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 27, 2008
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 | ||||||||
EX-99.1 | ||||||||
EX-99.2 |
Item 2.02. Results of Operations and Financial Condition
On October 27, 2008, Fidelity National Information Services, Inc. issued an earnings release announcing its financial results for the Third 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 Third Quarter 2008 Earnings. | |
99.2 |
Financial results presentation. |
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 28, 2008 | 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 Third Quarter 2008 Earnings. | |
99.2 |
Financial results presentation. |
Years Ended | ||||||||||||||||
FY 2008 | FY 2007 | |||||||||||||||
Adjusted net earnings per share: |
||||||||||||||||
Continuing operations |
$ | 1.51 | to | $ | 1.57 | $ | 1.23 | |||||||||
Certegy Australia |
(0.07 | ) | (0.07 | ) | $ | (0.05 | ) | |||||||||
Continuing operations, excluding Certegy Australia |
$ | 1.44 | to | 1.50 | $ | 1.18 | ||||||||||
Quarters Ended | ||||||||||||||||
12/31/2008 | 12/31/2007 | |||||||||||||||
Adjusted net earnings per share: |
||||||||||||||||
Continuing operations |
$ | 0.45 | to | $ | 0.49 | $ | 0.36 | |||||||||
Certegy Australia |
(0.02 | ) | | (0.01 | ) | |||||||||||
Continuing operations, excluding Certegy Australia |
$ | 0.43 | to | 0.49 | $ | 0.35 | ||||||||||
Exhibit A
|
Consolidated Statements of Earnings for the Three and Nine-Month Periods ended September 30, 2008 and 2007 | |
Exhibit B
|
Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007 | |
Exhibit C
|
Consolidated Statements of Cash Flows for the Nine-Month Periods ended September 30, 2008 and 2007 | |
Exhibit D
|
Supplemental Financial Information for the Three and Nine-Month Periods ended September 30, 2008 and 2007 | |
Exhibit E
|
Supplemental Non-GAAP Financial Information for the Three and Nine-Month Periods ended September 30, 2008 and 2007 | |
Exhibit F
|
Supplemental GAAP to Non-GAAP Reconciliation Unaudited for the Three and Nine-Month Periods ended September 30, 2008 and 2007 |
1
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Processing and services revenues |
$ | 893,844 | $ | 712,812 | $ | 2,610,720 | $ | 2,085,694 | ||||||||
Cost of revenues |
661,995 | 562,998 | 1,984,295 | 1,624,463 | ||||||||||||
Selling, general and administrative expenses |
79,944 | 72,387 | 308,846 | 216,612 | ||||||||||||
Research and development costs |
26,155 | 17,579 | 73,308 | 50,002 | ||||||||||||
Operating income |
125,750 | 59,848 | 244,271 | 194,617 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest income |
978 | 719 | 5,373 | 1,093 | ||||||||||||
Gain on sale of Covansys stock |
| 182,444 | | 274,488 | ||||||||||||
Other income |
(1,884 | ) | 3,327 | (101 | ) | 4,755 | ||||||||||
Interest expense |
(48,397 | ) | (37,856 | ) | (132,415 | ) | (152,863 | ) | ||||||||
Total other income (expense) |
(49,303 | ) | 148,634 | (127,143 | ) | 127,473 | ||||||||||
Earnings before income taxes, equity earnings and minority interest |
76,447 | 208,482 | 117,128 | 322,090 | ||||||||||||
Provision for income taxes |
28,071 | 75,238 | 37,481 | 113,802 | ||||||||||||
Equity in (losses) earnings of unconsolidated entities |
| 86 | (157 | ) | 2,824 | |||||||||||
Minority interest expense |
(2,751 | ) | 41 | (2,867 | ) | 369 | ||||||||||
Net earnings from continuing operations |
45,625 | 133,371 | 76,623 | 211,481 | ||||||||||||
Earnings from discontinued operations, net of tax |
(2,002 | ) | 111,933 | 109,407 | 241,330 | |||||||||||
Net earnings |
$ | 43,623 | $ | 245,304 | $ | 186,030 | $ | 452,811 | ||||||||
Net earnings per share-basic from continuing operations* |
$ | 0.24 | $ | 0.69 | $ | 0.40 | $ | 1.10 | ||||||||
Net earnings per share-basic from discontinued operations* |
(0.01 | ) | 0.58 | 0.57 | 1.25 | |||||||||||
Net earnings per share-basic* |
$ | 0.23 | $ | 1.27 | $ | 0.97 | $ | 2.35 | ||||||||
Weighted average shares outstanding-basic |
189,541 | 193,171 | 192,198 | 192,609 | ||||||||||||
Net earnings per share-diluted from continuing operations* |
