31.4 | 21.2 | ||||||
Trade receivables, net |
538.1 | 825.9 | ||||||
Settlement receivables |
52.1 | 116.9 | ||||||
Other receivables |
121.1 | 206.7 | ||||||
Receivable from FNF and LPS |
10.1 | 14.9 | ||||||
Prepaid expenses and other current assets |
115.1 | 168.5 | ||||||
Deferred income taxes |
64.0 | 120.1 | ||||||
Total current assets |
1,152.8 | 1,829.5 | ||||||
Property and equipment, net of accumulated depreciation and amortization |
272.6 | 392.5 | ||||||
Goodwill |
4,196.5 | 5,326.8 | ||||||
Other intangible assets, net of accumulated amortization |
924.3 | 1,030.6 | ||||||
Computer software, net of accumulated amortization |
617.0 | 775.2 | ||||||
Deferred contract costs |
241.2 | 256.9 | ||||||
Investment in FNRES |
| 30.5 | ||||||
Long-term notes receivable from FNF |
5.5 | 6.1 | ||||||
Other noncurrent assets |
79.6 | 146.5 | ||||||
Total assets |
$ | 7,489.5 | $ | 9,794.6 | ||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued liabilities |
$ | 408.0 | $ | 606.2 | ||||
Settlement payables |
83.3 | 129.8 | ||||||
Current portion of long-term debt |
105.5 | 272.0 | ||||||
Deferred revenues |
182.9 | 246.2 | ||||||
Total current liabilities |
779.7 | 1,254.2 | ||||||
Deferred revenues |
86.7 | 111.9 | ||||||
Deferred income taxes |
314.4 | 395.0 | ||||||
Long-term debt, excluding current portion |
2,409.0 | 4,003.4 | ||||||
Other long-term liabilities |
197.8 | 234.7 | ||||||
Total liabilities |
3,787.6 | 5,999.2 | ||||||
Minority interest |
164.2 | 14.2 | ||||||
Stockholders equity: |
||||||||
Preferred stock $0.01 par value |
| | ||||||
Common stock $0.01 par value |
2.0 | 2.0 | ||||||
Additional paid in capital |
2,964.7 | 3,038.2 | ||||||
Retained earnings |
1,076.1 | 899.5 | ||||||
Accumulated other comprehensive (loss) earnings |
(102.3 | ) | 53.4 | |||||
Treasury stock |
(402.8 | ) | (211.9 | ) | ||||
Total stockholders equity |
3,537.7 | 3,781.2 | ||||||
Total liabilities and stockholders equity |
$ | 7,489.5 | $ | 9,794.6 | ||||
3
Year ended December 31, | ||||||||
2008 | 2007 | |||||||
Cash flows from operating activities: |
||||||||
Net earnings |
$ | 214.8 | $ | 561.2 | ||||
Adjustment to reconcile net earnings to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
465.4 | 496.8 | ||||||
Amortization of debt issue costs |
16.8 | 30.6 | ||||||
Gain on sale of Covansys stock |
| (274.5 | ) | |||||
Net loss (gain) on sale of non-strategic businesses |
33.6 | (71.7 | ) | |||||
Gain on pension curtailment |
| (12.1 | ) | |||||
Stock-based compensation cost |
60.7 | 39.0 | ||||||
Deferred income taxes |
35.6 | 17.9 | ||||||
Income tax benefit from exercise of stock options |
| (47.5 | ) | |||||
Equity in loss (earnings) of unconsolidated entities |
2.3 | (0.9 | ) | |||||
Minority interest |
2.8 | 2.2 | ||||||
Changes in assets and liabilities, net of effects from acquisitions: |
||||||||
Net increase in trade receivables |
(31.0 | ) | (169.9 | ) | ||||
Net decrease (increase) in prepaid expenses and other assets |
(12.7 | ) | (70.1 | ) | ||||
Additions to deferred contract costs |
(62.1 | ) | (57.9 | ) | ||||
Net increase (decrease) in deferred revenue |
9.6 | (11.5 | ) | |||||
Net (decrease) increase in accounts payable, accrued
liabilities and other liabilities |
(139.3 | ) | 31.9 | |||||
Net cash provided by operating activities |
596.5 | 463.5 | ||||||
Cash flows from investing activities: |
||||||||
Additions to property and equipment |
(76.7 | ) | (113.8 | ) | ||||
Additions to capitalized software |
