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Monday, October 27, 2008
Fidelity National Information Services Reports Revenue Growth of 25.4%; Organic Revenue Increases 9.4%
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JACKSONVILLE, Fla., Oct 27, 2008 /PRNewswire-FirstCall via COMTEX/ ----Fidelity National Information Services, Inc. (NYSE: FIS), a leading global provider of technology services to financial institutions, today announced consolidated financial results for the third quarter of 2008.
Consolidated revenue increased 25.4% to $893.8 million, including approximately $142.8 million in revenue from eFunds, which FIS acquired in September 2007. Excluding eFunds, organic revenue increased 9.4% over the comparable 2007 quarter. GAAP net earnings from continuing operations totaled $0.24 per share, compared to $0.68 per share in the third quarter of 2007, which included an after-tax gain of $0.58 from the sale of Covansys stock.
Non-GAAP adjusted net earnings from continuing operations for the third quarter of 2008 totaled $0.42 per share, compared to $0.31 in the prior year, an increase of 35.5%. Adjusted EBITDA increased 27.9% to $228.9 million compared to $179.0 million in the third quarter of 2007. The EBITDA margin improved to 25.6% compared to 25.1% in the prior-year quarter and increased sequentially from 23.1% in the second quarter of 2008. Pro forma free cash flow (cash from operations, adjusted for merger and integration costs, less capital expenditures) increased to $118.2 million in the third quarter of 2008. Pro forma free cash flow for the first nine months of 2008 totaled $209.3 million, or 102% of adjusted net earnings, compared with $41.5 million in the same period in the prior year.
"FIS has achieved consistent improvement in organic revenue growth, EBITDA margin and free cash flow throughout 2008, and we are very pleased with these results," stated William P. Foley, II, executive chairman of FIS. "Despite the increasingly challenging economic environment, we are reaffirming our previously communicated earnings guidance."
"FIS is executing to plan, despite persistent challenges in the marketplace," added Lee A. Kennedy, president and chief executive officer. "We continue to focus on the goals that we established early in the year, including driving higher organic revenue growth through market share gains and cross sales, reducing our overall cost structure, completing the eFunds integration, reducing capital expenditures and improving cash flow. We are making solid progress on each of these initiatives, as demonstrated by the strong results across all business lines."
FIS' operating results are presented in accordance with generally accepted accounting principles ("GAAP") and on an adjusted pro forma basis, which management believes may provide more meaningful comparisons with respect to our current operations between the periods presented. The adjusted results exclude the after-tax impact of merger and acquisition and integration expenses, LPS spin-off related costs, debt restructuring and other charges, gains (losses) on the sale of certain non-strategic assets and acquisition related amortization.
Divestitures and Discontinued Operations
During the first half of 2008, FIS completed the sale of two non-strategic businesses, FIS Credit Services and Certegy Gaming Services. The company also exited a small operation that provided services to the residential homebuilding market. On July 2, 2008, FIS completed the spin-off of Lender Processing Services, Inc., (NYSE: LPS). These businesses are reported as discontinued operations for the periods presented.
On October 13, 2008, FIS completed the previously announced sale of Certegy Australia, Ltd., and will report this business as a discontinued operation beginning in the fourth quarter of 2008. Certegy Australia provides retail lending services to consumers.
Supplemental Information
Consolidated third quarter revenue increased 25.4% to $893.8 million (including eFunds revenue of $142.8 million) compared to $712.8 million (including eFunds revenue of $26.6 from the acquisition date of September 12, 2007) in the prior year quarter. Excluding eFunds revenue from both periods, revenue increased 9.4% to $751.0 million, driven by 25.5% growth in International, 9.0% growth in Integrated Financial Solutions and 3.7% growth in Enterprise Solutions. Termination fees totaled $1.7 million in the third quarter of 2008, compared to $3.0 million in the third quarter of 2007.
The strong performance in International was driven by growth in FIS' core bank processing operation in Germany, new customer implementations, the company's Brazilian card processing joint venture and favorable currency rates, which benefitted revenue by $13.6 million. The increase in Integrated Financial Solutions was due to growth in core processing services, ebusiness solutions, card marketing programs and a $5.6 million year-to-date adjustment for pass-through interchange revenue. Excluding the interchange adjustment, Integrated Financial Solutions revenue increased approximately 7.2%.
Enterprise Solutions revenue, excluding eFunds, increased 3.7% to $240.1 million compared to the prior-year quarter and increased 5.6% compared to the second quarter of 2008. Increased software license sales and outsourced technology revenue more than offset a $6.9 million decline in retail check risk management revenue.
