Exhibit 99.1
For More Information:
| | | | | |
| | | Michelle Kersch, 904.854.5043
Senior Vice President
Corporate Communications
Fidelity National Information Services
michelle.kersch@fnf.com
| | Mary Waggoner, 904.854.3282
Senior Vice President
Investor Relations
Fidelity National Information Services
mary.waggoner@fnf.com |
Fidelity National Information Services Provides Full Year 2006 Outlook
Jacksonville, Florida — February 15, 2006 —Fidelity National Information Services, Inc. (NYSE: FIS) announced today that it expects pro forma full year 2006 diluted earnings per share of $1.50 to $1.55, compared to $1.28 pro forma diluted earnings per share in 2005, and pro forma diluted cash earnings per share of $2.11 to $2.17, compared to $1.92 pro forma diluted cash earnings per share in 2005. The company’s outlook is based on the following assumptions:
| | • | | Revenue growth of 4% to 6% over $3.9 billion combined revenue in 2005. |
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| | • | | EBITDA growth of 9% to 11% over $1.0 billion pro forma combined EBITDA in 2005. |
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| | • | | Capital expenditures of approximately $225 million to $275 million. |
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| | • | | Average weighted diluted common shares outstanding of approximately 197 million. |
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| | • | | An effective tax rate of approximately 38.3%. |
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| | • | | Free cash flow of approximately $475 million to $525 million. |
The merger between Fidelity National Information Services, Inc. and Certegy Inc. was effective February 1, 2006. Projected pro forma results for 2006 will include full year 2006 results for both companies, and will exclude all merger related expenses and
costs incurred in conjunction with Certegy’s previously announced potential joint venture in Brazil. Also excluded will be approximately $24.5 million pre-tax expense associated with the vesting of certain FIS performance based options issued in conjunction with the recapitalization and sale of minority interests by FIS in March 2005, as described in Certegy’s proxy statement filed with the Securities and Exchange Commission on December 22, 2005. On a GAAP basis, which will exclude January results for Certegy and include the aforementioned stock option expense and joint venture costs, the company expects full year 2006 diluted earnings per share of $1.39 to $1.44.
FIS presents its financial results in accordance with Generally Accepted Accounting Principles (“GAAP”). However, in order to provide the investment community with a more thorough means of evaluating the operating performance of its operations, FIS also reports several non-GAAP measures, including earnings before interest, taxes, depreciation and amortization (“EBITDA”), net earnings plus depreciation and amortization less capital expenditures (“Free Cash Flow”) and net earnings plus other intangible amortization, net of income tax (“Cash Earnings”). 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. Reconciliations between the aforementioned pro forma, non-GAAP and GAAP results are provided in the attachments to this press release.
FIS will host an investor and analyst meeting today at 8:30 a.m. EST. William P. Foley II, chairman, and Lee A. Kennedy, chief executive officer, will host the meeting. To listen to the broadcast and view the slide presentation, please log on to http:www.fidelityinfoservices.com, and click on the link under the Investor Relations section at least 15 minutes prior to the start of the webcast. A replay of the webcast will be available on the company website shortly after the meeting ends until 5:00 p.m. EST March 14, 2006.
About Fidelity National Information Services, Inc.
Fidelity National Information Services, Inc. (NYSE:FIS) is a leading provider of core processing for financial institutions; card issuer and transaction processing services; mortgage loan processing and mortgage-related information products; and outsourcing
services to financial institutions, retailers, mortgage lenders and real estate professionals. FIS has processing and technology relationships with 35 of the top 50 global banks, including nine of the top ten. Nearly 50 percent of all U.S. residential mortgages are processed using FIS software. Headquartered in Jacksonville, Florida, FIS maintains a strong global presence, serving over 7,800 financial institutions and over 100,000 retailers in more than 60 countries worldwide. For more information on Fidelity National Information Services, please visit www.fidelityinfoservices.com. FIS is a majority-owned subsidiary of Fidelity National Financial Inc. (NYSE:FNF), number 261 on the Fortune 500. More information about FNF can be found atwww.fnf.com.
