EXHIBIT 99.1
PRESS RELEASE |
Fidelity National Information Services, Inc. Reports Strong
Third Quarter 2006 Financial Results
Pro Forma Revenue Growth of 10.2%
Increases Full Year 2006 Revenue Growth Outlook to 7% to 8%
Third Quarter 2006 Financial Results
Pro Forma Revenue Growth of 10.2%
Increases Full Year 2006 Revenue Growth Outlook to 7% to 8%
Jacksonville, Fla. — October 25, 2006— Fidelity National Information Services, Inc. (NYSE:FIS), a leading global provider of technology services to financial institutions, today announced financial results for the third quarter of 2006. Consolidated revenue increased to $1.08 billion, Net earnings increased to $78.6 million and Net earnings per diluted share was $0.41. In accordance with Generally Accepted Accounting Principles (“GAAP”), these results reflect the combination between FIS and Certegy Inc. as of February 1, 2006, the effective date of the merger.
“FIS reported excellent third quarter results with pro forma revenue growth of 10.2%, EBITDA growth of 10.5% and adjusted cash earnings of $0.57 per diluted share,” stated FIS Chairman William P. Foley, II. “With continued strong market share gains and cross sales to existing customers, we now expect to achieve revenue growth of 7% to 8% and cash earnings per diluted share of $2.08 to $2.12.”
FIS’ operating results are presented on a GAAP and on an adjusted pro forma basis, which management believes provides more meaningful comparisons between the periods presented. FIS’ pro forma results reflect a January 1, 2005, effective date for the merger between FIS and Certegy, the March 2005 recapitalization and the sale of minority interests by FIS. Additionally, the adjusted pro forma results exclude merger and acquisition and integration expenses. Reconciliations between GAAP and pro forma results are provided in the attachments to this press release, which are posted on the company’s website at http://www.fidelityinfoservices.com.
GAAP | 3rd Quarter | 3rd Quarter | ||||||
(amounts in millions) | 2006 | 2005 | ||||||
Total Revenue | $ | 1,080.7 | million | $ | 698.1 | million | ||
Net Earnings | $ | 78.6 | million | $ | 57.9 | million | ||
Net Earnings Per Diluted Share | $ | 0.41 | $ | 0.45 |
Adjusted Pro Forma (see Appendix A) | 3rd Quarter | 3rd Quarter | ||||||||||
(amounts in millions) | 2006 | 2005 | % Chg | |||||||||
Total Revenue | $ | 1,080.7 | million | $ | 980.9 | million | 10.2 | % | ||||
EBITDA | $ | 286.2 | million | $ | 259.0 | million | 10.5 | % | ||||
Pro Forma Net Earnings | $ | 82.2 | million | $ | 73.4 | million | 11.9 | % | ||||
Pro Forma Net Earnings Per Diluted Share | $ | 0.42 | $ | 0.38 | 10.5 | % | ||||||
Cash Earnings | $ | 110.9 | million | $ | 102.6 | million | 8.0 | % | ||||
Cash Earnings Per Diluted Share | $ | 0.57 | $ | 0.54 | 5.6 | % |
FIS presents its financial results in accordance with GAAP. However, in order to provide the investment community with a broader 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.
Pro Forma Segment Information
FIS’ Transaction Processing Services generated revenue of $650.4 million, or 14.1% over the prior-year period, driven by 36.8% growth in International, 10.0% growth in Enterprise Solutions and 9.8% growth in Integrated Financial Solutions. The company’s new item processing operation in Brazil, new account wins and deeper penetration of the existing customer base contributed to the strong growth rate. EBITDA increased 14.7% to $157.2 million, and the EBITDA margin increased to 24.2%.
Lender Processing Services revenue increased 4.7% to $432.9 million, driven by a 5.5% increase in the number of mortgage loans processed, and strong results within the Default Solutions and Appraisal product lines. The $4.5 million, or 2.9% decrease in EBITDA is attributable to strong results in the comparable prior year quarter, a change in product mix and a longer deferral period for the company’s life of loan tax services. The 34.5% EBITDA margin was comparable to the second quarter 2006 margin.
Additional segment and pro forma information is provided in the following table:
Segment Revenues | 3rd Quarter | 3rd Quarter | ||||||||||
(amounts in millions) | 2006 | 2005 | % Chg. | |||||||||
Transaction Processing Services: | ||||||||||||
Integrated Financial Solutions | $ | 280.7 | $ | 255.5 | 9.8 | % | ||||||
Enterprise Solutions | 253.6 | 230.4 | 10.0 | % | ||||||||
International | 118.8 | 86.9 | 36.8 | % | ||||||||
Other | (2.7 | ) | (2.8 | ) | 4.5 | % | ||||||
$ | 650.4 | $ | 570.0 | 14.1 | % | |||||||
Lender Processing Services: | ||||||||||||
Mortgage Processing | $ | 93.6 | $ | 91.1 | 2.7 | % | ||||||
Information Outsourcing | 339.4 | 321.6 | 5.5 | % | ||||||||
Other | (0.1 | ) | 0.9 | (11.1 | )% | |||||||
$ | 432.9 | $ | 413.6 | 4.7 | % | |||||||
Corporate | $ | (2.6 | ) | $ | (2.7 | ) | — | |||||
Total FIS | $ | 1,080.7 | $ | 980.9 | 10.2 | % | ||||||
Pro forma corporate expense for the third quarter of 2006 totaled $20.3 million. The $11.6 million, or 36.3%, decline from the prior-year quarter was primarily attributable to the consolidation of duplicate administrative functions. Pro forma interest expense for the quarter increased $9.0 million to $49.7 million, due primarily to higher interest rates. The increase in interest expense was partially offset by a lower effective tax rate of 35.8%.
