EX-99.1 2 a34833exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
 

EXHIBIT 99.1
(FIS Press Release)
FIDELITY NATIONAL INFORMATION SERVICES, INC. REPORTS
THIRD QUARTER 2007 RESULTS
LENDER PROCESSING REVENUES INCREASE 8.5%
     Jacksonville, Fla. — October 24, 2007 — 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 2007. Consolidated revenue increased to $1.2 billion, net earnings totaled $245.3 million and net earnings per diluted share totaled $1.25. These results include after-tax gains of $159.4 million ($0.81 per diluted share) and after-tax restructuring and other charges of $12.9 million ($0.07 per diluted share).
     FIS reported revenue growth of 10.4%, adjusted EBITDA growth of 14.4% and adjusted cash earnings per diluted share of $0.63. These results include a partial month of eFunds operations, which the Company acquired on September 12, 2007. “FIS delivered another quarter of solid operating performance in a challenging market,” stated FIS Executive Chairman William P. Foley, II.
     “The eFunds integration is off to a good start, and we remain confident that the additional scale and product capabilities will generate meaningful growth opportunities,” added FIS President and Chief Executive Officer Lee A. Kennedy. “We are also confident that we will achieve our targeted annualized run rate cost savings of $65 million over a two-year period. Based on our preliminary assessment, we expect eFunds to contribute approximately $0.05 to $0.10 to diluted cash earnings per share in 2008.”
     FIS’ operating results are presented on a U.S. generally accepted accounting principles (“GAAP”) basis and on an adjusted pro forma basis, which management believes provides more meaningful comparisons between the periods presented. The adjusted pro forma results exclude certain merger and acquisition and integration expenses, certain stock compensation charges, restructuring and other charges, and gains on the sale of Covansys Corporation common stock, Property Insight and other assets.
     The Company completed the sale of Property Insight on August 31, 2007. FIS’ earnings include discontinued operations of $0.01 per diluted share in the third quarter of 2007 and $0.02 per diluted share in the third quarter of 2006, as previously disclosed. Results from operations, adjusted for the gains and restructuring items described above, and other adjustments for third quarter and full year 2006, as described in Appendix A, are presented in the following table.

 


 

             
    3rd Quarter   3rd Quarter   %
(As Adjusted)   2007   2006   Chg.
Total Revenue
  $1,168.1 million   $1,058.2 million   10.4%
EBITDA
  $319.1 million   $279.0 million   14.4%
Net Earnings
  $98.7 million   $82.2 million   20.1%
Net Earnings Per Diluted Share
  $0.50   $0.42   19.0%
Cash Earnings
  $124.3 million   $110.9 million   12.1%
Cash Earnings Per Diluted Share
  $0.63   $0.57   10.5%
Diluted Shares Outstanding
  196.6 million   193.6 million    
     Revenue by segment is provided in the following table. Certain prior year numbers have been adjusted to reflect subsequent reclassifications between business units.
                         
Segment Revenues   3rd Quarter     3rd Quarter     %  
(amounts in millions)   2007     2006     Chg.  
Transaction Processing Services:
                       
Integrated Financial Solutions
  $ 296.1     $ 276.7       7.0 %
Enterprise Solutions
    255.5       257.6       (0.8 %)
International
    142.1       118.8       19.5 %
Other
    (0.8 )     (2.7 )     70.7 %
Subtotal
    692.9       650.4       6.5 %
eFunds
    26.6           nm
Subtotal
  $ 719.5     $ 650.4       10.6 %
 
                       
Lender Processing Services:
                       
Mortgage Processing
  $ 92.4     $ 93.6       (1.3 %)
Information Services
    353.2       304.3       16.1 %
Other
    (1.4 )     11.5       (112.7 %)
 
  $ 444.2     $ 409.4       8.5 %
 
                       
Corporate
  $ 4.4       (1.6 )   nm
Total FIS
  $ 1,168.1     $ 1,058.2       10.4 %

 


 

