Georgia | 37-1490331 | |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification Number) |
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)) |
Exhibit | Description | |
99.1 | Press release of Fidelity National Information Services, Inc. dated July 26, 2016 regarding second quarter 2016 financial results. |
Fidelity National Information Services, Inc. | ||||
Date: July 26, 2016 | By: | /s/ James W. Woodall | ||
Name: | James W. Woodall | |||
Title: | Corporate Executive Vice President and Chief Financial Officer | |||
Fidelity National Information Services, Inc. | ||||
Date: July 26, 2016 | By: | /s/ Michael A. Nussbaum | ||
Name: | Michael A. Nussbaum | |||
Title: | Corporate Senior Vice President and Chief Accounting Officer |
Exhibit | Description | |
99.1 | Press release of Fidelity National Information Services, Inc. dated July 26, 2016 regarding second quarter 2016 financial results. |
• | Reported revenue grew 45.3 percent, and organic revenue grew 5.4 percent |
• | Diluted EPS from continuing operations was $0.36, and Adjusted EPS was $0.90 |
• | Net cash provided by operating activities of $435 million and free cash flow of $291 million |
• | Management raises FY 2016 Guidance |
• | Integrated Financial Solutions: |
• | Global Financial Solutions: |
• | Corporate / Other: |
• | Organic revenue growth of 4 to 5 percent, up from prior guidance of 3 to 4 percent |
• | Adjusted EPS of $3.75 to $3.85, up from prior guidance of $3.70 to $3.80 |
• | the risk that acquired businesses will not be integrated successfully, or that the integration will be more costly or more time-consuming and complex than anticipated; |
• | the risk that cost savings and other synergies anticipated to be realized from acquisitions may not be fully realized or may take longer to realize than expected; |
• | the risk of doing business internationally; |
• | changes in general economic, business and political conditions, including the possibility of intensified international hostilities, acts of terrorism, changes in either or both the United States and international lending, capital and financial markets, and currency fluctuations; |
• | the effect of legislative initiatives or proposals, statutory changes, governmental or other applicable regulations and/or changes in industry requirements, including privacy regulations; |
• | 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 our solutions; |
• | failures to adapt our solutions to changes in technology or in the marketplace; |
• | internal or external security breaches of our systems, including those relating to unauthorized access, theft, corruption or loss of personal information and computer viruses and other malware affecting our software or platforms, and the reactions of customers, card associations, government regulators and others to any such events; |
• | the risk that implementation of software (including software updates) for customers or at customer locations may result in the corruption or loss of data or customer information, interruption of business operations, exposure to liability claims or loss of customers; |
• | the reaction of current and potential customers to communications from us or regulators regarding information security, risk management, internal audit or other matters; |
• | competitive pressures on pricing related to our solutions 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 under “Risk Factors” and other sections of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and other filings with the SEC. |
Ellyn Raftery, 904.438.6083 | Peter Gunnlaugsson, 904.438.6603 | |
Chief Marketing Officer | Senior Vice President | |
FIS Global Marketing and Corporate Communications | FIS Investor Relations | |
ellyn.raftery@fisglobal.com | pete.gunnlaugsson@fisglobal.com |
Exhibit A | Condensed Consolidated Statements of Earnings - Unaudited for the three and six months ended June 30, 2016 and 2015 |
Exhibit B | Condensed Consolidated Balance Sheets - Unaudited as of June 30, 2016 and December 31, 2015 |
