UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 5, 2008
METAVANTE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
| Wisconsin | 001-33747 | 39-0968604 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
4900 West Brown Deer Road
Milwaukee, Wisconsin 53223
(Address of Principal executive offices, including Zip Code)
(414) 357-2290
(Registrant’s 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:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01 | Regulation FD Disclosure. |
On March 5, 2008, Metavante Technologies, Inc. (“Metavante”) made available on its website a databook containing supplemental financial data. This presentation is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
| Exhibit No. |
Description | |
| 99.1 |
Databook of Supplemental Financial Data |
2
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 hereunto duly authorized.
| METAVANTE TECHNOLOGIES, INC. | ||||
| Date: March 5, 2008 | /s/ Navroz J. Daroga | |||
| Name: | Navroz J. Daroga | |||
| Title: | Executive Vice President, Chief Administrative Officer and Secretary | |||
3
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 |
Databook of Supplemental Financial Data |
E-1
Exhibit 99.1
Supplemental Financial Data
(Issued March 5, 2008)
Metavante Technologies, Inc.
4900 West Brown Deer Road
Milwaukee, WI 53223
Investor Relations Contacts
Kirk Larsen
Phone: 1-414-357-3553
Email: kirk.larsen@metavante.com
Kimberly Buxbaum
Phone: 1-414-357-9092
Email: kimberly.buxbaum@metavante.com
Website
www.metavante.com
Table of Contents
| Page | ||
| Annual Statements of Income |
1 | |
| Quarterly Statements of Income |
||
| - 2007 |
2 | |
| - 2006 |
3 | |
| Annual Revenue and Earnings Information |
4 | |
| Quarterly Revenue and Earnings Information |
||
| - 2007 |
5 | |
| - 2006 |
6 | |
| Balance Sheet Information |
7 | |
| Cash Flow Information |
8 | |
| Non-GAAP Financial Measures |
9 | |
The following summary financial information is being provided to supplement the audited financial statements set forth in Metavante Technologies, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2007.
This summary includes non-GAAP financial measures. Please see page 9 for a discussion of why management believes these measures are useful to investors and the definitions of such terms.
The information contained herein has been derived from the financial statements of Metavante Technologies, Inc. All information should be read in conjunction with the historical financial statements contained in Metavante Technologies, Inc.’s Annual Report on Form 10-K, periodic reports on Form 10-Q or Form 8-K, and public announcements of financial information. Copies of these reports are available on our website at www.metavante.com or upon request from Metavante Technologies, Inc.
Metavante Technologies, Inc.
Statements of Income
(in thousands)
| Year Ended December 31, | ||||||||||||||||
| 2007 | 2006 | 2005 | 2004 | |||||||||||||
| Revenue |
$ | 1,598,123 | $ | 1,504,178 | $ | 1,284,997 | $ | 1,015,393 | ||||||||
| Expenses: |
||||||||||||||||
| Cost of processing and services |
1,062,724 | 998,041 | 877,856 | 744,485 | ||||||||||||
| Selling, general, and administrative |
233,405 | 234,170 | 178,626 | 124,364 | ||||||||||||
| Impairment charges |
129,451 | — | — | — | ||||||||||||
| Transaction costs |
19,647 | — | — | — | ||||||||||||
| Total Expenses |
1,445,227 | 1,232,211 | 1,056,482 | 868,849 | ||||||||||||
| Income from operations |
152,896 | 271,967 | 228,515 | 146,544 | ||||||||||||
| Other non-operating items: |
||||||||||||||||
| Interest expense, net |
(40,888 | ) | (28,631 | ) | (37,271 | ) | (21,819 | ) | ||||||||
| Net gains from Firstsource |
6,856 | — | — | — | ||||||||||||
| Other, net |
1,176 | (2,853 | ) | 1,626 | 1,119 | |||||||||||
| Income before income taxes |
120,040 | 240,483 | 192,870 | 125,844 | ||||||||||||
| Income tax provision |
70,589 | 80,359 | 73,339 | 49,030 | ||||||||||||