Outlook
Management updated its full year 2006 outlook as follows:
• | Revenue growth of 7% to 8% compared to its previous outlook for 5% to 7%; | ||
• | Pro forma earnings per diluted share of $1.51 to $1.55; | ||
• | Pro forma cash earnings per diluted share of $2.08 to $2.12; | ||
• | Pro forma EBITDA growth of 10% to 12%; | ||
• | Capital expenditures of approximately $300 million, including anticipated investments in the Brazilian credit card processing joint venture and the newly launched item processing and business process outsourcing operation; | ||
• | Pro forma free cash flow of $440 million to $470 million, which includes the aforementioned capital investments in Brazil. |
This guidance excludes pre-tax merger and acquisition and integration costs associated with the February 1, 2006, combination of FIS and Certegy Inc.; pre-tax expense associated with the accelerated vesting of performance based options in the first quarter of 2006; and merger and acquisition costs associated with the completion of the merger with Fidelity National Financial, Inc., in November 2006.
FIS will host a call with investors and analysts to discuss first quarter results on Thursday, October 26, 2006, beginning at 8:00 a.m. Eastern daylight time. Those wishing to participate via the webcast should access the call through FIS’ Investor Relations website athttp://www.fidelityinfoservices.com. Those wishing to participate via the telephone may do so by calling 800-230-1092 (USA) or 612-288-0318 (International). The webcast replay will be available on FIS’ Investor Relations website. The telephone replay will be available through November 2, 2006, by dialing 800-475-6701 (USA) or 320-365-3844 (International). The access code will be 844664.
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. Approximately 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 in more than 60 countries worldwide. For more information on Fidelity National Information Services, please visitwww.fidelityinfoservices.com.
FIS is a majority-owned subsidiary of Fidelity National Financial Inc. (NYSE:FNF), number 248 on the Fortune 500 and a provider of outsourced products and services to a variety of industries. More information about FNF can be found atwww.fnf.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 risk that the recent merger between Fidelity National Information Services, Inc. and Certegy Inc. may fail to achieve beneficial synergies or that it may take longer than expected to do so; 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; failures to adapt our services to changes in technology or in the marketplace; adverse changes in the level of real estate activity, which would adversely affect certain of our businesses; our potential inability to find suitable acquisition candidates or difficulties in integrating acquisitions; significant competition that our operating subsidiaries face; 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.
SOURCE: Fidelity National Information Services, Inc.
CONTACT: Mary Waggoner, Senior Vice President, Investor Relations, 904-854-3282, mary.waggoner@fnf.com
CONTACT: Mary Waggoner, Senior Vice President, Investor Relations, 904-854-3282, mary.waggoner@fnf.com
###
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
AND SUBSIDIARIES AND AFFILIATES
UNAUDITED CONSOLIDATED AND COMBINED RESULTS FOR THE THREE AND NINE MONTHS ENDING SEPTEMBER 30, 2006 AND 2005
(In thousands)
(In thousands)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Processing and services revenues | $ | 1,080,651 | $ | 698,109 | $ | 3,003,533 | $ | 2,058,402 | ||||||||
Cost of revenues | 772,580 | 447,794 | 2,114,635 | 1,331,373 | ||||||||||||
Selling, general, and administrative expenses | 112,724 | 93,047 | 384,319 | 312,921 | ||||||||||||
Research and development costs | 25,855 | 33,545 | 77,561 | 85,784 | ||||||||||||
Operating income | 169,492 | 123,723 | 427,018 | 328,324 | ||||||||||||
Other income (expense) | ||||||||||||||||