Exhibit C | Condensed Consolidated Statements of Cash Flows - Unaudited for the six months ended June 30, 2016 and 2015 |
Exhibit D | Supplemental Non-GAAP Financial Information - Unaudited for the three and six months ended June 30, 2016 and 2015 |
Exhibit E | Supplemental GAAP to Non-GAAP Reconciliation - Unaudited for the three and six months ended June 30, 2016 and 2015 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Processing and services revenues | $ | 2,305 | $ | 1,587 | $ | 4,486 | $ | 3,142 | |||||||
Cost of revenues | 1,600 | 1,070 | 3,153 | 2,140 | |||||||||||
Gross profit | 705 | 517 | 1,333 | 1,002 | |||||||||||
Selling, general and administrative expenses | 422 | 230 | 866 | 500 | |||||||||||
Operating income | 283 | 287 | 467 | 502 | |||||||||||
Other income (expense): | |||||||||||||||
Interest expense, net | (93 | ) | (36 | ) | (186 | ) | (73 | ) | |||||||
Other income (expense), net | (1 | ) | 152 | (2 | ) | 150 | |||||||||
Total other income (expense), net | (94 | ) | 116 | (188 | ) | 77 | |||||||||
Earnings from continuing operations before income taxes | 189 | 403 | 279 | 579 | |||||||||||
Provision for income taxes | 66 | 156 | 97 | 214 | |||||||||||
Earnings from continuing operations, net of tax | 123 | 247 | 182 | 365 | |||||||||||
Earnings (loss) from discontinued operations, net of tax | 1 | (2 | ) | 1 | (5 | ) | |||||||||
Net earnings | 124 | 245 | 183 | 360 | |||||||||||
Net earnings attributable to noncontrolling interest | (3 | ) | (5 | ) | (7 | ) | (9 | ) | |||||||
Net earnings attributable to FIS common stockholders | $ | 121 | $ | 240 | $ | 176 | $ | 351 | |||||||
Net earnings per share-basic from continuing operations attributable to FIS common stockholders | $ | 0.37 | $ | 0.86 | $ | 0.54 | $ | 1.26 | |||||||
Net earnings (loss) per share-basic from discontinued operations attributable to FIS common stockholders | — | (0.01 | ) | — | (0.02 | ) | |||||||||
Net earnings per share-basic attributable to FIS common stockholders | $ | 0.37 | $ | 0.85 | $ | 0.54 | $ | 1.25 | |||||||
Weighted average shares outstanding-basic | 325 | 281 | 325 | 282 | |||||||||||
Net earnings per share-diluted from continuing operations attributable to FIS common stockholders | $ | 0.36 | $ | 0.85 | $ | 0.53 | $ | 1.25 | |||||||
Net earnings (loss) per share-diluted from discontinued operations attributable to FIS common stockholders | — | (0.01 | ) | — | (0.02 | ) | |||||||||
Net earnings per share-diluted attributable to FIS common stockholders | $ | 0.37 | $ | 0.84 | $ | 0.54 | $ | 1.23 | |||||||
Weighted average shares outstanding-diluted | 329 | 284 | 328 | 286 | |||||||||||
Amounts attributable to FIS common stockholders: | |||||||||||||||
Earnings from continuing operations, net of tax | $ | 120 | $ | 242 | $ | 175 | $ | 356 | |||||||
Earnings (loss) from discontinued operations, net of tax | 1 | (2 | ) | 1 | (5 | ) | |||||||||
Net earnings attributable to FIS common stockholders | $ | 121 | $ | 240 | $ | 176 | $ | 351 |
Exhibit B | |||||||
June 30, | December 31, | ||||||
2016 | 2015 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 765 | $ | 682 | |||
Settlement deposits | 437 | 371 | |||||
Trade receivables, net | 1,646 | 1,731 | |||||
Settlement receivables | 224 | 162 | |||||
Other receivables | 156 | 197 | |||||
Prepaid expenses and other current assets | 298 | 266 | |||||
Deferred income taxes | 152 | 100 | |||||
Total current assets | 3,678 | 3,509 | |||||
Property and equipment, net | 595 | 611 | |||||
Goodwill | 14,565 | 14,745 | |||||
Intangible assets, net | 5,273 | 5,159 | |||||
Computer software, net | 1,625 | 1,584 | |||||
Deferred contract costs, net | 285 | 253 | |||||
Other noncurrent assets | 363 | 339 | |||||
Total assets | $ | 26,384 | $ | 26,200 | |||
Liabilities and Equity | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 1,157 | $ | 1,196 | |||
Settlement payables | 669 | 538 | |||||
Deferred revenues | 757 | 615 | |||||
Current portion of long-term debt | 913 | 15 | |||||
