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: | ||
x | 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)) | |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | ||
Emerging growth company o | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o |
Exhibit | Description | |
99.1 | Press release of Fidelity National Information Services, Inc. dated April 30, 2019 regarding financial results for the three months ended March 31, 2019. |
Fidelity National Information Services, Inc. | ||||
Date: April 30, 2019 | By: | /s/ James W. Woodall | ||
Name: | James W. Woodall | |||
Title: | Corporate Executive Vice President and Chief Financial Officer | |||
Fidelity National Information Services, Inc. | ||||
Date: April 30, 2019 | By: | /s/ Katy T. Thompson | ||
Name: | Katy T. Thompson | |||
Title: | Corporate Senior Vice President and Chief Accounting Officer |
• | GAAP revenue decreased 0.5 percent; organic revenue increased 5.1 percent |
• | Diluted EPS of $0.45; Adjusted EPS increased 9.3 percent to $1.64 |
• | Company raises full-year organic revenue growth guidance |
• | Integrated Financial Solutions (IFS): |
• | Global Financial Solutions (GFS): |
• | Corporate / Other: |
• | Consolidated GAAP revenue increase of 0.0 to 0.5 percent |
• | Net earnings margin expansion of 210 to 350 bps |
• | Diluted EPS of $3.15 to $3.55 |
• | Consolidated organic revenue increase of 4.0 to 4.5 percent |
• | Adjusted EBITDA margin expansion of 150 to 200 bps |
• | Adjusted EPS of $7.35 to $7.55 |
• | the risk that the Worldpay transaction will not be completed or will not provide the expected benefits, or that we will not be able to achieve the cost or revenue synergies anticipated; |
• | the risk that the integration of FIS and Worldpay will be more difficult, time-consuming or expensive than anticipated; |
• | the risk of customer loss or other business disruption in connection with the Worldpay transaction, or of the loss of key employees; |
• | the possible occurrence of an event, change or other circumstance that would give rise to the termination of the merger agreement; |
• | the fact that unforeseen liabilities of FIS or Worldpay may exist; |
• | 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 and cybersecurity laws and 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 or employee error in monitoring our software and platforms may result in the corruption or loss of data or customer information, interruption of business operations, outages, 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 the decreasing number of community banks in the U.S., the development of new disruptive technologies competing with one or more of our solutions, increasing presence of international competitors in the U.S. market and the entry into the market by global banks and global companies with respect to certain competitive solutions, each of which may have the impact of unbundling individual solutions from a comprehensive suite of solutions we provide to many of our customers; |
• | the failure to innovate in order to keep up with new emerging technologies, which could impact our solutions and our ability to attract new, or retain existing, customers; |
• | the failure to meet financial goals to grow the business in Brazil after the unwinding of the Brazilian Venture; |
• | the risks of reduction in revenue from the loss of existing and/or potential customers in Brazil after the unwinding of the Brazilian Venture; |
• | an operational or natural disaster at one of our major operations centers; and |
• | other risks detailed in the “Risk Factors” and other sections of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and in our other filings with the Securities and Exchange Commission. |
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 months ended March 31, 2019 and 2018 |
Exhibit B | Condensed Consolidated Balance Sheets - Unaudited as of March 31, 2019 and December 31, 2018 |
Exhibit C | Condensed Consolidated Statements of Cash Flows - Unaudited for the three months ended March 31, 2019 and 2018 |
Exhibit D | Supplemental Non-GAAP Financial Information - Unaudited for the three months ended March 31, 2019 and 2018 |
Exhibit E | Supplemental GAAP to Non-GAAP Reconciliations - Unaudited for the three months ended March 31, 2019 and 2018 |
Exhibit F | Supplemental GAAP to Non-GAAP Reconciliations on Guidance - Unaudited for the year ended December 31, 2019 |
Three months ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Revenue | $ | 2,057 | $ | 2,066 | |||