$ | 0.24 | $ | 0.68 | $ | 0.39 | $ | 1.08 | ||||||||
Net earnings per share-diluted from discontinued operations* |
(0.01 | ) | 0.57 | 0.56 | 1.23 | |||||||||||
Net earnings per share-diluted* |
$ | 0.23 | $ | 1.25 | $ | 0.96 | $ | 2.30 | ||||||||
Weighted average shares outstanding-diluted |
191,822 | 196,649 | 194,261 | 196,480 | ||||||||||||
* | Amounts may not sum due to rounding. |
2
As of | As of | |||||||
September 30, | December 31, | |||||||
2008 | 2007 | |||||||
(unaudited) | ||||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 238,458 | $ | 355,278 | ||||
Settlement deposits |
30,218 | 21,162 | ||||||
Trade receivables, net |
518,640 | 825,915 | ||||||
Other receivables |
165,391 | 206,746 | ||||||
Settlement receivables |
41,243 | 116,935 | ||||||
Receivable from FNF and LPS |
8,627 | 14,907 | ||||||
Prepaid expenses and other current assets |
119,604 | 168,454 | ||||||
Deferred income taxes |
83,317 | 120,098 | ||||||
Total current assets |
1,205,498 | 1,829,495 | ||||||
Property and equipment, net of accumulated depreciation and amortization |
280,502 | 392,508 | ||||||
Goodwill |
4,232,979 | 5,326,831 | ||||||
Other intangible assets, net of accumulated amortization |
853,360 | 1,030,582 | ||||||
Computer software, net of accumulated amortization |
639,867 | 775,151 | ||||||
Deferred contract costs |
233,574 | 256,852 | ||||||
Investment in FNRES |
| 30,491 | ||||||
Long-term notes receivable from FNF |
5,659 | 6,154 | ||||||
Other noncurrent assets |
100,036 | 146,519 | ||||||
Total assets |
$ | 7,551,475 | $ | 9,794,583 | ||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued liabilities |
$ | 392,564 | $ | 606,179 | ||||
Settlement payables |
75,927 | 129,799 | ||||||
Deferred revenues |
159,837 | 246,222 | ||||||
Current portion of long-term debt |
93,962 | 272,014 | ||||||
Total current liabilities |
722,290 | 1,254,214 | ||||||
Deferred revenues |
88,853 | 111,884 | ||||||
Deferred income taxes |
354,636 | 394,972 | ||||||
Long-term debt, excluding current portion |
2,554,799 | 4,003,383 | ||||||
Other long-term liabilities |
175,248 | 234,757 | ||||||
Total liabilities |
3,895,826 | 5,999,210 | ||||||
Minority interest |
66,293 | 14,194 | ||||||
Stockholders equity: |
||||||||
Preferred stock $0.01 par value |
| | ||||||
Common stock $0.01 par value |
1,994 | 1,990 | ||||||
Additional paid in capital |
2,957,937 | 3,038,203 | ||||||
Retained earnings |
1,056,801 | 899,512 | ||||||
Accumulated other comprehensive earnings |
(24,617 | ) | 53,389 | |||||
Treasury stock |
(402,759 | ) | (211,915 | ) | ||||
Total stockholders equity |
3,589,356 | 3,781,179 | ||||||
Total liabilities and stockholders equity |
$ | 7,551,475 | $ | 9,794,583 | ||||
3
Nine Months ended September 30, | ||||||||
2008 | 2007 | |||||||
Cash flows from operating activities: |
||||||||
Net earnings |
$ | 186,030 | $ | 452,811 | ||||
Adjustment to reconcile net earnings to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
344,520 | 358,943 | ||||||
Amortization of debt issue costs |
16,043 | 29,224 | ||||||
(Gain) on sale of Covansys stock |
| (274,488 | ) | |||||
Net (Gain) on sale of Non Strategic businesses |
2,496 | (71,675 | ) | |||||
Stock-based compensation cost |
50,594 | 27,130 | ||||||
Deferred income taxes |
3,096 | (26,713 | ) | |||||
Income tax benefit from exercise of stock options |
(139 | ) | (44,243 | ) | ||||
Equity in (earnings) loss of unconsolidated entities |
2,274 | (1,266 | ) | |||||
Minority interest |
3,589 | 1,463 | ||||||
Changes in assets and liabilities, net of effects from acquisitions: |
||||||||
Net increase in trade receivables |
(30,983 | ) | (115,811 | ) | ||||
Net increase in prepaid expenses and other assets |
(11,388 | ) | (41,571 | ) | ||||
Additions to deferred contract costs |
(54,736 | ) | (41,335 | ) | ||||
Net decrease in deferred revenue |
(9,328 | ) | (11,630 | ) | ||||
Net (decrease) increase in accounts payable, accrued
liabilities and other liabilities |
(103,408 | ) | 15,567 | |||||
Net cash provided by operating activities |
398,660 | 256,406 | ||||||
