FIS-2012 03/31/2012
Table of Contents

 
 
 
 
 
 
 
 
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________
Form 10-Q
_______________________________________________
R
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the quarterly period ended March 31, 2012
Or
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the transition period from                      to
Commission File No. 001-16427
_______________________________________________
Fidelity National Information Services, Inc.
(Exact name of registrant as specified in its charter)
Georgia
 
37-1490331
(State or other jurisdiction
 
(I.R.S. Employer Identification No.)
of incorporation or organization)
 
 
 
 
 
601 Riverside Avenue
 
 
Jacksonville, Florida
 
32204
(Address of principal executive offices)
 
(Zip Code)
(904) 438-6000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES R NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES R NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer R
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company)
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES o NO R
As of April 30, 2012, 294,803,536 shares of the Registrant’s Common Stock were outstanding.
 
 
 
 
 
 
 
 
 
 



FORM 10-Q
QUARTERLY REPORT
Quarter Ended March 31, 2012
INDEX
 
Page
 
 
 
EX-10.1
 
EX-10.2
 
EX-10.3
 
EX-10.4
 
 EX-31.1
 
 EX-31.2
 
 EX-32.1
 
 EX-32.2
 
 EX-101 INSTANCE DOCUMENT
 
 EX-101 SCHEMA DOCUMENT
 
 EX-101 CALCULATION LINKBASE DOCUMENT
 
 EX-101 DEFINITION LINKBASE DOCUMENT
 
 EX-101 LABELS LINKBASE DOCUMENT
 
 EX-101 PRESENTATION LINKBASE DOCUMENT
 


1

Table of Contents



FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions, except per share amounts)
(Unaudited)
 
March 31, 2012
 
December 31, 2011
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
481.7

 
$
415.5

Settlement deposits
31.7

 
43.9

Trade receivables, net of allowance for doubtful accounts of $39.8 and $33.1 as of
March 31, 2012 and December 31, 2011, respectively
889.3

 
858.5

Settlement receivables
87.4

 
78.1

Other receivables
35.5

 
40.1

Due from related parties
59.4

 
56.9

Prepaid expenses and other current assets
127.4

 
117.1

Deferred income taxes
55.2

 
72.6

Total current assets
1,767.6

 
1,682.7

Property and equipment, net
414.4

 
414.5

Goodwill
8,545.5

 
8,542.8

Intangible assets, net
1,842.7

 
1,903.3

Computer software, net
878.0

 
881.5

Deferred contract costs, net
249.2

 
246.4

Other noncurrent assets
207.0

 
177.1

Total assets
$
13,904.4

 
$
13,848.3

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued liabilities
$
523.3

 
$
641.5

Due to Brazilian venture partner
37.7

 
36.5

Settlement payables
140.9

 
141.2

Current portion of long-term debt
115.7

 
259.2

Deferred revenues
287.0

 
276.5

Total current liabilities
1,104.6

 
1,354.9

Deferred revenues
51.0

 
55.9

Deferred income taxes
878.2

 
872.5

Long-term debt, excluding current portion
4,728.4

 
4,550.6

Due to Brazilian venture partner
50.3

 
50.6

Other long-term liabilities
324.8

 
312.6

Total liabilities
7,137.3

 
7,197.1

Equity:
 
 
 
FIS stockholders’ equity:
 
 
 
Preferred stock, $0.01 par value, 200 shares authorized, none issued and outstanding as of March 31, 2012 and December 31, 2011

 

Common stock, $0.01 par value, 600 shares authorized, 384.6 shares issued as of March 31, 2012 and
December 31, 2011
3.8

 
3.8

Additional paid in capital
7,202.5

 
7,224.7

Retained earnings
1,908.7

 
1,880.4

Accumulated other comprehensive earnings
63.0

 
36.3

Treasury stock, $0.01 par value, 89.3 and 91.7 shares as of March 31, 2012 and December 31, 2011, respectively, at cost
(2,563.0
)
 
(2,642.2
)
Total FIS stockholders’ equity
6,615.0

 
6,503.0

Noncontrolling interest
152.1

 
148.2

Total equity
6,767.1

 
6,651.2

Total liabilities and equity
$
13,904.4

 
$
13,848.3

See accompanying notes to unaudited condensed consolidated financial statements.