Adjusted EBITDA increased 27.9% to $228.9 million. The adjusted EBITDA margin increased 50 basis points to 25.6% compared to the third quarter of 2007, and increased 250 basis points compared to 23.1% in the second quarter of 2008. The improvement was driven by increasing profitability in the company's International business, efficiency gains and higher software license fees.
Corporate overhead expense totaled $23.7 million in the third quarter of 2008, compared to $15.6 million in the third quarter of 2007. The increase was driven by higher incentive compensation accruals and stock option expense.
Balance Sheet
During the quarter, FIS retired $200 million of secured 4.75% fixed rate notes. As of September 30, 2008, the company had $238.5 million in cash and cash equivalents and $2.6 billion in outstanding debt, of which $2.1 billion has been swapped to fixed interest rates. The effective interest rate on FIS total debt at September 30, 2008, was 5.5%.
Outlook
FIS reaffirmed its previously communicated full year 2008 earnings guidance as follows:
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 In addition, the company provided guidance for fourth quarter 2008 as follows: 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
Use of Non-GAAP Financial Information
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' 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.
Conference Call and Webcast
FIS will host a call with investors and analysts to discuss third quarter 2008 results on Monday, October 27, 2008, beginning at 5:00 p.m. Eastern daylight time. To register for the live event and to access a supplemental slide presentation, go to the Investor Relations section at www.fidelityinfoservices.com and click on "Events and Multimedia." A webcast replay will be available on FIS' Investor Relations website, and a telephone replay will be available through November 10, 2008, by dialing 800-475-6701 (USA) or 320-365-3844 (International). The access code will be 965579. To access a PDF version of this release and accompanying financial tables, go to http://www.investor.fidelityinfoservices.com.
About Fidelity National Information Services, Inc.
Fidelity National Information Services, Inc. (NYSE: FIS), a Fortune 500 company, is a leading provider of core processing for financial institutions; card issuer and transaction processing services; and outsourcing services to financial institutions and retailers. FIS has processing and technology relationships with 40 of the top 50 global banks, including nine of the top 10. FIS is a member of Standard and Poor's (S&P) 500(R) Index and has been ranked the number one overall financial technology provider in the world by American Banker and the research firm Financial Insights in the annual FinTech 100 rankings. Headquartered in Jacksonville, Fla., FIS maintains a strong global presence, serving more than 13,000 financial institutions in more than 80 countries worldwide. For more information on Fidelity National Information Services, please visit www.fidelityinfoservices.com.
Forward-Looking Statements
This press release 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.
FIS-e Fidelity National Information Services, Inc. Earnings Release Supplemental Financial Information October 27, 2008 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 Exhibit A FIDELITY NATIONAL INFORMATION SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED (In thousands, except per share data) Three months ended Nine months ended September 30, 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. Exhibit B FIDELITY NATIONAL INFORMATION SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) 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 Exhibit C FIDELITY NATIONAL INFORMATION SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (In thousands) 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 Exhibit D FIDELITY NATIONAL INFORMATION SERVICES, INC. SUPPLEMENTAL FINANCIAL INFORMATION - UNAUDITED (In thousands, except per share data) 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% Exhibit E FIDELITY NATIONAL INFORMATION SERVICES, INC. NON-GAAP FINANCIAL INFORMATION - UNAUDITED (In thousands, except per share data) 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% Exhibit E FIDELITY NATIONAL INFORMATION SERVICES, INC. RECONCILIATION OF PRO FORMA TO ADJUSTED PRO FORMA CASH FLOW MEASURES - UNAUDITED (In thousands) Quarter Ended Quarter Ended September 30, 2008 June 30, 2008 Pro Adj GAAP Adj Adjusted forma (1) Adj Pro forma Cash flows from operating activities: Net earnings (2) $43,623 $2,022 $45,645 $15,593 $28,862 $44,455 Adjustments to reconcile net earnings to net cash provided by operating