Investors

Press Release


FIS Reports First Quarter 2016 Results

  • Revenue of $2.2 billion, 4.2 percent organic revenue growth
  • EPS from continuing operations of $0.17, or $0.79 on an adjusted basis, a 22% increase
  • SunGard integration ahead of plan
  • Free cash flow of $338 million

JACKSONVILLE, Fla.--(BUSINESS WIRE)--May 3, 2016-- FIS™ (NYSE:FIS), a global leader in financial services technology, today reported that first quarter revenue increased to $2.2 billion from $1.6 billion in the first quarter of 2015. GAAP net earnings from continuing operations attributable to common stockholders was $55 million, or $0.17 per diluted share, compared to $114 million, or $0.40 per diluted share in the prior year quarter.

Organic revenue growth was 4.2 percent in the quarter. Adjusted net earnings from continuing operations attributable to common stockholders was $259 million for the quarter, or $0.79 per share compared to $0.65 per share in the prior year period, an increase of 22 percent. Adjusted EBITDA increased to $637 million in the first quarter 2016, from $589 million adjusted combined EBITDA in the prior year quarter, while adjusted EBITDA margin was 28.2 percent.

“We are pleased with our strong performance to start the year, which was driven by solid sales execution, high-quality recurring revenues, and earnings,” said Gary Norcross, president and chief executive officer, FIS. “The addition of solutions from the SunGard portfolio and synergy attainment significantly expanded margins. These gains underscore our commitment to delivering top-line growth with margin expansion to create long-term value for FIS shareholders.”

Definitions of non-GAAP financial measures and reconciliations of non-GAAP measures to related GAAP measures are provided in subsequent sections of the press release narrative and supplemental schedules.

Segment Information

Certain items within our prior period segment results have been recast to reflect the manner in which the business is currently operated and managed.

  • Integrated Financial Solutions:

First quarter revenue grew to $1.1 billion. Organic revenue growth was 5.4 percent in the quarter. Adjusted EBITDA increased to $426 million and adjusted EBITDA margin was 38.0 percent.

  • Global Financial Solutions:

First quarter revenue increased to $990 million. Organic revenue growth was 4.4 percent in the quarter. Adjusted EBITDA increased to $251 million and adjusted EBITDA margin was 25.4 percent.

  • Corporate / Other:

The Corporate and Other segment now includes: the public sector & education, retail check processing, and commercial service businesses. First quarter revenue was $70 million. Adjusted EBITDA loss was $40 million and is inclusive of $76 million of corporate expenses.

First quarter interest expense, net of interest income was $93 million. The effective tax rate on an adjusted basis was 35.0 percent in the first quarter.

Balance Sheet and Cash Flow

As of March 31, 2016, cash and cash equivalents totaled $702 million and debt outstanding totaled $11.3 billion.

Net cash provided by operations was $385 million and adjusted cash flow from operations was $483 million for the first quarter. Capital expenditures were $145 million and free cash flow was $338 million.

The company paid dividends in the first quarter totaling $85 million.

2016 Outlook

FIS maintains its 2016 outlook as follows:

  • Organic revenue growth of 3 to 4 percent
  • Adjusted EPS from continuing operations of $3.70 to $3.80, an increase of 15 to 18 percent compared to $3.22 per share in 2015
  • Free cash flow is expected to approximate adjusted net earnings

Webcast

FIS will announce first quarter 2016 financial results on Tuesday, May 3rd prior to market open. The company will sponsor a live webcast of its earnings conference call with the investment community, beginning at 8:30 a.m. (EDT) Tuesday, May 3rd. To access the webcast, go to the Investor Relations section of FIS’ homepage, www.fisglobal.com. A replay will be available after the conclusion of the live webcast.

Use of Non-GAAP Financial Information

Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, the company has provided non-GAAP financial measures, which it believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. For these reasons, management also uses these measures in part to assess its performance.

These non-GAAP measures include: adjusted revenue, adjusted EBITDA, adjusted EBITDA margin, adjusted combined revenue, adjusted combined EBITDA, adjusted combined EBITDA margin, EBITDA, constant currency revenue, organic revenue growth, adjusted net earnings from continuing operations (including per share amounts), adjusted cash flow from operations, and free cash flow. These non-GAAP measures may be used in this release and/or in the attached supplemental financial information.

Adjusted revenue includes reported revenue and is increased to adjust for the purchase accounting deferred revenue adjustment to estimated fair value, determined as fulfillment cost plus a normal profit margin. The deferred revenue adjustment represents revenue that would have been recognized in the normal course of business by SunGard but was not recognized due to GAAP purchase accounting adjustments.

Adjusted EBITDA excludes certain costs and other transactions which management deems non-recurring or unusual in nature, the removal of which improves comparability of operating results across reporting periods.

Adjusted EBITDA margin reflects adjusted EBITDA divided by adjusted revenue.

Adjusted combined revenue includes reported revenue for FIS and SunGard combined for periods in 2014 and 2015 and excludes the impacts of SunGard businesses that were divested prior to being purchased by FIS.

Adjusted combined EBITDA includes EBITDA for FIS and SunGard combined for periods in 2014 and 2015 and excludes certain costs and other transactions which management deems non-recurring or unusual in nature, such as purchase accounting amortization, acquisition, integration and severance costs and restructuring costs, the removal of which improves comparability of operating results across reporting periods.

Adjusted combined EBITDA margin reflects adjusted combined EBITDA divided by adjusted combined revenue.

EBITDA reflects earnings from continuing operations before interest, taxes, depreciation and amortization.

Constant currency revenue is reported revenue excluding the impact of fluctuations in foreign currency exchange rates in the current period.

Organic revenue growth includes reported revenue, adjusted to exclude revenue of any divestitures, include pre-acquisition revenue for companies acquired during the applicable reporting period and exclude the impact of foreign currency fluctuations.

Adjusted net earnings from continuing operations excludes the after tax impact of certain costs and other transactions which management deems non-recurring or unusual in nature, the removal of which improves comparability of operating results across reporting periods. It also excludes the after tax impact of acquisition-related purchase accounting amortization, which is recurring.

Adjusted net earnings per diluted share, or adjusted EPS, reflects adjusted net earnings from continuing operations divided by weighted average diluted shares outstanding.

Adjusted cash flow from operations reflects GAAP cash flow from operations as adjusted for the net change in settlement assets and obligations, and excludes certain transactions that are closely associated with non-operating activities or are otherwise non-recurring or unusual in nature and not indicative of future operating cash flows.

Free cash flow reflects adjusted cash flow from operations less capital expenditures. Free cash flow does not represent our residual cash flow available for discretionary expenditures, since we have mandatory debt service requirements and other non-discretionary expenditures that are not deducted from the measure.

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 measures. Further, FIS’ non-GAAP measures may be calculated differently from similarly titled measures of other companies. Reconciliations of these non-GAAP measures to related GAAP measures, including footnotes describing the specific adjustments, are provided in the attached schedules and in the Investor Relations section of the FIS web site, www.fisglobal.com.

About FIS

FIS is a global leader in financial services technology, with a focus on retail and institutional banking, payments, asset and wealth management, risk and compliance, consulting, and outsourcing solutions. Through the depth and breadth of our solutions portfolio, global capabilities and domain expertise, FIS serves more than 20,000 clients in over 130 countries. Headquartered in Jacksonville, Fla., FIS employs more than 55,000 people worldwide and holds global leadership positions in payment processing, financial software and banking solutions. Providing software, services and outsourcing of the technology that empowers the financial world, FIS is a Fortune 500 company and is a member of Standard & Poor’s 500® Index. For more information about FIS, visit www.fisglobal.com.

Follow FIS on Facebook (facebook.com/FIStoday) and Twitter (@FISGlobal).