(178.7 | ) | (229.5 | ) | ||||
Other investing activities |
(4.7 | ) | | |||||
Cash received from sale of Covansys stock |
| 430.2 | ||||||
Investment in Brazilian Venture |
(25.7 | ) | | |||||
Net proceeds from sale of company assets |
32.6 | 96.2 | ||||||
Acquisitions, net of cash acquired |
(19.9 | ) | (1,729.0 | ) | ||||
Net cash used in investing activities |
(273.1 | ) | (1,545.9 | ) | ||||
Cash flows from financing activities: |
||||||||
Borrowings |
5,160.0 | 4,300.3 | ||||||
Debt service payments |
(5,337.3 | ) | (3,032.7 | ) | ||||
Capitalized debt issuance costs |
| (29.4 | ) | |||||
Dividends paid |
(38.2 | ) | (38.7 | ) | ||||
Cash transferred in LPS spin-off |
(20.8 | ) | | |||||
Minority interest contribution to Brazilian Venture |
14.8 | | ||||||
Income tax benefit from exercise of stock options |
| 47.5 | ||||||
Stock options exercised |
19.2 | 57.7 | ||||||
Treasury stock purchases |
(236.2 | ) | (80.3 | ) | ||||
Net cash (used in) provided by financing activities |
(438.5 | ) | 1,224.4 | |||||
Effect of foreign currency exchange rates on cash |
(19.3 | ) | 1.5 | |||||
Net (decrease) increase in cash and cash equivalents |
(134.4 | ) | 143.5 | |||||
Cash and cash equivalents, at beginning of period |
355.3 | 211.8 | ||||||
Cash and cash equivalents, at end of period |
$ | 220.9 | $ | 355.3 | ||||
4
Three Month Periods ended | Twelve Month Periods ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
1. Revenues |
||||||||||||||||
Revenue from Continuing Operations: |
||||||||||||||||
Integrated Financial Solutions |
$ | 391.9 | $ | 368.5 | $ | 1,531.7 | $ | 1,258.8 | ||||||||
Enterprise Solutions |
282.1 | 289.0 | 1,125.4 | 991.6 | ||||||||||||
International |
177.2 | 187.4 | 747.6 | 614.0 | ||||||||||||
Corporate and Other |
10.8 | 10.4 | 41.3 | 56.6 | ||||||||||||
Total Revenue from Continuing Operations |
$ | 862.0 | $ | 855.3 | $ | 3,446.0 | $ | 2,921.0 | ||||||||
Total Revenue Growth from Prior Year Period |
||||||||||||||||
Integrated Financial Solutions |
6.4 | % | 30.1 | % | 21.7 | % | 18.9 | % | ||||||||
Enterprise Solutions |
-2.4 | % | 19.1 | % | 13.5 | % | 13.2 | % | ||||||||
International |
-5.4 | % | 32.9 | % | 21.8 | % | 42.7 | % | ||||||||
Corporate and Other |
3.8 | % | -3.3 | % | -27.0 | % | 8.7 | % | ||||||||
Total |
0.8 | % | 26.2 | % | 18.0 | % | 20.9 | % | ||||||||
5
Three Month Periods ended | Twelve Month Periods ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
1. EBIT and EBITDA Consolidated |
||||||||||||||||
Revenue from Continuing Operations |
$ | 862.0 | $ | 855.3 | $ | 3,446.0 | $ | 2,921.0 | ||||||||
Operating Income |
$ | 106.0 | $ | 100.2 | $ | 334.9 | $ | 281.9 | ||||||||
M&A, Restructuring and Integration Costs |
| 1.7 | 46.3 | 28.3 | ||||||||||||
Corporate Costs Non Disc. Ops |
| 3.4 | 18.1 | 22.0 | ||||||||||||
LPS Spin-off Costs |
| 0.5 | 9.3 | 0.5 | ||||||||||||
Trademark impairment |
26.0 | | 26.0 | | ||||||||||||
EBIT, as adjusted |
$ | 132.0 | $ | 105.8 | $ | 434.6 | $ | 332.7 | ||||||||
Depreciation and Amortization from Continuing
Operations, as adjusted |
94.9 | 111.8 | 393.1 | 373.6 | ||||||||||||
EBITDA, as adjusted |
$ | 226.9 | $ | 217.6 | $ | 827.7 | $ | 706.3 | ||||||||
EBIT Margin, as adjusted |
15.3 | % | 12.4 | % | 12.6 | % | 11.4 | % | ||||||||
EBITDA Margin, as adjusted |
26.3 | % | 25.4 | % | 24.0 | % | 24.2 | % | ||||||||
6
Quarter Ended December 31, 2008 | Twelve Month Period Ended December 31, 2008 | |||||||||||||||||||||||