Forward-Looking Statements
This presentation contains statements related to future events and expectations, including FIS’s pro forma outlook for 2006 and the underlying assumptions, and as such, constitute forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the company to be different from those expressed or implied above. The Company expressly disclaims any duty to update or revise forward-looking statements. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to, the effects of governmental regulations, the economy, competition, the risk that the merger may fail to achieve beneficial synergies or that it may take longer than expected to do so, the effects of FIS’s substantial leverage, which may limit the funds available to make acquisitions and invest in its business, the risk of reduction in revenue from the elimination of existing and potential customers due to consolidation in the banking, retail and financial services industries, potential overdependence on a limited number of customers due to consolidation in the banking, retail and financial services industries, the risk of a downturn in the level of real estate activity, which would adversely affect certain of FIS’s businesses, failure to adapt to changes in technology or in the marketplace and other risks detailed from time to time in the Form 10-K and other reports and filings with the Securities and Exchange Commission.
SOURCE: Fidelity National Information Services
# # #
Appendix A- Historical Detail and Reconciliation of Non-GAAP Measures
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NOTE: | | The Adjustments Column represents pro forma adjustments relating to the merger transaction between CEY and FIS, the recapitalization transaction at FIS in March 2005 and certain 2004 FIS acquistions as if they occurred on January 1, 2004. FIS presents its financial results in accordance with Generally Accepted Accounting Principles (“GAAP”). However, in order to provide the investment community with a more thorough means of evaluating the operating performance of its operations, FNF also reports several non-GAAP measures, including earnings before interest, taxes, depreciation and amortization (“EBITDA”), net earnings plus depreciation and amortization less capital expenditures (“Free Cash Flow”) and net earnings plus other intangible amortization, net of income tax (“Cash Earnings”). 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. |
EBITDA Detail
| | | | | | | | | | | | | | | | | |
| 2005 YTD | | FIS | | | CEY | | | ADJ | | | Pro Forma | |
Net Earnings | | $ | 196,550 | | | $ | 105,514 | | | $ | (53,923 | ) | | $ | 248,141 | |
+ Interest Expense | | | 126,778 | | | | 12,832 | | | | 21,031 | | | | 160,641 | |
+ Minority Interest | | | 4,450 | | | | 117 | | | | — | | | | 4,567 | |
+ Income Taxes | | | 116,085 | | | | 68,927 | | | | (31,942 | ) | | | 153,070 | |
+ Depreciation/Amort | | | 299,637 | | | | 51,858 | | | | 82,279 | | | | 433,774 | |
- Interest Income | | | (6,392 | ) | | | (2,435 | ) | | | — | | | | (8,827 | ) |
- Equity in (Earnings) Loss of Non-Consolidated Entites, net of tax | | | (5,029 | ) | | | — | | | | — | | | | (5,029 | ) |
- Other (Income) Expense | | | 4,237 | | | | — | | | | — | | | | 4,237 | |
| | | |
EBITDA | | $ | 736,316 | | | $ | 236,813 | | | $ | 17,445 | | | $ | 990,574 | |
| | | |
| | | | | | | | | | | | | | | | | |
| 2004 YTD | | FIS | | | CEY | | | ADJ | | | Pro Forma | |
Net Earnings | | $ | 189,417 | | | $ | 97,678 | | | $ | (110,097 | ) | | $ | 176,998 | |
+ Interest Expense | | | 4,496 | | | | 12,914 | | | | 88,475 | | | | 105,885 | |
+ Minority Interest | | | 3,673 | | | | — | | | | 53 | | | | 3,726 | |
+ Income Taxes | | | 118,343 | | | | 59,111 | | | | (67,830 | ) | | | 109,624 | |
+ Depreciation/Amort | | | 238,400 | | | | 47,449 | | | | 130,114 | | | | 415,963 | |
- Interest Income | | | (1,232 | ) | | | (1,207 | ) | | | — | | | | (2,439 | ) |
- Equity in (Earnings) Loss of Non-Consolidated Entites, net of tax | | | 3,308 | | | | — | | | | — | | | | 3,308 | |