2

Table of Contents

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(In millions, except per share data)
(Unaudited)

 
Three months ended
March 31,
 
2012
 
2011
Processing and services revenues (for related party activity, see note 2)
$
1,446.9

 
$
1,383.4

Cost of revenues
1,010.3

 
996.0

Gross profit
436.6

 
387.4

Selling, general, and administrative expenses (for related party activity, see note 2)
207.1

 
173.5

Operating income
229.5

 
213.9

Other income (expense):
 
 
 
Interest expense, net
(59.4
)
 
(68.0
)
Other income (expense), net
(20.9
)
 
3.3

Total other income (expense)
(80.3
)
 
(64.7
)
Earnings from continuing operations before income taxes
149.2

 
149.2

Provision for income taxes
50.4

 
52.3

Earnings from continuing operations, net of tax
98.8

 
96.9

Earnings (loss) from discontinued operations, net of tax
(8.7
)
 
(3.3
)
Net earnings
90.1

 
93.6

Net (earnings) loss attributable to noncontrolling interest
(3.0
)
 
(0.8
)
Net earnings attributable to FIS
$
87.1

 
$
92.8

Net earnings per share — basic from continuing operations attributable to FIS common stockholders
$
0.33

 
$
0.32

Net earnings (loss) per share — basic from discontinued operations attributable to FIS common stockholders
(0.03
)
 
(0.01
)
Net earnings per share — basic attributable to FIS common stockholders *
$
0.30

 
$
0.31

Weighted average shares outstanding — basic
289.7

 
301.5

Net earnings per share — diluted from continuing operations attributable to FIS common stockholders
$
0.32

 
$
0.31

Net earnings (loss) per share — diluted from discontinued operations attributable to FIS common stockholders
(0.03
)
 
(0.01
)
Net earnings per share — diluted attributable to FIS common stockholders *
$
0.29

 
$
0.30

Weighted average shares outstanding — diluted
295.4

 
308.7

Cash dividends paid per share
$
0.20

 
$
0.05

Amounts attributable to FIS common stockholders:
 
 
 
Earnings from continuing operations, net of tax
$
95.8

 
$
96.1

Earnings (loss) from discontinued operations, net of tax
(8.7
)
 
(3.3
)
Net earnings attributable to FIS
$
87.1

 
$
92.8

* Amounts may not sum due to rounding.
See accompanying notes to unaudited condensed consolidated financial statements.

3

Table of Contents


FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Earnings
(In millions, except per share data)
(Unaudited)

 
Three months ended March 31,
 
2012
 
2011
Net earnings
 
 
$
90.1

 
 
 
$
93.6

Other comprehensive earnings, before tax:
 
 
 
 
 
 
 
Unrealized gain (loss) on investments and derivatives
$
8.3

 
 
 
$
(8.2
)
 
 
Reclassification adjustment for gains included in net earnings

 
 
 
(3.1
)
 
 
Unrealized gain (loss) on investments and derivatives, net
8.3

 
 
 
(11.3
)
 
 
Foreign currency translation adjustments
24.4

 
 
 
26.9

 
 
Other comprehensive earnings, before tax
32.7

 
 
 
15.6

 
 
Provision for income tax expense (benefit) related to items of other comprehensive earnings
3.8

 
 
 
(3.9
)
 
 
Other comprehensive earnings, net of tax
$
28.9

 
28.9

 
$
19.5

 
19.5

Comprehensive earnings
 
 
119.0

 
 
 
113.1

Less: comprehensive earnings attributable to noncontrolling interest
 
 
(5.2
)
 
 
 
(3.2
)
Comprehensive earnings attributable to FIS
 
 
$
113.8

 
 
 
$
109.9








4

Table of Contents

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Condensed Consolidated Statement of Equity
Three months ended March 31, 2012
(In millions, except per share amounts)
(Unaudited)

 
 
 
 
 
Amount
 
 
 
 
 
FIS Stockholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
Number of shares
 
 
 
Additional
 
 
 
other
 
 
 
 
 
 
 