GAAP | Adj | Adjusted | Pro forma (1) | Adj | Adj Pro forma | |||||||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||||||||
Net earnings (2) |
$ | 28.8 | $ | | $ | 28.8 | $ | 103.5 | $ | 39.1 | $ | 142.6 | ||||||||||||
Adjustments to reconcile net earnings
to net cash provided by operating activities: |
||||||||||||||||||||||||
Non-cash adjustments |
196.7 | | 196.7 | 556.4 | | 556.4 | ||||||||||||||||||
Working capital adjustments (3) |
(27.6 | ) | 2.5 | (25.1 | ) | (186.1 | ) | 75.5 | (110.6 | ) | ||||||||||||||
Net cash provided
by operating
activities |
197.9 | 2.5 | 200.4 | 473.8 | 114.6 | 588.4 | ||||||||||||||||||
Capital expenditures |
(51.6 | ) | | (51.6 | ) | (230.3 | ) | | (230.3 | ) | ||||||||||||||
Net free cash flow |
$ | 146.3 | $ | 2.5 | $ | 148.8 | $ | 243.5 | $ | 114.6 | $ | 358.1 | ||||||||||||
Quarter Ended December 31, 2007 | Twelve Month Period Ended December 31, 2007 | |||||||||||||||||||||||
Pro forma (1) | Adj | Adj Pro forma | Pro forma (1) | Adj | Adj Pro forma | |||||||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||||||||
Net earnings (2) |
$ | 50.0 | $ | (5.1 | ) | $ | 44.9 | $ | 311.4 | $ | 46.8 | $ | 358.2 | |||||||||||
Adjustments to reconcile net earnings
to net cash provided by operating activities: |
||||||||||||||||||||||||
Non-cash adjustments |
165.6 | | 165.6 | 58.4 | | 58.4 | ||||||||||||||||||
Working capital adjustments (3) |
(68.9 | ) | 47.9 | (21.0 | ) | (170.6 | ) | 194.7 | 24.1 | |||||||||||||||
Net cash provided
by operating
activities |
146.7 | 42.8 | 189.5 | 199.2 | 241.5 | 440.7 | ||||||||||||||||||
Capital expenditures |
(62.6 | ) | | (62.6 | ) | (272.3 | ) | | (272.3 | ) | ||||||||||||||
Net free cash flow |
$ | 84.1 | $ | 42.8 | $ | 126.9 | $ | (73.1 | ) | $ | 241.5 | $ | 168.4 | |||||||||||
(1) | Pro forma cash flows are presented as if the LPS spin-off was completed on January 1, 2007 and represents FIS on a post-spin basis. | |
(2) | Adjustments to Net Earnings reflect the elimination of the after-tax impact of non-recurring M&A and related integration costs, costs associated with the LPS spin-off, restructuring costs and the elimination of corporate costs attributable to LPS. | |
(3) | Adjustments to working capital reflect elimination of settlement of various acquisition related liabilities. |
7
New Reporting Segments (1) | ||||||||||||||||||||
Year Ended December 31, 2008 | ||||||||||||||||||||
Corporate | ||||||||||||||||||||
Financial | Payment | and | ||||||||||||||||||
Solutions | Solutions | International | Other | Total | ||||||||||||||||
Revenue from Continuing Operations: |
||||||||||||||||||||
Integrated Financial Solutions |
$ | 265.3 | $ | 1,266.4 | $ | | $ | | $ | 1,531.7 | ||||||||||
Enterprise Solutions |
849.7 | 260.5 | 15.2 | | 1,125.4 | |||||||||||||||
International |
| 3.3 | 744.3 | | 747.6 | |||||||||||||||
Corporate and Other |
43.8 | | | (2.5 | ) | 41.3 | ||||||||||||||
Total Revenue from Continuing
Operations |
$ | 1,158.8 | $ | 1,530.2 | $ | 759.5 | $ | (2.5 | ) | $ | 3,446.0 | |||||||||
(1) | Effective December 31, 2008, the Company changed its internal reporting structure. The new reporting segments align with this new structure and the table provides a bridge from our old reporting structure to the new segments. |
8
GAAP | Non-GAAP | |||||||||||||||||||
Three Months | Three Months | |||||||||||||||||||
Ended | Purchase | Ended | ||||||||||||||||||
December 31, 2008 | Trademark | Price | December 31, 2008 | |||||||||||||||||
(Unaudited) | Impairment (8) | Subtotal | Amortization (4) | (Unaudited) | ||||||||||||||||