| Net income |
$ | 49,451 | $ | 160,124 | $ | 119,531 | $ | 76,814 | ||||||||
| Adjusted EBITDA (1) |
$ | 468,688 | $ | 413,555 | $ | 369,275 | $ | 278,197 | ||||||||
| Adjusted cash net income (1) |
$ | 208,194 | $ | 181,493 | $ | 135,432 | $ | 87,741 | ||||||||
| (1) | Adjusted EBITDA and Adjusted cash net income are non-GAAP financial measures. See page 9 for a discussion of why management believes these measures are useful to investors and the definitions of such terms. See below for reconciliations of Adjusted EBITDA and Adjusted cash net income to net income. |
| Year Ended December 31, | ||||||||||||
| 2007 | 2006 | 2005 | 2004 | |||||||||
| Reconciliation of Net Income to EBITDA and Adjusted EBITDA: |
||||||||||||
| Net income |
$ | 49,451 | $ | 160,124 | $ | 119,531 | $ | 76,814 | ||||
| Add: |
||||||||||||
| Interest expense - net |
40,888 | 28,631 | 37,271 | 21,819 | ||||||||
| Income tax provision |
70,589 | 80,359 | 73,339 | 49,030 | ||||||||
| Depreciation and amortization |
154,383 | 144,441 | 139,134 | 130,534 | ||||||||
| Transaction-related costs |
23,926 | — | — | — | ||||||||
| Impairment charges |
129,451 | — | — | — | ||||||||
| Adjusted EBITDA |
$ | 468,688 | $ | 413,555 | $ | 369,275 | $ | 278,197 | ||||
| Reconciliation of Net Income to Adjusted Net Income and Adjusted Cash Net Income: | ||||||||||||
| Net income |
$ | 49,451 | $ | 160,124 | $ | 119,531 | $ | 76,814 | ||||
| Add: |
||||||||||||
| Impairment charges, net of tax |
111,458 | — | — | — | ||||||||
| Transaction-related costs, net of tax |
16,010 | — | — | — | ||||||||
| Incremental interest expense, net of tax |
9,878 | — | — | — | ||||||||
| Adjusted net income |
186,797 | 160,124 | 119,531 | 76,814 | ||||||||
| Add: |
||||||||||||
| Acquisition intangible amortization, net of tax |
17,142 | 16,038 | 10,829 | 6,555 | ||||||||
| Stock-based compensation, net of tax |
4,255 | 5,331 | 5,072 | 4,372 | ||||||||
| Adjusted cash net income |
$ | 208,194 | $ | 181,493 | $ | 135,432 | $ | 87,741 | ||||
1
Metavante Technologies, Inc.
Quarterly Statements of Income
(in thousands)
(unaudited)
| 2007 | ||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | |||||||||||||
| Revenue |
$ | 387,241 | $ | 395,735 | $ | 406,913 | $ | 408,234 | ||||||||
| Expenses: |
||||||||||||||||
| Cost of processing and services |
254,811 | 263,201 | 270,318 | 274,394 | ||||||||||||
| Selling, general, and administrative |
56,247 | 57,837 | 49,045 | 70,276 | ||||||||||||
| Impairment charges |
— | — | — | 129,451 | ||||||||||||
| Transaction costs |
— | 900 | 1,443 | 17,304 | ||||||||||||
| Total Expenses |
311,058 | 321,938 | 320,806 | 491,425 | ||||||||||||
| Income (loss) from operations |
76,183 | 73,797 | 86,107 | (83,191 | ) | |||||||||||
| Other non-operating items: |
||||||||||||||||
| Interest expense, net |
(7,284 | ) | (6,764 | ) | (5,621 | ) | (21,219 | ) | ||||||||
| Net gains (losses) related to Firstsource |
8,028 | (982 | ) | (6 | ) | (184 | ) | |||||||||
| Other, net |
34 | (6 | ) | (523 | ) | 1,671 | ||||||||||
| Income (loss) before income taxes |
76,961 | 66,045 | 79,957 | (102,923 | ) | |||||||||||
| Income tax provision (benefit) |
27,686 | 23,184 | 29,796 | (10,077 | ) | |||||||||||
| Net income (loss) |
$ | 49,275 | $ | 42,861 | $ | 50,161 | $ | (92,846 | ) | |||||||
| Adjusted EBITDA (1) |
$ | 121,490 | $ | 111,167 | $ | 124,761 | $ | 111,271 | ||||||||
| Adjusted cash net income (1) |
$ | 54,380 | $ | 48,992 | $ | 54,992 | $ | 49,828 | ||||||||
| (1) | Adjusted EBITDA and Adjusted cash net income are non-GAAP financial measures. See page 9 for a discussion of why management believes these measures are useful to investors and the definitions of such terms. See below for reconciliations of Adjusted EBITDA and Adjusted cash net income to net income (loss). |
Note: The sum of the quarters may not be equal to the respective full year figures due to rounding.