Common
 
Treasury
 
Common
 
paid in
 
Retained
 
comprehensive
 
Treasury
 
Noncontrolling
 
Total
 
shares
 
shares
 
stock
 
capital
 
earnings
 
earnings
 
stock
 
interest
 
equity
Balances, December 31, 2011
384.6

 
(91.7
)
 
$
3.8

 
$
7,224.7

 
$
1,880.4

 
$
36.3

 
$
(2,642.2
)
 
$
148.2

 
$
6,651.2

Exercise of stock options and stock purchase right

 
6.2

 

 
(55.5
)
 

 

 
183.9

 

 
128.4

Treasury shares held for taxes due upon exercise of stock options

 
(0.1
)
 

 

 

 

 
(3.7
)
 

 
(3.7
)
Excess income tax benefit from exercise of stock options

 

 

 
7.0

 

 

 

 

 
7.0

Stock-based compensation

 

 

 
26.3

 

 

 

 

 
26.3

Cash dividends paid ($0.20 per share per quarter) and other distributions

 

 

 

 
(58.8
)
 

 

 
(1.3
)
 
(60.1
)
Purchases of treasury stock

 
(3.7
)
 

 

 

 

 
(101.0
)
 

 
(101.0
)
Net earnings

 

 

 

 
87.1

 

 

 
3.0

 
90.1

Other comprehensive earnings

 

 

 

 

 
26.7

 

 
2.2

 
28.9

Balances, March 31, 2012
384.6

 
(89.3
)
 
$
3.8

 
$
7,202.5

 
$
1,908.7

 
$
63.0

 
$
(2,563.0
)
 
$
152.1

 
$
6,767.1

See accompanying notes to unaudited condensed consolidated financial statements.


5

Table of Contents

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)

 
Three months ended
March 31,
 
2012
 
2011
Cash flows from operating activities:
 
 
 
Net earnings
$
90.1

 
$
93.6

Adjustment to reconcile net earnings to net cash provided by operating activities:
 
 
 
Depreciation and amortization
158.1

 
154.4

Amortization of debt issue costs
21.4

 
3.6

Stock-based compensation
26.3

 
15.4

Deferred income taxes
19.0

 
21.4

Excess income tax benefit from exercise of stock options
(7.0
)
 
(4.9
)
Other operating activities, net

 
(4.5
)
Net changes in assets and liabilities, net of effects from acquisitions and foreign currency:
 
 
 
Trade receivables
(21.1
)
 

Settlement activity
2.4

 
58.3

Prepaid expenses and other assets
(6.1
)
 
(17.6
)
Deferred contract costs
(17.9
)
 
(18.2
)
Deferred revenue
3.3

 
1.3

Accounts payable, accrued liabilities, and other liabilities
(64.7
)
 
(42.6
)
Net cash provided by operating activities
203.8

 
260.2

 
 
 
 
Cash flows from investing activities:
 
 
 
Additions to property and equipment
(24.2
)
 
(20.4
)
Additions to computer software
(40.8
)
 
(51.2
)
Net proceeds from sale of assets

 
5.9

Acquisitions, net of cash acquired

 
(12.8
)
Net cash used in investing activities
(65.0
)
 
(78.5
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Borrowings
4,631.7

 
2,732.2

Repayment of borrowings
(4,598.5
)
 
(2,912.7
)
Debt issuance costs
(44.5
)
 

Excess income tax benefit from exercise of stock options
7.0

 
4.9

Proceeds from exercise of stock options, net of tax withholding
124.7

 
51.5

Treasury stock purchases
(136.0
)
 

Dividends paid
(58.8
)
 
(15.2
)
Other financing activities, net
(1.4
)
 
(0.8
)
Net cash used in financing activities
(75.8
)
 
(140.1
)
Effect of foreign currency exchange rate changes on cash
3.2

 
4.5

Net increase (decrease) in cash and cash equivalents
66.2

 
46.1

Cash and cash equivalents, beginning of period
415.5

 
338.0

Cash and cash equivalents, end of period
$
481.7

 
$
384.1

 
 
 
 
Supplemental cash flow information:
 
 
 
Cash paid for interest
$
82.1

 
$
88.2

Cash paid for income taxes
$
19.5

 
$
12.6

See accompanying notes to unaudited condensed consolidated financial statements.