Cash flows from investing activities: |
||||||||
Additions to property and equipment |
(57,084 | ) | (85,386 | ) | ||||
Additions to capitalized software |
(146,725 | ) | (159,285 | ) | ||||
Other Investing Activities |
(4,665 | ) | | |||||
Cash received from sale of Covansys stock |
| 430,157 | ||||||
Net proceeds from sale of company assets |
33,506 | 81,235 | ||||||
Acquisitions, net of cash acquired |
(17,404 | ) | (1,722,257 | ) | ||||
Net cash used in investing activities |
(192,372 | ) | (1,455,536 | ) | ||||
Cash flows from financing activities: |
||||||||
Borrowings |
3,796,198 | 4,300,300 | ||||||
Debt service payments |
(3,839,311 | ) | (2,987,160 | ) | ||||
Capitalized debt issue costs |
(12 | ) | (28,052 | ) | ||||
Dividends paid |
(28,752 | ) | (28,931 | ) | ||||
LPS spin-off |
(20,770 | ) | | |||||
Income tax benefit from exercise of stock options |
139 | 44,243 | ||||||
Stock options exercised |
18,626 | 44,960 | ||||||
Treasury stock purchases |
(236,168 | ) | (80,339 | ) | ||||
Net cash (used in) provided by financing activities |
(310,050 | ) | 1,265,021 | |||||
Effect of foreign currency exchange rates on cash |
(13,058 | ) | 1,432 | |||||
Net (decrease) increase in cash and cash equivalents |
(116,820 | ) | 67,323 | |||||
Cash and cash equivalents, at beginning of period |
355,278 | 211,753 | ||||||
Cash and cash equivalents, at end of period |
$ | 238,458 | $ | 279,076 | ||||
4
Three Month Periods ended | Nine Month Periods ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
1. Revenues |
||||||||||||||||
Revenue from Operations: |
||||||||||||||||
TPS |
||||||||||||||||
Integrated Financial Solutions |
$ | 390,746 | $ | 309,729 | $ | 1,139,794 | $ | 890,599 | ||||||||
Enterprise Solutions |
301,386 | 243,003 | 870,080 | 722,737 | ||||||||||||
International |
192,420 | 144,707 | 570,412 | 426,185 | ||||||||||||
Other |
(666 | ) | (1,789 | ) | (2,370 | ) | (3,110 | ) | ||||||||
Total TPS Revenue |
883,886 | 695,650 | 2,577,916 | 2,036,411 | ||||||||||||
Corporate |
9,958 | 17,162 | 32,804 | 49,283 | ||||||||||||
Total Revenue from Operations |
893,844 | 712,812 | 2,610,720 | 2,085,694 | ||||||||||||
Total Revenue from Operations, excluding eFunds |
$ | 750,979 | $ | 686,185 | $ | 2,189,323 | $ | 2,059,067 | ||||||||
Revenue Growth from Prior Year Period |
||||||||||||||||
Revenue from Operations: |
||||||||||||||||
TPS |
||||||||||||||||
Integrated Financial Solutions |
26.2 | % | 11.9 | % | 28.0 | % | 14.9 | % | ||||||||
Enterprise Solutions |
24.0 | % | 3.8 | % | 20.4 | % | 21.0 | % | ||||||||
International |
33.0 | % | 21.8 | % | 33.8 | % | 47.3 | % | ||||||||
Other |
62.8 | % | 33.6 | % | 23.8 | % | 65.3 | % | ||||||||
Total TPS Revenue Growth |
27.1 | % | 11.0 | % | 26.6 | % | 19.6 | % | ||||||||
Corporate |
-42.0 | % | 24.6 | % | -33.4 | % | -2.0 | % | ||||||||
Total Revenue from Operations |
25.4 | % | 11.3 | % | 25.2 | % | 19.0 | % | ||||||||
Total Revenue Growth, excluding eFunds |
9.4 | % | 7.1 | % | 6.3 | % | 17.5 | % | ||||||||
5
Three Month Periods ended | Nine Month Periods ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
1. EBIT and EBITDA Consolidated |
||||||||||||||||
Revenue from Operations |
$ | 893,844 | $ | 712,812 | $ | 2,610,720 | $ | 2,085,694 | ||||||||
Operating Income |
$ | 125,750 | $ | 59,848 | $ | 244,271 | $ | 194,617 | ||||||||
M&A, Restructuring and Integration Costs |
2,236 | 19,455 | 46,277 | 26,611 | ||||||||||||
Corporate Costs Non Disc. Ops |
| 5,697 | 18,118 | 18,613 | ||||||||||||
LPS Spin Costs |
898 | | 9,338 | | ||||||||||||
EBIT, as adjusted |
$ | 128,884 | $ | 85,000 | $ | 318,004 | $ | 239,841 | ||||||||
Depr and Amort from Cont Ops, as adjusted |
99,980 | 93,973 | 298,424 | 261,818 | ||||||||||||
EBITDA, as adjusted |
$ | 228,864 | $ | 178,973 | $ | 616,428 | $ | 501,659 | ||||||||
EBIT Margin, as adjusted |
14.4 | % | 11.9 | % | 12.2 | % | 11.5 | % | ||||||||
EBITDA Margin, as adjusted |
25.6 | % | 25.1 | % | 23.6 | % | 24.1 | % | ||||||||
2. EBITDA TPS |
||||||||||||||||
Revenue from Operations |