Total current liabilities | 3,496 | 2,364 | |||||
Long-term debt, excluding current portion | 10,208 | 11,429 | |||||
Deferred income taxes | 2,729 | 2,658 | |||||
Deferred revenues | 21 | 30 | |||||
Other long-term liabilities | 323 | 312 | |||||
Total liabilities | 16,777 | 16,793 | |||||
Equity: | |||||||
FIS stockholders’ equity: | |||||||
Preferred stock $0.01 par value | — | — | |||||
Common stock $0.01 par value | 4 | 4 | |||||
Additional paid in capital | 10,291 | 10,210 | |||||
Retained earnings | 3,078 | 3,073 | |||||
Accumulated other comprehensive earnings (loss) | (246 | ) | (279 | ) | |||
Treasury stock, at cost | (3,630 | ) | (3,687 | ) | |||
Total FIS stockholders’ equity | 9,497 | 9,321 | |||||
Noncontrolling interest | 110 | 86 | |||||
Total equity | 9,607 | 9,407 | |||||
Total liabilities and equity | $ | 26,384 | $ | 26,200 |
Exhibit C | |||||||
Six months ended June 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net earnings | $ | 183 | $ | 360 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 584 | 308 | |||||
Amortization of debt issue costs | 9 | 4 | |||||
Gain on sale of assets | — | (150 | ) | ||||
Stock-based compensation | 68 | 36 | |||||
Deferred income taxes | (82 | ) | (38 | ) | |||
Excess income tax benefit from exercise of stock options | (19 | ) | (12 | ) | |||
Other operating activities, net | (2 | ) | 2 | ||||
Net changes in assets and liabilities, net of effects from acquisitions and foreign currency: | |||||||
Trade receivables | 118 | (26 | ) | ||||
Settlement activity | 2 | (30 | ) | ||||
Prepaid expenses and other assets | (54 | ) | (34 | ) | |||
Deferred contract costs | (61 | ) | (55 | ) | |||
Deferred revenue | 132 | 40 | |||||
Accounts payable, accrued liabilities and other liabilities | (58 | ) | 38 | ||||
Net cash provided by operating activities | 820 | 443 | |||||
Cash flows from investing activities: | |||||||
Additions to property and equipment | (70 | ) | (81 | ) | |||
Additions to computer software | (223 | ) | (138 | ) | |||
Proceeds from sale of assets | — | 241 | |||||
Other investing activities, net | (3 | ) | 1 | ||||
Net cash (used in) provided by investing activities | (296 | ) | 23 | ||||
Cash flows from financing activities: | |||||||
Borrowings | 2,727 | 3,493 | |||||
Repayment of borrowings and capital lease obligations | (3,060 | ) | (3,520 | ) | |||
Excess income tax benefit from exercise of stock options | 19 | 12 | |||||
Proceeds from exercise of stock options | 68 | 27 | |||||
Treasury stock activity | (26 | ) | (307 | ) | |||
Dividends paid | (171 | ) | (147 | ) | |||
Distribution to Brazilian venture partner | — | (24 | ) | ||||
Other financing activities, net | (18 | ) | (19 | ) | |||
Net cash used in financing activities | (461 | ) | (485 | ) | |||
Effect of foreign currency exchange rate changes on cash | 20 | (28 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 83 | (47 | ) | ||||
Cash and cash equivalents, at beginning of period | 682 | 493 | |||||
Cash and cash equivalents, at end of period | $ | 765 | $ | 446 |
Exhibit D | |||||||||||||||
Three months ended June 30, 2016 | |||||||||||||||
Integrated Financial Solutions | Global Financial Solutions | Corporate and Other | Consolidated | ||||||||||||
Processing and services revenue | $ | 1,162 | $ | 1,048 | $ | 95 | $ | 2,305 | |||||||
Non-GAAP adjustments: | |||||||||||||||
Acquisition deferred revenue adjustment (1) | — | — | 59 | 59 | |||||||||||
Adjusted processing and services revenue | $ | 1,162 | $ | 1,048 | $ | 154 | $ | 2,364 |
Six months ended June 30, 2016 | |||||||||||||||
Integrated Financial Solutions | Global Financial Solutions | Corporate and Other | Consolidated | ||||||||||||
Processing and services revenue | $ | 2,283 | $ | 2,038 | $ | 165 | $ | 4,486 | |||||||
Non-GAAP adjustments: | |||||||||||||||
Acquisition deferred revenue adjustment (1) | — | — | 140 | 140 | |||||||||||
Adjusted processing and services revenue | $ | 2,283 | $ | 2,038 | $ | 305 | $ | 4,626 |
Three months ended June 30, 2015 | |||||||||||||||