Processing and services revenue |
$ | 862.0 | $ | | $ | 862.0 | $ | | $ | 862.0 | ||||||||||
Cost of revenues |
652.4 | (26.0 | ) | 626.4 | (35.0 | ) | 591.4 | |||||||||||||
Gross profit |
209.6 | 26.0 | 235.6 | 35.0 | 270.6 | |||||||||||||||
Selling, general and administrative |
80.5 | | 80.5 | | 80.5 | |||||||||||||||
Research and development costs |
23.1 | | 23.1 | | 23.1 | |||||||||||||||
Operating income |
106.0 | 26.0 | 132.0 | 35.0 | 167.0 | |||||||||||||||
Other income (expense): |
||||||||||||||||||||
Interest income |
1.0 | | 1.0 | | 1.0 | |||||||||||||||
Interest expense |
(33.4 | ) | | (33.4 | ) | | (33.4 | ) | ||||||||||||
Other income, net |
1.5 | | 1.5 | | 1.5 | |||||||||||||||
Total other income (expense) |
(30.9 | ) | | (30.9 | ) | | (30.9 | ) | ||||||||||||
Earnings from continuing operations before income taxes,
equity in (losses) earnings of unconsolidated entities,
and minority interest |
75.1 | 26.0 | 101.1 | 35.0 | 136.1 | |||||||||||||||
Provision (benefit) for income taxes |
24.0 | 8.3 | 32.3 | 11.2 | 43.5 | |||||||||||||||
Earnings from continuing operations before equity in (losses)
earnings of unconsolidated entities, and minority
interest |
51.1 | 17.7 | 68.8 | 23.8 | 92.6 | |||||||||||||||
Equity in earnings (losses) of unconsolidated entities |
| | | | | |||||||||||||||
Minority interest income (expense) |
(1.2 | ) | | (1.2 | ) | | (1.2 | ) | ||||||||||||
Net earnings from continuing operations |
$ | 49.9 | $ | 17.7 | $ | 67.6 | $ | 23.8 | $ | 91.4 | ||||||||||
Net earnings per share diluted from continuing operations* |
$ | 0.26 | $ | 0.09 | $ | 0.35 | $ | 0.12 | $ | 0.48 | ||||||||||
Weighted average shares outstanding diluted |
191.1 | 191.1 | 191.1 | 191.1 | 191.1 | |||||||||||||||
Supplemental Information: |
||||||||||||||||||||
Depreciation and amortization from continuing operations |
$ | 94.9 | $ | (35.0 | ) | $ | 59.9 | |||||||||||||
Stock compensation expense from continuing operations,
excluding acceleration charges |
$ | 10.1 | ||||||||||||||||||
Stock acceleration charges |
| |||||||||||||||||||
Total stock compensation expense from continuing operations |
$ | 10.1 | ||||||||||||||||||
* | Amounts may not sum due to rounding. |
9
GAAP | M&A | Non-GAAP | ||||||||||||||||||||||||||||||
Twelve Months | Restructuring | Corporate | Twelve Months | |||||||||||||||||||||||||||||
Ended | And | Costs | LPS | Purchase | Ended | |||||||||||||||||||||||||||
December 31, 2008 | Integration | Non-Disc | Spin | Trademark | Price | December 31, 2008 | ||||||||||||||||||||||||||
(Unaudited) | Costs (1) | Ops (2) | Costs (3) | Impairment (8) | Subtotal | Amortization (4) | (Unaudited) | |||||||||||||||||||||||||
Processing and services revenue |
$ | 3,446.0 | $ | | $ | | $ | | $ | | $ | 3,446.0 | $ | | $ | 3,446.0 | ||||||||||||||||
Cost of revenues |
2,636.9 | (25.3 | ) | | | (26.0 | ) | 2,585.6 | (142.4 | ) | 2,443.2 | |||||||||||||||||||||
Gross profit |
809.1 | 25.3 | | | 26.0 | 860.4 | 142.4 | 1,002.8 | ||||||||||||||||||||||||
Selling, general and administrative |
389.4 | (21.0 | ) | (18.1 | ) | (9.3 | ) | | 341.0 | | 341.0 | |||||||||||||||||||||
Research and development costs |
84.8 | | | | | 84.8 | | 84.8 | ||||||||||||||||||||||||
Operating income |
334.9 | 46.3 | 18.1 | 9.3 | 26.0 | 434.6 | 142.4 | 577.0 | ||||||||||||||||||||||||
Other income (expense): |
||||||||||||||||||||||||||||||||
Interest income |
6.3 | | | | | 6.3 | | 6.3 | ||||||||||||||||||||||||
Interest expense |