$ | 883,886 | $ | 695,650 | $ | 2,577,916 | $ | 2,036,411 | ||||||||
Operating Income |
$ | 148,677 | $ | 86,088 | $ | 372,562 | $ | 275,318 | ||||||||
Depreciation |
43,140 | 56,450 | 128,123 | 128,059 | ||||||||||||
Purchase Price Amortization |
35,380 | 29,104 | 106,925 | 85,329 | ||||||||||||
Other Amortization |
10,998 | 9,585 | 29,654 | 23,970 | ||||||||||||
EBITDA , before other items |
$ | 238,195 | $ | 181,227 | $ | 637,264 | $ | 512,676 | ||||||||
M&A, Restructuring and Integration Costs |
708 | 4,614 | 13,250 | 4,614 | ||||||||||||
EBITDA, excluding other items |
$ | 238,903 | $ | 185,841 | $ | 650,514 | $ | 517,290 | ||||||||
EBITDA Margin, as adjusted |
27.0 | % | 26.7 | % | 25.2 | % | 25.4 | % | ||||||||
6
Quarter Ended September 30, 2008 | Quarter Ended June 30, 2008 | Quarter Ended March 31, 2008 | Year to Date September 30, 2008 | |||||||||||||||||||||||||||||||||||||||||||||
GAAP | Adj | Adjusted | Pro forma (1) | Adj | Adj Pro forma | Pro forma (1) | Adj | Adj Pro forma | Pro forma (1) | Adj | Adj Pro forma | |||||||||||||||||||||||||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||||||||||||||||||||||||||||||||
Net earnings (2) |
$ | 43,623 | $ | 2,022 | $ | 45,645 | $ | 15,593 | $ | 28,862 | $ | 44,455 | $ | 15,439 | $ | 8,270 | $ | 23,709 | $ | 74,655 | $ | 39,154 | $ | 113,809 | ||||||||||||||||||||||||
Adjustments to reconcile net earnings
to net cash provided by operating activities: |
||||||||||||||||||||||||||||||||||||||||||||||||
Non-cash adjustments |
128,760 | | 128,760 | 118,947 | | 118,947 | 114,008 | | 114,008 | 361,715 | | 361,715 | ||||||||||||||||||||||||||||||||||||
Working capital adjustments (3) |
(16,555 | ) | 8,560 | (7,995 | ) | (43,039 | ) | 18,090 | (24,949 | ) | (100,899 | ) | 46,340 | (54,559 | ) | (160,493 | ) | 72,990 | (87,503 | ) | ||||||||||||||||||||||||||||
Net cash provided by operating activities |
155,828 | 10,582 | 166,410 | 91,501 | 46,952 | 138,453 | 28,548 | 54,610 | 83,158 | 275,877 | 112,144 | 388,021 | ||||||||||||||||||||||||||||||||||||
Capital expenditures |
(48,163 | ) | | (48,163 | ) | (52,260 | ) | | (52,260 | ) | (78,250 | ) | | (78,250 | ) | (178,673 | ) | | (178,673 | ) | ||||||||||||||||||||||||||||
Net free cash flow |
$ | 107,665 | $ | 10,582 | $ | 118,247 | $ | 39,241 | $ | 46,952 | $ | 86,193 | $ | (49,702 | ) | $ | 54,610 | $ | 4,908 | $ | 97,204 | $ | 112,144 | $ | 209,348 | |||||||||||||||||||||||
Quarter Ended September 30, 2007 | Quarter Ended June 30, 2007 | Quarter Ended March 31, 2007 | Year to Date September 30, 2007 | |||||||||||||||||||||||||||||||||||||||||||||
Pro forma (1) | Adj | Adj Pro forma | Pro forma (1) | Adj | Adj Pro forma | Pro forma (1) | Adj | Adj Pro forma | Pro forma (1) | Adj | Adj Pro forma | |||||||||||||||||||||||||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||||||||||||||||||||||||||||||||
Net earnings (2) |
$ | 177,551 | $ | 15,521 | $ | 193,072 | $ | 83,069 | $ | 17,541 | $ | 100,610 | $ | 819 | $ | 18,810 | $ | 19,629 | $ | 261,439 | $ | 51,872 | $ | 313,311 | ||||||||||||||||||||||||
Adjustments to reconcile net earnings
to net cash provided by operating activities: |
||||||||||||||||||||||||||||||||||||||||||||||||
Non-cash adjustments |
(212,517 | ) | | (212,517 | ) | (6,481 | ) | | (6,481 | ) | 111,782 | | 111,782 | (107,216 | ) | | (107,216 | ) | ||||||||||||||||||||||||||||||
Working capital adjustments (3) |
(13,236 | ) | 116,060 | 102,824 | 23,250 | 18,100 | 41,350 | (111,715 | ) | 12,700 | (99,015 | ) | (101,701 | ) | 146,860 | 45,159 | ||||||||||||||||||||||||||||||||
Net cash provided by operating activities |
(48,202 | ) | 131,581 | 83,379 | 99,838 | 35,641 | 135,479 | 886 | 31,510 | 32,396 | 52,522 | 198,732 | 251,254 | |||||||||||||||||||||||||||||||||||
Capital expenditures |
(81,213 | ) | | (81,213 | ) | (64,963 | ) | | (64,963 | ) | (63,611 | ) | | (63,611 | ) | (209,787 | ) | | (209,787 | ) | ||||||||||||||||||||||||||||
Net free cash flow |
$ | (129,415 | ) | $ | 131,581 | $ | 2,166 | $ | 34,875 | $ | 35,641 | $ | 70,516 | $ | (62,725 | ) | $ | 31,510 | $ | (31,215 | ) | $ | (157,265 | ) | $ | 198,732 | $ | 41,467 | ||||||||||||||||||||