- Other (Income) Expense | | | (18,175 | ) | | | — | | | | — | | | | (18,175 | ) |
| | | |
EBITDA | | $ | 538,230 | | | $ | 215,945 | | | $ | 40,715 | | | $ | 794,890 | |
| | | |
EBITDA Margin
| | | | | | | | | | | | | | | | | |
| 2005 YTD | | FIS | | | CEY | | | ADJ | | | Pro Forma | |
EBITDA | | $ | 736,316 | | | $ | 236,813 | | | $ | 17,445 | | | $ | 990,574 | |
Revenue | | $ | 2,766,085 | | | $ | 1,117,141 | | | $ | — | | | $ | 3,883,226 | |
EBITDA Margin | | | 26.6 | % | | | 21.2 | % | | | | | | | 25.5 | % |
| | | | | | | | | | | | | | | | | |
| 2004 YTD | | FIS | | | CEY | | | ADJ | | | Pro Forma | |
EBITDA | | $ | 538,230 | | | $ | 215,945 | | | $ | 40,715 | | | $ | 794,890 | |
Revenue | | $ | 2,331,527 | | | $ | 1,039,506 | | | $ | 318,426 | | | $ | 3,689,459 | |
EBITDA Margin | | | 23.1 | % | | | 20.8 | % | | | | | | | 21.5 | % |
EBIT Detail
| | | | | | | | | | | | | | | | | |
| 2005 YTD | | FIS | | | CEY | | | ADJ | | | Pro Forma | |
Net Earnings | | $ | 196,550 | | | $ | 105,514 | | | $ | (53,923 | ) | | $ | 248,141 | |
+ Interest Expense | | | 126,778 | | | | 12,832 | | | | 21,031 | | | | 160,641 | |
+ Minority Interest | | | 4,450 | | | | 117 | | | | — | | | | 4,567 | |
+ Income Taxes | | | 116,085 | | | | 68,927 | | | | (31,942 | ) | | | 153,070 | |
- Interest Income | | | (6,392 | ) | | | (2,435 | ) | | | — | | | | (8,827 | ) |
- Equity in (Earnings) Loss of Non-Consolidated Entites, net of tax | | | (5,029 | ) | | | — | | | | — | | | | (5,029 | ) |
- Other (Income) Expense | | | 4,237 | | | | — | | | | — | | | | 4,237 | |
| | | |
EBIT | | $ | 436,679 | | | $ | 184,955 | | | $ | (64,834 | ) | | $ | 556,800 | |
| | | |
| | | | | | | | | | | | | | | | | |
| 2004 YTD | | FIS | | | CEY | | | ADJ | | | Pro Forma | |
Net Earnings | | $ | 189,417 | | | $ | 97,678 | | | $ | (110,097 | ) | | $ | 176,998 | |
+ Interest Expense | | | 4,496 | | | | 12,914 | | | | 88,475 | | | | 105,885 | |
+ Minority Interest | | | 3,673 | | | | — | | | | 53 | | | | 3,726 | |
+ Income Taxes | | | 118,343 | | | | 59,111 | | | | (67,830 | ) | | | 109,624 | |
- Interest Income | | | (1,232 | ) | | | (1,207 | ) | | | — | | | | (2,439 | ) |
- Equity in (Earnings) Loss of Non-Consolidated Entites, net of tax | | | 3,308 | | | | — | | | | — | | | | 3,308 | |
- Other (Income) Expense | | | (18,175 | ) | | | — | | | | — | | | | (18,175 | ) |
| | | |
EBIT | | $ | 299,830 | | | $ | 168,496 | | | $ | (89,399 | ) | | $ | 378,927 | |
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EBIT Margin
| | | | | | | | | | | | | | | | | |
| 2005 YTD | | FIS | | | CEY | | | ADJ | | | Pro Forma | |
EBIT | | $ | 436,679 | | | $ | 184,955 | | | $ | (64,834 | ) | | $ | 556,800 | |
Revenue | | $ | 2,766,085 | | | $ | 1,117,141 | | | $ | — | | | $ | 3,883,226 | |
EBIT Margin | | | 15.8 | % | | | 16.6 | % | | | | | | | 14.3 | % |
| | | | | | | | | | | | | | | | | |
| 2004 YTD | | FIS | | | CEY | | | ADJ | | | Pro Forma | |
EBIT | | $ | 299,830 | | | $ | 168,496 | | | $ | (89,399 | ) | | $ | 378,927 | |
Revenue | | $ | 2,331,527 | | | $ | 1,039,506 | | | $ | 318,426 | | | $ | 3,689,459 | |
EBIT Margin | | | 12.9 | % | | | 16.2 | % | | | | | | | 10.3 | % |
Adjusted Diluted EPS
| | | | | | | | | | | | | | | | | |
| 2005 YTD | | FIS | | | CEY | | | ADJ | | | Pro Forma | |
Net Earnings | | $ | 196,550 | | | $ | 105,514 | | | $ | (53,923 | ) | | $ | 248,141 | |
Adjusted EPS | | $ | 1.02 | | | $ | 0.55 | | | $ | (0.28 | ) | | $ | 1.28 | |
Diluted Shares Outstanding | | | 193,424 | | | | 193,424 | | | | 193,424 | | | | 193,424 | |
| | | | | | | | | | | | | | | | | |
| 2004 YTD | | FIS | | | CEY | | | ADJ | | | Pro Forma | |
Net Earnings | | $ | 189,417 | | | $ | 97,678 | | | $ | (110,097 | ) | | $ | 176,998 | |
Adjusted EPS | | $ | 0.99 | | | $ | 0.51 | | | $ | (0.58 | ) | | $ | 0.92 | |
Diluted Shares Outstanding | | | 191,886 | | | | 191,886 | | | | 191,886 | | | | 191,886 | |
Cash Earnings
| | | | | | | | | | | | | | | | | |
| 2005 YTD | | FIS | | | CEY | | | ADJ | | | Pro Forma | |