(163.5 | ) | 2.7 | | 12.4 | | (148.4 | ) | | (148.4 | ) | |||||||||||||||||||||
Other income, net |
1.5 | | | | | 1.5 | | 1.5 | ||||||||||||||||||||||||
Total other income (expense) |
(155.7 | ) | 2.7 | | 12.4 | | (140.6 | ) | | (140.6 | ) | |||||||||||||||||||||
Earnings from continuing operations before income taxes,
equity in (losses) earnings of unconsolidated entities,
and minority interest |
179.2 | 49.0 | 18.1 | 21.7 | 26.0 | 294.0 | 142.4 | 436.4 | ||||||||||||||||||||||||
Provision (benefit) for income taxes |
57.6 | 17.5 | 5.5 | 7.3 | 8.3 | 96.2 | 47.8 | 144.0 | ||||||||||||||||||||||||
Earnings from continuing operations before equity in (losses)
earnings of unconsolidated entities, and minority interest |
121.6 | 31.5 | 12.6 | 14.4 | 17.7 | 197.8 | 94.6 | 292.4 | ||||||||||||||||||||||||
Equity in losses of unconsolidated entities |
(0.2 | ) | | | | | (0.2 | ) | | (0.2 | ) | |||||||||||||||||||||
Minority interest income (expense) |
(4.0 | ) | | | | | (4.0 | ) | | (4.0 | ) | |||||||||||||||||||||
Net earnings from continuing operations |
$ | 117.4 | $ | 31.5 | $ | 12.6 | $ | 14.4 | $ | 17.7 | $ | 193.6 | $ | 94.6 | $ | 288.2 | ||||||||||||||||
Net earnings per share diluted from continuing operations * |
$ | 0.61 | $ | 0.16 | $ | 0.07 | $ | 0.07 | $ | 0.09 | $ | 1.00 | $ | 0.49 | $ | 1.49 | ||||||||||||||||
Weighted average shares outstanding diluted |
193.5 | 193.5 | 193.5 | 193.5 | 193.5 | 193.5 | 193.5 | 193.5 | ||||||||||||||||||||||||
Supplemental Information: |
||||||||||||||||||||||||||||||||
Depreciation and amortization from continuing operations |
$ | 393.1 | $ | (142.4 | ) | $ | 250.7 | |||||||||||||||||||||||||
Stock compensation expense from continuing operations,
excluding acceleration charges |
$ | 34.9 | ||||||||||||||||||||||||||||||
Stock acceleration charges |
16.7 | |||||||||||||||||||||||||||||||
Total stock compensation expense from continuing operations |
$ | 51.6 | ||||||||||||||||||||||||||||||
* | Amounts may not sum due to rounding. |
10
GAAP | M&A | Non-GAAP | ||||||||||||||||||||||||||
Three Months | Restructuring | Corporate | Three Months | |||||||||||||||||||||||||
Ended | And | Costs | LPS | Purchase | Ended | |||||||||||||||||||||||
December 31, 2007 | Integration | Non-Disc | Spin | Price | December 31, 2007 | |||||||||||||||||||||||
(Unaudited) | Costs (1) | Ops (2) | Costs (3) | Subtotal | Amortization (4) | (Unaudited) | ||||||||||||||||||||||
Processing and services revenue |
$ | 855.3 | $ | | $ | | $ | | $ | 855.3 | $ | | $ | 855.3 | ||||||||||||||
Cost of revenues |
648.4 | | | | 648.4 | (38.4 | ) | 610.0 | ||||||||||||||||||||
Gross profit |
206.9 | | | | 206.9 | 38.4 | 245.3 | |||||||||||||||||||||
Selling, general and administrative |
86.3 | (1.7 | ) | (3.4 | ) | (0.5 | ) | 80.7 | | 80.7 | ||||||||||||||||||
Research and development costs |
20.4 | | | | 20.4 | | 20.4 | |||||||||||||||||||||
Operating income |
100.2 | 1.7 | 3.4 | 0.5 | 105.8 | 38.4 | 144.2 | |||||||||||||||||||||
Other income (expense): |
||||||||||||||||||||||||||||
Interest income |
1.9 | | | | 1.9 | | 1.9 | |||||||||||||||||||||
Interest expense |
(39.4 | ) | | | | (39.4 | ) | | (39.4 | ) | ||||||||||||||||||
Gain on sale of Covansys stock |
| | | | | | | |||||||||||||||||||||
Other income, net |
11.2 | (12.1 | ) | | | (0.9 | ) | | (0.9 | ) | ||||||||||||||||||
Total other income (expense) |
(26.3 | ) | (12.1 | ) | | | (38.4 | ) | | (38.4 | ) | |||||||||||||||||
Earnings from continuing operations before income taxes,