Interest income | 477 | 1,790 | 3,901 | 4,826 | ||||||||||||
Realized gains and losses | (593 | ) | 821 | (1,837 | ) | (2,391 | ) | |||||||||
Interest expense | (49,717 | ) | (37,548 | ) | (142,018 | ) | (87,357 | ) | ||||||||
Total other income (expense) | (49,833 | ) | (34,937 | ) | (139,954 | ) | (84,922 | ) | ||||||||
Earnings before income taxes, equity earnings and minority interest | 119,659 | 88,786 | 287,064 | 243,402 | ||||||||||||
Income tax expense | 42,799 | 31,112 | 106,915 | 90,546 | ||||||||||||
Equity in earnings of unconsolidated entities | (1,686 | ) | (2,135 | ) | (3,778 | ) | (4,379 | ) | ||||||||
Minority interest | (34 | ) | 1,917 | (40 | ) | 6,171 | ||||||||||
Net earnings | $ | 78,580 | $ | 57,892 | $ | 183,967 | $ | 151,064 | ||||||||
Net earnings per share-basic | $ | 0.41 | $ | 0.45 | $ | 1.00 | $ | 1.18 | ||||||||
Weighted average shares outstanding-basic | 190,690 | 127,920 | 184,373 | 127,920 | ||||||||||||
Net earnings per share-diluted | $ | 0.41 | $ | 0.45 | $ | 0.98 | $ | 1.18 | ||||||||
Weighted average shares outstanding-diluted | 193,626 | 127,920 | 187,405 | 127,920 | ||||||||||||
Appendix A- Historical Detail and Reconciliation of Non-GAAP Measures
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 the purchase of the remaining minority interest in Kordoba in September 2005 to reflect such transactions as if they occurred January 1, 2005 |
EBITDA Detail
2006 Q3 | FIS | |||
Net Earnings | $ | 78,580 | ||
+ Interest Expense | 49,717 | |||
+ Minority Interest | (34 | ) | ||
+ Income Taxes | 42,799 | |||
+ Depreciation/Amort | 111,135 | |||
- Interest Income | (477 | ) | ||
- Equity in (Earnings) Loss of Unconsolidated Entities, net of tax | (1,686 | ) | ||
- Other (Income) Expense | 593 | |||
EBITDA | $ | 280,627 | ||
EBITDA Margin
2006 Q3 | FIS | |||
EBITDA | $ | 280,627 | ||
Revenue | $ | 1,080,651 | ||
EBITDA Margin | 26.0 | % |
EBIT Detail
2006 Q3 | FIS | |||
Net Earnings | $ | 78,580 | ||
+ Interest Expense | 49,717 | |||
+ Minority Interest | (34 | ) | ||
+ Income Taxes | 42,799 | |||
- Interest Income | (477 | ) | ||
- Equity in (Earnings) Loss of Unconsolidated Entities, net of tax | (1,686 | ) | ||
- Other (Income) Expense | 593 | |||
EBIT | $ | 169,492 | ||
EBIT Margin
2006 Q3 | FIS | |||
EBIT | $ | 169,492 | ||
Revenue | $ | 1,080,651 | ||
EBIT Margin | 15.7 | % |
Adjusted Diluted EPS
2006 Q3 | FIS | |||
Net Earnings | $ | 78,580 | ||
Adjusted EPS | $ | 0.41 | ||
Diluted Shares Outstanding | 193,626 |
Cash Earnings
2006 Q3 | FIS | |||
Net Earnings | $ | 78,580 | ||
+ Tax Adjusted Purchase Price Amortization | 28,749 | |||
Cash Earnings | $ | 107,329 | ||
Diluted Cash EPS | $ | 0.55 | ||
Diluted Shares Outstanding | 193,626 |
Free Cash Flow
2006 Q3 | FIS | |||
Net Earnings | $ | 78,580 | ||
+ Depreciation/Amort | 111,135 | |||
- Capital Expenditures | (67,114 | ) | ||
Free Cash Flow | $ | 122,601 |
2006 Q3 | ||||
Stock Compensation | $ | 4,434 |
Financial Measures Excluding Selected Items
EBITDA | $ | 280,627 | ||
M&A and Integration costs | 5,621 | |||
EBITDA, excluding selected items | $ | 286,248 | ||
Net Earnings | $ | 78,580 | ||
M&A and Integration Costs, net of tax | 3,575 | |||
Net Earnings, excluding selected items | $ | 82,155 | ||
Net Earnings per diluted share | $ | 0.41 | ||
M&A and Integration costs per share | 0.01 | |||
Net Earnings per diluted share, excluding selected items | $ | 0.42 | ||
Net Earnings, excluding selected items | $ | 82,155 | ||
+ Tax Adjusted Purchase Price Amortization | 28,749 | |||
Cash Earnings, excluding selected items | $ | 110,904 | ||
Net Earnings per diluted share, excluding selected items | $ | 0.42 | ||
+ Tax Adjusted Purchase Price Amortization-per share | 0.15 | |||
Cash Earnings per diluted share, excluding selected items | $ | 0.57 | ||
Net Earnings, excluding selected items | $ | 82,155 | ||
+ Depreciation/Amort | $ | 111,135 | ||
- Capital Expenditures | (67,114 | ) | ||
Free Cash Flow, excluding selected items | $ | 126,176 | ||