Integrated Financial Solutions | Global Financial Solutions | Corporate and Other | Consolidated | ||||||||||||
Adjusted EBITDA | $ | 369 | $ | 117 | $ | (33 | ) | $ | 453 | ||||||
Historical SunGard operating income, as adjusted (2) | 38 | 123 | (31 | ) | 130 | ||||||||||
Historical SunGard depreciation and amortization from continuing operations, as adjusted (2) | 6 | 23 | 5 | 34 | |||||||||||
Adjusted combined EBITDA | $ | 413 | $ | 263 | $ | (59 | ) | $ | 617 |
Six months ended June 30, 2015 | |||||||||||||||
Integrated Financial Solutions | Global Financial Solutions | Corporate and Other | Consolidated | ||||||||||||
Adjusted EBITDA | $ | 740 | $ | 198 | $ | (60 | ) | $ | 878 | ||||||
Historical SunGard operating income, as adjusted (2) | 78 | 242 | (62 | ) | 258 | ||||||||||
Historical SunGard depreciation and amortization from continuing operations, as adjusted (2) | 12 | 47 | 11 | 70 | |||||||||||
Adjusted combined EBITDA | $ | 830 | $ | 487 | $ | (111 | ) | $ | 1,206 |
(1) | See note (1) to Exhibit E. |
(2) | See note (4) to Exhibit E. |
Exhibit D (continued) | ||||||||||||||||||||||||||
Three months ended June 30, | ||||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||||
Constant | ||||||||||||||||||||||||||
Currency | In Year | Adjusted | Organic | |||||||||||||||||||||||
Revenue (1) | FX | Revenue | Revenue | Adjustments (2) | Base | Growth (3) | ||||||||||||||||||||
Integrated Financial Solutions | $ | 1,162 | $ | 1 | $ | 1,163 | $ | 931 | $ | 142 | $ | 1,073 | 8.3 | % | ||||||||||||
Global Financial Solutions | 1,048 | 21 | 1,069 | 555 | 483 | 1,038 | 2.9 | % | ||||||||||||||||||
Corporate and Other | 154 | 1 | 155 | 101 | 53 | 154 | 1.3 | % | ||||||||||||||||||
Total | $ | 2,364 | $ | 23 | $ | 2,387 | $ | 1,587 | $ | 678 | $ | 2,265 | 5.4 | % |
Six months ended June 30, | ||||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||||
Constant | ||||||||||||||||||||||||||
Currency | In Year | Adjusted | Organic | |||||||||||||||||||||||
Revenue (1) | FX | Revenue | Revenue | Adjustments (2) | Base | Growth (3) | ||||||||||||||||||||
Integrated Financial Solutions | $ | 2,283 | $ | 2 | $ | 2,285 | $ | 1,859 | $ | 279 | $ | 2,138 | 6.9 | % | ||||||||||||
Global Financial Solutions | 2,038 | 61 | 2,099 | 1,067 | 958 | 2,025 | 3.6 | % | ||||||||||||||||||
Corporate and Other | 305 | 1 | 306 | 216 | 96 | 312 | (1.8 | )% | ||||||||||||||||||
Total | $ | 4,626 | $ | 64 | $ | 4,690 | $ | 3,142 | $ | 1,333 | $ | 4,475 | 4.8 | % |
(2) | In year adjustments primarily include SunGard acquisition revenues, and also include revenues from other FIS acquisitions, as well as removing revenue from businesses divested by FIS. |
(3) | Organic growth percentages are calculated utilizing more precise amounts than the rounding to millions included in the tables above. |
Exhibit D (continued) | |||||||
Three months ended | Six months ended | ||||||
June 30, 2016 | June 30, 2016 | ||||||
Net cash provided by operating activities | $ | 435 | $ | 820 | |||
Non-GAAP adjustments: | |||||||
Capco acquisition related payments (1) | — | 20 | |||||
Acquisition, integration and severance payments (2) | 26 | 84 | |||||
Settlement activity | (22 | ) | (2 | ) | |||
Adjusted cash flows from operations | 439 | 922 | |||||
Capital expenditures | (148 | ) | (293 | ) | |||
Free cash flow | $ | 291 | $ | 629 |
Three months ended | Six months ended | ||||||
June 30, 2015 | June 30, 2015 | ||||||
Net cash provided by operating activities | $ | 212 | $ | 443 | |||
Non-GAAP adjustments: | |||||||
Capco acquisition related payments (1) | 1 | 31 | |||||
Acquisition, integration and severance payments (2) | 8 | 14 | |||||
Settlement activity | (24 | ) | 30 | ||||
Adjusted cash flows from operations | 197 | 518 | |||||
Capital expenditures | (118 | ) | (219 | ) | |||
Free cash flow | $ | 79 | $ | 299 |