| 2007 | ||||||||||||||
| Q1 | Q2 | Q3 | Q4 | |||||||||||
| Reconciliation of Net Income (Loss) to Adjusted EBITDA: |
||||||||||||||
| Net income (loss) |
$ | 49,275 | $ | 42,861 | $ | 50,161 | $ | (92,846 | ) | |||||
| Add: |
||||||||||||||
| Interest expense - net |
7,284 | 6,764 | 5,621 | 21,219 | ||||||||||
| Income tax provision (benefit) |
27,686 | 23,184 | 29,796 | (10,077 | ) | |||||||||
| Depreciation and amortization |
37,245 | 37,449 | 40,814 | 38,874 | ||||||||||
| Transaction-related costs |
— | 909 | (1,631 | ) | 24,650 | |||||||||
| Impairment charges |
— | — | — | 129,451 | ||||||||||
| Adjusted EBITDA |
$ | 121,490 | $ | 111,167 | $ | 124,761 | $ | 111,271 | ||||||
| Reconciliation of Net Income (Loss) to Adjusted Cash Net Income: |
||||||||||||||
| Net income (loss) |
$ | 49,275 | $ | 42,861 | $ | 50,161 | $ | (92,847 | ) | |||||
| Add: |
||||||||||||||
| Impairment charges, net of tax |
— | — | — | 111,458 | ||||||||||
| Transaction-related costs, net of tax |
— | 906 | (472 | ) | 15,575 | |||||||||
| Incremental interest expense, net of tax |
— | — | — | 9,878 | ||||||||||
| Adjusted net income |
49,275 | 43,767 | 49,689 | 44,064 | ||||||||||
| Add: |
||||||||||||||
| Acquisition intangible amortization, net of tax |
4,069 | 4,258 | 4,250 | 4,565 | ||||||||||
| Stock-based compensation, net of tax |
1,036 | 967 | 1,053 | 1,199 | ||||||||||
| Adjusted cash net income |
$ | 54,380 | $ | 48,992 | $ | 54,992 | $ | 49,828 | ||||||
2
Metavante Technologies, Inc.
Quarterly Statements of Income
(in thousands)
(unaudited)
| 2006 | ||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | |||||||||||||
| Revenue |
$ | 370,947 | $ | 373,540 | $ | 373,774 | $ | 385,917 | ||||||||
| Expenses: |
||||||||||||||||
| Cost of processing and services |
252,954 | 252,919 | 236,751 | 255,417 | ||||||||||||
| Selling, general, and administrative |
56,072 | 54,833 | 65,043 | 58,222 | ||||||||||||
| Total Expenses |
309,026 | 307,752 | 301,794 | 313,639 | ||||||||||||
| Income from operations |
61,921 | 65,788 | 71,980 | 72,278 | ||||||||||||
| Other non-operating items: |
||||||||||||||||
| Interest expense, net |
(8,266 | ) | (7,569 | ) | (6,678 | ) | (6,118 | ) | ||||||||
| Other, net |
408 | 133 | (250 | ) | (3,144 | ) | ||||||||||
| Income before income taxes |
54,063 | 58,352 | 65,052 | 63,016 | ||||||||||||
| Income tax provision |
19,533 | 17,978 | 23,812 | 19,036 | ||||||||||||
| Net income |
$ | 34,530 | $ | 40,374 | $ | 41,240 | $ | 43,980 | ||||||||
| EBITDA (1) |
$ | 98,746 | $ | 101,988 | $ | 107,152 | $ | 105,670 | ||||||||
| Cash net income (1) |
$ | 39,633 | $ | 45,794 | $ | 46,596 | $ | 49,470 | ||||||||
| (1) | EBITDA and Cash net income are non-GAAP financial measures. See page 9 for a discussion of why management believes these measures are useful to investors and the definitions of such terms. See below for reconciliations of EBITDA and Cash net income to net income. |
Note: The sum of the quarters may not be equal to the respective full year figures due to rounding.