(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. The adjustments also include a recast of Q1 and Q2 2008 to reflect proper allocation of stock based compensation related to LPS. | |
(3) | Adjustments to working capital reflect elimination of settlement of various acquisition related liabilities. |
7
M&A | ||||||||||||||||||||||||
GAAP | Restructuring | Non-GAAP | ||||||||||||||||||||||
Three Months | And | LPS | Purchase | Three Months | ||||||||||||||||||||
Ended | Integration | Spin | Price | Ended | ||||||||||||||||||||
September 30, 2008 | Costs (1) | Costs (3) | Subtotal | Amortization (4) | September 30, 2008 | |||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||
Processing and services revenue |
$ | 893,844 | $ | | $ | | $ | 893,844 | $ | | $ | 893,844 | ||||||||||||
Cost of revenues |
661,995 | (1,311 | ) | | 660,684 | (35,382 | ) | 625,302 | ||||||||||||||||
Gross profit |
231,849 | 1,311 | | 233,160 | 35,382 | 268,542 | ||||||||||||||||||
Selling, general and administrative |
79,944 | (925 | ) | (898 | ) | 78,121 | | 78,121 | ||||||||||||||||
Research and development costs |
26,155 | | | 26,155 | | 26,155 | ||||||||||||||||||
Operating income |
125,750 | 2,236 | 898 | 128,884 | 35,382 | 164,266 | ||||||||||||||||||
Other income (expense): |
||||||||||||||||||||||||
Interest income |
978 | | | 978 | | 978 | ||||||||||||||||||
Interest expense |
(48,397 | ) | | 12,371 | (36,026 | ) | | (36,026 | ) | |||||||||||||||
Other income, net |
(1,884 | ) | | | (1,884 | ) | | (1,884 | ) | |||||||||||||||
Total other income (expense) |
(49,303 | ) | | 12,371 | (36,932 | ) | | (36,932 | ) | |||||||||||||||
Earnings before income taxes, equity in
(losses) earnings of
unconsolidated entities, minority interest,
and discontinued
operations |
76,447 | 2,236 | 13,269 | 91,952 | 35,382 | 127,334 | ||||||||||||||||||
Provision (benefit) for income taxes |
28,071 | 716 | 4,246 | 33,033 | 11,322 | 44,355 | ||||||||||||||||||
Earnings before equity in (losses) earnings of
unconsolidated entities,
minority interest, and discontinued
operations |
48,376 | 1,520 | 9,023 | 58,919 | 24,060 | 82,979 | ||||||||||||||||||
Equity in earnings (losses) of unconsolidated
entities |
| | | | | | ||||||||||||||||||
Minority interest |
(2,751 | ) | | | (2,751 | ) | | (2,751 | ) | |||||||||||||||
Net earnings from continuing operations |
$ | 45,625 | $ | 1,520 | $ | 9,023 | $ | 56,168 | $ | 24,060 | $ | 80,228 | ||||||||||||
Net earnings per share diluted from
continuing operations* |
$ | 0.24 | $ | 0.01 | $ | 0.05 | $ | 0.29 | $ | 0.13 | $ | 0.42 | ||||||||||||
Weighted average shares outstanding diluted |
191,822 | 191,822 | 191,822 | 191,822 | 191,822 | 191,822 | ||||||||||||||||||
Supplemental Information: |
||||||||||||||||||||||||
Depreciation and amortization from
continuing operations |
$ | 99,980 | $ | (35,382 | ) | $ | 64,598 | |||||||||||||||||
Stock compensation expense from continuing
operations,
excluding
acceleration charges |
$ | 8,427 | ||||||||||||||||||||||
Stock acceleration charges |
| |||||||||||||||||||||||
Total stock compensation expense
from continuing operations |
$ | 8,427 | ||||||||||||||||||||||
* | Amounts may not sum due to rounding. |
8
M&A | ||||||||||||||||||||||||||||
GAAP | Restructuring | Corporate | Non-GAAP | |||||||||||||||||||||||||
Nine Months | And | Costs | LPS | Purchase | Nine Months | |||||||||||||||||||||||
Ended | Integration | Non-Disc | Spin | Price | Ended | |||||||||||||||||||||||
September 30, 2008 | Costs (1) | Ops (2) | Costs (3) | Subtotal | Amortization (4) | September 30, 2008 | ||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||||||
Processing and services revenue |
$ | 2,610,720 | $ | | $ | | $ | | $ | 2,610,720 | $ | | $ | 2,610,720 | ||||||||||||||
Cost of revenues |
1,984,295 | (25,261 | ) | | | 1,959,034 | (107,341 | ) | 1,851,693 | |||||||||||||||||||
Gross profit |
626,425 | 25,261 | | | 651,686 | 107,341 | 759,027 | |||||||||||||||||||||
Selling, general and administrative |