6

Table of Contents

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


Unless stated otherwise or the context otherwise requires, all references to “FIS,” “we,” the “Company” or the “registrant” are to Fidelity National Information Services, Inc., a Georgia corporation, and its subsidiaries; all references to “Metavante” are to Metavante Technologies, Inc., and its subsidiaries, as acquired by FIS on October 1, 2009; and all references to "Capco" are to The Capital Markets Company N.V., as acquired by FIS on December 2, 2010.

(1) Basis of Presentation
The unaudited financial information included in this report includes the accounts of FIS and its subsidiaries prepared in accordance with U.S. generally accepted accounting principles and the instructions to Form 10-Q and Article 10 of Regulation S-X. All adjustments considered necessary for a fair presentation have been included. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. The preparation of these Condensed Consolidated Financial Statements (Unaudited) in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements (Unaudited) and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. Certain reclassifications have been made in the 2011 Condensed Consolidated Financial Statements (Unaudited) to conform to the classifications used in 2012.
We report the results of our operations in four reporting segments: 1) Financial Solutions Group (“FSG”), 2) Payment Solutions Group (“PSG”), 3) International Solutions Group (“ISG”) and 4) Corporate and Other (Note 11).

(2) Related Party Transactions
We are party to certain related party agreements described below.
Revenues and Expenses
A detail of related party items included in revenues for the three months ended March 31, 2012 and 2011 is as follows (in millions):
 
Three months ended
March 31,
 
2012
 
2011
Banco Bradesco Brazilian Venture revenue
$
75.4

 
$
66.5

Banco Bradesco item processing revenue
0.1

 
1.2

FNF data processing services revenue
12.0

 
11.7

Ceridian data processing and services revenue
18.7

 
13.9

Total related party revenues
$
106.2

 
$
93.3


A detail of related party items included in selling, general and administrative expenses (net of expense reimbursements) for the three months ended March 31, 2012 and 2011 is as follows (in millions):
 
Three months ended
March 31,
 
2012
 
2011
Administrative corporate support and other services with FNF
$
1.1

 
$
1.1

Employee benefits services with Ceridian
0.2

 
0.1

Total related party expenses
$
1.3

 
$
1.2





7

Table of Contents
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


Brazilian Venture

The Company operates a venture ("Brazilian Venture") with Banco Bradesco S.A. (“Banco Bradesco”) in which we own a 51% controlling interest, to provide comprehensive, fully outsourced card processing services to Brazilian card issuers, including Banco Bradesco. The Brazilian Venture currently processes approximately 50.0 million cards for clients in Brazil and provides call center, cardholder support and collection services for their card portfolios.

FNF

We provide data processing services to Fidelity National Financial, Inc. ("FNF"), our former parent, consisting primarily of infrastructure support and data center management. The Vice Chairman of the Board of Directors of FIS is currently the Chairman of the Board of Directors of FNF. Our agreement with FNF runs through September 30, 2013, with an option to renew for one or two additional years, subject to certain early termination provisions (including the payment of minimum monthly service and termination fees). We also incur expenses for amounts paid by us to FNF to lease certain real estate and under cost-sharing agreements to use certain corporate aircraft.

Ceridian

We provide data processing services to Ceridian Corporation (“Ceridian”) and Ceridian provides us with outsourced employee benefits services. FNF holds an approximate 33% equity interest in Ceridian.

We believe the amounts earned from or charged by us under each of the foregoing arrangements are fair and reasonable. We believe our service arrangements are priced within the range of prices we offer to third parties. However, the amounts we earned or that were charged under these arrangements were not negotiated at arm's-length, and may not represent the terms that we might have obtained from an unrelated third party.