Net Earnings | | $ | 196,550 | | | $ | 105,514 | | | $ | (53,923 | ) | | $ | 248,141 | |
+ Tax Adjusted Purchase Price Amortization | | | 78,733 | | | | 2,721 | | | | 42,425 | | | | 123,879 | |
| | | |
Cash Earnings | | $ | 275,283 | | | $ | 108,235 | | | $ | (11,498 | ) | | $ | 372,020 | |
| | | |
| | | | | | | | | | | | | | | | | |
Diluted Cash EPS | | $ | 1.42 | | | $ | 0.56 | | | $ | (0.06 | ) | | $ | 1.92 | |
Diluted Shares Outstanding | | | 193,424 | | | | 193,424 | | | | 193,424 | | | | 193,424 | |
| | | | | | | | | | | | | | | | | |
| 2004 YTD | | FIS | | | CEY | | | ADJ | | | Pro Forma | |
Net Earnings | | $ | 189,417 | | | $ | 97,678 | | | $ | (110,097 | ) | | $ | 176,998 | |
+ Tax Adjusted Purchase Price Amortization | | | 64,436 | | | | 2,489 | | | | 56,663 | | | | 123,588 | |
| | | |
Cash Earnings | | $ | 253,853 | | | $ | 100,167 | | | $ | (53,434 | ) | | $ | 300,586 | |
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| | | | | | | | | | | | | | | | | |
Diluted Cash EPS | | $ | 1.32 | | | $ | 0.52 | | | $ | (0.28 | ) | | $ | 1.57 | |
Diluted Shares Outstanding | | | 191,886 | | | | 191,886 | | | | 191,886 | | | | 191,886 | |
Free Cash Flow
| | | | | | | | | | | | | | | | | |
| 2005 YTD | | FIS | | | CEY | | | ADJ | | | Pro Forma | |
Net Earnings | | $ | 196,550 | | | $ | 105,514 | | | $ | (53,923 | ) | | $ | 248,141 | |
+ Depreciation/Amort | | | 299,637 | | | | 51,858 | | | | 82,279 | | | | 433,774 | |
- Capital Expenditures | | | (239,006 | ) | | | (63,566 | ) | | | — | | | | (302,572 | ) |
| | | |
Free Cash Flow | | $ | 257,181 | | | $ | 93,806 | | | $ | 28,356 | | | $ | 379,343 | |
| | | | | | | | | | | | | | | | | |
| 2004 YTD | | FIS | | | CEY | | | ADJ | | | Pro Forma | |
Net Earnings | | $ | 189,417 | | | $ | 97,678 | | | $ | (110,097 | ) | | $ | 176,998 | |
+ Depreciation/Amort | | | 238,400 | | | | 47,449 | | | | 130,114 | | | | 415,963 | |
- Capital Expenditures | | | (177,502 | ) | | | (40,908 | ) | | | — | | | | (218,410 | ) |
| | | |
Free Cash Flow | | $ | 250,315 | | | $ | 104,219 | | | $ | 20,017 | | | $ | 374,551 | |
Appendix B
Unaudited Pro Forma Combined Statement of Continuing Operations
for the Year Ended December 31, 2004
(In thousands Except Per Share Data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Acquisition/ | | | | | | | | |
| | | | | | | | | | | Pro Forma | | | | | | | | | | | 2004 FIS | | | Recapitalization | | | | | | | Pro Forma, as | |
| | | Certegy | | | FIS | | | Adjustments | | | Note | | | Pro Forma | | | Acquistions | | | Adjustments | | | Note | | | adjusted | |
| | | |
| Total revenue | | $ | 1,039,506 | | | $ | 2,331,527 | | | | | | | | | | | $ | 3,371,033 | | | $ | 318,426 | | | $ | — | | | | | | | $ | 3,689,459 | |
| Total cost of revenue | | | 741,331 | | | | 1,525,174 | | | | 85,111 | | | | (1) | | | | 2,349,804 | | | | 208,250 | | | | 23,453 | | | | (6) | | | $ | 2,581,507 | |
| | | | | | | | | | | | (1,812 | ) | | | (2) | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Gross profit (loss) | | | 298,175 | | | | 806,353 | | | | (83,299 | ) | | | | | | | 1,021,229 | | | | 110,176 | | | | (23,453 | ) | | | | | | | 1,107,952 | |
| General and administrative | | | 129,679 | | | | 432,310 | | | | (8,510 | ) | | | (2) | | | | 553,479 | | | | 100,338 | | | | 994 | | | | (7) | | | | 654,811 | |
| Research and development costs | | | — | | | | 74,214 | | | | — | | | | | | | | 74,214 | | | | | | | | — | | | | | | | | 74,214 | |
| | | | | | | | | | | | | | | | |
| Income (loss) from operations | | | 168,496 | | | | 299,829 | | | | (74,789 | ) | | | | | | | 393,536 | | | | 9,838 | | | | (24,447 | ) | | | | | | | 378,927 | |
| Interest income (expense) and other | | | (11,707 | ) | | | 14,911 | | | | — | | | | | | | | 3,204 | | | | 2,607 | | | | (91,082 | ) | | | (8) | | | | (85,271 | ) |
| | | | | | | | | | | | | | | | |
| Income from continuing operations before tax and minority interest | | | 156,789 | | | | 314,740 | | | | (74,789 | ) | | | | | | | 396,740 | | | | 12,445 | | | | (115,529 | ) | | | | | | | 293,656 | |