equity in (losses) earnings of unconsolidated entities,
and minority interest |
73.9 | (10.4 | ) | 3.4 | 0.5 | 67.4 | 38.4 | 105.8 | ||||||||||||||||||||
Provision (benefit) for income taxes |
26.0 | (3.9 | ) | 1.3 | 0.2 | 23.6 | 14.3 | 37.9 | ||||||||||||||||||||
Earnings from continuing operations before equity in (losses)
earnings of unconsolidated entities, and minority interest |
47.9 | (6.5 | ) | 2.1 | 0.3 | 43.8 | 24.1 | 67.9 | ||||||||||||||||||||
Equity in earnings (losses) of unconsolidated entities |
| | | | | | | |||||||||||||||||||||
Minority interest income (expense) |
(0.3 | ) | | | | (0.3 | ) | | (0.3 | ) | ||||||||||||||||||
Net earnings from continuing operations |
$ | 47.6 | $ | (6.5 | ) | $ | 2.1 | $ | 0.3 | $ | 43.5 | $ | 24.1 | $ | 67.6 | |||||||||||||
Net earnings per share diluted from continuing operations* |
$ | 0.24 | $ | (0.03 | ) | $ | 0.01 | $ | 0.00 | $ | 0.22 | $ | 0.12 | $ | 0.34 | |||||||||||||
Weighted average shares outstanding diluted |
196.7 | 196.7 | 196.7 | 196.7 | 196.7 | 196.7 | 196.7 | |||||||||||||||||||||
Supplemental Information: |
||||||||||||||||||||||||||||
Depreciation and amortization from continuing operations |
$ | 111.8 | $ | (38.4 | ) | $ | 73.4 | |||||||||||||||||||||
Stock compensation expense from continuing operations,
excluding acceleration charges |
$ | 6.9 | ||||||||||||||||||||||||||
Stock acceleration charges |
1.7 | |||||||||||||||||||||||||||
Total stock compensation expense from continuing operations |
$ | 8.6 | ||||||||||||||||||||||||||
* | Amounts may not sum due to rounding. |
11
GAAP | M&A | Non-GAAP | ||||||||||||||||||||||||||||||||||||||
Twelve Months | Restructuring | Corporate | Gain | Twelve Months | ||||||||||||||||||||||||||||||||||||
Ended | And | Costs | LPS | On Sale | Allocation | Debt | Purchase | Ended | ||||||||||||||||||||||||||||||||
December 31, 2007 | Integration | Non-Disc | Spin | Covansys | Interest | Restructure | Price | December 31, 2007 | ||||||||||||||||||||||||||||||||
(Unaudited) | Costs (1) | Ops (2) | Costs (3) | Stock (5) | Expense (6) | Charge (7) | Subtotal | Amortization (4) | (Unaudited) | |||||||||||||||||||||||||||||||
Processing and services revenue |
$ | 2,921.0 | $ | | $ | | $ | | $ | | $ | | $ | | $ | 2,921.0 | $ | | $ | 2,921.0 | ||||||||||||||||||||
Cost of revenues |
2,265.8 | (22.3 | ) | | | | | | 2,243.5 | (124.2 | ) | 2,119.3 | ||||||||||||||||||||||||||||
Gross profit |
655.2 | 22.3 | | | | | | 677.5 | 124.2 | 801.7 | ||||||||||||||||||||||||||||||
Selling, general and administrative |
302.9 | (6.0 | ) | (22.0 | ) | (0.5 | ) | | | | 274.4 | | 274.4 | |||||||||||||||||||||||||||
Research and development costs |
70.4 | | | | | | | 70.4 | | 70.4 | ||||||||||||||||||||||||||||||
Operating income |
281.9 | 28.3 | 22.0 | 0.5 | | | | 332.7 | 124.2 | 456.9 | ||||||||||||||||||||||||||||||
Other income (expense): |
||||||||||||||||||||||||||||||||||||||||
Interest income |
3.0 | | | | | | | 3.0 | | 3.0 | ||||||||||||||||||||||||||||||
Interest expense |
(190.2 | ) | | | | | 55.7 | 27.2 | (107.3 | ) | | (107.3 | ) | |||||||||||||||||||||||||||
Gain on sale of Covansys stock |
274.5 | | | | (274.4 | ) | | | 0.1 | | 0.1 | |||||||||||||||||||||||||||||
Other income, net |
14.8 | (14.9 | ) | | | | | | (0.1 | ) | | (0.1 | ) | |||||||||||||||||||||||||||
Total other income (expense) |
102.1 | (14.9 | ) | | | (274.4 | ) | 55.7 | 27.2 | (104.3 | ) | | (104.3 | ) | ||||||||||||||||||||||||||
Earnings from continuing operations before income taxes,