(3) Unaudited Net Earnings per Share
The basic weighted average shares and common stock equivalents for the three months ended March 31, 2012 and 2011 are computed using the treasury stock method.
The following table summarizes the earnings per share attributable to FIS common stockholders for the three months ended March 31, 2012 and 2011 (in millions, except per share amounts):

8

Table of Contents
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


 
Three months ended
March 31,
 
2012
 
2011
Earnings from continuing operations attributable to FIS, net of tax
$
95.8

 
$
96.1

Earnings (loss) from discontinued operations attributable to FIS, net of tax
(8.7
)
 
(3.3
)
Net earnings attributable to FIS
$
87.1

 
$
92.8

Weighted average shares outstanding — basic
289.7

 
301.5

Plus: Common stock equivalent shares
5.7

 
7.2

Weighted average shares outstanding — diluted
295.4

 
308.7

Net earnings per share — basic from continuing operations attributable to FIS common stockholders
$
0.33

 
$
0.32

Net earnings (loss) per share — basic from discontinued operations attributable to FIS common stockholders
(0.03
)
 
(0.01
)
Net earnings per share — basic attributable to FIS common stockholders *
$
0.30

 
$
0.31

Net earnings per share — diluted from continuing operations attributable to FIS common stockholders
$
0.32

 
$
0.31

Net earnings (loss) per share — diluted from discontinued operations attributable to FIS common stockholders
(0.03
)
 
(0.01
)
Net earnings per share — diluted attributable to FIS common stockholders *
$
0.29

 
$
0.30

 
 
 
 
* amounts may not sum due to rounding.
 
 
 
Options to purchase approximately 4.1 million and 5.0 million shares of our common stock for the three months ended March 31, 2012 and 2011, respectively, were not included in the computation of diluted earnings per share because they were anti-dilutive.

(4) Discontinued Operations

      Brazil Item Processing and Remittance Services Operations

As previously disclosed, during the third quarter 2010, the Company decided to pursue strategic alternatives for Fidelity National Participacoes Ltda. (“Participacoes”). There were no revenues for the 2012 period and revenues of $9.6 million for the 2011 first quarter. Participacoes had losses before taxes of $13.0 million and $4.8 million during the three months ended March 31, 2012 and 2011, respectively. The operating results of Participacoes are recorded as discontinued operations in the Condensed Consolidated Statements of Earnings (Unaudited). Participacoes' processing volume was transitioned to other vendors or back to its customers during the second quarter of 2011. As a result of the dismissal of employees related to the shut-down activities completed in 2011, the three months ended March 31, 2012 and 2011 included charges of $11.6 million and $10.1 million, respectively, to increase our accrual for potential labor claims. Former employees have up to two years from the date of termination to file labor claims. Consequently, we expect to have continued exposure to such claims, which were not transferred with other assets and liabilities in the disposal. Our accrued liability for labor claims is $37.6 million as of March 31, 2012. Any changes in the estimated liability related to these labor claims will also be recorded as discontinued operations.

(5) Condensed Consolidated Financial Statement Details
The following tables show the Company’s condensed consolidated financial statement details as of March 31, 2012 and December 31, 2011 (in millions):


9

Table of Contents
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


 
March 31, 2012
 
December 31, 2011
 
Cost
 
Accumulated
depreciation and amortization
 
Net
 
Cost
 
Accumulated
depreciation and amortization
 
Net
Property and equipment
$
912.8

 
$
498.4

 
$
414.4

 
$
882.7

 
$
468.2

 
$
414.5

Intangible assets
$
3,061.1

 
$
1,218.4

 
$
1,842.7

 
$
3,053.4

 
$
1,150.1

 
$
1,903.3

Computer software
$
1,537.5

 
$
659.5

 
$
878.0

 
$
1,517.0

 
$
635.5

 
$
881.5

       
The Company entered into capital lease obligations of $1.5 million and $31.4 million during the three months ended March 31, 2012 and year ended December 31, 2011, respectively for certain computer hardware and software. The assets are included in property and equipment and computer software and the remaining capital lease obligation is classified as long-term debt on our Condensed Consolidated Balance Sheet as of March 31, 2012. Periodic payments are included in repayment of borrowings on the Condensed Consolidated Statements of Cash Flows.