(1) | Adjusted cash flow from operations and free cash flow for the three and six months ended June 30, 2016 and 2015 excludes payments for contingent purchase price and the New Hires and Promotions Incentive Plan associated with the 2010 acquisition of Capco. In accordance with the accounting guidance, contingent purchase price payments are included in financing activities on the Condensed Consolidated Statements of Cash Flows only to the extent they represent the original liability established at the acquisition date. Payments related to subsequent adjustments to the contingent purchase price are included in the net cash provided by operating activities. |
(2) | Adjusted cash flow from operations and free cash flow for the three and six months ended June 30, 2016 and 2015 excludes cash payments for certain acquisition, integration and severance expenses, net of related tax impact. |
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net earnings from continuing operations attributable to FIS | $ | 120 | $ | 242 | $ | 175 | $ | 356 | ||||||||
Provision for income taxes | 66 | 156 | 97 | 214 | ||||||||||||
Interest expense, net | 93 | 36 | 186 | 73 | ||||||||||||
Other, net | 4 | (147 | ) | 9 | (141 | ) | ||||||||||
Operating income, as reported | 283 | 287 | 467 | 502 | ||||||||||||
FIS depreciation and amortization from continuing operations | 144 | 105 | 283 | 208 | ||||||||||||
FIS non-GAAP adjustments: | ||||||||||||||||
Acquisition deferred revenue adjustment (1) | 59 | — | 140 | — | ||||||||||||
Acquisition, integration and severance (2) | 63 | 11 | 142 | 23 | ||||||||||||
Global restructure (3) | — | — | — | 45 | ||||||||||||
Purchase accounting amortization (5) | 147 | 50 | 301 | 100 | ||||||||||||
Adjusted EBITDA | $ | 696 | 453 | $ | 1,333 | 878 | ||||||||||
Historical SunGard operating income, as adjusted (4) | 130 | 258 | ||||||||||||||
Historical SunGard depreciation and amortization from continuing operations, as adjusted (4) | 34 | 70 | ||||||||||||||
Adjusted combined EBITDA | $ | 617 | $ | 1,206 |
Exhibit E (continued) | ||||||||||||||||||||||||
Three months ended June 30, 2016 | ||||||||||||||||||||||||
Acquisition, | ||||||||||||||||||||||||
Acquisition | Integration, | |||||||||||||||||||||||
Deferred | and | Purchase | ||||||||||||||||||||||
Revenue | Severance | Accounting | ||||||||||||||||||||||
GAAP | Adjustment (1) | Costs (2) | Subtotal | Amortization (6) | Non-GAAP | |||||||||||||||||||
Processing and services revenue | $ | 2,305 | $ | 59 | $ | — | $ | 2,364 | $ | — | $ | 2,364 | ||||||||||||
Cost of revenues | 1,600 | — | — | 1,600 | (147 | ) | 1,453 | |||||||||||||||||
Gross profit | 705 | 59 | — | 764 | 147 | 911 | ||||||||||||||||||
Selling, general and administrative expenses | 422 | — | (63 | ) | 359 | — | 359 | |||||||||||||||||
Operating income | 283 | 59 | 63 | 405 | 147 | 552 | ||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Interest income (expense), net | (93 | ) | — | — | (93 | ) | — | (93 | ) | |||||||||||||||
Other income (expense), net | (1 | ) | — | — | (1 | ) | — | (1 | ) | |||||||||||||||
Total other income (expense) | (94 | ) | — | — | (94 | ) | — | (94 | ) | |||||||||||||||
Earnings (loss) from continuing operations before income taxes | 189 | 59 | 63 | 311 | 147 | 458 | ||||||||||||||||||
Provision for income taxes | 66 | 21 | 22 | 109 | 51 | 160 | ||||||||||||||||||
Earnings (loss) from continuing operations, net of tax | 123 | 38 | 41 | 202 | 96 | 298 | ||||||||||||||||||
Earnings (loss) from discontinued operations, net of tax | 1 | — | — | 1 | — | 1 | ||||||||||||||||||
Net earnings (loss) | 124 | 38 | 41 | 203 | 96 | 299 | ||||||||||||||||||
Net (earnings) loss attributable to noncontrolling interest | (3 | ) | — | — | (3 | ) | — | (3 | ) | |||||||||||||||
Net earnings (loss) attributable to FIS common stockholders | $ | 121 | $ | 38 | $ | 41 | $ | 200 | $ | 96 | $ | 296 | ||||||||||||
Amounts attributable to FIS common stockholders | ||||||||||||||||||||||||
Earnings (loss) from continuing operations, net of tax | $ | 120 | $ | 38 | $ | 41 | $ | 199 | $ | 96 | $ | 295 | ||||||||||||
Earnings (loss) from discontinued operations, net of tax | 1 | — | — | 1 | — | 1 | ||||||||||||||||||