2005 Q3 | FIS | CEY | ADJ | Pro Forma | ||||||||||||
Net Earnings | $ | 57,892 | $ | 22,667 | $ | (7,142 | ) | $ | 73,417 | |||||||
+ Interest Expense | 37,548 | 3,122 | — | 40,670 | ||||||||||||
+ Minority Interest | 1,917 | — | (740 | ) | 1,177 | |||||||||||
+ Income Taxes | 31,112 | 17,900 | (4,669 | ) | 44,343 | |||||||||||
+ Depreciation/Amort | 70,783 | 12,939 | 21,133 | 104,855 | ||||||||||||
- Interest Income | (1,790 | ) | — | — | (1,790 | ) | ||||||||||
- Equity in (Earnings) Loss of Non-Consolidated Entities, net of tax | (2,135 | ) | — | — | (2,135 | ) | ||||||||||
- Other (Income) Expense | (821 | ) | (671 | ) | — | (1,492 | ) | |||||||||
EBITDA | $ | 194,506 | $ | 55,957 | $ | 8,582 | $ | 259,045 | ||||||||
2005 Q3 | FIS | CEY | ADJ | Pro Forma | ||||||||||||
EBITDA | $ | 194,506 | $ | 55,957 | $ | 8,582 | $ | 259,045 | ||||||||
Revenue | $ | 698,109 | $ | 282,774 | $ | — | $ | 980,883 | ||||||||
EBITDA Margin | 27.9 | % | 19.8 | % | 26.4 | % |
2005 Q3 | FIS | CEY | ADJ | Pro Forma | ||||||||||||
Net Earnings | $ | 57,892 | $ | 22,667 | $ | (7,142 | ) | $ | 73,417 | |||||||
+ Interest Expense | 37,548 | 3,122 | — | 40,670 | ||||||||||||
+ Minority Interest | 1,917 | — | (740 | ) | 1,177 | |||||||||||
+ Income Taxes | 31,112 | 17,900 | (4,669 | ) | 44,343 | |||||||||||
- Interest Income | (1,790 | ) | — | — | (1,790 | ) | ||||||||||
- Equity in (Earnings) Loss of Non-Consolidated Entities, net of tax | (2,135 | ) | — | — | (2,135 | ) | ||||||||||
- Other (Income) Expense | (821 | ) | (671 | ) | — | (1,492 | ) | |||||||||
EBIT | $ | 123,723 | $ | 43,018 | $ | (12,551 | ) | $ | 154,190 | |||||||
2005 Q3 | FIS | CEY | ADJ | Pro Forma | ||||||||||||
EBIT | $ | 123,723 | $ | 43,018 | $ | (12,551 | ) | $ | 154,190 | |||||||
Revenue | $ | 698,109 | $ | 282,774 | $ | — | $ | 980,883 | ||||||||
EBIT Margin | 17.7 | % | 15.2 | % | 15.7 | % |
2005 Q3 | FIS | CEY | ADJ | Pro Forma | ||||||||||||
Net Earnings | $ | 57,892 | $ | 22,667 | $ | (7,142 | ) | $ | 73,417 | |||||||
Adjusted EPS | $ | 0.45 | $ | 0.38 | ||||||||||||
Diluted Shares Outstanding | 127,920 | 191,233 |
2005 Q3 | FIS | CEY | ADJ | Pro Forma | ||||||||||||
Net Earnings | $ | 57,892 | $ | 22,667 | $ | (7,142 | ) | $ | 73,417 | |||||||
+ Tax Adjusted Purchase Price Amortization | 17,941 | 680 | 10,606 | 29,227 | ||||||||||||
Cash Earnings | $ | 75,833 | $ | 23,347 | $ | 3,464 | $ | 102,644 | ||||||||
Diluted Cash EPS | $ | 0.59 | $ | 0.54 | ||||||||||||
Diluted Shares Outstanding | 127,920 | — | — | 191,233 |
2005 Q3 | FIS | CEY | ADJ | Pro Forma | ||||||||||||
Net Earnings | $ | 57,892 | $ | 22,667 | $ | (7,142 | ) | $ | 73,417 | |||||||
+ Depreciation/Amort | 70,783 | 12,939 | 21,133 | 104,855 | ||||||||||||
- Capital Expenditures | (74,602 | ) | (14,764 | ) | — | (89,366 | ) | |||||||||
Free Cash Flow | $ | 54,073 | $ | 20,842 | $ | 13,991 | $ | 88,906 | ||||||||
2005 Q3 | ||||||||||||||||
Stock Compensation | $ | 4,562 | $ | 2,900 | $ | (2,900 | ) | $ | 4,562 |
Appendix A- Historical Detail and Reconciliation of Non-GAAP Measures
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 the purchase of the remaining minority interest in Kordoba in September 2005 to reflect such transactions as if they occurred January 1, 2005 |
EBITDA Detail
2006 Nine Months | FIS | CEY-Jan | ADJ | Pro Forma | ||||||||||||
Net Earnings | $ | 183,967 | $ | (42,523 | ) | (3,708 | ) | $ | 137,736 | |||||||
+ Interest Expense | 142,018 | 1,081 | — | 143,099 | ||||||||||||
+ Minority Interest | (40 | ) | — | — | (40 | ) | ||||||||||
+ Income Taxes | 106,915 | (26,396 | ) | (2,626 | ) | 77,893 | ||||||||||
+ Depreciation/Amort | 318,304 | 4,274 | 6,856 | 329,434 | ||||||||||||
- Interest Income | (3,901 | ) | — | — | (3,901 | ) | ||||||||||
- Equity in (Earnings) Loss of Unconsolidated Entities, net of tax | (3,778 | ) | — | (3,778 | ) | |||||||||||
- Other (Income) Expense | 1,837 | 123 | 1,960 | |||||||||||||
EBITDA | $ | 745,322 | $ | (63,441 | ) | $ | 522 | $ | 682,403 | |||||||