(6) Long-Term Debt
Long-term debt as of March 31, 2012 and December 31, 2011 consisted of the following (in millions):

 
March 31, 2012
 
December 31, 2011
Term Loan A-2, secured (1)
250.0

 
2,088.6

Term Loan A-3, secured, quarterly principal amortization (2)
2,100.0

 

New Term Loan B, secured (3)
200.0

 
1,250.0

Senior Notes due 2017, unsecured, interest payable semi-annually at 7.625%
750.0

 
750.0

Senior Notes due 2020, unsecured, interest payable semi-annually at 7.875%
500.0

 
500.0

Senior Notes due 2022, unsecured, interest payable semi-annually at 5.000%
700.0

 

Revolving Loan, secured (4)
299.7

 
175.0

Other
44.4

 
46.2

 
4,844.1

 
4,809.8

Current portion
(115.7
)
 
(259.2
)
Long-term debt, excluding current portion
$
4,728.4

 
$
4,550.6

__________________________________________
(1)
Interest on the Term Loan A-2 is generally payable at LIBOR plus an applicable margin of up to 2.50% based upon the Company's leverage ratio, as defined in the FIS Credit Agreement. As of March 31, 2012, the weighted average interest rate on the Term Loan A-2 was 2.49%.
(2)
Interest on the Term Loan A-3 is generally payable at LIBOR plus an applicable margin of up to 2.25% based upon the Company's corporate credit ratings and the ratings on the FIS Credit Agreement. As of March 31, 2012, the weighted average interest rate on the Term Loan A-2 was 2.24%.
(3)
Interest on the New Term Loan B is generally payable at LIBOR plus an applicable margin of 3.25%, subject to a LIBOR floor of 1.00%. As of March 31, 2012, the interest rate on the New Term Loan B was 4.25%.
(4)
Interest on the Revolving Loan is generally payable at LIBOR plus an applicable margin of up to 2.25% plus an unused commitment fee of up to 0.35%, each based upon the Company's corporate credit ratings and the ratings on the FIS Credit Agreement. As of March 31, 2012, the applicable margin on the Revolving Loan, excluding facility fees and unused commitment fees, was 2.00%.

On March 30, 2012, FIS amended and restated its syndicated credit agreement (the “FIS Credit Agreement”). The FIS Credit Agreement, as of March 31, 2012, provides total committed capital of $3,700.0 million comprised of: (1) a revolving credit facility in an aggregate maximum principal amount of $1,150.0 million maturing on March 30, 2017 ( the “Revolving Loan”); and (2) an aggregate of $2,550.0 million of term loans consisting of $250.0 million maturing on July 18, 2014 (the “Term Loan A-2”), $200.0 million maturing on July 18, 2016 (the "New Term Loan B") and $2,100.0 million maturing on March 30, 2017 (the "Term Loan A-3" and together with the Term Loan A-2 and the New Term Loan B, the "Term Loans"). As of March 31, 2012, the outstanding principal balance of the Revolving Loan was $299.7 million, with $849.5 million of borrowing capacity remaining thereunder (net of $0.8 million in outstanding letters of credit issued under the Revolving Loan).

The obligations under the FIS Credit Agreement are guaranteed by substantially all of the domestic subsidiaries of FIS and are secured by a pledge of the equity interests issued by substantially all of the domestic subsidiaries of FIS and a pledge of 65% of the equity interests issued by certain foreign subsidiaries of FIS.

10

Table of Contents
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



On December 19, 2011, FIS entered into a supplemental indenture whereby FIS issued an additional $150.0 million of our 7.625% Senior Notes due July 16, 2017 (the "Additional 2017 Notes") that have the same terms as the existing Senior Notes due in 2017 (the "2017 Notes").
   
On March 19, 2012, FIS completed an offering of $700.0 million aggregate principal amount of 5.000% Senior Notes due 2022 (the “2022 Notes” and together with the 2017 Notes, the Additional 2017 Notes and the Senior Notes due in 2020 (the "2020 Notes"), the “Notes”). FIS issued the 2022 Notes under an indenture dated as of March 19, 2012 among FIS, FIS' domestic subsidiaries that guaranteed its amended credit facility (the “Guarantors”) and The Bank of New York Mellon Trust Company, N.A., as trustee.

The Additional 2017 Notes and the 2022 Notes were offered and sold in the United States to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act. The Additional 2017 Notes and the 2022 Notes have not been registered under the Securities Act and may not be offered or sold without registration unless pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act and all applicable state laws.