Net earnings (loss) attributable to FIS common stockholders | $ | 121 | $ | 38 | $ | 41 | $ | 200 | $ | 96 | $ | 296 | ||||||||||||
Net earnings (loss) per share — diluted from continuing operations attributable to FIS common stockholders | $ | 0.36 | $ | 0.12 | $ | 0.12 | $ | 0.60 | $ | 0.29 | $ | 0.90 | ||||||||||||
Weighted average shares outstanding — diluted | 329 | 329 | 329 | 329 | 329 | 329 | ||||||||||||||||||
Effective tax rate | 35 | % | 35 | % | ||||||||||||||||||||
Supplemental information: | ||||||||||||||||||||||||
Depreciation and amortization | $ | 291 | (147 | ) | $ | 144 | ||||||||||||||||||
Stock compensation expense | $ | 38 |
Exhibit E (continued) | ||||||||||||||||||||||||
Six months ended June 30, 2016 | ||||||||||||||||||||||||
Acquisition, | ||||||||||||||||||||||||
Acquisition | Integration, | |||||||||||||||||||||||
Deferred | and | Purchase | ||||||||||||||||||||||
Revenue | Severance | Accounting | ||||||||||||||||||||||
GAAP | Adjustment (1) | Costs (2) | Subtotal | Amortization (6) | Non-GAAP | |||||||||||||||||||
Processing and services revenue | $ | 4,486 | $ | 140 | $ | — | $ | 4,626 | $ | — | $ | 4,626 | ||||||||||||
Cost of revenues | 3,153 | — | — | 3,153 | (301 | ) | 2,852 | |||||||||||||||||
Gross profit | 1,333 | 140 | — | 1,473 | 301 | 1,774 | ||||||||||||||||||
Selling, general and administrative expenses | 866 | — | (142 | ) | 724 | — | 724 | |||||||||||||||||
Operating income | 467 | 140 | 142 | 749 | 301 | 1,050 | ||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Interest income (expense), net | (186 | ) | — | — | (186 | ) | — | (186 | ) | |||||||||||||||
Other income (expense), net | (2 | ) | — | — | (2 | ) | — | (2 | ) | |||||||||||||||
Total other income (expense) | (188 | ) | — | — | (188 | ) | — | (188 | ) | |||||||||||||||
Earnings (loss) from continuing operations before income taxes | 279 | 140 | 142 | 561 | 301 | 862 | ||||||||||||||||||
Provision for income taxes | 97 | 49 | 50 | 196 | 105 | 301 | ||||||||||||||||||
Earnings (loss) from continuing operations, net of tax | 182 | 91 | 92 | 365 | 196 | 561 | ||||||||||||||||||
Earnings (loss) from discontinued operations, net of tax | 1 | — | — | 1 | — | 1 | ||||||||||||||||||
Net earnings (loss) | 183 | 91 | 92 | 366 | 196 | 562 | ||||||||||||||||||
Net (earnings) loss attributable to noncontrolling interest | (7 | ) | — | — | (7 | ) | — | (7 | ) | |||||||||||||||
Net earnings (loss) attributable to FIS common stockholders | $ | 176 | $ | 91 | $ | 92 | $ | 359 | $ | 196 | $ | 555 | ||||||||||||
Amounts attributable to FIS common stockholders | ||||||||||||||||||||||||
Earnings (loss) from continuing operations, net of tax | $ | 175 | $ | 91 | $ | 92 | $ | 358 | $ | 196 | $ | 554 | ||||||||||||
Earnings (loss) from discontinued operations, net of tax | 1 | — | — | 1 | — | 1 | ||||||||||||||||||
Net earnings (loss) attributable to FIS common stockholders | $ | 176 | $ | 91 | $ | 92 | $ | 359 | $ | 196 | $ | 555 | ||||||||||||
Net earnings (loss) per share — diluted from continuing operations attributable to FIS common stockholders | $ | 0.53 | $ | 0.28 | $ | 0.28 | $ | 1.09 | $ | 0.60 | $ | 1.69 | ||||||||||||
Weighted average shares outstanding — diluted | 328 | 328 | 328 | 328 | 328 | 328 | ||||||||||||||||||
Effective tax rate | 35 | % | 35 | % | ||||||||||||||||||||
Supplemental information: | ||||||||||||||||||||||||
Depreciation and amortization | $ | 584 | (301 | ) | $ | 283 | ||||||||||||||||||
Stock compensation expense | $ | 68 |
Exhibit E (continued) | ||||||||||||||||||||||||
Three months ended June 30, 2015 | ||||||||||||||||||||||||
Acquisition | ||||||||||||||||||||||||
Integration | ||||||||||||||||||||||||
and | Sale of | Purchase | ||||||||||||||||||||||
Severance | Gaming | Accounting | ||||||||||||||||||||||
GAAP | Costs (2) | Contracts (5) | Subtotal | Amortization (6) | Non-GAAP | |||||||||||||||||||
Processing and services revenue | $ | 1,587 | $ | — | $ | — | $ | 1,587 | $ | — | $ | 1,587 | ||||||||||||