| 2006 | ||||||||||||
| Q1 | Q2 | Q3 | Q4 | |||||||||
| Reconciliation of Net Income to EBITDA: |
||||||||||||
| Net income |
$ | 34,530 | $ | 40,374 | $ | 41,240 | $ | 43,980 | ||||
| Add: |
||||||||||||
| Interest expense - net |
8,266 | 7,569 | 6,678 | 6,118 | ||||||||
| Allocated income tax provision |
19,533 | 17,978 | 23,812 | 19,036 | ||||||||
| Depreciation and amortization |
36,417 | 36,067 | 35,422 | 36,536 | ||||||||
| EBITDA |
$ | 98,746 | $ | 101,988 | $ | 107,152 | $ | 105,670 | ||||
| Reconciliation of Net Income to Cash Net Income: |
||||||||||||
| Net income |
$ | 34,530 | $ | 40,374 | $ | 41,240 | $ | 43,980 | ||||
| Add: |
||||||||||||
| Acquisition intangible amortization, net of tax |
3,701 | 4,023 | 4,100 | 4,214 | ||||||||
| Stock-based compensation, net of tax |
1,402 | 1,397 | 1,256 | 1,276 | ||||||||
| Cash net income |
$ | 39,633 | $ | 45,794 | $ | 46,596 | $ | 49,470 | ||||
3
Metavante Technologies, Inc.
Revenue and Earnings Information
(in thousands)
| Year Ended December 31, | ||||||||||||||||
| 2007 | 2006 | 2005 | 2004 | |||||||||||||
| Revenue |
||||||||||||||||
| Financial Solutions Group |
$ | 636,230 | $ | 614,505 | $ | 545,118 | $ | 484,234 | ||||||||
| Payment Solutions Group |
961,893 | 889,673 | 739,879 | 531,159 | ||||||||||||
| Total |
$ | 1,598,123 | $ | 1,504,178 | $ | 1,284,997 | $ | 1,015,393 | ||||||||
| Segment Operating Income |
||||||||||||||||
| Financial Solutions Group |
$ | 154,618 | $ | 144,436 | $ | 104,204 | $ | 66,523 | ||||||||
| Payment Solutions Group |
276,822 | 256,737 | 223,593 | 150,330 | ||||||||||||
| Total |
431,440 | 401,173 | 327,797 | 216,853 | ||||||||||||
| Corporate/other (1) |
(95,421 | ) | (105,329 | ) | (79,607 | ) | (58,265 | ) | ||||||||
| Acquisition intangible amortization |
(28,570 | ) | (26,730 | ) | (18,049 | ) | (10,925 | ) | ||||||||
| Net gains related to Firstsource |
6,856 | — | — | — | ||||||||||||
| Impairment charges |
(129,451 | ) | — | — | — | |||||||||||
| Transaction-related costs |
(23,926 | ) | — | — | — | |||||||||||
| Interest expense, net |
(40,888 | ) | (28,631 | ) | (37,271 | ) | (21,819 | ) | ||||||||
| Income before income taxes |
120,040 | 240,483 | 192,870 | 125,844 | ||||||||||||
| Income tax provision |
70,589 | 80,359 | 73,339 | 49,030 | ||||||||||||
| Net income |
$ | 49,451 | $ | 160,124 | $ | 119,531 | $ | 76,814 | ||||||||
| Segment operating margin |
||||||||||||||||
| Financial Solutions Group |
24.3 | % | 23.5 | % | 19.1 | % | 13.7 | % | ||||||||
| Payment Solutions Group |
28.8 | % | 28.9 | % | 30.2 | % | 28.3 | % | ||||||||
| (1) | Corporate/other includes human resources, legal, finance and accounting, and various other unallocated charges. |
Note: As disclosed in the Metavante Technologies, Inc. Form 10-Q filed on November 14, 2007, Metavante transferred its Image Solutions business from the Financial Solutions segment to the Payment Solutions segment. In the fourth quarter of 2007, Metavante modified its internal management reporting to include certain costs in Segment Operating Income that were previously included in Corporate/other. Segment reporting for all periods presented has been adjusted to reflect these changes.