Forward-Looking Statements

This news release and today’s webcast contain “forward-looking statements” within the meaning of the U.S. federal securities laws. Statements that are not historical facts, including statements about anticipated financial outcomes, including any earnings guidance of the Company, business and market conditions, outlook, foreign currency exchange rates, expected dividends and share repurchases, the Company’s sales pipeline and anticipated profitability and growth, as well as other statements about our expectations, hopes, intentions, or strategies regarding the future, are forward-looking statements. These statements relate to future events and our future results, and involve a number of risks and uncertainties. Forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. Any statements that refer to beliefs, expectations, projections or other characterizations of future events or circumstances and other statements that are not historical facts are forward-looking statements.

Actual results, performance or achievement could differ materially from those contained in these forward-looking statements. The risks and uncertainties that forward-looking statements are subject to include, without limitation:

  • the risk that acquired businesses will not be integrated successfully, or that the integration will be more costly or more time-consuming and complex than anticipated;
  • the risk that cost savings and other synergies anticipated to be realized from acquisitions may not be fully realized or may take longer to realize than expected;
  • the risk of doing business internationally;
  • changes in general economic, business and political conditions, including the possibility of intensified international hostilities, acts of terrorism, and changes in either or both the United States and international lending, capital and financial markets;
  • the effect of legislative initiatives or proposals, statutory changes, governmental or other applicable regulations and/or changes in industry requirements, including privacy regulations;
  • the risks of reduction in revenue from the elimination of existing and potential customers due to consolidation in, or new laws or regulations affecting, the banking, retail and financial services industries or due to financial failures or other setbacks suffered by firms in those industries;
  • changes in the growth rates of the markets for our solutions;
  • failures to adapt our solutions to changes in technology or in the marketplace;
  • internal or external security breaches of our systems, including those relating to unauthorized access, theft, corruption or loss of personal information and computer viruses and other malware affecting our software or platforms, and the reactions of customers, card associations, government regulators and others to any such events;
  • the risk that implementation of software (including software updates) for customers or at customer locations may result in the corruption or loss of data or customer information, interruption of business operations, exposure to liability claims or loss of customers;
  • the reaction of current and potential customers to communications from us or regulators regarding information security, risk management, internal audit or other matters;
  • competitive pressures on pricing related to our solutions including the ability to attract new, or retain existing, customers;
  • an operational or natural disaster at one of our major operations centers; and
  • other risks detailed under “Risk Factors” and other sections of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and other filings with the SEC.

Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition, results of operations and prospects. Accordingly, readers should not place undue reliance on these forward-looking statements. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Except as required by applicable law or regulation, we do not undertake (and expressly disclaim) any obligation and do not intend to publicly update or review any of these forward-looking statements, whether as a result of new information, future events or otherwise.

 
Fidelity National Information Services, Inc.
Earnings Release Supplemental Financial Information
May 3, 2016
     
Exhibit A Condensed Consolidated Statements of Earnings - Unaudited for the three months ended March 31, 2016 and 2015
 
Exhibit B Condensed Consolidated Balance Sheets - Unaudited as of March 31, 2016 and December 31, 2015
 
Exhibit C Condensed Consolidated Statements of Cash Flows - Unaudited for the three months ended March 31, 2016 and 2015
 
Exhibit D Supplemental Non-GAAP Financial Information - Unaudited for the three months ended March 31, 2016 and 2015
 
Exhibit E Supplemental GAAP to Non-GAAP Reconciliation - Unaudited for the three months ended March 31, 2016 and 2015
 
   

FIDELITY NATIONAL INFORMATION SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS — UNAUDITED

(In millions, except per share data)

 

Exhibit A

 
Three months ended March 31,
2016 2015
Processing and services revenues $ 2,181 $ 1,555
Cost of revenues 1,553   1,070  
Gross profit 628 485
Selling, general and administrative expenses 444   270  
Operating income 184   215  
Other income (expense):
Interest expense, net (93 ) (37 )
Other income (expense), net (1 ) (2 )
Total other income (expense), net (94 ) (39 )
Earnings from continuing operations before income taxes 90 176
Provision for income taxes 31   58  
Earnings from continuing operations, net of tax 59 118
Earnings (loss) from discontinued operations, net of tax   (3 )
Net earnings 59 115
Net earnings attributable to noncontrolling interest (4 ) (4 )
Net earnings attributable to FIS common stockholders $ 55   $ 111  
Net earnings per share-basic from continuing operations attributable to FIS common stockholders $ 0.17 $ 0.40
Net earnings (loss) per share-basic from discontinued operations attributable to FIS common stockholders   (0.01 )
Net earnings per share-basic attributable to FIS common stockholders * $ 0.17   $ 0.39  
Weighted average shares outstanding-basic 324   283  
Net earnings per share-diluted from continuing operations attributable to FIS common stockholders $ 0.17 $ 0.40
Net earnings (loss) per share-diluted from discontinued operations attributable to FIS common stockholders   (0.01 )
Net earnings per share-diluted attributable to FIS common stockholders * $ 0.17   $ 0.39  
Weighted average shares outstanding-diluted 327   287  
Amounts attributable to FIS common stockholders:
Earnings from continuing operations, net of tax $ 55 $ 114
Earnings (loss) from discontinued operations, net of tax   (3 )
Net earnings attributable to FIS common stockholders $ 55   $ 111  
 

* Amounts may not sum due to rounding.

 
   

FIDELITY NATIONAL INFORMATION SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED

(In millions, except per share data)

 
Exhibit B
 
March 31, December 31,
2016 2015
Assets
Current assets:
Cash and cash equivalents $ 702 $ 682
Settlement deposits 299 371
Trade receivables, net 1,727 1,731
Settlement receivables 291 162
Other receivables 178 197
Prepaid expenses and other current assets 290 266
Deferred income taxes 142   100  
Total current assets 3,629 3,509
Property and equipment, net 611 611
Goodwill 14,576 14,745
Intangible assets, net 5,387 5,159
Computer software, net 1,608 1,584
Deferred contract costs, net 264 253
Other noncurrent assets 355   339  
Total assets $ 26,430   $ 26,200  
 
Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities $ 1,194 $ 1,196
Settlement payables 574 538
Deferred revenues 790 615
Current portion of long-term debt 764   15  
Total current liabilities 3,322 2,364
Long-term debt, excluding current portion 10,533 11,429
Deferred income taxes 2,743 2,658
Deferred revenues 19 30
Other long-term liabilities 324   312  
Total liabilities 16,941   16,793  
Equity:
FIS stockholders’ equity:
Preferred stock $0.01 par value
Common stock $0.01 par value 4 4
Additional paid in capital 10,239 10,210
Retained earnings 3,043 3,073
Accumulated other comprehensive earnings (loss) (232 ) (279 )
Treasury stock, at cost (3,661 ) (3,687 )
Total FIS stockholders’ equity 9,393 9,321
Noncontrolling interest 96   86  
Total equity 9,489   9,407  
Total liabilities and equity $ 26,430   $ 26,200  
 
   

FIDELITY NATIONAL INFORMATION SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED

(In millions)

 
Exhibit C
 
Three months ended March 31,
2016 2015
Cash flows from operating activities:
Net earnings $   59 $ 115
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 293 153
Amortization of debt issue costs 5 2
Stock-based compensation 30 19
Deferred income taxes (64 ) (22 )
Excess income tax benefit from exercise of stock options (8 ) (9 )
Other operating activities, net (1 ) 2
Net changes in assets and liabilities, net of effects from acquisitions and foreign currency:
Trade receivables 21 (22 )
Settlement activity (20 ) (54 )
Prepaid expenses and other assets (51 ) (24 )
Deferred contract costs (17 ) (28 )
Deferred revenue 165 56
Accounts payable, accrued liabilities and other liabilities (27 ) 43  
Net cash provided by operating activities 385   231  
 