Cost of revenue | 1,381 | 1,414 | |||||
Gross profit | 676 | 652 | |||||
Selling, general and administrative expenses | 361 | 358 | |||||
Operating income | 315 | 294 | |||||
Other income (expense): | |||||||
Interest expense, net | (75 | ) | (72 | ) | |||
Other income (expense), net | (52 | ) | 3 | ||||
Total other income (expense), net | (127 | ) | (69 | ) | |||
Earnings before income taxes and equity method investment earnings (loss) | 188 | 225 | |||||
Provision (benefit) for income taxes | 32 | 34 | |||||
Equity method investment earnings (loss) | (7 | ) | (1 | ) | |||
Net earnings | 149 | 190 | |||||
Net (earnings) loss attributable to noncontrolling interest | (1 | ) | (8 | ) | |||
Net earnings attributable to FIS common stockholders | $ | 148 | $ | 182 | |||
Net earnings per share-basic attributable to FIS common stockholders | $ | 0.46 | $ | 0.55 | |||
Weighted average shares outstanding-basic | 323 | 330 | |||||
Net earnings per share-diluted attributable to FIS common stockholders | $ | 0.45 | $ | 0.54 | |||
Weighted average shares outstanding-diluted | 326 | 334 |
Exhibit B | |||||||
March 31, | December 31, | ||||||
2019 | 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 576 | $ | 703 | |||
Settlement deposits | 666 | 700 | |||||
Trade receivables, net | 1,451 | 1,472 | |||||
Contract assets | 123 | 123 | |||||
Settlement receivables | 346 | 281 | |||||
Other receivables | 150 | 166 | |||||
Prepaid expenses and other current assets | 299 | 288 | |||||
Total current assets | 3,611 | 3,733 | |||||
Property and equipment, net | 556 | 587 | |||||
Goodwill | 13,544 | 13,545 | |||||
Intangible assets, net | 3,019 | 3,132 | |||||
Computer software, net | 1,777 | 1,795 | |||||
Other noncurrent assets | 1,028 | 503 | |||||
Deferred contract costs, net | 538 | 475 | |||||
Total assets | $ | 24,073 | $ | 23,770 | |||
Liabilities and Equity | |||||||
Current liabilities: | |||||||
Accounts payable, accrued and other liabilities | $ | 1,068 | $ | 1,099 | |||
Settlement payables | 946 | 972 | |||||
Deferred revenue | 854 | 739 | |||||
Short-term borrowings | 600 | 267 | |||||
Current portion of long-term debt | 53 | 48 | |||||
Total current liabilities | 3,521 | 3,125 | |||||
Long-term debt, excluding current portion | 8,562 | 8,670 | |||||
Deferred income taxes | 1,351 | 1,360 | |||||
Other long-term liabilities | 681 | 326 | |||||
Deferred revenue | 55 | 67 | |||||
Total liabilities | 14,170 | 13,548 | |||||
Equity: | |||||||
FIS stockholders’ equity: | |||||||
Preferred stock $0.01 par value | — | — | |||||
Common stock $0.01 par value | 4 | 4 | |||||
Additional paid in capital | 10,844 | 10,800 | |||||
Retained earnings | 4,558 | 4,528 | |||||
Accumulated other comprehensive earnings (loss) | (427 | ) | (430 | ) | |||
Treasury stock, at cost | (5,083 | ) | (4,687 | ) | |||
Total FIS stockholders’ equity | 9,896 | 10,215 | |||||
Noncontrolling interest | 7 | 7 | |||||
Total equity | 9,903 | 10,222 | |||||
Total liabilities and equity | $ | 24,073 | $ | 23,770 |
Exhibit C | |||||||
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net earnings | $ | 149 | $ | 190 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 368 | 352 | |||||
Amortization of debt issue costs | 4 | 5 | |||||
Loss (gain) on sale of businesses and investments | 6 | (7 | ) | ||||
Stock-based compensation | 19 | 20 | |||||
Deferred income taxes | (10 | ) | (14 | ) | |||
Net changes in assets and liabilities, net of effects from acquisitions and foreign currency: | |||||||
Trade and other receivables | 13 | 44 | |||||
Contract assets | (1 | ) | 2 | ||||
Settlement activity | (56 | ) | 2 | ||||
Prepaid expenses and other assets | (117 | ) | (43 | ) | |||
Deferred contract costs | (106 | ) | (65 | ) | |||
Deferred revenue | 110 | 69 | |||||
Accounts payable, accrued liabilities and other liabilities | (85 | ) | (201 | ) | |||
Net cash provided by operating activities | 294 | 354 | |||||
Cash flows from investing activities: | |||||||
Additions to property and equipment | (37 | ) | (54 | ) | |||
Additions to computer software | (108 | ) | (118 | ) | |||
Net proceeds from sale of businesses and investments | 43 | 49 | |||||
Other investing activities, net | (41 | ) | (4 | ) | |||
Net cash provided by (used in) investing activities | (143 | ) | (127 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings | 5,952 | 1,971 | |||||
Repayment of borrowings and other financing obligations | (5,754 | ) | (1,711 | ) | |||
Proceeds from exercise of stock options | 62 | 98 | |||||
Treasury stock activity | (423 | ) | (424 | ) | |||