activities: Non-cash adjustments 128,760 - 128,760 118,947 - 118,947 Working capital adjustments (3) (16,555) 8,560 (7,995) (43,039) 18,090 (24,949) Net cash provided by operating activities 155,828 10,582 166,410 91,501 46,952 138,453 Capital expenditures (48,163) - (48,163) (52,260) - (52,260) Net free cash flow $107,665 $10,582 $118,247 $39,241 $46,952 $86,193 Quarter Ended Quarter Ended September 30, 2007 June 30, 2007 Pro Adj Pro Adj forma (1) Adj Pro forma forma (1) Adj Pro forma Cash flows from operating activities: Net earnings (2) $177,551 $15,521 $193,072 $83,069 $17,541 $100,610 Adjustments to reconcile net earnings to net cash provided by operating activities: Non-cash adjustments (212,517) - (212,517) (6,481) - (6,481) Working capital adjustments (3) (13,236) 116,060 102,824 23,250 18,100 41,350 Net cash provided by operating activities (48,202) 131,581 83,379 99,838 35,641 135,479 Capital expenditures (81,213) - (81,213) (64,963) - (64,963) Net free cash flow $(129,415) $131,581 $2,166 $34,875 $35,641 $70,516 Quarter Ended Year to Date March 31, 2008 September 30, 2008 Pro Adj Pro Adj forma (1) Adj Pro forma forma (1) Adj Pro forma Cash flows from operating activities: Net earnings (2) $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 114,008 - 114,008 361,715 - 361,715 Working capital adjustments (3) (100,899) 46,340 (54,559) (160,493) 72,990 (87,503) Net cash provided by operating activities 28,548 54,610 83,158 275,877 112,144 388,021 Capital expenditures (78,250) - (78,250) (178,673) - (178,673) Net free cash flow $(49,702) $54,610 $4,908 $97,204 $112,144 $209,348 Quarter Ended Year to Date March 31, 2007 September 30, 2007 Pro Adj Pro Adj forma (1) Adj Pro forma forma (1) Adj Pro forma Cash flows from operating activities: Net earnings (2) $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 111,782 - 111,782 (107,216) - (107,216) Working capital adjustments (3) (111,715) 12,700 (99,015) (101,701) 146,860 45,159 Net cash provided by operating activities 886 31,510 32,396 52,522 198,732 251,254 Capital expenditures (63,611) - (63,611) (209,787) - (209,787) Net free cash flow $(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. Exhibit F FIDELITY NATIONAL INFORMATION SERVICES, INC. GAAP TO NON-GAAP RECONCILIATION - UNAUDITED (in thousands, except per share data) M&A Non-GAAP Restruc- Three GAAP turing Months Three Months And Purchase Ended Ended Integr- LPS Price September September 30, ation Spin Amort- 30, 2008 Costs Costs Subtotal ization 2008 (1) (3) (4) (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. See accompanying notes. Exhibit F FIDELITY NATIONAL INFORMATION SERVICES, INC. GAAP TO NON-GAAP RECONCILIATION - UNAUDITED (in thousands, except per share data) M&A Restruct GAAP -uring Corporate Nine Months And Costs Ended Integr Non- LPS September 30, -ation Disc Spin 2008 Costs(1) Ops(2) Costs(3) (Unaudited) Processing and services revenue $2,610,720 $- $- $- Cost of revenues 1,984,295 (25,261) - - Gross profit 626,425 25,261 - - Selling, general and administrative 308,846 (21,016) (18,118) (9,338) Research and development costs 73,308 - - - Operating income 244,271 46,277 18,118 9,338 Other income (expense): Interest income 5,373 - - - Interest expense (132,415) 2,722 - 12,371 Other income, net (101) - - - Total other income (expense) (127,143) 2,722 - 12,371 Earnings before income taxes, equity in (losses) earnings of unconsolidated entities, minority interest, and discontinued operations 117,128 48,999 18,118 21,709 Provision (benefit) for income taxes 37,481 17,450 5,538 7,268 Earnings before equity in (losses) earnings of unconsolidated entities, minority interest, and discontinued operations 79,647 31,549 12,580 14,441 Equity in earnings (losses) of unconsolidated entities (157) - - - Minority interest income (expense) (2,867) - - - Net earnings from continuing operations $76,623 $31,549 $12,580 $14,441 Net earnings per share - diluted from continuing operations * $0.39 $0.16 $0.06 $0.07 Weighted average shares outstanding - diluted 194,261 194,261 194,261 194,261 Non-GAAP Purchase Nine Months Price Ended Amorti- September 30, Subtotal zation (4) 2008 (Unaudited) Processing and services revenue $2,610,720 $- $2,610,720 Cost of revenues 1,959,034 (107,341) 1,851,693 Gross profit 651,686 107,341 759,027 Selling, general and administrative 260,374 - 260,374 Research and development costs 73,308 - 73,308 Operating income 318,004 107,341 425,345 Other income (expense): Interest income 5,373 - 5,373 Interest expense (117,322) - (117,322) Other income, net (101) - (101) Total other income (expense) (112,050) - (112,050) Earnings before income taxes, equity in (losses) earnings of unconsolidated