Cash flows from investing activities:
Additions to property and equipment (34 ) (42 )
Additions to computer software (111 ) (59 )
Other investing activities, net (1 ) (1 )
Net cash used in investing activities (146 ) (102 )
 
Cash flows from financing activities:
Borrowings 1,639 1,686
Repayment of borrowings and capital lease obligations (1,791 ) (1,559 )
Excess income tax benefit from exercise of stock options 8 9
Proceeds from exercise of stock options 26 13
Treasury stock activity (18 ) (156 )
Dividends paid (85 ) (74 )
Other financing activities, net (18 ) (17 )
Net cash used in financing activities (239 ) (98 )
 
Effect of foreign currency exchange rate changes on cash 20   (35 )
 
Net increase (decrease) in cash and cash equivalents 20 (4 )
Cash and cash equivalents, at beginning of period 682   493  
Cash and cash equivalents, at end of period $   702   $ 489  
 
       

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION — UNAUDITED

(In millions)

 
Exhibit D
 
Three months ended March 31, 2016

Integrated
Financial
Solutions

Global
Financial
Solutions

Corporate
and Other

Consolidated
Processing and services revenue $ 1,121 $ 990 $ 70 $ 2,181
Non-GAAP adjustments:
Acquisition deferred revenue adjustment (1)     81   81  
Adjusted processing and services revenue $ 1,121   $ 990   $ 151   $ 2,262  
 
Operating income (loss) $ 359 $ 187 $ (362 ) $ 184
Non-GAAP adjustments:
Acquisition deferred revenue adjustment (1) 81 81
Acquisition, integration and severance costs (2) 79 79
Purchase accounting amortization (5) 1   6   147   154  
Non-GAAP operating income (loss) 360 193 (55 ) 498
Depreciation and amortization from continuing operations 66   58   15   139  
Adjusted EBITDA $ 426   $ 251   $ (40 ) $ 637  
 
Non-GAAP operating margin 32.1 % 19.5 % N/M 22.0 %
 
Adjusted EBITDA margin 38.0 % 25.4 % N/M 28.2 %
 
Three months ended March 31, 2015

Integrated
Financial
Solutions

Global
Financial
Solutions

 

Corporate
and Other

Consolidated
Processing and services revenue, as reported $ 928 $ 512 $ 115 $ 1,555
Historical SunGard revenue, as adjusted (4) 132   475   59   666  
Adjusted combined revenue from continuing operations $ 1,060   $ 987   $ 174   $ 2,221  
 
Operating income (loss), as reported $ 319 $ 46 $ (150 ) $ 215
Historical SunGard operating income, as adjusted (4) 40 119 (31 ) 128
FIS non-GAAP adjustments:
Acquisition, integration and severance costs (2) 12 12
Global restructure (3) 45 45
Purchase accounting amortization (5)       50   50  
Adjusted combined operating income (loss) 359 165 (74 ) 450
FIS depreciation and amortization from continuing operations 52 35 16 103
Historical SunGard depreciation and amortization from continuing operations, as adjusted (4) 6   24   6   36  
Adjusted combined EBITDA $ 417   $ 224     $ (52 ) $ 589  
 
Non-GAAP combined operating margin 33.9 % 16.7 %   N/M 20.3 %
 
Adjusted combined EBITDA margin 39.3 % 22.7 % N/M 26.5 %
 

(1) See note (1) to Exhibit E.

(2) See note (2) to Exhibit E.

(3) See note (3) to Exhibit E.

(4) See note (4) to Exhibit E.

(5) See note (5) to Exhibit E.

 
       

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL NON-GAAP ORGANIC REVENUE GROWTH — UNAUDITED

(In millions)

 
Exhibit D (continued)
     
Three months ended March 31,
2016 2015
Constant
Currency In Year Adjusted Organic
Revenue (1) FX Revenue Revenue Adjustments (2) Base Growth
Integrated Financial Solutions $ 1,121 $ 1 $ 1,122 $ 928 $ 137 $ 1,065 5.4%
Global Financial Solutions 990 40 1,030 512 475 987 4.4%
Corporate and Other 151     151   115   43   158   N/M
Total processing and services revenue $ 2,262   $ 41   $ 2,303   $ 1,555   $ 655   $ 2,210   4.2%
 

(1) As adjusted. See Note (1) to Exhibit E.

(2) In year adjustments primarily include SunGard acquisition revenues.

 
 

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL NON-GAAP CASH FLOW MEASURES — UNAUDITED

(In millions)

 
Exhibit D (continued)
 
Three months ended March 31,
2016 2015
Net cash provided by operating activities $ 385 $ 231
Non-GAAP adjustments:
Capco acquisition related payments (1) 20 30
Acquisition, integration and severance payments (2) 58
Settlement activity 20   54  
Adjusted cash flows from operations 483 315
Capital expenditures (145 ) (101 )
Free cash flow $ 338   $ 214  
 

(1) Adjusted cash flow from operations and free cash flow for the three months ended March 31, 2016 and 2015 excludes payments for contingent purchase price and the New Hires and Promotions Incentive Plan associated with the 2010 acquisition of Capco. In accordance with the accounting guidance, contingent purchase price payments are included in financing activities on the Condensed Consolidated Statements of Cash Flows only to the extent they represent the original liability established at the acquisition date. Payments related to subsequent adjustments to the contingent purchase price are included in the net cash provided by operating activities.

(2) Adjusted cash flow from operations and free cash flow for the three months ended March 31, 2016 excludes cash payments for certain acquisition, integration and severance expenses, net of related tax impact.

   

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL GAAP TO NON-GAAP RECONCILIATION — UNAUDITED

(In millions)

 

Exhibit E

 
Three months ended
March 31,
2016 2015
 
Net earnings from continuing operations attributable to FIS $ 55 $ 114
Provision for income taxes 31 58
Interest expense, net 93 37
Other, net 5   6
 
Operating income (loss), as reported 184 215
Historical SunGard operating income, as adjusted (4) 128
FIS non-GAAP adjustments:
Acquisition deferred revenue adjustment (1) 81
Acquisition, integration and severance (2) 79 12
Global restructure (3) 45
Purchase accounting amortization (5) 154   50
 
Adjusted combined operating income (loss) 498 450
FIS depreciation and amortization from continuing operations, as reported 139 103
Historical SunGard depreciation and amortization from continuing operations, as adjusted (4)   36
Adjusted combined EBITDA $ 637   $ 589
 

(1) See note (1) to Exhibit E.

(2) See note (2) to Exhibit E.

(3) See note (3) to Exhibit E.

(4) See note (4) to Exhibit E.

(5) See note (5) to Exhibit E.

 
         

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL GAAP TO NON-GAAP RECONCILIATION — UNAUDITED

(In millions)

 
Exhibit E (continued)
 
Three months ended March 31, 2016
Acquisition,
Acquisition Integration,
Deferred and Purchase
Revenue Severance Accounting
GAAP Adjustment (1) Costs (2) Subtotal Amortization (5) Non-GAAP
Processing and services revenue $ 2,181 $ 81 $ $ 2,262 $ $ 2,262
Cost of revenues 1,553       1,553   (154 ) 1,399  
Gross profit 628 81 709 154 863
Selling, general and administrative expenses 444     (79 ) 365     365  
Operating income 184   81   79   344   154   498  
Other income (expense):
Interest income (expense), net (93 ) (93 ) (93 )
Other income (expense), net (1 )     (1 )   (1 )
Total other income (expense) (94 )     (94 )   (94 )
Earnings (loss) from continuing operations before income taxes 90 81 79 250 154 404
Provision for income taxes 31   28   28   87   54   141  
Earnings (loss) from continuing operations, net of tax 59 53 51 163 100 263
Earnings (loss) from discontinued operations, net of tax            
Net earnings (loss) 59 53 51 163 100 263
Net (earnings) loss attributable to noncontrolling interest (4 )     (4 )   (4 )
Net earnings (loss) attributable to FIS common stockholders $ 55   $ 53   $ 51   $ 159   $ 100   $ 259  
 
Amounts attributable to FIS common stockholders
Earnings (loss) from continuing operations, net of tax $ 55 $ 53 $ 51 $ 159 $ 100 $ 259
Earnings (loss) from discontinued operations, net of tax            
Net earnings (loss) attributable to FIS common stockholders $ 55   $ 53   $ 51   $ 159   $ 100   $ 259  
 
Net earnings (loss) per share — diluted from continuing operations attributable to FIS common stockholders* $ 0.17   $ 0.16   $ 0.16   $ 0.49   $ 0.31   $ 0.79  
Weighted average shares outstanding — diluted 327   327   327   327   327   327  
 
Effective tax rate * 35 % 35 %
 
Supplemental information:
Depreciation and amortization $ 293   (154 ) $ 139  
 
Stock compensation expense $ 30  
 

* Amounts may not sum due to rounding.