| Provision for income tax | | | 59,111 | | | | 118,343 | | | | (28,121 | ) | | | (4) | | | | 149,333 | | | | 3,730 | | | | (43,439 | ) | | | (9) | | | | 109,624 | |
| | | | | | | | | | | | | | | | |
| Income from continuing operations | | | 97,678 | | | | 196,397 | | | | (46,668 | ) | | | | | | | 247,407 | | | | 8,715 | | | | (72,090 | ) | | | | | | | 184,032 | |
| Equity in earnings (loss) of unconsolidated entities, net | | | — | | | | (3,308 | ) | | | — | | | | | | | | (3,308 | ) | | | — | | | | — | | | | | | | | (3,308 | ) |
| Minority interests in earnings, net of tax | | | — | | | | (3,673 | ) | | | — | | | | | | | | (3,673 | ) | | | (53 | ) | | | — | | | | | | | | (3,726 | ) |
| | | | | | | | | | | | | | | | |
| Net income | | $ | 97,678 | | | $ | 189,416 | | | $ | (46,668 | ) | | | | | | $ | 240,426 | | | $ | 8,662 | | | $ | (72,090 | ) | | | | | | $ | 176,998 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income per share-basic | | $ | 1.55 | | | $ | 0.95 | | | | | | | | | | | $ | 1.26 | | | | | | | | | | | | | | | $ | 0.93 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pro forma Weighted average shares-basic | | | 62,818 | | | | 200,000 | | | | | | | | | | | | 190,738 | | | | | | | | | | | | | | | | 190,738 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income per share-diluted | | $ | 1.53 | | | $ | 0.95 | | | | | | | | | | | $ | 1.25 | | | | | | | | | | | | | | | $ | 0.92 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pro forma Weighted average shares-diluted | | | 63,966 | | | | 200,000 | | | | | | | | | | | | 191,886 | | | | | | | | | | | | | | | | 191,886 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Unaudited Pro Forma Combined Statement of Continuing Operations
for the Year Ended December 31, 2005
(In thousands Except Per Share Data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Pro Forma | | | | | | | | | | | Recapitalization | | | | | | | Pro Forma, as | |
| | | Certegy | | | FIS | | | adjustments | | | Note | | | Pro Forma | | | Adjustments | | | Note | | | adjusted | |
| | | |
| Total revenue | | $ | 1,117,141 | | | $ | 2,766,085 | | | $ | — | | | | | | | $ | 3,883,226 | | | $ | — | | | | | | | $ | 3,883,226 | |
| Total cost of revenue | | | 791,581 | | | | 1,793,285 | | | | 82,279 | | | | (1) | | | | 2,666,101 | | | | — | | | | | | | $ | 2,666,101 | |
| | | | | | | | | | | | (1,044 | ) | | | (2) | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| Gross profit (loss) | | | 325,560 | | | | 972,800 | | | | (81,235 | ) | | | | | | | 1,217,125 | | | | — | | | | | | | | 1,217,125 | |
| General and administrative | | | 129,443 | | | | 422,623 | | | | (5,239 | ) | | | (2) | | | | 546,827 | | | | — | | | | | | | | 546,827 | |
| Research and development costs | | | | | | | 113,498 | | | | | | | | | | | | 113,498 | | | | | | | | | | | | 113,498 | |
| Merger and Acquisition Costs | | | 11,162 | | | | | | | | (11,162 | ) | | | (3) | | | | — | | | | — | | | | | | | | — | |
| | | | | | | | | | | | | | | | |
| Income (loss) from operations | | | 184,955 | | | | 436,679 | | | | (64,834 | ) | | | | | | | 556,800 | | | | — | | | | | | | | 556,800 | |
| Interest income (expense) and other | | | (10,397 | ) | | | (124,623 | ) | | | — | | | | | | | | (135,020 | ) | | | (21,031 | ) | | | (8) | | | | (156,051 | ) |
| | | | | | | | | | | | | | | | |
| Income from continuing operations before tax and minority interest | | | 174,558 | | | | 312,056 | | | | (64,834 | ) | | | | | | | 421,780 | | | | (21,031 | ) | | | | | | | 400,749 | |
| Provision for income tax | | | 68,927 | | | | 116,085 | | | | (24,118 | ) | | | (4) | | | | 160,894 | | | | (7,824 | ) | | | (9) | | | | 153,070 | |
| | | | | | | | | | | | | | | | |
| Income from continuing operations | | | 105,631 | | | | 195,971 | | | | (40,716 | ) | | | | | | | 260,886 | | | | (13,207 | ) | | | | | | | 247,679 | |
| Equity in earnings (loss) of unconsolidated entities, net | | | (117 | ) | | | 5,029 | | | | — | | | | | | | | 4,912 | | | | — | | | | | | | | 4,912 | |