     Transaction Processing Services’ adjusted EBITDA, which includes a partial month of eFunds, increased 18.8% over the prior-year quarter to $186.7 million. The adjusted EBITDA margin was 25.9%, which is a 170 basis point increase compared to prior year.
     Lender Processing Services’ adjusted EBITDA was $150.8 million, or 6.2% above the prior year quarter. The adjusted EBITDA margin was 33.9%, compared to 32.4% in the second quarter of 2007, and 34.7% in the third quarter of 2006. The decline from the prior year quarter is the result of strong growth in lower margin appraisal volumes and reduced volumes in origination and tax services.
     Corporate EBITDA, as adjusted, for the third quarter of 2007 totaled $18.3 million. The $2.0 million decrease compared to the prior year quarter is attributable to lower compensation and benefit expense. The effective tax rate was 37.0%.
Full Year 2007 Outlook
     Management expects full year 2007 adjusted net earnings of approximately $1.90 per diluted share, which has been adjusted to reflect a $0.03 per share impact from the sale of Property Insight and a $0.04 per share impact for purchase amortization associated with the acquisition of eFunds. The Company anticipates cash earnings to be at the low end of its previously announced guidance of $2.44 to $2.50 per diluted share, which reflects the impact of the sale of Property Insight. eFunds is expected to be neutral to 2007 cash earnings per diluted share.
Use of Non-GAAP Financial Information
     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 tax-adjusted purchase price amortization (“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 GAAP and pro forma results and GAAP and non-GAAP results, and schedules showing historical detail are provided in the attachments to this press release, which is also available on the Company’s website www.fidelityinfoservices.com.
Conference Call
     FIS will host a call with investors and analysts to discuss third quarter results on Thursday, October 25, 2007, beginning at 8:30 a.m. Eastern time. Those wishing to participate via the webcast should access the call through FIS’ Investor Relations website at http://www.fidelityinfoservices.com. Those wishing to participate via the telephone may do so by calling 800-762-6568 (USA) or 480-248-5088 (International). The webcast

 


 

replay will be available on FIS’ Investor Relations website. The telephone replay will be available through November 10, 2007, by dialing 800-475-6701 (USA) or 320-365-3844 (International). The access code will be 890767.
About Fidelity National Information Services
     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 10. Approximately 50 percent of all U.S. residential mortgages are processed using FIS software. FIS is a member of Standard and Poor’s (S&P) 500® Index and has been ranked the number one banking service provider in the world by American Banker and the research firm Financial Insights and the number two overall financial technology provider in the annual FinTech 100 rankings. Headquartered in Jacksonville, Fla., FIS maintains a strong global presence, serving more than 10,000 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; 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; the risks and uncertainties related to our recently announced data theft, which continues to be investigated, and which includes the potential for fines, increased operating costs and loss of business; 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
SOURCE: Fidelity National Information Services, Inc.
CONTACT: Mary Waggoner, Senior Vice President, Investor Relations, 904-854-3282, mary.waggoner@fnis.com
Michelle Kersch, Senior Vice President, Corporate Communications, 904-854-5043, michelle.kersch@fnis.com
###

 


 

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
UNAUDITED CONSOLIDATED RESULTS FOR THE THREE AND NINE MONTHS ENDING SEPTEMBER 30, 2007 AND 2006
(In thousands)
                                 
    Three months ended September 30,     Nine months ended September 30,  
    2007     2006     2007     2006  
Processing and services revenues
  $ 1,168,067     $ 1,058,197     $ 3,427,602     $ 2,933,641  
Cost of revenues
    838,912       758,813       2,470,143       2,072,464  
Selling, general, and administrative expenses
    123,802       111,014       363,922       379,278  
Research and development costs
    26,456       25,855       77,153       77,561  
 
                       
 
                               
Operating income
    178,897       162,515       516,384       404,338  
 
                               
Other income (expense) Interest income
    1,073       444       2,255       3,559  
Gain on sale of Covansys stock
    182,444             274,488        
Other income (expense)
    3,332       (593 )     4,812       (1,682 )
Interest expense
    (44,370 )     (49,717 )     (159,454 )     (142,018 )
 
                       
Total other income (expense)
    142,479       (49,866 )     122,101       (140,141 )
 
                       
 
                               
Earnings before income taxes, equity earnings and minority interest
    321,376       112,649       638,485       264,197  
Provision for income taxes
    118,909       40,207       236,240       98,266  
Equity in loss (earnings) of unconsolidated entities
    406       (1,686 )     (1,266 )     (3,778 )
Minority interest expense (income)
    799       (34 )     1,463       (40 )
 
                       
 
                               
Net earnings from continuing operations
    201,262       74,162       402,048       169,749  
Net earnings from discontinued operations
    1,918       4,418       8,639       14,218  
Gain on disposition of Property Insight
    42,124             42,124        
 
                       
 
                               
Net Earnings
  $ 245,304     $ 78,580     $ 452,811     $ 183,967  
 
                       
 
                               
Net earnings per share-basic from continuing operations
  $ 1.04     $ 0.39     $ 2.09     $ 0.92  
Net earnings per share-basic from discontinued operations
  $ 0.23     $ 0.02     $ 0.26     $ 0.08  
 
                       
Net earnings per share-basic
  $ 1.27     $ 0.41     $ 2.35     $ 1.00  
 
                       
 
                               
Weighted average shares outstanding-basic
    193,172       190,680       192,609       184,373  
 
                       
 
                               
Net earnings per share-diluted from continuing operations
  $ 1.02     $ 0.39     $ 2.04     $ 0.90  
Net earnings per share-diluted from discontinued operations
  $ 0.23     $ 0.02     $ 0.26     $ 0.08  
 