EBITDA Margin
2006 Nine Months | FIS | CEY-Jan | ADJ | Pro Forma | ||||||||||||
EBITDA | $ | 745,322 | $ | (63,441 | ) | $ | 522 | $ | 682,403 | |||||||
Revenue | $ | 3,003,533 | $ | 92,915 | $ | — | $ | 3,096,448 | ||||||||
EBITDA Margin | 24.8 | % | -68.3 | % | 22.0 | % |
EBIT Detail
2006 Nine Months | FIS | CEY-Jan | ADJ | Pro Forma | ||||||||||||
Net Earnings | $ | 183,967 | $ | (42,523 | ) | $ | (3,708 | ) | $ | 137,736 | ||||||
+ Interest Expense | 142,018 | 1,081 | — | 143,099 | ||||||||||||
+ Minority Interest | (40 | ) | — | — | (40 | ) | ||||||||||
+ Income Taxes | 106,915 | (26,396 | ) | (2,626 | ) | 77,893 | ||||||||||
- Interest Income | (3,901 | ) | — | — | (3,901 | ) | ||||||||||
- Equity in (Earnings) Loss of Unconsolidated Entities, net of tax | (3,778 | ) | — | — | (3,778 | ) | ||||||||||
- Other (Income) Expense | 1,837 | 123 | — | 1,960 | ||||||||||||
EBIT | $ | 427,018 | $ | (67,715 | ) | $ | (6,334 | ) | $ | 352,969 | ||||||
EBIT Margin
2006 Nine Months | FIS | CEY-Jan | ADJ | Pro Forma | ||||||||||||
EBIT | $ | 427,018 | $ | (67,715 | ) | $ | (6,334 | ) | $ | 352,969 | ||||||
Revenue | $ | 3,003,533 | $ | 92,915 | $ | — | $ | 3,096,448 | ||||||||
EBIT Margin | 14.2 | % | -72.9 | % | 11.4 | % |
Adjusted Diluted EPS
2006 Nine Months | FIS | CEY-Jan | ADJ | Pro Forma | ||||||||||||
Net Earnings | $ | 183,967 | $ | (42,523 | ) | $ | (3,708 | ) | $ | 137,736 | ||||||
Adjusted EPS | $ | 0.98 | $ | 0.71 | ||||||||||||
Diluted Shares Outstanding | 187,405 | 194,700 |
Cash Earnings
2006 Nine Months | FIS | CEY-Jan | ADJ | Pro Forma | ||||||||||||
Net Earnings | $ | 183,967 | $ | (42,523 | ) | $ | (3,708 | ) | $ | 137,736 | ||||||
+ Tax Adjusted Purchase Price Amortization | 81,866 | 233 | 3,524 | 85,623 | ||||||||||||
Cash Earnings | $ | 265,833 | $ | (42,290 | ) | $ | (184 | ) | $ | 223,359 | ||||||
Diluted Cash EPS | $ | 1.42 | $ | 1.15 | ||||||||||||
Diluted Shares Outstanding | 187,405 | 194,700 |
Free Cash Flow
2006 Nine Months | FIS | CEY-Jan | ADJ | Pro Forma | ||||||||||||
Net Earnings | $ | 183,967 | $ | (42,523 | ) | $ | (3,708 | ) | $ | 137,736 | ||||||
+ Depreciation/Amort | 318,304 | 4,274 | 6,856 | 329,434 | ||||||||||||
- Capital Expenditures | (216,534 | ) | (5,200 | ) | — | (221,734 | ) | |||||||||
Free Cash Flow | $ | 285,737 | $ | (43,449 | ) | $ | 3,148 | $ | 245,436 |
2006 Nine Months | ||||||||||||||||
Stock Compensation | $ | 37,222 | $ | 552 | $ | (552 | ) | $ | 37,222 |
Pro Forma Measures Excluding Selected Items
Pro Forma EBITDA | $ | 682,403 | ||
M&A and Integration costs | 94,350 | |||
Performance Based Stock Option Costs | 24,130 | |||
Pro Forma EBITDA, excluding selected items | $ | 800,883 | ||
Pro Forma Net Earnings | 137,736 | |||
M&A and Integration Costs, net of tax | 58,489 | |||
Performance Based Stock Option Costs, net of tax | 14,888 | |||
Pro Forma Net Earnings, excluding selected items | $ | 211,113 | ||
Weighted Average Shares | 187,405 | |||
Adjustment as if transaction took place 1/1/2005 | 7,295 | |||
Pro Forma Weighted Average Shares | 194,700 | |||
Pro Forma Net Earnings per diluted share | $ | 0.71 | ||
M&A and Integration costs per share | 0.29 | |||
Performance Based Stock Option Costs per share | 0.08 | |||
Pro Forma Net Earnings per diluted share, excluding selected items | $ | 1.08 | ||
Net Earnings, excluding selected items | 211,113 | |||
+ Tax Adjusted Purchase Price Amortization | 85,623 | |||
Cash Earnings, excluding selected items | 296,736 | |||
Net Earnings per diluted share, excluding selected items | 1.08 | |||
+ Tax Adjusted Purchase Price Amortization—per share | 0.44 | |||
Cash Earnings per diluted share, excluding selected items | $ | 1.52 | ||
Net Earnings, excluding selected items | $ | 211,113 | ||
+ Depreciation/Amort | 329,434 | |||
- Capital Expenditures | (221,734 | ) | ||
Free Cash Flow, excluding selected items | $ | 318,813 | ||
2005 Nine Months | FIS | CEY | ADJ | Pro Forma | ||||||||||||
Net Earnings | $ | 151,064 | $ | 69,213 | $ | (42,481 | ) | $ | 177,796 | |||||||