 

See accompanying notes.

 
           

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL GAAP TO NON-GAAP RECONCILIATION — UNAUDITED

(In millions)

 
Exhibit E (continued)
Three months ended March 31, 2015
Acquisition
Integration
and Purchase
Severance Global Accounting
GAAP Costs (2) Restructure (3) Subtotal Amortization (5) Non-GAAP
Processing and services revenue $ 1,555 $ $ $ 1,555 $ $ 1,555
Cost of revenues 1,070       1,070   (50 ) 1,020  
Gross profit 485 485 50 535
Selling, general and administrative expenses 270   (12 ) (45 ) 213     213  
Operating income 215   12   45   272   50   322  
Other income (expense):
Interest income (expense), net (37 ) (37 ) (37 )
Other income (expense), net (2 )     (2 )   (2 )
Total other income (expense) (39 )     (39 )   (39 )
Earnings (loss) from continuing operations before income taxes 176 12 45 233 50 283
Provision for income taxes 58   4   15   77   16   93  
Earnings (loss) from continuing operations, net of tax 118 8 30 156 34 190
Earnings (loss) from discontinued operations, net of tax (3 )     (3 )   (3 )
Net earnings (loss) 115 8 30 153 34 187
Net (earnings) loss attributable to noncontrolling interest (4 )     (4 )   (4 )
Net earnings (loss) attributable to FIS common stockholders $ 111   $ 8   $ 30   $ 149   $ 34   $ 183  
 
Amounts attributable to FIS common stockholders
Earnings (loss) from continuing operations, net of tax $ 114 $ 8 $ 30 $ 152 $ 34 $ 186
Earnings (loss) from discontinued operations, net of tax (3 )     (3 )   (3 )
Net earnings (loss) attributable to FIS common stockholders $ 111   $ 8   $ 30   $ 149   $ 34   $ 183  
 
Net earnings (loss) per share — diluted from continuing operations attributable to FIS common stockholders* $ 0.40   $ 0.03   $ 0.10   $ 0.53   $ 0.12   $ 0.65  
Weighted average shares outstanding — diluted 287   287   287   287   287   287  
 
Effective tax rate 33 % 33 %
 
Supplemental information:
Depreciation and amortization $ 153   (50 ) $ 103  

 

Stock compensation expense $ 19  
 

* Amounts may not sum due to rounding.

 

See accompanying notes.

 

Fidelity National Information Services, Inc.
Supplemental Financial Schedules
May 3, 2016

Notes to Unaudited - Supplemental GAAP to Non-GAAP Reconciliation for the three months ended March 31, 2016 and 2015.

The adjustments are as follows:

(1) This item represents the impact of the purchase accounting adjustment to reduce SunGard's deferred revenues to estimated fair value, determined as fulfillment cost plus a normal profit margin. The deferred revenue adjustment represents revenue that would have been recognized in the normal course of business by SunGard but was not recognized due to GAAP purchase accounting requirements.

(2) This item represents non-recurring costs primarily related to integrations and severance activity from the SunGard acquisition.

(3) Global Restructure represents severance costs incurred in connection with the reorganization and streamlining of operations in our Global Financial Solutions segment.

(4) The unaudited historical SunGard financial information, as adjusted is presented for illustrative purposes only. The adjusted financial information excludes amortization of purchased intangible assets, as well as the impact from the acquisition deferred revenue adjustment arising from the SunGard Acquisition as those impacts would be eliminated in the preparation of adjusted combined information. See Exhibit 99.2 to this Form 8-K for more detailed information relating to the adjustments needed to combine the results of SunGard with FIS on an adjusted combined basis.

(5) This item represents purchase price amortization expense on all intangible assets acquired through various Company acquisitions including customer relationships, contract value, trademarks and tradenames, and non-compete agreements. Beginning with the November 2015 acquisition of SunGard, this column also includes the incremental amortization associated with purchase price adjustments to technology assets acquired. The allocation of purchase price for SunGard to assets and liabilities as of March 31, 2016 is provisional and may be adjusted in future periods. The financial statements will not be retrospectively adjusted for any adjustments to provisional amounts that occur in subsequent periods. Rather, we will recognize any adjustments in the reporting period in which the adjustment is determined. We are also required to record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of any change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.

Fidelity National Information Services, Inc.
Additional Supplemental Financial Schedules
(Adjusted Combined)
May 3, 2016

SunGard Acquisition

On August 12, 2015, FIS and certain of its wholly owned subsidiaries entered into an Agreement and Plan of Merger (the "Merger Agreement") with SunGard and SunGard Capital Corp. II (collectively “SunGard”) pursuant to which, through a series of mergers, FIS acquired SunGard (collectively the "Acquisition" or the "SunGard acquisition"). FIS completed the Acquisition on November 30, 2015, and SunGard's results of operations and financial position have been included in the consolidated results of FIS from and after the date of acquisition.

Supplemental Financial Data

Due to the financial impact of the transactions described above, FIS management desires to furnish investors with the additional information set forth herein to improve the understanding of the Company’s operating performance. The purpose of the schedules included in this Exhibit 99.2 is to recalculate certain non-GAAP measures of the Company’s financial performance (specifically, adjusted revenues, adjusted operating income and adjusted EBITDA) taking into account the Acquisition, for each of the quarters in 2014 and 2015 and for the full years 2014 and 2015. These schedules have been prepared by (i) adding the adjusted historical revenues of SunGard to the adjusted revenues of the Company, (ii) adding the adjusted historical operating income of SunGard to adjusted operating income of the Company and (iii) for purposes of adjusted EBITDA, adding depreciation and amortization expense back to the adjusted combined operating income. The content of these schedules is as follows:

  • Exhibit A shows the totals of these adjusted combined amounts on a total company basis, including the totals of the components of expense that reduce adjusted operating income;
  • Exhibit B shows the totals of these adjusted combined amounts by segment (based on the Company’s segments effective for the three months ended March 31, 2016), and breaks out the non-GAAP adjustments applicable to the Company; and
  • Exhibit C reconciles the non-GAAP amounts for SunGard to its reported GAAP amounts.

The unaudited adjusted combined financial information is presented for illustrative purposes only and does not reflect the financial results of the combined companies had the companies actually been combined at the beginning of 2014, nor the impact of possible business model changes. The unaudited adjusted combined financial information also does not consider any potential impacts of current market conditions on revenues, expense efficiencies and other factors.

Although this Exhibit 99.2 contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company believes that it provides information that may be useful in understanding its results of operations, including a reasonable basis of comparison with its results for post-Acquisition periods. FIS’ management uses these non-GAAP measures in part to assess the Company’s performance. Therefore, management believes these non-GAAP measures to be relevant and useful information for investors. These non-GAAP measures should not be used in isolation or as a substitute for other measures of financial performance reported in accordance with GAAP. In addition, the Company’s non-GAAP measures may be calculated differently from similarly titled measures of other companies.