4
Metavante Technologies, Inc.
Quarterly Revenue and Earnings Information
(in thousands)
(unaudited)
| 2007 | ||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | |||||||||||||
| Revenue |
||||||||||||||||
| Financial Solutions Group |
$ | 152,018 | $ | 155,299 | $ | 166,474 | $ | 162,439 | ||||||||
| Payment Solutions Group |
235,223 | 240,436 | 240,439 | 245,795 | ||||||||||||
| Total |
$ | 387,241 | $ | 395,735 | $ | 406,913 | $ | 408,234 | ||||||||
| Segment Operating Income |
||||||||||||||||
| Financial Solutions Group |
$ | 38,747 | $ | 40,470 | $ | 36,672 | $ | 38,729 | ||||||||
| Payment Solutions Group |
64,460 | 67,077 | 74,027 | 71,258 | ||||||||||||
| Total |
103,207 | 107,547 | 110,699 | 109,987 | ||||||||||||
| Corporate/other (1) |
(20,208 | ) | (25,753 | ) | (19,662 | ) | (29,798 | ) | ||||||||
| Acquisition intangible amortization |
(6,780 | ) | (7,096 | ) | (7,085 | ) | (7,609 | ) | ||||||||
| Net gains/(losses) related to Firstsource |
8,028 | (982 | ) | (6 | ) | (184 | ) | |||||||||
| Impairment charges |
— | — | — | (129,451 | ) | |||||||||||
| Transaction-related costs |
— | (909 | ) | 1,633 | (24,650 | ) | ||||||||||
| Interest expense, net |
(7,286 | ) | (6,762 | ) | (5,621 | ) | (21,219 | ) | ||||||||
| Income (loss) before income taxes |
76,961 | 66,045 | 79,958 | (102,924 | ) | |||||||||||
| Income tax provision (benefit) |
27,686 | 23,184 | 29,796 | (10,077 | ) | |||||||||||
| Net income (loss) |
$ | 49,275 | $ | 42,861 | $ | 50,162 | $ | (92,847 | ) | |||||||
| Segment operating margin |
||||||||||||||||
| Financial Solutions Group |
25.5 | % | 26.1 | % | 22.0 | % | 23.8 | % | ||||||||
| Payment Solutions Group |
27.4 | % | 27.9 | % | 30.8 | % | 29.0 | % | ||||||||
| (1) | Corporate/other includes human resources, legal, finance and accounting, and various other unallocated charges. |
Note: The sum of the quarters may not be equal to the respective full year figures due to rounding.
5
Metavante Technologies, Inc.
Quarterly Revenue and Earnings Information
(in thousands)
(unaudited)
| 2006 | ||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | |||||||||||||
| Revenue |
||||||||||||||||
| Financial Solutions Group |
$ | 147,904 | $ | 152,817 | $ | 162,164 | $ | 151,620 | ||||||||
| Payment Solutions Group |
223,043 | 220,723 | 211,610 | 234,297 | ||||||||||||
| Total |
$ | 370,947 | $ | 373,540 | $ | 373,774 | $ | 385,917 | ||||||||
| Segment Operating Income |
||||||||||||||||
| Financial Solutions Group |
$ | 25,581 | $ | 35,652 | $ | 52,041 | $ | 31,162 | ||||||||
| Payment Solutions Group |
67,033 | 59,031 | 59,667 | 71,006 | ||||||||||||
| Total |
92,614 | 94,683 | 111,708 | 102,168 | ||||||||||||
| Corporate/other (1) |
(24,118 | ) | (22,056 | ) | (33,146 | ) | (26,011 | ) | ||||||||
| Acquisition intangible amortization |
(6,168 | ) | (6,705 | ) | (6,833 | ) | (7,023 | ) | ||||||||
| Interest expense, net |
(8,266 | ) | (7,569 | ) | (6,678 | ) | (6,118 | ) | ||||||||
| Income before income taxes |
54,062 | 58,353 | 65,051 | 63,016 | ||||||||||||
| Income tax provision |
19,532 | 17,979 | 23,812 | 19,036 | ||||||||||||
| Net income |
$ | 34,530 | $ | 40,374 | $ | 41,239 | $ | 43,980 | ||||||||
| Segment operating margin |
||||||||||||||||
| Financial Solutions Group |
17.3 | % | 23.3 | % | 32.1 | % | 20.6 | % | ||||||||
| Payment Solutions Group |
30.1 | % | 26.7 | % | 28.2 | % | 30.3 | % | ||||||||
| (1) | Corporate/other includes human resources, legal, finance and accounting, and various other unallocated charges. |
Note: The sum of the quarters may not be equal to the respective full year figures due to rounding.