+ Interest Expense | 87,357 | 9,677 | 21,031 | 118,065 | ||||||||||||
+ Minority Interest | 6,171 | — | (2,368 | ) | 3,803 | |||||||||||
+ Income Taxes | 90,546 | 45,969 | (26,568 | ) | 109,947 | |||||||||||
+ Depreciation/Amort | 221,886 | 38,352 | 63,399 | 323,637 | ||||||||||||
- Interest Income | (4,826 | ) | — | — | (4,826 | ) | ||||||||||
- Equity in (Earnings) Loss of Non-Consolidated Entities, net of tax | (4,379 | ) | — | — | (4,379 | ) | ||||||||||
- Other (Income) Expense | 2,391 | (1,412 | ) | — | 979 | |||||||||||
EBITDA | $ | 550,210 | $ | 161,799 | $ | 13,013 | $ | 725,022 | ||||||||
2005 Nine Months | FIS | CEY | ADJ | Pro Forma | ||||||||||||
EBITDA | $ | 550,210 | $ | 161,799 | $ | 13,013 | $ | 725,022 | ||||||||
Revenue | $ | 2,058,402 | $ | 821,255 | $ | — | $ | 2,879,657 | ||||||||
EBITDA Margin | 26.7 | % | 19.7 | % | 25.2 | % |
2005 Nine Months | FIS | CEY | ADJ | Pro Forma | ||||||||||||
Net Earnings | $ | 151,064 | $ | 69,213 | $ | (42,481 | ) | $ | 177,796 | |||||||
+ Interest Expense | 87,357 | 9,677 | 21,031 | 118,065 | ||||||||||||
+ Minority Interest | 6,171 | — | (2,368 | ) | 3,803 | |||||||||||
+ Income Taxes | 90,546 | 45,969 | (26,568 | ) | 109,947 | |||||||||||
- Interest Income | (4,826 | ) | — | — | (4,826 | ) | ||||||||||
- Equity in (Earnings) Loss of Non-Consolidated Entities, net of tax | (4,379 | ) | — | — | (4,379 | ) | ||||||||||
- Other (Income) Expense | 2,391 | (1,412 | ) | — | 979 | |||||||||||
EBIT | $ | 328,324 | $ | 123,447 | $ | (50,386 | ) | $ | 401,385 | |||||||
2005 Nine Months | FIS | CEY | ADJ | Pro Forma | ||||||||||||
EBIT | $ | 328,324 | $ | 123,447 | $ | (50,386 | ) | $ | 401,385 | |||||||
Revenue | $ | 2,058,402 | $ | 821,255 | $ | — | $ | 2,879,657 | ||||||||
EBIT Margin | 16.0 | % | 15.0 | % | 13.9 | % |
2005 Nine Months | FIS | CEY | ADJ | Pro Forma | ||||||||||||
Net Earnings | $ | 151,064 | $ | 69,213 | $ | (42,481 | ) | $ | 177,796 | |||||||
Adjusted EPS | $ | 1.18 | $ | 0.93 | ||||||||||||
Diluted Shares Outstanding | 127,920 | 190,864 |
2005 Nine Months | FIS | CEY | ADJ | Pro Forma | ||||||||||||
Net Earnings | $ | 151,064 | $ | 69,213 | $ | (42,481 | ) | $ | 177,796 | |||||||
+ Tax Adjusted Purchase Price Amortization | 60,857 | 1,361 | 31,819 | 94,037 | ||||||||||||
Cash Earnings | $ | 211,921 | $ | 70,574 | $ | (10,662 | ) | $ | 271,833 | |||||||
Diluted Cash EPS | $ | 1.66 | $ | 1.42 | ||||||||||||
Diluted Shares Outstanding | 127,920 | — | — | 190,864 |
2005 Nine Months | FIS | CEY | ADJ | Pro Forma | ||||||||||||
Net Earnings | $ | 151,064 | $ | 69,213 | $ | (42,481 | ) | $ | 177,796 | |||||||
+ Depreciation/Amort | 221,886 | 38,352 | 63,399 | 323,637 | ||||||||||||
- Capital Expenditures | (180,497 | ) | (42,883 | ) | — | (223,380 | ) | |||||||||
Free Cash Flow | $ | 192,453 | $ | 64,682 | $ | 20,918 | $ | 278,053 | ||||||||
2005 Nine Months | ||||||||||||||||
Stock Compensation | $ | 16,017 | $ | 9,200 | $ | (9,200 | ) | $ | 16,017 |
Appendix B
Unaudited Pro Forma Combined Statement of Continuing Operations
for the Nine Months Ended September 30, 2006
(In thousands Except Per Share Data)
Unaudited Pro Forma Combined Statement of Continuing Operations
for the Nine Months Ended September 30, 2006
(In thousands Except Per Share Data)
Tax Adjusted | ||||||||||||||||||||||||
Pro Forma | Purchase Price | Cash | ||||||||||||||||||||||
Certegy-Jan | FIS | Adjustments | Pro Forma | Amortization | Earnings | |||||||||||||||||||
Total revenue | $ | 92,915 | $ | 3,003,533 | $ | 3,096,448 | ||||||||||||||||||
Total cost of revenue | 73,218 | 2,114,635 | 6,856 | 2,194,709 | ||||||||||||||||||||
Gross profit (loss) | 19,697 | 888,898 | (6,856 | ) | 901,739 | |||||||||||||||||||
General and administrative | 7,645 | 369,736 | (522 | ) | 376,859 | |||||||||||||||||||
Research and development costs | — | 77,561 | 77,561 | |||||||||||||||||||||
Merger and Acquisition costs | 79,767 | 14,583 | 94,350 | |||||||||||||||||||||