| Minority interests in earnings, net of tax | | | — | | | | (4,450 | ) | | | — | | | | | | | | (4,450 | ) | | | — | | | | | | | | (4,450 | ) |
| | | | | | | | | | | | | | | | |
| Net income | | $ | 105,514 | | | $ | 196,550 | | | $ | (40,716 | ) | | | | | | $ | 261,348 | | | $ | (13,207 | ) | | | | | | $ | 248,141 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income per share-basic | | $ | 1.70 | | | $ | 0.98 | | | | | | | | | | | $ | 1.38 | | | | | | | | | | | $ | 1.31 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Pro forma Weighted average shares-basic | | | 62,011 | | | | 200,000 | | | | | | | | | | | | 189,931 | | | | | | | | | | | | 189,931 | |
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| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income per share-diluted | | $ | 1.66 | | | $ | 0.97 | | | | | | | | | | | $ | 1.35 | | | | | | | | | | | $ | 1.28 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Pro forma Weighted average shares-diluted | | | 63,391 | | | | 203,304 | | | | | | | | | | | | 193,424 | | | | | | | | | | | | 193,424 | |
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Appendix B
Notes to Unaudited Pro Forma Combined Statements of Continuing Operations for the Year Ended December 31, 2005 and Year Ended December 31, 2004
These combined statements of continuing operations include the historical statements of continuing operations of Certegy and FIS as though the merger had occurred on January 1, 2004, adjusted for items related to the transaction as described below:
| (1) | | Reflects the increase in amortization expense as a result of allocating an assumed portion of the merger consideration to intangible assets of Certegy, namely customer relationship intangibles and acquired software, and amortizing such intangibles over their estimated useful lives commencing as of the assumed acquisition date, offset by the amortization expense for such intangibles actually recorded by Certegy during the respective periods. Customer relationships are being amortized over 10 years on an accelerated method. Acquired computer software is being amortized over its estimated useful life of up to 10 years on an accelerated method. The acquired trademarks are considered to have indefinite useful lives and, therefore, are not reflected in these adjustments. The increase in amortization expense is $111.7 million offset by historical amortization of $26.6 million, or $85.1 million for the year ended December 31, 2004, and $111.7 million offset by historical amortization of $29.4 million, or $82.3 million for the year ended December 31, 2005. For comparison purposes, the first year purchase amortization for the Certegy purchase accounting is used for both 2004 and 2005. |
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| (2) | | Under the merger agreement, all Certegy stock options and restricted stock and restricted stock units will vest upon the closing of the merger. Accordingly, this adjustment reflects the elimination of historical stock compensation expense relating to the vesting of Certegy options in 2004 and 2005, because such expense will be reflected at the time of closing of the merger. This adjustment amounts to a reduction in cost of revenues of $1.8 million and $1.0 million and in selling, general and administrative costs of $14.4 million and $11.2 million for the years ended December 31, 2004 and 2005, respectively. Also, at closing, Certegy will grant approximately (1) 1.1 million options, which based on current assumptions, would have a fair value under SFAS No. 123R of approximately $11 per option, vesting over four years, and (2) 750,000 options, which based on current assumptions would have a fair value under SFAS No. 123R of approximately $12 per option, vesting over three years. The pro forma adjustment to increase stock compensation expense for these option grants is $5.9 million in 2004 and 2005, all of which is reflected in selling, general and administrative costs. |