6
Metavante Technologies, Inc.
Balance Sheet Information
(in thousands)
| December 31, | |||||||||
| 2007 | 2006 | 2005 | |||||||
| Assets |
|||||||||
| Current assets |
|||||||||
| Cash and cash equivalents |
$ | 185,528 | $ | 344,241 | $ | 208,028 | |||
| Short-term investments |
— | — | 80,000 | ||||||
| Restricted funds |
386,250 | 247,585 | 308,282 | ||||||
| Accounts receivable, net |
127,859 | 123,702 | 111,417 | ||||||
| EFD processing receivables |
110,788 | 50,893 | 45,207 | ||||||
| Unbilled revenues |
109,632 | 98,861 | 83,664 | ||||||
| Deferred income taxes |
37,638 | 34,110 | 35,647 | ||||||
| Other current assets |
55,813 | 41,183 | 33,265 | ||||||
| Total current assets |
1,013,508 | 940,575 | 905,510 | ||||||
| Capitalized software and conversions-net |
232,743 | 214,520 | 217,577 | ||||||
| Premises and equipment-net |
138,040 | 135,221 | 137,340 | ||||||
| Goodwill and intangibles-net |
1,560,141 | 1,639,170 | 1,564,699 | ||||||
| Long-term restricted funds |
— | — | 10,000 | ||||||
| Other assets |
155,567 | 85,828 | 22,663 | ||||||
| Total Assets |
$ | 3,099,999 | $ | 3,015,314 | $ | 2,857,789 | |||
| Liabilities and Shareholders’ Equity |
|||||||||
| Current liabilities |
|||||||||
| Current maturities of long-term debt |
$ | 13,164 | $ | — | $ | — | |||
| Accounts payable |
23,754 | 24,632 | 25,576 | ||||||
| Accrued compensation and related benefits |
48,048 | 52,379 | 46,176 | ||||||
| Accrued expenses |
180,956 | 124,219 | 125,168 | ||||||
| Payments held for third party remittance |
383,851 | 241,325 | 319,771 | ||||||
| Deferred revenues |
160,542 | 110,768 | 111,900 | ||||||
| Other current liabilities |
46,142 | 17,803 | 18,576 | ||||||
| Total current liabilities |
856,457 | 571,126 | 647,167 | ||||||
| Long-term debt |
1,736,883 | 982,000 | 982,000 | ||||||
| Deferred income taxes |
159,225 | 157,645 | 147,243 | ||||||
| Other long-term liabilities |
33,962 | 29,652 | 34,209 | ||||||
| Total liabilities |
2,786,527 | 1,740,423 | 1,810,619 | ||||||
| Minority interest |
14,121 | 12,757 | 11,503 | ||||||
| Shareholders’ equity |
299,351 | 1,262,134 | 1,035,667 | ||||||
| Total Liabilities and Shareholders’ Equity |
$ | 3,099,999 | $ | 3,015,314 | $ | 2,857,789 | |||
7
Metavante Technologies, Inc.