Income (loss) from operations | (67,715 | ) | 427,018 | (6,334 | ) | 352,969 | ||||||||||||||||||
Interest income (expense) and other | (1,204 | ) | (139,954 | ) | — | (141,158 | ) | |||||||||||||||||
Income from continuing operations before tax and min. int | (68,919 | ) | 287,064 | (6,334 | ) | 211,811 | ||||||||||||||||||
Provision for income tax | (26,396 | ) | 106,915 | (2,626 | ) | 77,893 | ||||||||||||||||||
Income from continuing operations | (42,523 | ) | 180,149 | (3,708 | ) | 133,918 | ||||||||||||||||||
Equity in earnings (loss) of unconsolidated entities, net | — | 3,778 | — | 3,778 | ||||||||||||||||||||
Minority interests in earnings, net of tax | — | 40 | — | 40 | ||||||||||||||||||||
Net income | $ | (42,523 | ) | $ | 183,967 | $ | (3,708 | ) | $ | 137,736 | $ | 85,623 | $ | 223,359 | ||||||||||
Net income per share-basic | $ | (0.68 | ) | $ | 1.00 | $ | 0.72 | $ | 1.17 | |||||||||||||||
Pro forma Weighted average shares-basic | 62,326 | 184,373 | 191,567 | 191,567 | ||||||||||||||||||||
Net income per share-diluted | $ | (0.67 | ) | $ | 0.98 | $ | 0.71 | $ | 1.15 | |||||||||||||||
Pro forma Weighted average shares-diluted | 63,796 | 187,405 | 194,700 | 194,700 | ||||||||||||||||||||
Pro Forma Net Earnings | $ | 137,736 | ||
Merger and Acquisition and Integration Costs, net of tax | 58,489 | |||
Performance Based Stock Option Costs, net of tax | 14,888 | |||
Pro Forma Net Earnings, excluding selected items | $ | 211,113 |
Appendix C
Unaudited Pro Forma and Historical Segment Information
for the Quarters and Nine Month Periods Ended September 30, 2006 and 2005
(In thousands Except Per Share Data)
Unaudited Pro Forma and Historical Segment Information
for the Quarters and Nine Month Periods Ended September 30, 2006 and 2005
(In thousands Except Per Share Data)
2006- Quarter 3 | Pro Forma | Historical | ||||||||||||||||||||||||||||||
Transaction | Lender | Transaction | Lender | |||||||||||||||||||||||||||||
Processing | Processing | Corporate | Processing | Processing | Corporate | |||||||||||||||||||||||||||
Services | Services | and Other | Total | Services | Services | and Other | Total | |||||||||||||||||||||||||
Processing and services revenue | 650,406 | 432,891 | (2,646 | ) | 1,080,651 | 650,406 | 432,891 | (2,646 | ) | 1,080,651 | ||||||||||||||||||||||
Cost of revenues | 514,390 | 258,190 | — | 772,580 | 514,390 | 258,190 | — | 772,580 | ||||||||||||||||||||||||
Gross profit | 136,016 | 174,701 | (2,646 | ) | 308,071 | 136,016 | 174,701 | (2,646 | ) | 308,071 | ||||||||||||||||||||||
Selling, general and admin costs | 39,736 | 52,338 | 20,650 | 112,724 | 39,736 | 52,338 | 20,650 | 112,724 | ||||||||||||||||||||||||
Research development costs | 17,838 | 8,017 | — | 25,855 | 17,838 | 8,017 | — | 25,855 | ||||||||||||||||||||||||
Operating income | 78,442 | 114,346 | (23,296 | ) | 169,492 | 78,442 | 114,346 | (23,296 | ) | 169,492 | ||||||||||||||||||||||
Depreciation and amortization | 75,158 | 33,658 | 2,319 | 111,135 | 75,158 | 33,658 | 2,319 | 111,135 | ||||||||||||||||||||||||
EBITDA | 153,600 | 148,004 | (20,977 | ) | 280,627 | 153,600 | 148,004 | (20,977 | ) | 280,627 | ||||||||||||||||||||||
ProForma EBITDA | 153,600 | 148,004 | (20,977 | ) | 280,627 | |||||||||||||||||||||||||||
Merger and Acquisition and Integration costs | 3,568 | 1,337 | 716 | 5,621 | ||||||||||||||||||||||||||||
ProForma EBITDA, excluding selected items | 157,168 | 149,341 | (20,261 | ) | 286,248 |
2006- 9mths YTD | Pro Forma | Historical | ||||||||||||||||||||||||||||||
Transaction | Lender | Transaction | Lender | |||||||||||||||||||||||||||||
Processing | Processing | Corporate | Processing | Processing | Corporate | |||||||||||||||||||||||||||
Services | Services | and Other | Total | Services | Services | and Other | Total | |||||||||||||||||||||||||
Processing and services revenue | 1,854,993 | 1,241,472 | (17 | ) | 3,096,448 | 1,764,030 | 1,241,472 | (1,969 | ) | 3,003,533 | ||||||||||||||||||||||