Fidelity National Information Services, Inc.
Additional Supplemental Financial Schedules
(Adjusted Combined)
May 3, 2016

 

Exhibit Index

Exhibit A Supplemental Non-GAAP Adjusted Combined Operating Data (Unaudited)
 
Exhibit B

Adjusted Combined Consolidated and Reporting Segments — (Unaudited)

 
Exhibit C GAAP to Non-GAAP Adjusted Combined Operating Income (Unaudited)
 
         

FIDELITY NATIONAL INFORMATION SERVICES, INC.

Supplemental Non-GAAP Adjusted Combined Operating Data (Unaudited)

(in millions)

 

Exhibit A

 
First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
2015 2015 2015 2015 2015
Processing and services revenue, as adjusted $ 2,221 $ 2,269 $ 2,275 $ 2,368 $ 9,133
Expenses, as adjusted:
Cost of revenues 1,406 1,419 1,367 1,399 5,591
Selling, general and administrative expenses 365   372   338   378   1,453  
Total expenses, as adjusted 1,771   1,791   1,705   1,777   7,044  
Operating income, as adjusted $ 450   $ 478   $ 570   $ 591   $ 2,089  
 
Operating margin, as adjusted 20.3 % 21.1 % 25.1 % 25.0 % 22.9 %
 
         
First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
2014 2014 2014 2014 2014
Processing and services revenue, as adjusted $ 2,178 $ 2,266 $ 2,289 $ 2,475 $ 9,208
Expenses, as adjusted:
Cost of revenues 1,402 1,451 1,414 1,460 5,727
Selling, general and administrative expenses 353   357   362   379   1,451  
Total expenses, as adjusted 1,755   1,808   1,776   1,839   7,178  
Operating income, as adjusted $ 423   $ 458   $ 513   $ 636   $ 2,030  
 
Operating margin, as adjusted 19.4 % 20.2 % 22.4 % 25.7 % 22.0 %
 

See Exhibit C for reconciliation of adjusted amounts to reported amounts.

 
       

FIDELITY NATIONAL INFORMATION SERVICES, INC.

Adjusted Combined Consolidated and Reporting Segments (Unaudited)

(in millions)

 

Exhibit B

 
Three months ended March 31, 2015

Integrated
Financial
Solutions

Global
Financial
Solutions

Corporate
and Other

Consolidated
Processing and services revenue, as reported $ 928 $ 512 $ 115 $ 1,555
Historical SunGard revenue, as adjusted (4) 132   475   59   666  
Adjusted combined revenue from continuing operations $ 1,060   $ 987   $ 174   $ 2,221  
 
Operating income (loss), as reported $ 319 $ 46 $ (150 ) $ 215
Historical SunGard operating income, as adjusted (4) 40 119 (31 ) 128
FIS non-GAAP adjustments:
Acquisition, integration and severance costs (1) 12 12
Global restructure (2) 45 45
Purchase accounting amortization (3)     50   50  
Adjusted combined operating income (loss) 359 165 (74 ) 450
FIS depreciation and amortization from continuing operations 52 35 16 103
Historical SunGard depreciation and amortization from continuing operations, as adjusted (4) 6   24   6   36  
Adjusted combined EBITDA $ 417   $ 224   $ (52 ) $ 589  
 
Non-GAAP combined operating margin 33.9 % 16.7 % N/M 20.3 %
 
Adjusted combined EBITDA margin 39.3 % 22.7 % N/M 26.5 %
 
Three months ended June 30, 2015

Integrated
Financial
Solutions

Global
Financial
Solutions

Corporate
and Other

Consolidated
Processing and services revenue, as reported $ 931 $ 555 $ 101 $ 1,587
Historical SunGard revenue, as adjusted (4) 138   483   61   682  
Adjusted combined revenue from continuing operations $ 1,069   $ 1,038   $ 162   $ 2,269  
 
Operating income (loss), as reported $ 313 $ 82 $ (108 ) $ 287
Historical SunGard operating income, as adjusted (4) 38 123 (31 ) 130
FIS non-GAAP adjustments:
Acquisition, integration and severance costs (1) 11 11
Purchase accounting amortization (3)     50   50  
Adjusted combined operating income (loss) 351 205 (78 ) 478
FIS depreciation and amortization from continuing operations 56 35 14 105
Historical SunGard depreciation and amortization from continuing operations, as adjusted (4) 6   23   5   34  
Adjusted combined EBITDA $ 413   $ 263   $ (59 ) $ 617  
 
Non-GAAP combined operating margin 32.8 % 19.7 % N/M 21.1 %
 
Adjusted combined EBITDA margin 38.6 % 25.3 % N/M 27.2 %
 

(1) See note (2) to Exhibit C.

(2) See note (3) to Exhibit C.

(3) See note (6) to Exhibit C.

(4) See note (5) to Exhibit C.

 

Exhibit B (continued)

       
Three months ended September 30, 2015

Integrated
Financial
Solutions

Global
Financial
Solutions

Corporate
and Other

Consolidated
Processing and services revenue, as reported $ 944 $ 539 $ 96 $ 1,579
Historical SunGard revenue, as adjusted (4) 138   497   61   696  
Adjusted combined revenue from continuing operations $ 1,082   $ 1,036   $ 157   $ 2,275  
 
Operating income (loss), as reported $ 346 $ 107 $ (115 ) $ 338
Historical SunGard operating income, as adjusted (4) 42 137 (33 ) 146
FIS non-GAAP adjustments:
Acquisition, integration and severance costs (1) 36 36
Purchase accounting amortization (2)     50   50  
Adjusted combined operating income (loss) 388 244 (62 ) 570
FIS depreciation and amortization from continuing operations 58 34 13 105
Historical SunGard depreciation and amortization from continuing operations, as adjusted (4) 7   25   5   37  
Adjusted combined EBITDA $ 453   $ 303   $ (44 ) $ 712  
 
Non-GAAP combined operating margin 35.9 % 23.6 % N/M 25.1 %
 
Adjusted combined EBITDA margin 41.9 % 29.2 % N/M 31.3 %
 
Three months ended December 31, 2015

Integrated
Financial
Solutions

Global
Financial
Solutions

Corporate
and Other

Consolidated
Processing and services revenue, as reported $ 1,043 $ 754 $ 78 $ 1,875
Historical SunGard revenue, as adjusted (4) 88 325 32 445
FIS non-GAAP adjustments:
Acquisition deferred revenue adjustment (3)     $ 48   48  
Adjusted combined revenue from continuing operations $ 1,131   $ 1,079   $ 158   $ 2,368  
 
Operating income (loss), as reported $ 364 $ 172 $ (277 ) $ 259
Historical SunGard operating income, as adjusted (4) 26 82 (24 ) 84
FIS non-GAAP adjustments:
Acquisition deferred revenue adjustment (3) 48 48
Acquisition, integration and severance costs (1) 112 112
Purchase accounting amortization (2)     88   88  
Adjusted combined operating income (loss) 390 254 (53 ) 591
FIS depreciation and amortization from continuing operations 60 42 16 118
Historical SunGard depreciation and amortization from continuing operations, as adjusted (4) 5   17   3   25  
Adjusted combined EBITDA $ 455   $ 313   $ (34 ) $ 734  
 
Non-GAAP combined operating margin 34.5 % 23.5 % N/M 25.0 %
 
Adjusted combined EBITDA margin 40.2 % 29.0 % N/M 31.0 %
 

(1) See note (2) to Exhibit C.

(2) See note (6) to Exhibit C.

(3) See note (1) to Exhibit C.

(4) See note (5) to Exhibit C.