308,846 | (21,016 | ) | (18,118 | ) | (9,338 | ) | 260,374 | | 260,374 | ||||||||||||||||||
Research and development costs |
73,308 | | | | 73,308 | | 73,308 | |||||||||||||||||||||
Operating income |
244,271 | 46,277 | 18,118 | 9,338 | 318,004 | 107,341 | 425,345 | |||||||||||||||||||||
Other income (expense): |
||||||||||||||||||||||||||||
Interest income |
5,373 | | | | 5,373 | | 5,373 | |||||||||||||||||||||
Interest expense |
(132,415 | ) | 2,722 | | 12,371 | (117,322 | ) | | (117,322 | ) | ||||||||||||||||||
Other income, net |
(101 | ) | | | | (101 | ) | | (101 | ) | ||||||||||||||||||
Total other income (expense) |
(127,143 | ) | 2,722 | | 12,371 | (112,050 | ) | | (112,050 | ) | ||||||||||||||||||
Earnings before income taxes, equity in (losses) earnings of
unconsolidated entities, minority interest, and discontinued
operations |
117,128 | 48,999 | 18,118 | 21,709 | 205,954 | 107,341 | 313,295 | |||||||||||||||||||||
Provision (benefit) for income taxes |
37,481 | 17,450 | 5,538 | 7,268 | 67,737 | 36,600 | 104,337 | |||||||||||||||||||||
Earnings before equity in (losses) earnings of
unconsolidated entities, minority interest, and discontinued
operations |
79,647 | 31,549 | 12,580 | 14,441 | 138,217 | 70,741 | 208,958 | |||||||||||||||||||||
Equity in earnings (losses) of unconsolidated entities |
(157 | ) | | | | (157 | ) | | (157 | ) | ||||||||||||||||||
Minority interest income (expense) |
(2,867 | ) | | | | (2,867 | ) | | (2,867 | ) | ||||||||||||||||||
Net earnings from continuing operations |
$ | 76,623 | $ | 31,549 | $ | 12,580 | $ | 14,441 | $ | 135,193 | $ | 70,741 | $ | 205,934 | ||||||||||||||
Net earnings per share diluted from continuing operations * |
$ | 0.39 | $ | 0.16 | $ | 0.06 | $ | 0.07 | $ | 0.70 | $ | 0.36 | $ | 1.06 | ||||||||||||||
Weighted average shares outstanding diluted |
194,261 | 194,261 | 194,261 | 194,261 | 194,261 | 194,261 | 194,261 | |||||||||||||||||||||
Supplemental Information: |
||||||||||||||||||||||||||||
Depreciation and amortization from continuing operations |
$ | 298,424 | $ | (107,341 | ) | $ | 191,083 | |||||||||||||||||||||
Stock compensation expense from continuing operations,
excluding acceleration charges |
$ | 24,795 | ||||||||||||||||||||||||||
Stock acceleration charges |
16,662 | |||||||||||||||||||||||||||
Total stock compensation expense from continuing operations |
$ | 41,457 | ||||||||||||||||||||||||||
* | Amounts may not sum due to rounding. |
9
M&A | ||||||||||||||||||||||||||||||||
GAAP | Restructuring | Corporate | Gain | Non-GAAP | ||||||||||||||||||||||||||||
Three Months | And | Costs | On Sale | Interest | Purchase | Three Months | ||||||||||||||||||||||||||
Ended | Integration | Non-Disc | Covansys | Expense | Price | Ended | ||||||||||||||||||||||||||
September 30, 2007 | Costs (1) | Ops (2) | Stock (5) | Allocation (6) | Subtotal | Amortization (4) | September 30, 2007 | |||||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||||||||||
Processing and services revenue |
$ | 712,812 | $ | | $ | | $ | | $ | | $ | 712,812 | $ | | $ | 712,812 | ||||||||||||||||
Cost of revenues |
562,998 | (15,133 | ) | | | | 547,865 | (29,574 | ) | 518,291 | ||||||||||||||||||||||
Gross profit |
149,814 | 15,133 | | | | 164,947 | 29,574 | 194,521 | ||||||||||||||||||||||||
Selling, general and administrative |
72,387 | (4,322 | ) | (5,697 | ) | | | 62,368 | | 62,368 | ||||||||||||||||||||||
Research and development costs |
17,579 | | | | | 17,579 | | 17,579 | ||||||||||||||||||||||||
Operating income |
59,848 | 19,455 | 5,697 | | | 85,000 | 29,574 | 114,574 | ||||||||||||||||||||||||
Other income (expense): |
||||||||||||||||||||||||||||||||
Interest income |
719 | | | | | 719 | | 719 | ||||||||||||||||||||||||
Interest expense |
(37,856 | ) | | | | 16,122 | (21,734 | ) | | (21,734 | ) | |||||||||||||||||||||
Gain on sale of Covansys stock |
182,444 | | | (182,444 | ) | | | | | |||||||||||||||||||||||
Other income, net |
3,327 | (2,781 | ) | | | | 546 | | 546 | |||||||||||||||||||||||
Total other income (expense) |