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| (3) | | Reflects the removal of merger and acquisition costs that were recognized as expense by Certegy in 2005. A tax benefit for these costs was not recorded because the ultimate tax treatment of these costs cannot be determined with adequate certainty at this time. |
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| (4) | | Reflects the tax benefit relating to the pro forma adjustments at the FIS tax rate of approximately 37.6% for the year ended December 31, 2004, and approximately 37.2% for the year ended December 31, 2005. |
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| (5) | | This column is the sum of the historical activity of Aurum, Sanchez, Kordoba and InterCept from January 1, 2004, through their respective acquisition dates in 2004. The details for these acquisitions are noted as follows: |
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| | | Aurum | | | Sanchez | | | Kordoba | | | InterCept | | | | |
| | | Historical | | | Historical | | | Historical | | | Historical | | | | |
| | | (through | | | (through | | | (through | | | (through | | | | |
| | | March 10) | | | April 13) | | | September 29) | | | November 7) | | | Combined | |
| Processing and services revenues | | $ | 33,560 | | | $ | 25,269 | | | $ | 70,126 | | | $ | 189,471 | | | $ | 318,426 | |
| Cost of revenues | | | 21,948 | | | | 16,526 | | | | 45,862 | | | | 123,914 | | | | 208,250 | |
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| Gross profit | | | 11,612 | | | | 8,743 | | | | 24,264 | | | | 65,557 | | | | 110,176 | |
| Selling, general and administrative expenses | | | 13,984 | | | | 15,376 | | | | 10,769 | | | | 60,209 | | | | 100,338 | |
| Operating income (loss) | | | (2,372 | ) | | | (6,633 | ) | | | 13,495 | | | | 5,348 | | | | 9,838 | |
| Interest income (expense), net | | | (743 | ) | | | 52 | | | | 790 | | | | 2,508 | | | | 2,607 | |
| Earnings (loss) before income taxes and minority interest | | | (3,115 | ) | | | (6,581 | ) | | | 14,285 | | | | 7,856 | | | | 12,445 | |
| Income tax expense (benefit) | | | 52 | | | | (2,269 | ) | | | 2,854 | | | | 3,093 | | | | 3,730 | |
| Minority interest expense | | | — | | | | — | | | | — | | | | (53 | ) | | | (53 | ) |
| | | | | | | | | | | | | | | | |
| Net earnings (loss) | | $ | (3,167 | ) | | $ | (4,312 | ) | | $ | 11,431 | | | $ | 4,710 | | | $ | 8,662 | |
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| (6) | | Reflects the increase in amortization expense as a result of allocating the purchase price of each acquisition to intangible assets, namely customer relationship intangibles and computer software, and amortizing such intangibles over their estimated useful lives commencing as of the assumed acquisition date. The increase in amortization expense is $23.4 million for the year ended December 31, 2004 (Aurum—$1.6 million; Sanchez—$1.6 million; Kordoba—$5.9 million; and Intercept—$14.3 million). |
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| (7) | | In accordance with SFAS No. 123, unearned compensation cost was measured upon consummation of the Sanchez acquisition for the unearned portion of the fair value of the unvested Sanchez options that were exchanged for unvested FNF options. The amortization of the unearned compensation cost over the remaining vesting periods results in compensation expense, which is charged to the combined statements of earnings, of $1.0 million for the year ended December 31, 2004. |
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| (8) | | Reflects an increase in interest expense for the years ended December 31, 2004, and 2005, of $91.1 million and $21.0 million, respectively, as if the recapitalization completed on March 9, 2005 was completed on January 1, 2004. |
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| (9) | | Reflects the tax benefit relating to the pro forma adjustments at FIS’s tax rate of approximately 37.6% for the year ended December 31, 2004, and approximately 37.2% for the year ended December 31, 2005. |
Appendix C
Fidelity National Information Services, Inc.