 

Exhibit B (continued)

       
Year ended December 31, 2015

Integrated
Financial
Solutions

Global
Financial
Solutions

Corporate
and Other

Consolidated
Processing and services revenue, as reported $ 3,846 $ 2,360 $ 390 $ 6,596
Historical SunGard revenue, as adjusted (5) 496 1,780 213 2,489
FIS non-GAAP adjustments:
Acquisition deferred revenue adjustment (3) $   $   $ 48   48  
Adjusted combined revenue from continuing operations $ 4,342   $ 4,140   $ 651   $ 9,133  
 
Operating income (loss), as reported $ 1,342 $ 407 $ (650 ) $ 1,099
Historical SunGard operating income, as adjusted (5) 146 461 (119 ) 488
FIS non-GAAP adjustments:
Acquisition deferred revenue adjustment (1) 48 48
Acquisition, integration and severance costs (2) 171 171
Global restructure (3) 45 45
Purchase accounting amortization (4)     238   238  
Adjusted combined operating income (loss) 1,488 868 (267 ) 2,089
FIS depreciation and amortization from continuing operations 226 146 59 431
Historical SunGard depreciation and amortization from continuing operations, as adjusted (5) 24   89   19   132  
Adjusted combined EBITDA $ 1,738   $ 1,103   $ (189 ) $ 2,652  
 
Non-GAAP combined operating margin 34.3 % 21.0 % N/M 22.9 %
 
Adjusted combined EBITDA margin 40.0 % 26.6 % N/M 29.0 %
 

(1) See note (1) to Exhibit C.

(2) See note (2) to Exhibit C.

(3) See note (3) to Exhibit C.

(4) See note (6) to Exhibit C.

(5) See note (5) to Exhibit C.

 
       

FIDELITY NATIONAL INFORMATION SERVICES, INC.

Adjusted Combined Consolidated and Reporting Segments (Unaudited)

(in millions)

 

Exhibit B (continued)

 
Three months ended March 31, 2014

Integrated
Financial
Solutions

Global
Financial
Solutions

Corporate
and Other

Consolidated
Processing and services revenue, as reported $ 898 $ 496 $ 126 $ 1,520
Historical SunGard revenue, as adjusted (3) 126 465 58 649
FIS non-GAAP adjustments:
Contract settlement (1) 9       9  
Adjusted combined revenue from continuing operations $ 1,033   $ 961   $ 184   $ 2,178  
 
Operating income (loss), as reported $ 310 $ 58 $ (82 ) $ 286
Historical SunGard operating income, as adjusted (3) 28 91 (46 ) 73
FIS non-GAAP adjustments:
Contract settlement (1) 9 9
Purchase accounting amortization (2)     55   55  
Adjusted combined operating income (loss) 347 149 (73 ) 423
FIS depreciation and amortization from continuing operations 51 32 15 98
Historical SunGard depreciation and amortization from continuing operations, as adjusted (3) $ 8   $ 33   $ 10   51  
Adjusted combined EBITDA $ 406   $ 214   $ (48 ) $ 572  
 
Non-GAAP combined operating margin 33.6 % 15.5 % N/M 19.4 %
 
Adjusted combined EBITDA margin 39.3 % 22.3 % N/M 26.3 %
 
Three months ended June 30, 2014

Integrated
Financial
Solutions

Global
Financial
Solutions

Corporate
and Other

Consolidated
Processing and services revenue, as reported $ 928 $ 543 $ 128 $ 1,599
Historical SunGard revenue, as adjusted (3) 134   472   61   667  
Adjusted combined revenue from continuing operations $ 1,062   $ 1,015   $ 189   $ 2,266  
 
Operating income (loss), as reported $ 316 $ 77 $ (83 ) $ 310
Historical SunGard operating income, as adjusted (3) 31 98 (35 ) 94
FIS non-GAAP adjustments:
Purchase accounting amortization (2)     54   54  
Adjusted combined operating income (loss) 347 175 (64 ) 458
FIS depreciation and amortization from continuing operations 53 34 15 102
Historical SunGard depreciation and amortization from continuing operations, as adjusted (3) $ 8   $ 35   $ 10   53  
Adjusted combined EBITDA $ 408   $ 244   $ (39 ) $ 613  
 
Non-GAAP combined operating margin 32.7 % 17.2 % N/M 20.2 %
 
Adjusted combined EBITDA margin 38.4 % 24.0 % N/M 27.1 %
 

(1) See note (4) to Exhibit C.

(2) See note (6) to Exhibit C.

(3) See note (5) to Exhibit C

 

Exhibit B (continued)

       
Three months ended September 30, 2014

Integrated
Financial
Solutions

Global
Financial
Solutions

Corporate
and Other

Consolidated
Processing and services revenue, as reported $ 911 $ 555 $ 139 $ 1,605
Historical SunGard revenue, as adjusted (3) 132   492   60   684  
Adjusted combined revenue from continuing operations $ 1,043   $ 1,047   $ 199   $ 2,289  
 
Operating income (loss), as reported $ 311 $ 93 $ (80 ) $ 324
Historical SunGard operating income, as adjusted (3) 30 132 (34 ) 128
FIS non-GAAP adjustments:
Acquisition, integration and severance costs (1) 7 7
Purchase accounting amortization (2)     54   54  
Adjusted combined operating income (loss) 341 225 (53 ) 513
FIS depreciation and amortization from continuing operations 54 33 16 103
Historical SunGard depreciation and amortization from continuing operations, as adjusted (3) $ 7   $ 28   $ 8   43  
Adjusted combined EBITDA $ 402   $ 286   $ (29 ) $ 659  
 
Non-GAAP combined operating margin 32.7 % 21.5 % N/M 22.4 %
 
Adjusted combined EBITDA margin 38.5 % 27.3 % N/M 28.8 %
 
Three months ended December 31, 2014

Integrated
Financial
Solutions

Global
Financial
Solutions

Corporate
and Other

Consolidated
Processing and services revenue, as reported $ 942 $ 604 $ 143 $ 1,689
Historical SunGard revenue, as adjusted (3) 143   583   60   786  
Adjusted combined revenue from continuing operations $ 1,085   $ 1,187   $ 203   $ 2,475  
 
Operating income (loss), as reported $ 323 $ 121 $ (93 ) $ 351
Historical SunGard operating income, as adjusted (3) 44 208 (33 ) 219
FIS non-GAAP adjustments:
Acquisition, integration and severance costs (1) 14 14
Purchase accounting amortization (2)     52   52  
Adjusted combined operating income (loss) 367 329 (60 ) 636
FIS depreciation and amortization from continuing operations 56 34 18 108
Historical SunGard depreciation and amortization from continuing operations, as adjusted (3) $ 6   $ 24   $ 6   36  
Adjusted combined EBITDA $ 429   $ 387   $ (36 ) $ 780  
 
Non-GAAP combined operating margin 33.8 % 27.7 % N/M 25.7 %
 
Adjusted combined EBITDA margin 39.5 % 32.6 % N/M 31.5 %
 

(1) See note (2) to Exhibit C.

(2) See note (6) to Exhibit C.

(3) See note (5) to Exhibit C.

 

Exhibit B (continued)

       
Year ended December 31, 2014

Integrated
Financial
Solutions

Global
Financial
Solutions

Corporate
and Other

Consolidated
Processing and services revenue, as reported $ 3,679 $ 2,198 $ 536 $ 6,413
Historical SunGard revenue, as adjusted (4) 535 2,012 239 2,786
FIS non-GAAP adjustments:
Contract settlement (1) $ 9   $   $   9  
Adjusted combined revenue from continuing operations $ 4,223   $ 4,210   $ 775   $ 9,208  
 
Operating income (loss), as reported $ 1,260 $ 349 $ (338 ) $ 1,271
Historical SunGard operating income, as adjusted (4) 133 529 (148 ) 514
FIS non-GAAP adjustments:
Contract settlement (1) 9 9
Acquisition, integration and severance costs (2) 21 21
Purchase accounting amortization (3)     215   215  
Adjusted combined operating income (loss) 1,402 878 (250 ) 2,030
FIS depreciation and amortization from continuing operations 214 133 64 411
Historical SunGard depreciation and amortization from continuing operations, as adjusted (4) $ 29   $ 120   $ 34   183  
Adjusted combined EBITDA $ 1,645   $ 1,131   $ (152 ) $ 2,624  
 
Non-GAAP combined operating margin 33.2 % 20.9 % N/M 22.0 %
 
Adjusted combined EBITDA margin 39.0 % 26.9 % N/M 28.5 %
 

(1) See note (4) to Exhibit C.