Cost of revenues | 1,456,928 | 737,781 | — | 2,194,709 | 1,376,854 | 737,781 | — | 2,114,635 | ||||||||||||||||||||||||
Gross profit | 398,065 | 503,691 | (17 | ) | 901,739 | 387,176 | 503,691 | (1,969 | ) | 888,898 | ||||||||||||||||||||||
Selling, general and admin costs | 134,751 | 161,574 | 174,884 | 471,209 | 130,341 | 161,574 | 92,404 | 384,319 | ||||||||||||||||||||||||
Research development costs | 52,183 | 25,378 | — | 77,561 | 52,183 | 25,378 | — | 77,561 | ||||||||||||||||||||||||
Operating income | 211,131 | 316,739 | (174,901 | ) | 352,969 | 204,652 | 316,739 | (94,373 | ) | 427,018 | ||||||||||||||||||||||
Depreciation and amortization | 218,698 | 104,882 | 5,854 | 329,434 | 207,658 | 104,882 | 5,764 | 318,304 | ||||||||||||||||||||||||
EBITDA | 429,829 | 421,621 | (169,047 | ) | 682,403 | 412,310 | 421,621 | (88,609 | ) | 745,322 | ||||||||||||||||||||||
ProForma EBITDA | 429,829 | 421,621 | (169,047 | ) | 682,403 | |||||||||||||||||||||||||||
Merger and Acquisition and Integration costs | 7,851 | 3,349 | 83,150 | 94,350 | ||||||||||||||||||||||||||||
Acceleration of performance-based shares | — | — | 24,130 | 24,130 | ||||||||||||||||||||||||||||
ProForma EBITDA, excluding selected items | 437,680 | 424,970 | (61,767 | ) | 800,883 |
2005 - Quarter 3 | Pro Forma | Historical | ||||||||||||||||||||||||||||||
Transaction | Lender | Transaction | Lender | |||||||||||||||||||||||||||||
Processing | Processing | Corporate | Processing | Processing | Corporate | |||||||||||||||||||||||||||
Services | Services | and Other | Total | Services | Services | and Other | Total | |||||||||||||||||||||||||
Processing and services revenue | 570,015 | 413,591 | (2,723 | ) | 980,883 | 287,241 | 413,591 | (2,723 | ) | 698,109 | ||||||||||||||||||||||
Cost of revenues | 439,483 | 231,179 | — | 670,662 | 216,615 | 231,179 | — | 447,794 | ||||||||||||||||||||||||
Gross profit | 130,532 | 182,412 | (2,723 | ) | 310,221 | 70,626 | 182,412 | (2,723 | ) | 250,315 | ||||||||||||||||||||||
Selling, general and admin costs | 35,315 | 55,693 | 31,478 | 122,486 | 13,312 | 55,693 | 24,042 | 93,047 | ||||||||||||||||||||||||
Research development costs | 26,294 | 7,251 | — | 33,545 | 26,294 | 7,251 | — | 33,545 | ||||||||||||||||||||||||
Operating income | 68,923 | 119,468 | (34,201 | ) | 154,190 | 31,020 | 119,468 | (26,765 | ) | 123,723 | ||||||||||||||||||||||
Depreciation and amortization | 68,145 | 34,334 | 2,376 | 104,855 | 34,360 | 34,334 | 2,089 | 70,783 | ||||||||||||||||||||||||
EBITDA | 137,068 | 153,802 | (31,825 | ) | 259,045 | 65,380 | 153,802 | (24,676 | ) | 194,506 | ||||||||||||||||||||||
2005 - 9 mths YTD | Pro Forma | Historical | ||||||||||||||||||||||||||||||
Transaction | Lender | Transaction | Lender | |||||||||||||||||||||||||||||
Processing | Processing | Corporate | Processing | Processing | Corporate | |||||||||||||||||||||||||||
Services | Services | and Other | Total | Services | Services | and Other | Total | |||||||||||||||||||||||||
Processing and services revenue | 1,726,995 | 1,156,848 | (4,186 | ) | 2,879,657 | 905,740 | 1,156,848 | (4,186 | ) | 2,058,402 | ||||||||||||||||||||||
Cost of revenues | 1,323,088 | 659,657 | — | 1,982,745 | 671,716 | 659,657 | — | 1,331,373 | ||||||||||||||||||||||||
Gross profit | 403,907 | 497,191 | (4,186 | ) | 896,912 | 234,024 | 497,191 | (4,186 | ) | 727,029 | ||||||||||||||||||||||
Selling, general and admin costs | 141,618 | 171,593 | 96,532 | 409,743 | 71,016 | 171,593 | 70,312 | 312,921 | ||||||||||||||||||||||||
Research development costs | 66,530 | 19,254 | — | 85,784 | 66,530 | 19,254 | — | 85,784 | ||||||||||||||||||||||||
Operating income | 195,759 | 306,344 | (100,718 | ) | 401,385 | 96,478 | 306,344 | (74,498 | ) | 328,324 | ||||||||||||||||||||||
Depreciation and amortization | 209,155 | 109,235 | 5,247 | 323,637 | 108,328 | 109,235 | 4,323 | 221,886 | ||||||||||||||||||||||||
EBITDA | 404,914 | 415,579 | (95,471 | ) | 725,022 | 204,806 | 415,579 | (70,175 | ) | 550,210 | ||||||||||||||||||||||