Cash Flow Information
(in thousands)
| Year Ended December 31, | ||||||||||||||||
| 2007 | 2006 | 2005 | 2004 | |||||||||||||
| Operating Activities |
||||||||||||||||
| Net income |
$ | 49,451 | $ | 160,124 | $ | 119,531 | $ | 76,814 | ||||||||
| Adjustments to reconcile net income to net cash from operating activities: |
||||||||||||||||
| Depreciation of premises and equipment |
40,520 | 40,882 | 40,448 | 35,659 | ||||||||||||
| Amortization |
113,863 | 103,559 | 98,686 | 94,875 | ||||||||||||
| Impairment charges |
129,451 | — | — | — | ||||||||||||
| Deferred income taxes |
(25,481 | ) | 8,865 | (1,067 | ) | 5,620 | ||||||||||
| Stock-based compensation expense |
21,125 | 8,104 | 7,624 | 7,286 | ||||||||||||
| Excess tax benefit from stock-based compensation arrangements |
(4,255 | ) | (1,940 | ) | (2,415 | ) | (2,231 | ) | ||||||||
| Other non-cash items |
(3,193 | ) | 1,777 | 1,104 | 7,102 | |||||||||||
| Changes in assets and liabilities-net of effect from acquisitions of businesses and foreign currency adjustments: |
||||||||||||||||
| Accounts receivable |
(5,057 | ) | (7,190 | ) | (20,033 | ) | 9,828 | |||||||||
| EFD processing receivables |
(60,177 | ) | (18,969 | ) | 4,201 | (11,299 | ) | |||||||||
| Unbilled revenues |
(11,128 | ) | (12,307 | ) | 1,244 | (16,019 | ) | |||||||||
| Accounts payable and accrued liabilities |
58,836 | 18,335 | (417 | ) | 4,225 | |||||||||||
| Deferred revenues |
25,018 | (7,524 | ) | 2,419 | (44 | ) | ||||||||||
| Other assets and liabilities |
16,452 | (1,294 | ) | (993 | ) | (584 | ) | |||||||||
| Cash provided by operating activities |
345,425 | 292,422 | 250,332 | 211,232 | ||||||||||||
| Investing Activities: |
||||||||||||||||
| Capital expenditures for premises and equipment |
(43,248 | ) | (37,362 | ) | (44,175 | ) | (27,603 | ) | ||||||||
| Capital expenditures for capitalized software and conversion costs |
(100,189 | ) | (72,059 | ) | (67,797 | ) | (59,861 | ) | ||||||||
| Purchase of equity investment |
— | (66,777 | ) | — | — | |||||||||||
| Change in short-term investments |
— | 80,000 | (77,546 | ) | — | |||||||||||
| Change in restricted cash |
(167,791 | ) | 696 | 269,669 | (88,522 | ) | ||||||||||
| Change in restricted CD’s |
30,000 | 70,000 | (190,000 | ) | — | |||||||||||
| Acquisitions-net of cash acquired |
(55,771 | ) | (82,554 | ) | (90,764 | ) | (990,286 | ) | ||||||||
| Other |
— | — | — | 5,927 | ||||||||||||
| Cash used in investing activities |
(336,999 | ) | (108,056 | ) | (200,613 | ) | (1,160,345 | ) | ||||||||
| Financing Activities: |
||||||||||||||||
| Repayment of debt and capital lease obligations |
(982,348 | ) | (2,647 | ) | (42,634 | ) | (1,812 | ) | ||||||||
| Change in payments held for third party remittance |
142,527 | (78,446 | ) | (78,180 | ) | 88,522 | ||||||||||
| Cash contribution from minority shareholders |
— | — | 12,561 | — | ||||||||||||
| Proceeds from issuance of debt and capital lease obligations |
1,750,000 | — | — | 907,251 | ||||||||||||
| Proceeds from the issuance of common stock |
625,000 | — | — | — | ||||||||||||
| Payment of debt issuance costs |
(23,731 | ) | — | — | — | |||||||||||
| Payment of equity issuance costs |
(22,340 | ) | — | — | — | |||||||||||
| Proceeds from the exercise of stock options |
1,508 | — | — | — | ||||||||||||
| Excess tax benefit from stock-based compensation arrangements |
4,255 | 1,940 | 2,415 | 2,231 | ||||||||||||
| Capital contribution for acquisitions |
— | 35,000 | 94,899 | 100,000 | ||||||||||||
| Dividend paid to parent |
(1,665,000 | ) | (4,000 | ) | (4,000 | ) | (4,000 | ) | ||||||||
| Cash (used in) provided by financing activities |
(170,129 | ) | (48,153 | ) | (14,939 | ) | 1,092,192 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents |
2,990 | — | — | — | ||||||||||||
| Change in cash and cash equivalents |
(158,713 | ) | 136,213 | 34,780 | 143,079 | |||||||||||
| Cash and cash equivalents-beginning of period |
344,241 | 208,028 | 173,248 | 30,169 | ||||||||||||
| Cash and cash equivalents-end of period |
$ | 185,528 | $ | 344,241 | $ | 208,028 | $ | 173,248 | ||||||||
| Free Cash Flow (1): |
||||||||||||||||
| Cash provided by operating activities |