148,634 | (2,781 | ) | | (182,444 | ) | 16,122 | (20,469 | ) | | (20,469 | ) | ||||||||||||||||||||
Earnings before income taxes, equity in (losses) earnings of
unconsolidated entities, minority interest, and discontinued
operations |
208,482 | 16,674 | 5,697 | (182,444 | ) | 16,122 | 64,531 | 29,574 | 94,105 | |||||||||||||||||||||||
Provision (benefit) for income taxes |
75,238 | 6,169 | 2,153 | (67,505 | ) | 6,236 | 22,291 | 10,536 | 32,827 | |||||||||||||||||||||||
Earnings before equity in (losses) earnings of
unconsolidated entities, minority interest, and discontinued
operations |
133,244 | 10,505 | 3,544 | (114,939 | ) | 9,886 | 42,240 | 19,038 | 61,278 | |||||||||||||||||||||||
Equity in earnings (losses) of unconsolidated entities |
86 | | | | | 86 | | 86 | ||||||||||||||||||||||||
Minority interest income (expense) |
41 | | | | | 41 | | 41 | ||||||||||||||||||||||||
Net earnings from continuing operations |
$ | 133,371 | $ | 10,505 | $ | 3,544 | $ | (114,939 | ) | $ | 9,886 | $ | 42,367 | $ | 19,038 | $ | 61,405 | |||||||||||||||
Net earnings per share diluted from continuing
operations* |
$ | 0.68 | $ | 0.05 | $ | 0.02 | $ | (0.58 | ) | $ | 0.05 | $ | 0.22 | $ | 0.10 | $ | 0.31 | |||||||||||||||
Weighted average shares outstanding diluted |
196,649 | 196,649 | 196,649 | 196,649 | 196,649 | 196,649 | 196,649 | 196,649 | ||||||||||||||||||||||||
Supplemental Information: |
||||||||||||||||||||||||||||||||
Depreciation and amortization from continuing operations |
$ | 93,973 | $ | (29,574 | ) | $ | 64,399 | |||||||||||||||||||||||||
Stock compensation expense from continuing operations,
excluding acceleration charges |
$ | 5,657 | ||||||||||||||||||||||||||||||
Stock acceleration charges |
603 | |||||||||||||||||||||||||||||||
Total stock compensation expense from continuing operations |
$ | 6,260 | ||||||||||||||||||||||||||||||
* | Amounts may not sum due to rounding. |
10
M&A | ||||||||||||||||||||||||||||||||||||
GAAP | Restructuring | Corporate | Gain | Non-GAAP | ||||||||||||||||||||||||||||||||
Nine Months | And | Costs | On Sale | Interest | Debt | Purchase | Nine Months | |||||||||||||||||||||||||||||
Ended | Integration | Non-Disc | Covansys | Expense | Restructure | Price | Ended | |||||||||||||||||||||||||||||
September 30, 2007 | Costs (1) | Ops (2) | Stock (5) | Allocation (6) | Charge (7) | Subtotal | Amortization (4) | September 30, 2007 | ||||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||||||||||||||
Processing and services revenue |
$ | 2,085,694 | $ | | $ | | $ | | $ | | $ | | $ | 2,085,694 | $ | | $ | 2,085,694 | ||||||||||||||||||
Cost of revenues |
1,624,463 | (22,289 | ) | | | | | 1,602,174 | (85,868 | ) | 1,516,306 | |||||||||||||||||||||||||
Gross profit |
461,231 | 22,289 | | | | | 483,520 | 85,868 | 569,388 | |||||||||||||||||||||||||||
Selling, general and administrative |
216,612 | (4,322 | ) | (18,613 | ) | | | | 193,677 | | 193,677 | |||||||||||||||||||||||||
Research and development costs |
50,002 | | | | | | 50,002 | | 50,002 | |||||||||||||||||||||||||||
Operating income |
194,617 | 26,611 | 18,613 | | | | 239,841 | 85,868 | 325,709 | |||||||||||||||||||||||||||
Other income (expense): |
||||||||||||||||||||||||||||||||||||
Interest income |
1,093 | | | | | | 1,093 | | 1,093 | |||||||||||||||||||||||||||
Interest expense |
(152,863 | ) | | | | 55,800 | 27,164 | (69,899 | ) | | (69,899 | ) | ||||||||||||||||||||||||
Gain on sale of Covansys stock |
274,488 | | | (274,488 | ) | | | | | | ||||||||||||||||||||||||||
Other income, net |
4,755 | (2,781 | ) | | | | | 1,974 | | 1,974 | ||||||||||||||||||||||||||
Total other income (expense) |
127,473 | (2,781 | ) | | (274,488 | ) | 55,800 | 27,164 | (66,832 | ) | | (66,832 | ) | |||||||||||||||||||||||
Earnings before income taxes, equity in (losses) earnings of
unconsolidated entities, minority interest, and discontinued
operations |
322,090 | 23,830 | 18,613 | (274,488 | ) | 55,800 | 27,164 | 173,009 | 85,868 | 258,877 | ||||||||||||||||||||||||||
Provision (benefit) for income taxes |
113,802 | 8,824 | 7,036 | (101,561 | ) | 21,584 | 10,105 | 59,790 | 30,367 | 90,157 | ||||||||||||||||||||||||||