entities, minority interest, and discontinued operations 205,954 107,341 313,295 Provision (benefit) for income taxes 67,737 36,600 104,337 Earnings before equity in (losses) earnings of unconsolidated entities, minority interest, and discontinued operations 138,217 70,741 208,958 Equity in earnings (losses) of unconsolidated entities (157) - (157) Minority interest income (expense) (2,867) - (2,867) Net earnings from continuing operations $135,193 $70,741 $205,934 Net earnings per share - diluted from continuing operations * $0.70 $0.36 $1.06 Weighted average shares outstanding - diluted 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. See accompanying notes. Exhibit F FIDELITY NATIONAL INFORMATION SERVICES, INC. GAAP TO NON-GAAP RECONCILIATION - UNAUDITED (in thousands, except per share data) M&A GAAP Restruct Three -uring Corporate Months And Costs Gain Interest Ended Integr- Non- On Sale Expense September 30, ation Disc Covansys Allocation 2007 Costs (1) Ops (2) Stock (5) (6) (Unaudited) Processing and services revenue $712,812 $- $- $- $- Cost of revenues 562,998 (15,133) - - - Gross profit 149,814 15,133 - - - Selling, general and administrative 72,387 (4,322) (5,697) - - Research and development costs 17,579 - - - - Operating income 59,848 19,455 5,697 - - Other income (expense): Interest income 719 - - - - Interest expense (37,856) - - - 16,122 Gain on sale of Covansys stock 182,444 - - (182,444) - Other income, net 3,327 (2,781) - - - Total other income (expense) 148,634 (2,781) - (182,444) 16,122 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 Provision (benefit) for income taxes 75,238 6,169 2,153 (67,505) 6,236 Earnings before equity in (losses) earnings of unconsolidated entities, minority interest, and discontinued operations 133,244 10,505 3,544 (114,939) 9,886 Equity in earnings (losses) of unconsolidated entities 86 - - - - Minority interest income (expense) 41 - - - - Net earnings from continuing operations $133,371 $10,505 $3,544 $(114,939) $9,886 Net earnings per share - diluted from continuing operations* $0.68 $0.05 $0.02 $(0.58) $0.05 Weighted average shares outstanding - diluted 196,649 196,649 196,649 196,649 196,649 Non-GAAP Purchase Three Months Price Ended Amortization September 30, Subtotal (4) 2007 (Unaudited) Processing and services revenue $712,812 $- $712,812 Cost of revenues 547,865 (29,574) 518,291 Gross profit 164,947 29,574 194,521 Selling, general and administrative 62,368 - 62,368 Research and development costs 17,579 - 17,579 Operating income 85,000 29,574 114,574 Other income (expense): Interest income 719 - 719 Interest expense (21,734) - (21,734) Gain on sale of Covansys stock - - - Other income, net 546 - 546 Total other income (expense) (20,469) - (20,469) Earnings before income taxes, equity in (losses) earnings of unconsolidated entities, minority interest, and discontinued operations 64,531 29,574 94,105 Provision (benefit) for income taxes 22,291 10,536 32,827 Earnings before equity in (losses) earnings of unconsolidated entities, minority interest, and discontinued operations 42,240 19,038 61,278 Equity in earnings (losses) of unconsolidated entities 86 - 86 Minority interest income (expense) 41 - 41 Net earnings from continuing operations $42,367 $19,038 $61,405 Net earnings per share - diluted from continuing operations* $0.22 $0.10 $0.31 Weighted average shares outstanding - diluted 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. See accompanying notes. Exhibit F FIDELITY NATIONAL INFORMATION SERVICES, INC. GAAP TO NON-GAAP RECONCILIATION - UNAUDITED (in thousands, except per share data) M&A GAAP Restruct Nine Months -uring Corporate Ended And Costs September 30, Integration Non-Disc 2007 Costs (1) Ops (2) (Unaudited) Processing and services revenue $2,085,694 $- $- Cost of revenues 1,624,463 (22,289) - Gross profit 461,231 22,289 - Selling, general and administrative 216,612 (4,322) (18,613) Research and development costs 50,002 - - Operating income 194,617 26,611 18,613 Other income (expense): Interest income 1,093 - - Interest expense (152,863) - - Gain on sale of Covansys stock 274,488 - - Other income, net 4,755 (2,781) - Total other income (expense) 127,473 (2,781) - Earnings before income taxes, equity in (losses) earnings of unconsolidated entities, minority interest, and discontinued operations 322,090 23,830 18,613 Provision (benefit) for income taxes 113,802 8,824 7,036 Earnings before equity in (losses) earnings of unconsolidated entities, minority interest, and discontinued operations 208,288 15,006 11,577 Equity in earnings (losses) of unconsolidated entities 2,824 - - Minority interest income (expense) 369 - - Net earnings from continuing operations $211,481 $15,006 $11,577 Net earnings per share - diluted from continuing operations* $1.08 $0.08 $0.06 Weighted average shares outstanding - diluted 196,480 196,480 196,480 Gain On Sale Interest Debt Covansys Expense Restructure Stock (5) Allocation (6) Charge (7) Processing and services revenue $- $- $- Cost of revenues - - - Gross profit - - - Selling, general and administrative - - - Research and development costs - - - Operating income - - - Other income (expense): Interest income - - - Interest expense - 55,800 27,164 Gain on sale of Covansys stock (274,488) - - Other income, net - - - Total other income (expense) (274,488) 55,800 27,164 Earnings before income taxes, equity in (losses) earnings of unconsolidated entities, minority interest, and discontinued operations (274,488) 55,800 27,164 Provision (benefit) for income taxes (101,561) 21,584 10,105 Earnings before equity in (losses) earnings of unconsolidated entities, minority interest, and discontinued operations (172,927) 34,216 17,059 Equity in earnings (losses) of unconsolidated entities - - - Minority interest income (expense) - - - Net earnings from continuing operations $(172,927) $34,216 $17,059 Net earnings per share - diluted from continuing operations* $(0.88) $0.17 $0.09 Weighted average shares outstanding - diluted 196,480 196,480 196,480 Non-GAAP Purchase Nine Months Price Ended September 30, Subtotal Amortization (4) 2007 (Unaudited) Processing and services revenue $2,085,694 $- $2,085,694 Cost of revenues 1,602,174 (85,868) 1,516,306 Gross profit 483,520 85,868 569,388 Selling, general and administrative 193,677 - 193,677 Research and development costs 50,002 - 50,002 Operating income 239,841 85,868 325,709 Other income (expense): Interest income 1,093 - 1,093 Interest expense (69,899) - (69,899) Gain on sale of Covansys stock - - - Other income, net 1,974 - 1,974 Total other income (expense) (66,832) - (66,832) Earnings before income taxes, equity in (losses) earnings of unconsolidated entities, minority interest, and discontinued operations 173,009 85,868 258,877 Provision (benefit) for income taxes 59,790 30,367 90,157 Earnings before equity in (losses) earnings of unconsolidated entities, minority interest, and discontinued operations 113,219 55,501 168,720 Equity in earnings (losses) of unconsolidated entities 2,824 - 2,824 Minority interest income (expense) 369 - 369 Net earnings from continuing operations $116,412 $55,501 $171,913 Net earnings per share - diluted from continuing operations* $0.59 $0.28 $0.87 Weighted average shares outstanding - diluted 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. See accompanying notes.
Notes to Unaudited - Supplemental GAAP to Non-GAAP Reconciliation for the Three and Nine-Month Periods ended September 30, 2008
The adjustments are as follows: (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.
SOURCE Fidelity National Information Services, Inc.
http://www.fidelityinfoservices.com
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Some mutual funds want you to pay for the privilege of them (or your investment adviser) taking your money to invest. It's called a load, and it works like a cover charge to get into a nightclub. Luckily, there are such things as no-load funds. As the name implies, shares of these funds are sold without a fee paid to a broker or investment advisor.
The entire amount you invest in no-load funds goes to work for your returns. On the other hand, with load funds, right off the bat you're charged commission (not to mention other fees incurred over the life of the investment). Let's say, for example, you invest $25,000 into a load fund that charges a 5% commission. This costs you $1,250 off the top, bringing your actual investment down to only $23,750.
The often-cited horse race analogy argues against investing in load funds. Here's the logic behind it: Would you place a bet on a horse that had to start a race 200 yards behind the others? Well, maybe you would if you got a tip from a sketchy, trench coat-clad man in a dark alley. However, under most circumstances, it's not smart to put your money on that handicapped horse.
But some argue that at times that man in the trench coat (aka your broker) knows more about the horses than you do, and has a better shot at picking a winner. Also, sometimes these fees are unavoidable because some funds are available only through investment advisers.
Cost-benefit analysis can help determine when a load fund is worth it (in other words, when it will score you a load) and when it is better to "do it yourself" and avoid the fees. Load-fund fees range depending on share class and can cover a variety of costs, such as paper work and fund management.