                       
Net earnings per share-diluted
  $ 1.25     $ 0.41     $ 2.30     $ 0.98  
 
                       
 
                               
Weighted average shares outstanding-diluted
    196,649       193,626       196,480       187,405  
 
                       


 

Appendix A- Historical Detail and Reconciliation of Non-GAAP Measures

EBITDA Detail

         
2007 Q3   FIS  
Net Earnings from Continuing Operations
  $ 201,262  
+ Interest Expense
    44,370  
+ Minority Interest
    799  
+ Income Taxes
    118,909  
+ Depreciation
    28,379  
+ Purchase Price Amortization
    40,600  
+ Other Amortization
    65,316  
- Interest Income
    (1,073 )
- Equity in (Earnings) Losses of Unconsolidated Entities, net of tax
    406  
- Other (Income) Expense
    (3,332 )
- Covansys Gain
    (182,444 )
 
     
EBITDA
  $ 313,192  
 
     
EBITDA Margin

         
2007 Q3   FIS  
EBITDA
  $ 313,192  
Revenue from Continuing Operations
  $ 1,168,067  
EBITDA Margin
    26.8 %
EBIT Detail

         
2007 Q3   FIS  
Net Earnings from Continuing Operations
  $ 201,262  
+ Interest Expense
    44,370  
+ Minority Interest
    799  
+ Income Taxes
    118,909  
- Interest Income
    (1,073 )
- Equity in (Earnings) Losses of Unconsolidated Entities, net of tax
    406  
- Other (Income) Expense
    (3,332 )
- Covansys Gain
    (182,444 )
 
     
EBIT
  $ 178,897  
 
     
EBIT Margin

         
2007 Q3   FIS  
EBIT
  $ 178,897  
Revenue from Continuing Operations
  $ 1,168,067  
EBIT Margin
    15.3 %
Cash Earnings

         
2007 Q3   FIS  
Net Earnings
  $ 245,304  
+ Tax Adjusted Purchase Price Amortization
    25,578  
 
     
Cash Earnings
  $ 270,882  
 
     
 
       
Diluted Cash EPS
  $ 1.38  
Diluted Shares Outstanding
    196,649  
EBITDA Detail

         
2006 Q3   FIS  
Net Earnings from Continuing Operations
  $ 74,162  
+ Interest Expense
    49,717  
+ Minority Interest
    (34 )
+ Income Taxes
    40,207  
+ Depreciation
    22,954  
+ Purchase Price Amortization
    45,545  
+ Other Amortization
    42,321  
- Interest Income
    (444 )
- Equity in (Earnings) Losses of Unconsolidated Entities, net of tax
    (1,686 )
- Other (Income) Expense
    593  
 
       
 
     
EBITDA
  $ 273,335  
 
     
EBITDA Margin

         
2006 Q3   FIS  
EBITDA
  $ 273,335  
Revenue from Continuing Operations
  $ 1,058,197  
EBITDA Margin
    25.8 %
EBIT Detail

         
2006 Q3   FIS  
Net Earnings from Continuing Operations
  $ 74,162  
+ Interest Expense
    49,717  
+ Minority Interest
    (34 )
+ Income Taxes
    40,207  
- Interest Income
    (444 )
- Equity in (Earnings) Loss of Unconsolidated Entities, net of tax
    (1,686 )
- Other (Income) Expense
    593  
 
       
 
     
EBIT
  $ 162,515  
 
     
EBIT Margin

         
2006 Q3   FIS  
EBIT
  $ 162,515  
Revenue from Continuing Operations
  $ 1,058,197  
EBIT Margin
    15.4 %
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

         
2007 Q3   FIS  
Net Earnings
  $ 245,304  
+ Depreciation/Amort
    134,440  
- Capital Expenditures
    (90,661 )
 
     
Free Cash Flow
  $ 289,083  
 
     

         
2007 Q3        
Stock Compensation
  $ 9,890  

         
2007 Q3 Financial Measures Excluding Certain Items
 
       
EBITDA
  $ 313,192  
Merger and Acquisition, Restructuring and Integration Costs
    5,924  
 
     
EBITDA, excluding non recurring items
  $ 319,116  
 
     
 
       
Net Earnings
  $ 245,304  
Merger and Acquisition, Restructuring and Integration Costs, net of tax
    10,505  
Covansys Gain, net of tax
    (114,939 )
Gain on Property Insight, net of tax
    (42,124 )
 
     
Net Earnings , excluding non recurring items
  $ 98,746  
 
     
 
       
Diluted Shares Outstanding
    196,649  
 
       
Net Earnings per diluted share
  $ 1.25  
Merger and Acquisition, Restructuring and Integration Costs, net of tax
    0.05  
Covansys Gain, net of tax
    (0.58 )
Gain on Property Insight, net of tax
    (0.21 )
 