Cost of revenues | 1,070 | — | — | 1,070 | (50 | ) | 1,020 | |||||||||||||||||
Gross profit | 517 | — | — | 517 | 50 | 567 | ||||||||||||||||||
Selling, general and administrative expenses | 230 | (11 | ) | — | 219 | — | 219 | |||||||||||||||||
Operating income | 287 | 11 | — | 298 | 50 | 348 | ||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Interest income (expense), net | (36 | ) | — | — | (36 | ) | — | (36 | ) | |||||||||||||||
Other income (expense), net | 152 | — | (140 | ) | 12 | — | 12 | |||||||||||||||||
Total other income (expense) | 116 | — | (140 | ) | (24 | ) | — | (24 | ) | |||||||||||||||
Earnings (loss) from continuing operations before income taxes | 403 | 11 | (140 | ) | 274 | 50 | 324 | |||||||||||||||||
Provision for income taxes | 156 | 3 | (68 | ) | 91 | 17 | 108 | |||||||||||||||||
Earnings (loss) from continuing operations, net of tax | 247 | 8 | (72 | ) | 183 | 33 | 216 | |||||||||||||||||
Earnings (loss) from discontinued operations, net of tax | (2 | ) | — | — | (2 | ) | — | (2 | ) | |||||||||||||||
Net earnings (loss) | 245 | 8 | (72 | ) | 181 | 33 | 214 | |||||||||||||||||
Net (earnings) loss attributable to noncontrolling interest | (5 | ) | — | — | (5 | ) | — | (5 | ) | |||||||||||||||
Net earnings (loss) attributable to FIS common stockholders | $ | 240 | $ | 8 | $ | (72 | ) | $ | 176 | $ | 33 | $ | 209 | |||||||||||
Amounts attributable to FIS common stockholders | ||||||||||||||||||||||||
Earnings (loss) from continuing operations, net of tax | $ | 242 | $ | 8 | $ | (72 | ) | $ | 178 | $ | 33 | $ | 211 | |||||||||||
Earnings (loss) from discontinued operations, net of tax | (2 | ) | — | — | (2 | ) | — | (2 | ) | |||||||||||||||
Net earnings (loss) attributable to FIS common stockholders | $ | 240 | $ | 8 | $ | (72 | ) | $ | 176 | $ | 33 | $ | 209 | |||||||||||
Net earnings (loss) per share — diluted from continuing operations attributable to FIS common stockholders | $ | 0.85 | $ | 0.03 | $ | (0.25 | ) | $ | 0.63 | $ | 0.12 | $ | 0.74 | |||||||||||
Weighted average shares outstanding — diluted | 284 | 284 | 284 | 284 | 284 | 284 | ||||||||||||||||||
Effective tax rate | 39 | % | 33 | % | ||||||||||||||||||||
Supplemental information: | ||||||||||||||||||||||||
Depreciation and amortization | $ | 155 | (50 | ) | $ | 105 | ||||||||||||||||||
Stock compensation expense | $ | 17 |
Exhibit E (continued) | ||||||||||||||||||||||||||||
Six months ended June 30, 2015 | ||||||||||||||||||||||||||||
Acquisition | ||||||||||||||||||||||||||||
Integration | ||||||||||||||||||||||||||||
and | Sale of | Purchase | ||||||||||||||||||||||||||
Severance | Gaming | Global | Accounting | |||||||||||||||||||||||||
GAAP | Costs (2) | Contracts (5) | Restructure (3) | Subtotal | Amortization (6) | Non-GAAP | ||||||||||||||||||||||
Processing and services revenue | $ | 3,142 | $ | — | $ | — | $ | — | $ | 3,142 | $ | — | $ | 3,142 | ||||||||||||||
Cost of revenues | 2,140 | — | — | — | 2,140 | (100 | ) | 2,040 | ||||||||||||||||||||
Gross profit | 1,002 | — | — | — | 1,002 | 100 | 1,102 | |||||||||||||||||||||
Selling, general and administrative expenses | 500 | (23 | ) | — | (45 | ) | 432 | — | 432 | |||||||||||||||||||
Operating income | 502 | 23 | — | 45 | 570 | 100 | 670 | |||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||||
Interest income (expense), net | (73 | ) | — | — | — | (73 | ) | — | (73 | ) | ||||||||||||||||||
Other income (expense), net | 150 | — | (140 | ) | — | 10 | — | 10 | ||||||||||||||||||||
Total other income (expense) | 77 | — | (140 | ) | — | (63 | ) | — | (63 | ) | ||||||||||||||||||
Earnings (loss) from continuing operations before income taxes | 579 | 23 | (140 | ) | 45 | 507 | 100 | 607 | ||||||||||||||||||||
Provision for income taxes | 214 | 7 | (68 | ) | 15 | 168 | 33 | 201 | ||||||||||||||||||||
Earnings (loss) from continuing operations, net of tax | 365 | 16 | (72 | ) | 30 | 339 | 67 | 406 | ||||||||||||||||||||
Earnings (loss) from discontinued operations, net of tax | (5 | ) | — | — | — | (5 | ) | — | (5 | ) | ||||||||||||||||||