The Notes are fully and unconditionally guaranteed on a senior unsecured basis by each of the Guarantors. The Notes and the related guarantees are general senior unsecured obligations of FIS and the Guarantors and (1) rank equally in right of payment with all of FIS' and the Guarantors' existing and future senior debt, (2) are effectively junior to all of FIS' and the Guarantors' existing and future secured debt to the extent of the value of the assets securing that secured debt, (3) are effectively junior to all existing and future debt and liabilities of FIS' non-guarantor subsidiaries and (4) rank senior in right of payment to all of FIS' future debt, if any, that is by its terms expressly subordinated to the Notes.

The following table summarizes the mandatory annual principal payments pursuant to the FIS Credit Agreement and the Notes' indentures as of March 31, 2012 (in millions). There are no mandatory principal payments on the Revolving Loan and any balance outstanding on the Revolving Loan will be due and payable at its scheduled maturity date:
 
Term Loan
 
Term Loan
 
New Term
 
2017
 
2020
 
2022
 
 
 
A-2
 
A-3
 
Loan B
 
Notes
 
Notes
 
Notes
 
Total
2012
$

 
$
78.8

 
$

 
$

 
$

 
$

 
$
78.8

2013

 
144.4

 

 

 

 

 
144.4

2014
250.0

 
196.9

 

 

 

 

 
446.9

2015

 
288.8

 

 

 

 

 
288.8

2016

 
393.8

 
200.0

 

 

 

 
593.8

Thereafter

 
997.3

 

 
750.0

 
500.0

 
700.0

 
2,947.3

Total
$
250.0

 
$
2,100.0

 
$
200.0

 
$
750.0

 
$
500.0

 
$
700.0

 
$
4,500.0


Our New Term Loan B and Notes are held by a number of institutional investors. As of March 31, 2012, $2.1 million of New Term Loan B and $41.8 million of Notes were held by FNF.

We monitor the financial stability of our counterparties on an ongoing basis. The lender commitments under the undrawn portions of the Revolving Loan are comprised of a diversified set of financial institutions, both domestic and international. The combined commitments of our top 10 revolving lenders comprise about 66% of our Revolving Loan. The failure of any single lender to perform their obligations under the Revolving Loan would not adversely impact our ability to fund operations. If the single largest lender were to default under the terms of the FIS Credit Agreement (impacting the capacity of the Revolving Loan), the maximum loss of available capacity on the undrawn portion of the Revolving Loan, as of March 31, 2012, would be approximately $80.6 million.

In connection with the March 2012 refinancing and bond offering, we wrote off certain previously capitalized debt issuance costs and transaction expenses totaling $18.4 million and capitalized $29.3 million of other costs. Debt issuance costs of $60.3 million, net of accumulated amortization, remain capitalized as of March 31, 2012, related to all of the above credit facilities.


11

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FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


The fair value of the Company’s long-term debt is estimated to be approximately $104.5 million higher than the carrying value as of March 31, 2012. This estimate is based on quoted prices of our Notes and trades of our other debt in close proximity to March 31, 2012, which are considered Level 2-type measurements. This estimate is subjective in nature and involves uncertainties and significant judgment in the interpretation of current market data. Therefore, the values presented are not necessarily indicative of amounts the Company could realize or settle currently.

As of March 31, 2012, we have entered into the following interest rate swap transactions converting a portion of the interest rate exposure on our Term Loans and Revolving Loan from variable to fixed (in millions):

Effective date
 
Termination date
 
Notional amount
 
Bank pays
variable rate of
 
FIS pays
 fixed rate of
 
November 1, 2010
 
November 1, 2012
 
150.0

 
1 Month LIBOR (1)
 
0.50
%
(2)
February 1, 2011
 
February 1, 2013
 
200.0

 
1 Month LIBOR (1)
 
0.62
%
(2)
May 3, 2011
 
May 1, 2013
 
400.0

 
1 Month LIBOR (1)
 
0.73
%
(2)
September 1, 2011
 
September 1, 2014
 
150.0

 
1 Month LIBOR (1)
 
0.74
%
(2)
September 1, 2011
 
September 1, 2014
 
150.0

 
1 Month LIBOR (1)
 
0.74
%
(2)
September 1, 2011
 
September 1, 2014
 
300.0

 
1 Month LIBOR (1)
 
0.72
%
(2)
 
 
 
 
$
1,350.0

 
 
 
 

 
___________________________________
(1)
0.24% in effect as of March 31, 2012.
(2)
Does not include the applicable margin and facility fees paid to lenders on the Term Loans and Revolving Loan as described above.
We have designated these interest rate swaps as cash flow hedges and, as such, they are carried on the Condensed Consolidated Balance Sheets at fair value with changes in fair value included in other comprehensive earnings, net of tax.