equity in (losses) earnings of unconsolidated entities,
and minority interest |
384.0 | 13.4 | 22.0 | 0.5 | (274.4 | ) | 55.7 | 27.2 | 228.4 | 124.2 | 352.6 | |||||||||||||||||||||||||||||
Provision (benefit) for income taxes |
136.2 | 5.0 | 8.3 | 0.2 | (101.5 | ) | 21.5 | 10.1 | 79.8 | 44.6 | 124.4 | |||||||||||||||||||||||||||||
Earnings from continuing operations before equity in (losses)
earnings of unconsolidated entities, and minority interest |
247.8 | 8.4 | 13.7 | 0.3 | (172.9 | ) | 34.2 | 17.1 | 148.6 | 79.6 | 228.2 | |||||||||||||||||||||||||||||
Equity in earnings (losses) of unconsolidated entities |
2.8 | | | | | | | 2.8 | | 2.8 | ||||||||||||||||||||||||||||||
Minority interest income (expense) |
0.1 | | | | | | | 0.1 | | 0.1 | ||||||||||||||||||||||||||||||
Net earnings from continuing operations |
$ | 250.7 | $ | 8.4 | $ | 13.7 | $ | 0.3 | $ | (172.9 | ) | $ | 34.2 | $ | 17.1 | $ | 151.5 | $ | 79.6 | $ | 231.1 | |||||||||||||||||||
Net earnings per share diluted from continuing operations* |
$ | 1.28 | $ | 0.04 | $ | 0.07 | $ | 0.00 | $ | (0.88 | ) | $ | 0.17 | $ | 0.09 | $ | 0.77 | $ | 0.41 | $ | 1.18 | |||||||||||||||||||
Weighted average shares outstanding diluted |
196.5 | 196.5 | 196.5 | 196.5 | 196.5 | 196.5 | 196.5 | 196.5 | 196.5 | 196.5 | ||||||||||||||||||||||||||||||
Supplemental Information: |
||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization from continuing operations |
$ | 373.6 | $ | (124.2 | ) | $ | 249.4 | |||||||||||||||||||||||||||||||||
Stock compensation expense from continuing operations,
excluding acceleration charges |
$ | 22.6 | ||||||||||||||||||||||||||||||||||||||
Stock acceleration charges |
2.3 | |||||||||||||||||||||||||||||||||||||||
Total stock compensation expense from continuing operations |
$ | 24.9 | ||||||||||||||||||||||||||||||||||||||
* | Amounts may not sum due to rounding. |
12
(1) | This column represents charges for restructuring and integration costs relating to merger and acquisition activities. | |
(2) | This column represents corporate costs attributable to LPS as previously reported in our investor package furnished on form 8-K on May 28, 2008. These amounts are not allocable to discontinued operations under U.S. Generally Accepted Accounting Principles. | |
(3) | This column represents incremental transaction costs incurred by the Company directly related to the LPS spin-off. | |
(4) | This column represents purchase price amortization expense on intangibles assets acquired through various Company acquisitions. | |
(5) | This column represents a gain on sale of investment in Covansys to a third party recorded in the second and third quarters of 2007. | |
(6) | This column represents the allocation of interest expense for the periods presented, as if the debt retired in conjunction with the LPS spin-off had occurred on January 1, 2007, as previously reported in our investor package furnished on form 8-K on May 28, 2008 | |
(7) | This column represents debt restructuring charges recorded in the first quarter of 2007, to write-off capitalized unamortized debt issuance costs. | |
(8) | This column represents an impairment charge of $52 million related to a decline in the fair value of a trade mark associated with our retail check business. $26 million ($0.09 per diluted share after tax) of the charge was classified in continuing operations and $26 million ($0.09 per diluted share after tax) was classified as discontinued operations. |
13