(2) See note (2) to Exhibit C.

(3) See note (6) to Exhibit C.

(4) See note (5) to Exhibit C.

 
 

FIDELITY NATIONAL INFORMATION SERVICES, INC.

GAAP to Non-GAAP Adjusted Combined Operating Income (Unaudited)

(in millions)

 

Exhibit C

 
Three months ended March 31, 2015
As   As       Acquisition       Purchase   Non-GAAP
Reported Reported SunGard Adjusted Integration & Global Price Adjusted
FIS SunGard Adjustments Combined Severance (2) Restructure (3) Subtotal Amortization (6) Combined
Processing and services revenue, $ 1,555   $ 671   $ (5 ) (a) $ 2,221   $   $   $ 2,221   $   $ 2,221
Expenses:
Cost of revenues 1,070 404 (18 ) (a)(c) 1,456 1,456 (50 ) 1,406
Selling, general and administrative expenses 270   152     422   (12 ) (45 ) 365     365
Total expenses 1,340   556   (18 ) 1,878   (12 ) (45 ) 1,821   (50 ) 1,771
Operating income $ 215   $ 115   $ 13   $ 343   $ 12   $ 45   $ 400   $ 50   $ 450
 
 
Three months ended June 30, 2015
As   As       Acquisition     Purchase   Non-GAAP
Reported Reported SunGard Adjusted Integration & Price Adjusted
FIS SunGard Adjustments Combined Severance (2) Subtotal Amortization (6) Combined
Processing and services revenue $ 1,587   $ 687   $ (5 ) (a) $ 2,269   $   $ 2,269   $   $ 2,269
Expenses:
Cost of revenues 1,069 418 (18 ) (a)(c) 1,469 1,469 (50 ) 1,419
Selling, general and administrative expenses 231   161   (9 ) (b) 383   (11 ) 372     372
Total expenses 1,300   579   (27 ) 1,852   (11 ) 1,841   (50 ) 1,791
Operating income $ 287   $ 108   $ 22   $ 417   $ 11   $ 428   $ 50   $ 478
 
 
Three months ended September 30, 2015
As   As       Acquisition     Purchase   Non-GAAP
Reported Reported SunGard Adjusted Integration & Price Adjusted
FIS SunGard Adjustments Combined Severance (2) Subtotal Amortization (6) Combined
Processing and services revenue $ 1,579   $ 702   $ (6 ) (a) $ 2,275   $   $ 2,275   $   $ 2,275
Expenses:
Cost of revenues 1,021 419 (23 ) (a)(c) 1,417 1,417 (50 ) 1,367
Selling, general and administrative expenses 220   163   (9 ) (b) 374   (36 ) 338     338
Total expenses 1,241   582   (32 ) 1,791   (36 ) 1,755   (50 ) 1,705
Operating income $ 338   $ 120   $ 26   $ 484   $ 36   $ 520   $ 50   $ 570
 

Exhibit C (continued)

 
Three months ended December 31, 2015
        Acquisition        
As Deferred Acquisition Purchase Non-GAAP
Reported Historical SunGard Adjusted Revenue Integration & Price Adjusted
FIS SunGard Adjustments Combined Adjustment (1) Severance (2) Subtotal Amortization (6) Combined
Processing and services revenue $ 1,875   $ 445   $   $ 2,320   $ 48   $   $ 2,368   $   $ 2,368
Expenses:
Cost of revenues 1,233 254 1,487 1,487 (88 ) 1,399
Selling, general and administrative expenses 383   107     490     (112 ) 378     378
Total expenses 1,616   361     1,977     (112 ) 1,865   (88 ) 1,777
Operating income $ 259   $ 84   $   $ 343   $ 48   $ 112   $ 503   $ 88   $ 591
 
 
Year ended December 31, 2015
        Acquisition          
As Deferred Acquisition Purchase Non-GAAP
Reported Historical SunGard Adjusted Revenue Integration & Global Price Adjusted
FIS SunGard Adjustments Combined Adjustment (1) Severance (2) Restructure (3)   Subtotal Amortization (6) Combined
Processing and services revenue $ 6,596   $ 2,505   $ (16 ) (a) $ 9,085   $ 48   $   $     $ 9,133   $   $ 9,133
Expenses:
Cost of revenues 4,393 1,495 (59 ) (a)(c) 5,829 5,829 (238 ) 5,591
Selling, general and administrative expenses 1,104   583   (18 ) (b) 1,669     (171 ) (45 )   1,453     1,453
Total expenses 5,497   2,078   (77 ) 7,498     (171 ) (45 )   7,282   (238 ) 7,044
Operating income $ 1,099   $ 427   $ 61   $ 1,587   $ 48   $ 171   $ 45     $ 1,851   $ 238   $ 2,089
 
   

FIDELITY NATIONAL INFORMATION SERVICES, INC.

GAAP to Non-GAAP Adjusted Combined Operating Income (Unaudited)

(in millions)

 

Exhibit C (continued)

 
Three months ended March 31, 2014    
           
As As Purchase Non-GAAP
Reported Reported SunGard Adjusted Contract Price Adjusted
FIS SunGard Adjustments Combined Settlement (4) Subtotal Amortization (6) Combined
Processing and services revenue $ 1,520   $ 653   $ (4 ) (a) $ 2,169   $ 9   $ 2,178   $   $ 2,178
Expenses:
Cost of revenues 1,044 433 (20 ) (a)(c) 1,457 1,457 (55 ) 1,402
Selling, general and administrative expenses 190 170 (7 ) (b) 353 353 353
Impairment charges   339   (339 )

(c)

       

Total expenses

1,234   942   (366 ) 1,810     1,810   (55 ) 1,755
Operating income $ 286   $ (289 ) $ 362   $ 359   $ 9   $ 368   $ 55   $ 423
 
 
Three months ended June 30, 2014
                       
As As Purchase Non-GAAP
Reported Reported SunGard Adjusted Price Adjusted
FIS SunGard Adjustments Combined Amortization (6) Combined
Processing and services revenue $ 1,599   $ 673   $ (6 ) (a) $ 2,266   $   $ 2,266
Expenses:
Cost of revenues 1,092 434 (21 ) (a)(c) 1,505 (54 ) 1,451
Selling, general and administrative expenses 197   162   (2 ) (b) 357     357
Total expenses 1,289   596   (23 ) 1,862   (54 ) 1,808
Operating income $ 310   $ 77   $ 17   $ 404   $ 54   $ 458
 
 
Three months ended September 30, 2014
             
As As Acquisition Purchase Non-GAAP
Reported Reported SunGard Adjusted Integration & Price Adjusted
FIS SunGard Adjustments Combined Severance (2) Subtotal Amortization (6) Combined
Processing and services revenue $ 1,605   $ 691   $ (7 ) (a) $ 2,289   $   $ 2,289   $   $ 2,289
Expenses:
Cost of revenues 1,074 425 (31 ) (a)(b)(c) 1,468 1,468 (54 ) 1,414
Selling, general and administrative expenses 207   171   (9 ) (b) 369   (7 ) 362     362
Total expenses 1,281   596   (40 ) 1,837   (7 ) 1,830   (54 ) 1,776
Operating income $ 324   $ 95   $ 33   $ 452   $ 7   $ 459   $ 54   $ 513
 