     
Net Earnings per diluted share, excluding non recurring items
  $ 0.50  
 
     
 
       
Cash Earnings
  $ 270,882  
Merger and Acquisition, Restructuring and Integration Costs, net of tax
    10,505  
Covansys Gain, net of tax
    (114,939 )
Gain on Property Insight, net of tax
    (42,124 )
 
     
Cash Earnings, excluding non recurring items
  $ 124,324  
 
     
 
       
Cash Earnings per diluted share
  $ 1.38  
Merger and Acquisition, Restructuring and Integration Costs, net of tax
    0.05  
Covansys Gain, net of tax
    (0.58 )
Gain on Property Insight, net of tax
    (0.21 )
 
     
Cash Earnings per diluted share, excluding non recurring items
  $ 0.63  
 
     
 
       
Free Cash Flow
  $ 289,083  
Merger and Acquisition, Restructuring and Integration Costs, net of tax
    (3,026 )
Covansys Gain, net of tax
    (114,939 )
Gain on Property Insight, net of tax
    (42,124 )
 
     
Free Cash Flow, excluding non recurring items
  $ 128,994  
 
     
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  

         
2006 Q3 Financial Measures
Excluding Non Recurring Items
 
       
EBITDA
  $ 273,335  
Merger and Acquisition, and Integration Costs
    5,621  
 
     
EBITDA, excluding non recurring items
  $ 278,956  
 
     
 
       
Net Earnings
  $ 78,580  
Merger and Acquisition, and Integration Costs, net of tax
    3,575  
 
       
 
     
Net Earnings, excluding non recurring items
  $ 82,155  
 
     
 
       
Diluted Shares Outstanding
    193,626  
 
       
 
       
Net Earnings per diluted share
  $ 0.41  
Merger and Acquisition, and Integration Costs per share
    0.01  
 
     
Net Earnings per diluted share, excluding non recurring items
  $ 0.42  
 
     
 
       
 
       
Cash Earnings
  $ 107,329  
Merger and Acquisition, and Integration Costs, net of tax
    3,575  
 
     
Cash Earnings, excluding non recurring items
  $ 110,904  
 
     
 
       
Cash Earnings per diluted share
  $ 0.55  
Merger and Acquisition, and Integration Costs per share
    0.02  
 
       
 
     
Cash Earnings per diluted share, excluding non recurring items
  $ 0.57  
 
     
 
       
Free Cash Flow
  $ 122,601  
Merger and Acquisition, and Integration Costs, net of tax
    3,575  
 
     
Free Cash Flow, excluding non recurring items
  $ 126,176  
 
     


 


 

Appendix B
Unaudited Pro Forma and Historical Segment Information
For the Three and Nine Months Ended September 30, 2007 and 2006
(In thousands Except Per Share Data)
2007 — Quarter 3
                                 
    Historical  
    Transaction     Lender     Corporate        
    Processing Services     Processing Services     and Other     Total  
Processing and services revenue
    719,541       444,183       4,343       1,168,067  
Cost of revenues
    569,436       269,476             838,912  
 
                       
Gross profit
    150,105       174,707       4,343       329,155  
Selling, general and admin costs
    46,638       48,168       28,996       123,802  
Research development costs
    17,579       8,877             26,456  
 
                       
Operating income
    85,888       117,662       (24,653 )     178,897  
 
                               
Depreciation and amortization
    96,150       32,427       5,718       134,295  
 
                       
EBITDA
    182,038       150,089       (18,935 )     313,192  
 
                       
 
                               
EBITDA
    182,038       150,089       (18,935 )     313,192  
Merger and Acquisition, and Integration costs
    4,614       707       603       5,924  
 
                       
EBITDA, excluding non-recurring items
    186,652       150,796       (18,332 )     319,116  
2006- Quarter 3
                                 
    Historical  
    Transaction     Lender     Corporate        
    Processing Services     Processing Services     and Other     Total  
Processing and services revenue
    650,406       409,431       (1,640 )     1,058,197  
Cost of revenues
    514,390       244,423             758,813  
 
                       
Gross profit
    136,016       165,008       (1,640 )     299,384  
Selling, general and admin costs
    39,736       49,622       21,656       111,014  
Research development costs
    17,838       8,017             25,855  
 
                       
Operating income
    78,442       107,369       (23,296 )     162,515  
 
                               
Depreciation and amortization
    75,158       33,343       2,319       110,820  
 
                       
EBITDA
    153,600       140,712       (20,977 )     273,335  
 
                       
 
                               
EBITDA
    153,600       140,712       (20,977 )     273,335  
Merger and Acquisition costs
    3,568       1,337       716       5,621  
 
                       
EBITDA, excluding selected items
    157,168       142,049       (20,261 )     278,956