Reconciliation of Non-GAAP Measures-2006 Projections
(All amounts in millions, except per share amounts)
FIS presents its financial results in accordance with Generally Accepted Accounting Principles (“GAAP”). However, in order to provide the investment community with a more thorough means of evaluating the operating performance of its operations, FIS also reports several non-GAAP measures, including earnings before interest, taxes, depreciation and amortization (“EBITDA”), net earnings plus depreciation and amortization less capital expenditures (“Free Cash Flow”) and net earnings plus other intangible amortization, net of income tax (“Cash Earnings”). 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.
The amounts below are projections based on the guidance range given by FIS regarding its 2006 results. The tables below are reconciliations of pro forma projections of non-GAAP measures to the nearest GAAP measurement.
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Pro Forma 2006 Revenue-Projected | | | | |
| | | | | |
| Projected 2006 Revenue | | $ | 3,983 | |
| Budgeted Certegy Revenue for January 2006 | | | 90 | |
| | | | |
| Pro Forma Projected Revenue | | $ | 4,073 | |
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Pro Forma 2006 Net Earnings-Projected | | | | |
| | | | | |
| Projected 2006 Net Earnings | | $ | 279 | |
| Budgeted Certegy Net Earnings for January 2006 | | | 7 | |
| Stock Compensation Charge for FIS Performance Based Options, net of tax | | | 15 | |
| | | | |
| Pro Forma Projected Net Earnings | | $ | 300 | |
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Pro-Forma 2006 Diluted Earnings Per Share-Projected | | | | |
| | | | | |
| Projected Earnings Per Share-Diluted | | $ | 1.41 | |
| Budgeted Certegy Results for January 2006 | | | 0.03 | |
| Stock Compensation Charge for FIS Performance Based Options | | | 0.08 | |
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| Pro Forma Projected Net Earnings Per Share-Diluted | | $ | 1.52 | |
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| | | | |
| Projected Weighted Average Shares Diluted | | | 197 | |
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Pro Forma 2006 Cash Earnings-Projected | | | | |
| | | | | |
| Pro Forma Projected Net Earnings | | $ | 300 | |
| Tax Adjusted Purchase Price Amortization | | | 119 | |
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| Pro Forma Cash Earnings | | $ | 420 | |
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Pro Forma 2006 Cash Earnings Per Share-Projected | | | | |
| | | | | |
| Pro forma Projected Net Earnings Per Share | | $ | 1.52 | |
| Tax Adjusted Purchase Price Amortization Per Share | | | 0.61 | |
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| Pro Forma Cash Earnings Per Share | | $ | 2.13 | |
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Pro Forma EBITDA-Projected | | | | |
| | | | | |
| Pro Forma Projected Net Earnings | | $ | 300 | |
| Projected Income Tax Expense | | | 186 | |
| Projected Interest Expense | | | 170 | |
| Projected Depreciation and Amortization | | | 460 | |
| Projected Other Income/Minority Interest & Interest Income | | | (27 | ) |
| | | | |
| Pro Forma EBITDA | | $ | 1,090 | |
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Pro Forma EBITDA Margin — Projected | | | | |
| | | | | |
| Pro Forma Projected Revenue | | $ | 4,073 | |
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| Pro Forma EBITDA | | $ | 1,090 | |
| | | | |
| Pro Forma EBITDA Margin — Projected | | | 27 | % |
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Pro Forma Free Cash Flow-Projected | | | | |
| | | | | |
| Pro Forma Projected Net Earnings | | $ | 300 | |
| Projected Depreciation and Amortization | | | 460 | |
| Projected Capital Expenditures | | | (260 | ) |
| | | | |
| Pro Forma Free Cash Flow | | $ | 500 | |
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