Exhibit C (continued)

 
Three months ended December 31, 2014
             
As As Acquisition Purchase Non-GAAP
Reported Reported SunGard Adjusted Integration & Price Adjusted
FIS SunGard Adjustments Combined Severance (2) Subtotal Amortization (6) Combined
Processing and services revenue $ 1,689   $ 792   $ (6 ) (a) $ 2,475   $   $ 2,475   $   $ 2,475
Expenses:
Cost of revenues 1,117 414 (19 ) (a)(c) 1,512 1,512 (52 ) 1,460
Selling, general and administrative expenses 221   174   (2 ) (b) 393   (14 ) 379     379

Total expenses

1,338   588   (21 ) 1,905   (14 ) 1,891   (52 ) 1,839
Operating income $ 351   $ 204   $ 15   $ 570   $ 14   $ 584   $ 52   $ 636
 
 
Year ended December 31, 2014
               
As As Acquisition Purchase Non-GAAP
Reported Reported SunGard Adjusted Contract Integration & Price Adjusted
FIS SunGard Adjustments Combined Settlement (4) Severance (2) Subtotal Amortization (6) Combined
Processing and services revenue $ 6,413   $ 2,809   $ (23 ) (a) $ 9,199   $ 9   $   $ 9,208   $   $ 9,208
Expenses:
Cost of revenues 4,327 1,706 (91 ) (a)(b)(c) 5,942 5,942 (215 ) 5,727
Selling, general and administrative expenses 815 677 (20 ) (b) 1,472 (21 ) 1,451 1,451
Impairment charges   339   (339 ) (c)          
Total expenses 5,142   2,722   (450 ) 7,414     (21 ) 7,393   (215 ) 7,178
Operating income $ 1,271   $ 87   $ 427   $ 1,785   $ 9   $ 21   $ 1,815   $ 215   $ 2,030
 

FIDELITY NATIONAL INFORMATION SERVICES, INC.

Notes to Unaudited GAAP to Non-GAAP Adjusted Combined Operating Income

(in millions)

This presentation is limited to revenues and expenses that comprise operating income. The unaudited adjusted combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined companies had the companies actually been combined at the beginning of each period presented, nor the impact of possible business model changes. The unaudited adjusted combined financial information also does not consider any potential impacts of current market conditions on revenues, expense efficiencies and other factors. In addition, the adjusted combined financial information does not reflect the amortization of purchased intangible assets nor the acquisition deferred revenue adjustment as those impacts would be adjusted as described in footnote 5.

Items a - c below represent adjustments needed to combine the results of SunGard with FIS on an adjusted combined basis.

(a) To eliminate the retail banking business which was divested by SunGard prior to the merger with FIS.

  First   Second   Third   Fourth   Full
Quarter Quarter Quarter Quarter Year
2015 2015 2015 2015 2015
Processing and services revenue $ (5 ) $ (5 ) $ (6 ) $   $ (16 )
Cost of revenues $ (4 ) $ (4 ) $ (9 ) $   $ (17 )
  First   Second   Third   Fourth   Full
Quarter Quarter Quarter Quarter Year
2014 2014 2014 2014 2014
Processing and services revenue $ (4 ) $ (6 ) $ (7 ) $ (6 ) $ (23 )
Cost of revenues $ (4 ) $ (6 ) $ (6 ) $ (5 ) $ (21 )

(b) To eliminate management fees and severance from SunGard's results and to reclassify foreign currency gains and losses from operating income to Other Income (expense), net to conform with FIS classification.

  First   Second   Third   Fourth   Full
Quarter Quarter Quarter Quarter Year
2015 2015 2015 2015 2015
Selling, general and administrative expenses $   $ (9 ) $ (9 ) $   $ (18 )
  First   Second   Third   Fourth   Full
Quarter Quarter Quarter Quarter Year
2014 2014 2014 2014 2014
Cost of revenues $   $   $ (11 ) $   $ (11 )
Selling, general and administrative expenses $ (7 ) $ (2 ) $ (9 ) $ (2 ) $ (20 )

(c) To eliminate the legacy SunGard purchase price amortization consistent with the description in footnote 5. The first quarter of 2014 includes a trademark impairment.

  First   Second   Third   Fourth   Full
Quarter Quarter Quarter Quarter Year
2015 2015 2015 2015 2015
Cost of revenues $ (14 ) $ (14 ) $ (14 ) $   $ (42 )
  First   Second   Third   Fourth   Full
Quarter Quarter Quarter Quarter Year
2014 2014 2014 2014 2014
Cost of revenues $ (16 ) $ (15 ) $ (14 ) $ (14 ) $ (59 )
Trademark impairment $ (339 ) $   $   $   $ (339 )

The combined impact of the items a - c above to Revenues, Expenses, and Operating income is summarized as follows:

  First   Second   Third   Fourth   Full
Quarter Quarter Quarter Quarter Year
2015 2015 2015 2015 2015
Processing and services revenue $ (5 ) $ (5 ) $ (6 ) $ $ (16 )
Cost of revenues (18 ) (18 ) (23 ) (59 )
Selling, general and administrative expenses   (9 ) (9 )   (18 )
Operating income $ 13   $ 22   $ 26   $   $ 61  
  First   Second   Third   Fourth   Full
Quarter Quarter Quarter Quarter Year
2014 2014 2014 2014 2014
Processing and services revenue $ (4 ) $ (6 ) $ (7 ) $ (6 ) $ (23 )
Cost of revenues (20 ) (21 ) (31 ) (19 ) (91 )
Selling, general and administrative expenses (7 ) (2 ) (9 ) (2 ) (20 )
Trademark impairment (339 )       (339 )
Operating income $ 362   $ 17   $ 33   $ 15   $ 427  

Items 1 — 6 represent FIS Non-GAAP adjustments to the adjusted combined historical results.

(1) This item represents the impact of the purchase accounting adjustment to reduce SunGard's deferred revenues to estimated fair value, determined as fulfillment cost plus a normal profit margin. The deferred revenue adjustment represents revenue that would have been recognized in the normal course of business by SunGard but was not recognized due to GAAP purchase accounting requirements.

(2) This item represents non-recurring costs primarily related to integrations and severance activity from the SunGard acquisition.

(3) Global Restructure represents severance costs incurred in connection with the reorganization and streamlining of operations in our Global Financial Solutions segment.

(4) The revenue adjustment in this column represents a cash settlement for the extinguishment of certain contractual minimums with a reseller. Although the 2014 cash settlement has no contract performance obligation, revenue is amortized in this circumstance over the remaining relationship with the reseller.

(5) The unaudited historical SunGard financial information, as adjusted, is presented for illustrative purposes only. The adjusted financial information excludes amortization of purchased intangible assets, as well as the impact from the acquisition deferred revenue adjustment arising from the SunGard Acquisition as those impacts would be eliminated in the preparation of adjusted combined information.

(6) This item represents purchase price amortization expense on all intangible assets acquired through various Company acquisitions including customer relationships, contract value, trademarks and tradenames, and non-compete agreements. Beginning with the November 2015 acquisition of SunGard, this column also includes the incremental amortization associated with purchase price adjustments to technology assets acquired. The allocation of purchase price for SunGard to assets and liabilities as of December 31, 2015 is provisional and may be adjusted in future periods. The financial statements will not be retrospectively adjusted for any adjustments to provisional amounts that occur in subsequent periods. Rather, we will recognize any adjustments in the reporting period in which the adjustment is determined. We are also required to record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of any change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.

Source: Fidelity National Information Services

Ellyn Raftery, 904.438.6083
Chief Marketing Officer
FIS Global Marketing and Corporate Communications
ellyn.raftery@fisglobal.com
or
Peter Gunnlaugsson, 904.438.6603
Senior Vice President
FIS Investor Relations
pete.gunnlaugsson@fisglobal.com