Net earnings (loss) | 360 | 16 | (72 | ) | 30 | 334 | 67 | 401 | ||||||||||||||||||||
Net (earnings) loss attributable to noncontrolling interest | (9 | ) | — | — | — | (9 | ) | — | (9 | ) | ||||||||||||||||||
Net earnings (loss) attributable to FIS common stockholders | $ | 351 | $ | 16 | $ | (72 | ) | $ | 30 | $ | 325 | $ | 67 | $ | 392 | |||||||||||||
Amounts attributable to FIS common stockholders | ||||||||||||||||||||||||||||
Earnings (loss) from continuing operations, net of tax | $ | 356 | $ | 16 | $ | (72 | ) | $ | 30 | $ | 330 | $ | 67 | $ | 397 | |||||||||||||
Earnings (loss) from discontinued operations, net of tax | (5 | ) | — | — | — | (5 | ) | — | (5 | ) | ||||||||||||||||||
Net earnings (loss) attributable to FIS common stockholders | $ | 351 | $ | 16 | $ | (72 | ) | $ | 30 | $ | 325 | $ | 67 | $ | 392 | |||||||||||||
Net earnings (loss) per share — diluted from continuing operations attributable to FIS common stockholders | $ | 1.25 | $ | 0.06 | $ | (0.25 | ) | $ | 0.11 | $ | 1.16 | $ | 0.23 | $ | 1.39 | |||||||||||||
Weighted average shares outstanding — diluted | 286 | 286 | 286 | 286 | 286 | 286 | 286 | |||||||||||||||||||||
Effective tax rate | 37 | % | 33 | % | ||||||||||||||||||||||||
Supplemental information: | ||||||||||||||||||||||||||||
Depreciation and amortization | $ | 308 | (100 | ) | $ | 208 | ||||||||||||||||||||||
Stock compensation expense | $ | 36 |
(1) | This item represents the impact of the purchase accounting adjustment to reduce SunGard's 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 SunGard under GAAP if the acquisition had not occurred, but was not recognized due to GAAP purchase accounting requirements. |
(2) | This item represents certain costs and other transactions which management deems non-operational primarily related to integrations and severance activity from the SunGard acquisition. |
(3) | Global Restructure represents severance costs incurred in connection with the reorganization and streamlining of operations in our Global Financial Solutions segment. |
(4) | The unaudited historical SunGard financial information, as adjusted, is presented for illustrative purposes only. The adjusted financial information excludes amortization of purchased intangible assets, as well as the impact from the acquisition deferred revenue adjustment arising from the SunGard Acquisition as those impacts would be eliminated in the preparation of adjusted combined information. It also excludes (i) revenues and cost of revenues from businesses disposed of by SunGard in 2015 and (ii) SunGard's historical expense prior to its acquisition by FIS for amortization of purchased intangibles acquired by SunGard. |
(5) | This column represents gain on the sale of check warranty contracts and other assets in the gaming industry. The sale did not meet the standard necessary to be reported as discontinued operations and, therefore, the gain and related prior period earnings remain reported within earnings from continuing operations. |
(6) | This item represents purchase price amortization expense on all intangible assets acquired through various Company acquisitions, including customer relationships, contract value, trademarks and tradenames, and non-compete agreements. Beginning with the November 2015 acquisition of SunGard, this column also includes the incremental amortization associated with purchase price adjustments to technology assets acquired. The allocation of purchase price for SunGard to assets and liabilities as of June 30, 2016 is provisional and may be adjusted in future periods. The financial statements will not be retrospectively adjusted for any adjustments to provisional amounts that occur in subsequent periods. Rather, we will recognize any adjustments in the reporting period in which the adjustment is determined. We are also required to record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of any change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. |