$ | 345,425 | $ | 292,422 | $ | 250,332 | $ | 211,232 | ||||||||
| Less: |
||||||||||||||||
| Capital expenditures for premises and equipment |
(43,248 | ) | (37,362 | ) | (44,175 | ) | (27,603 | ) | ||||||||
| Capital expenditures for capitalized software and conversion costs |
(100,189 | ) | (72,059 | ) | (67,797 | ) | (59,861 | ) | ||||||||
| Free cash flow |
$ | 201,988 | $ | 183,001 | $ | 138,360 | $ | 123,768 | ||||||||
| (1) | Free cash flow is a non-GAAP financial measure. See page 9 for a discussion of why management believes free cash flow is useful to investors. |
8
Metavante Technologies, Inc.
Non-GAAP Financial Measures
This databook contains non-GAAP financial measures such as “EBITDA”, “Adjusted EBITDA”, “Cash Net Income”, “Adjusted Cash Net Income”, “Free Cash Flow”, and “Adjusted Net Income”. These measures should not be considered substitutes for GAAP measures. The reconciliations of the non-GAAP measures to the appropriate GAAP measures can be found on the respective pages on which the measures are presented.
The following is a specific discussion of each measure:
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA
Metavante’s management believes that “EBITDA” and “Adjusted EBITDA” are useful for evaluating performance against peer companies within its industry, as well as providing investors additional transparency to a financial measure used by management in its financial and operational decision-making. In addition, Metavante utilizes EBITDA and adjusted EBITDA in its evaluation and determination of the price of potential acquisition candidates, and to explain trends in its operating performance and believes it provides useful information about its ability to incur and service indebtedness. Also, EBITDA is included in the financial covenants applicable to Metavante’s credit facilities. EBITDA, as defined in the financial covenants, also excludes certain non-cash charges, such as impairment charges and stock option expense.
Adjusted EBITDA is defined as EBITDA excluding costs related to the separation from Marshall & Ilsley Corporation and impairment charges recorded in the fourth quarter of 2007. Metavante’s definition of EBITDA and adjusted EBITDA may differ from definitions used by other companies.
Cash Net Income and Adjusted Cash Net Income
Metavante’s management defines “cash net income” as net income before (1) stock-based compensation expense, net of tax, and (2) the amortization of intangible assets resulting from business acquisitions, net of tax. Adjusted cash net income excludes the items described above as well as the costs related to the separation from Marshall & Ilsley Corporation and the impairment charges recorded in the fourth quarter of 2007. Metavante’s management uses cash net income and adjusted cash net income to assess business performance and believes that it is useful for evaluating performance against peer companies within its industry, as well as providing investors additional transparency to a financial measure used by management in its financial and operational decision-making. Metavante’s definition of cash net income and adjusted cash net income may differ from definitions used by other companies.
Free Cash Flow
Metavante’s management defines free cash flow as cash provided by operating activities less capital expenditures. Metavante’s management believes that free cash flow provides useful information to investors regarding Metavante’s ability to generate cash from business operations that is available for acquisitions and other investments, and debt service. Metavante’s definition of free cash flow may differ from definitions used by other companies.
Adjusted Net Income
Metavante’s management defines “adjusted net income” as income excluding costs related to the separation from Marshall & Ilsley Corporation and impairment charges recorded in the fourth quarter of 2007. Metavante’s management believes that adjusted net income is meaningful to investors because it is an indicator of the ongoing operating performance of Metavante’s business. Metavante’s definition of adjusted net income may be different from definitions used by other companies.
9