Dividends paid | (113 | ) | (106 | ) | |||
Other financing activities, net | 1 | (1 | ) | ||||
Net cash provided by (used in) financing activities | (275 | ) | (173 | ) | |||
Effect of foreign currency exchange rate changes on cash | (3 | ) | 6 | ||||
Net increase (decrease) in cash and cash equivalents | (127 | ) | 60 | ||||
Cash and cash equivalents, at beginning of period | 703 | 665 | |||||
Cash and cash equivalents, at end of period | $ | 576 | $ | 725 |
Three months ended March 31, 2018 | |||||||||||||||
Integrated Financial Solutions | Global Financial Solutions | Corporate and Other | Consolidated | ||||||||||||
Revenue | $ | 1,061 | $ | 927 | $ | 78 | $ | 2,066 | |||||||
Non-GAAP adjustments: | |||||||||||||||
Acquisition deferred revenue adjustment (1) | — | — | 2 | 2 | |||||||||||
Adjusted revenue | $ | 1,061 | $ | 927 | $ | 80 | $ | 2,068 |
(1) | See note (3) to Exhibit E. |
Exhibit D (continued) | ||||||||||||||||||||||||||
Three months ended March 31, | ||||||||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||||||||
Constant | ||||||||||||||||||||||||||
Currency | Adjusted | In Year | Adjusted | Organic | ||||||||||||||||||||||
Revenue | FX | Revenue | Revenue | Adjustments (1) | Base | Growth | ||||||||||||||||||||
Integrated Financial Solutions | $ | 1,129 | $ | 1 | $ | 1,130 | $ | 1,061 | $ | (8 | ) | $ | 1,053 | 7.3 | % | |||||||||||
Global Financial Solutions | 863 | 25 | 888 | 927 | (60 | ) | 867 | 2.4 | % | |||||||||||||||||
Corporate and Other | 65 | — | 65 | 80 | (18 | ) | 62 | 4.1 | % | |||||||||||||||||
Total | $ | 2,057 | $ | 26 | $ | 2,083 | $ | 2,068 | $ | (86 | ) | $ | 1,982 | 5.1 | % |
(1) | In year adjustments primarily include removing revenue from the Certegy Check Services business unit in North America and the Reliance Trust Company of Delaware divestitures and the unwinding of the Brazilian Venture. |
Exhibit D (continued) | |||||||
Three months ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Net cash provided by operating activities | $ | 294 | $ | 354 | |||
Non-GAAP adjustments: | |||||||
Acquisition, integration and other payments (1) | 44 | 27 | |||||
Tax payments on divestitures (2) | — | 19 | |||||
Settlement activity | 56 | (2 | ) | ||||
Adjusted cash flows from operations | 394 | 398 | |||||
Capital expenditures | (145 | ) | (172 | ) | |||
Free cash flow | $ | 249 | $ | 226 |
(1) | Adjusted cash flows from operations and free cash flow for the three months ended March 31, 2019 and 2018 exclude cash payments for certain acquisition, integration and other costs, net of related tax impact. The related tax impact totaled $10 million and $7 million for the three months ended March 31, 2019 and 2018, respectively. |
(2) | Adjusted cash flows from operations and free cash flow exclude tax payments made in 2018 related to the sale of Capco consulting business and risk and compliance consulting business recognized during 2017. |
Three months ended | ||||||||
March 31, | ||||||||
2019 | 2018 | |||||||
Net earnings attributable to FIS common stockholders | $ | 148 | $ | 182 | ||||
Provision (benefit) for income taxes | 32 | 34 | ||||||
Interest expense, net | 75 | 72 | ||||||
Other, net | 60 | 6 | ||||||
Operating income, as reported | 315 | 294 | ||||||
FIS non-GAAP adjustments: | ||||||||
Depreciation and amortization (1) | 368 | 352 | ||||||
Acquisition, integration and other costs (2) | 46 | 57 | ||||||
Acquisition deferred revenue adjustment (3) | — | 2 | ||||||
Adjusted EBITDA | $ | 729 | $ | 705 |
Three months ended | ||||||||
March 31, | ||||||||
2019 | 2018 | |||||||
Earnings before income taxes and equity method investment earnings (loss) | $ | 188 | $ | 225 | ||||
Provision (benefit) for income taxes | 32 | 34 | ||||||
Equity method investment earnings (loss) | (7 | ) | (1 | ) | ||||
Net (earnings) loss attributable to noncontrolling interest | (1 | ) | (8 | ) | ||||
Net earnings attributable to FIS common stockholders | 148 | 182 | ||||||
FIS non-GAAP adjustments: | ||||||||
Depreciation and amortization (1) | 368 | 352 | ||||||
Acquisition, integration and other costs (2) | 100 | 57 | ||||||
Acquisition deferred revenue adjustment (3) | — | 2 | ||||||
Loss (gain) on sale of businesses and investments (4) | 6 | (3 | ) | |||||
Equity method investment earnings (loss) (5) | 7 | — | ||||||
Provision for income taxes on non-GAAP adjustments | (94 | ) | (90 | ) | ||||
Total non-GAAP adjustments | 387 | 318 | ||||||
Adjusted net earnings, net of tax | $ | 535 | $ | 500 | ||||