Fidelity National Information Services Supplemental Materials 4th Quarter 2008 |
Forward Looking Statements 2 This presentation 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 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 or due to financial failures suffered by firms in those industries; failures to adapt our services to changes in technology or in the marketplace; 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. |
Use of Non-GAAP Measures 3 FIS reports several non-GAAP measures, including earnings before interest, taxes, depreciation and amortization ("EBITDA") and adjusted net earnings, free cash flow and organic revenues. The adjusted results exclude the after-tax impact of merger and acquisition and integration expenses, certain stock compensation charges, debt restructuring and other costs, gains (losses) on the sale of certain non-strategic assets and acquisition related amortization. Organic revenue excludes eFunds during the periods being compared. 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's non-GAAP measures may be calculated differently from similarly-titled measures of other companies. A reconciliation of these non-GAAP measures to related GAAP measures is included in the press release materials. |
FIS Fourth Quarter 2008 Earnings Conference Call Agenda 4th Quarter 2008 Results Summary Market Overview Financial Review New Segment Reporting 2009 Outlook Q&A 4 |
Execution Growth 5 (2) (1) Excludes eFunds revenue from Q1-Q3 in 2008 and 2007. (2) Reflects current period results on a pro forma basis as if foreign currency rates did not change from the comparable prior year period. (1) |
Execution Balance Sheet Management ($ millions) 6 Capital Expenditures Free Cash Flow 124 % Adjusted Net Earnings 2007 2008 $273 $230 |
Q4 Revenue Growth ($ millions) 7 (1)Reflects current period results on a pro forma basis as if foreign currency rates did not change from the comparable prior year period. (2)Excludes corporate and other revenue comprised primarily of outsourced data processing services provided to Fidelity National Financial. (3)Excluding Check Services' revenue of $63.8 million in Q4-08 and $76.6 million in Q4-07, EBS revenue growth was 2.8% and FIS consolidated growth was 2.5%. (3) Consolidated Market Channels(2) Constant(1)- 4.3% US$ - 0.8%(3) (2.4%) Constant(1) - 9.7% US$ - (5.4%) 6.4% |
International Revenue FIS Q4-08 Revenue Composition by Major Currency 8 Foreign Currency Exchange Rates Foreign Currency Exchange Rates Foreign Currency Exchange Rates Foreign Currency Exchange Rates LC/$ Q4-08 Q4-07 Change Euro 1.32 1.45 -9.0% Brazil 0.44 0.56 -21.4% UK 1.57 2.04 -23.0% 1Q-08 2Q-08 3Q-08 4Q-08 (1)International revenue increased 9.7% assuming no change in currency compared to Q4-07. (2)International revenue increased 9.9% assuming no change in currency compared to Q3-08. |
Currency Adjusted Growth Rates - 2008 9 |
Adjusted EBITDA ($ millions) 10 |
Q4 Adjusted Net Earnings ($ millions) 11 |
12 Cash Flows ($ millions) |
13 Total Debt ($ millions) |
New Reporting Segments 14 Rationale for segment changes: Aligned with how company is now being managed Improved transparency into operational performance Enhanced comparability to peers |
New Reporting Segments 2008 Revenue Bridge ($ millions) 15 |
Retail Check Services 16 |
2009 Outlook ($ millions) 17 |
2009 Outlook Assumptions ($ millions) 18 |
2009 Outlook Currency Impact 19 |
Appendix 20 |
Full Year Results ($ millions) 21 |
Full Year Adjusted Net Earnings ($ millions) 22 |