Earnings before equity in (losses) earnings of
unconsolidated entities, minority interest, and discontinued
operations |
208,288 | 15,006 | 11,577 | (172,927 | ) | 34,216 | 17,059 | 113,219 | 55,501 | 168,720 | ||||||||||||||||||||||||||
Equity in earnings (losses) of unconsolidated entities |
2,824 | | | | | | 2,824 | | 2,824 | |||||||||||||||||||||||||||
Minority interest income (expense) |
369 | | | | | | 369 | | 369 | |||||||||||||||||||||||||||
Net earnings from continuing operations |
$ | 211,481 | $ | 15,006 | $ | 11,577 | $ | (172,927 | ) | $ | 34,216 | $ | 17,059 | $ | 116,412 | $ | 55,501 | $ | 171,913 | |||||||||||||||||
Net earnings per share diluted from continuing operations* |
$ | 1.08 | $ | 0.08 | $ | 0.06 | $ | (0.88 | ) | $ | 0.17 | $ | 0.09 | $ | 0.59 | $ | 0.28 | $ | 0.87 | |||||||||||||||||
Weighted average shares outstanding diluted |
196,480 | 196,480 | 196,480 | 196,480 | 196,480 | 196,480 | 196,480 | 196,480 | 196,480 | |||||||||||||||||||||||||||
Supplemental Information: |
||||||||||||||||||||||||||||||||||||
Depreciation and amortization from continuing operations |
$ | 261,818 | $ | (85,868 | ) | $ | 175,950 | |||||||||||||||||||||||||||||
Stock compensation expense from continuing operations,
excluding acceleration charges |
$ | 15,683 | ||||||||||||||||||||||||||||||||||
Stock acceleration charges |
603 | |||||||||||||||||||||||||||||||||||
Total stock compensation expense from continuing operations |
$ | 16,286 | ||||||||||||||||||||||||||||||||||
* | Amounts may not sum due to rounding. |
11
(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. |
12
Fidelity National Information Services Supplemental Materials 3rd Quarter 2008 |
Forward Looking Statements 3 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; the possibility that our acquisition of EFD/eFunds 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; 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 5 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 attachments to this release. |
FIS Third Quarter 2008 Earnings Conference Call Agenda 3rd Quarter 2008 Results Summary Market Overview Financial Review Q&A 7 |
Execution Earnings Figure 1 Figure 2 Figure 3 9 |
Capital Expenditures (in millions) Free Cash Flow (in millions) 102% Adjusted Net Earnings Execution Balance Sheet Management 1Q 2Q 3Q YTD-08 YTD-07 Figure 4 Figure 5 $31M Reduction 11 |
IFS EBS Int'l Retail Check IFS 1140 647 570 223 Diverse and Recurring Revenue YTD-08 Revenue by Vertical Community Institutions $1.1B U.S. Tier 1 & Tier 2 $647M International $570M Retail Check $223M Diverse revenue streams multiple market segments multiple products and services multiple geographies 86% recurring revenue Multi-year contracts Substantial early termination penalties Long conversion lead-times Low customer concentration Largest customer ~ 2% consolidated FIS Top 10 customers ~ 14% consolidated FIS 44% 25% 22% 9% Balanced Operating Model 13 |
Bank Failures and Consolidations (in millions) 15 |
Presentation Methods for Comparability 3rd Quarter 2008 And Prior Periods 4th Quarter 2008 And Future Periods Property Insight FIS Credit Services Homebuilders Financial Network Game Cash LPS Discontinued Discontinued Certegy Australia(1) Continuing Discontinued SEC Filings (1) The sale of Certegy Australia was completed on 10/13/2008. 17 |
FIS Revenue 3Q-08 vs. 3Q-07 19 |
International Revenue Figure 1 Figure 3 Figure 2 FIS Q3-08 Revenue Composition by Major Currency 21 Foreign Currency Exchange Rates Foreign Currency Exchange Rates Foreign Currency Exchange Rates Foreign Currency Exchange Rates LC/$ 9/30/08 10/24/08 Change Brazil 0.52 0.43 -17.3% Euro 1.43 1.28 -10.5% UK 1.80 1.62 -10.0% Year-Over-Year Growth Year-Over-Year Growth Year-Over-Year Growth 1Q08 2Q08 3Q08 Constant Currency 13.8% 27.7% 23.6% (1) Includes eFunds Revenue |
FIS EBITDA and EBIT 3Q-08 vs. 3Q-07 23 |
FIS Adjusted Net Earnings 25 |
Consolidated Cash Flow Statements (in millions) 27 |
Long-term Debt 29 |
Full Year and 4th Quarter Earnings Guidance 31 |