Net earnings per share - diluted attributable to FIS common stockholders | $ | 0.45 | $ | 0.54 | ||||
FIS non-GAAP adjustments: | ||||||||
Depreciation and amortization (1) | 1.13 | 1.05 | ||||||
Acquisition, integration and other costs (2) | 0.31 | 0.17 | ||||||
Acquisition deferred revenue adjustment (3) | — | 0.01 | ||||||
Loss (gain) on sale of businesses and investments (4) | 0.02 | (0.01 | ) | |||||
Equity method investment earnings (loss) (5) | 0.02 | — | ||||||
Provision for income taxes on non-GAAP adjustments | (0.29 | ) | (0.27 | ) | ||||
Adjusted net earnings per share - diluted attributable to FIS common stockholders | $ | 1.64 | $ | 1.50 | ||||
Weighted average shares outstanding-diluted | 326 | 334 |
(1) | This item represents the impact of depreciation and amortization expense. The Company has excluded the impact of depreciation of fixed assets and amortization of intangibles as such amounts can be significantly impacted by the timing and/or size of acquisitions. Although the Company excludes these amounts from its non-GAAP expenses, the Company believes that it is important for investors to understand that such tangible and intangible assets contribute to revenue generation. Depreciation and amortization of assets, including those that relate to past acquisitions, will recur in future periods until such assets have been fully depreciated or amortized. Any future acquisitions may result in the depreciation and/or amortization of future assets. Within the depreciation and amortization item, $195 million and $169 million for the three months ended March 31, 2019 and 2018, respectively, consist of depreciation and amortization of non-purchase accounting assets. The tax effects related to depreciation and amortization of non-purchase accounting assets are $37 million and $32 million for the three months ended March 31, 2019 and 2018, respectively. |
(2) | This item represents acquisition and integration costs primarily related to the potential acquisition of Worldpay and certain other costs including those associated with data center consolidation activities of $8 million in the first quarter of 2019. For the first quarter of 2018, this item represents acquisition and integration costs primarily related to the SunGard acquisition, and certain other costs. |
(3) | 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. The year ended December 31, 2018 was the final year impacted by this purchase accounting adjustment. |
(4) | This item represents the net pre-tax loss (gain) on sale of businesses and investments during the first quarter of 2019 and 2018. |
(5) | This item represents our equity method investment earnings or loss and is predominantly due to our equity ownership interest in Cardinal Holdings, LP. |
Year ended | |||||
December 31, 2019 | |||||
Low | High | ||||
Consolidated GAAP revenue increase/(decrease) | — | % | 0.5 | % | |
Estimated adjustments (1) | 4.0 | % | 4.0 | % | |
Consolidated organic revenue increase | 4.0 | % | 4.5 | % |
Year ended | |||||
December 31, 2019 | |||||
Low | High | ||||
Net earnings margin attributable to FIS common stockholders | 12.1 | % | 13.5 | % | |
Estimated adjustments (2) | 26.6 | % | 25.7 | % | |
Adjusted EBITDA margin | 38.7 | % | 39.2 | % | |
Year ended | |||||||
December 31, 2019 | |||||||
Low | High | ||||||
Net earnings per share - diluted attributable to FIS common stockholders | $ | 3.15 | $ | 3.55 | |||
Estimated adjustments (3) | 4.20 | 4.00 | |||||
Adjusted net earnings per share - diluted attributable to FIS common stockholders | $ | 7.35 | $ | 7.55 |
(1) | Estimated adjustments for the full-year 2018 needed to create a comparable base year for organic revenue increase/decrease include the addition of deferred revenue adjustments, and the subtraction of pre-divestiture revenue, in the applicable periods, associated with the divestitures of Reliance Trust Company of Delaware, Kingstar, Certegy Check Services in North America business unit and the unwinding of the Brazilian Venture. Estimated adjustments for the full-year 2019 include the addition or subtraction of revenue associated with foreign currency translation. The effect of the foregoing estimated adjustments are shown on a combined basis. |
(2) | Estimated adjustments for the full-year 2019 include acquisition, integration and other costs and other items. |
(3) | Estimated adjustments for the full-year 2019 include depreciation and amortization, acquisition, integration and other costs, equity method investment earnings (loss) and other items, net of tax impact. |