A summary of the fair value of the Company’s derivative instruments is as follows (in millions):

 
March 31, 2012
 
December 31, 2011
 
Balance sheet location
 
Fair
value
 
Balance sheet location
 
Fair
value
Interest rate swap contracts
Accounts payable and accrued liabilities
 
$
0.9

 
Accounts payable and accrued liabilities
 
$
3.4

Interest rate swap contracts
Other long-term liabilities
 
5.5

 
Other long-term liabilities
 
4.0

Total derivatives designated as hedging instruments
 
 
$
6.4

 
 
 
$
7.4


In accordance with the authoritative guidance for fair value measurements, the inputs used to determine the estimated fair value of our interest rate swaps are Level 2-type measurements. We considered our own credit risk and the credit risk of the counterparties when determining the fair value of our interest rate swaps. Adjustments are made to these amounts and to accumulated other comprehensive earnings ("AOCE") within the Condensed Consolidated Statements of Equity and Comprehensive Earnings as the factors that impact fair value change, including current and projected interest rates, time to maturity and required cash transfers/settlements with our counterparties. Periodic actual and estimated settlements with counterparties are recorded to interest expense as a yield adjustment to effectively fix the otherwise variable rate interest expense associated with the Term Loans and Revolving Loan.

A summary of the effect of derivative instruments on the Company’s Condensed Consolidated Statements of Comprehensive Earnings and recognized in AOCE for the years ended March 31, 2012 and 2011 is as follows (in millions):


12

Table of Contents
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


 
 
Amount of loss recognized
in AOCE on
derivatives
 
 
 
Amount of loss reclassified
from AOCE into
income
Derivatives in cash
 
Three months ended
 
Location of loss
 
Three months ended
flow hedging
 
March 31,
 
reclassified from
 
March 31,
relationships
 
2012
 
2011
 
AOCE into income
 
2012
 
2011
Interest rate swap contracts
 
$
(1.8
)
 
$
(0.7
)
 
Interest expense
 
$
(2.5
)
 
$
(6.5
)

Approximately $2.7 million of the balance in AOCE as of March 31, 2012 is expected to be reclassified into income over the next twelve months.
Our existing cash flow hedges are highly effective and there was no impact on earnings due to hedge ineffectiveness. It is our practice to execute such instruments with credit-worthy banks at the time of execution and not to enter into derivative financial instruments for speculative purposes. As of March 31, 2012, we believe that our interest rate swap counterparties will be able to fulfill their obligations under our agreements and we believe we will have debt outstanding through the various expiration dates of the swaps such that the forecasted transactions remain probable of occurring.

(7) Supplemental Guarantor Financial Information

The following supplemental financial information sets forth for FIS and its guarantor and non-guarantor subsidiaries: (a) the Condensed Consolidating Balance Sheets as of March 31, 2012 and December 31, 2011; (b) the Condensed Consolidating Statements of Earnings and Comprehensive Earnings for the three months ended March 31, 2012 and 2011; and (c) the Condensed Consolidating Statements of Cash Flows for the three months ended March 31, 2012 and 2011.
 
March 31, 2012
 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
FIS
 
subsidiaries
 
subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
12.7

 
$
173.8

 
$
295.2

 
$

 
$
481.7

Settlement deposits

 
31.5

 
0.2

 

 
31.7

Trade receivables, net

 
696.3

 
193.0

 

 
889.3

Investment in subsidiaries, intercompany and receivables from related parties
9,639.6

 
8,361.4

 
1,061.0

 
(19,002.6
)
 
59.4

Other current assets
8.7

 
230.5

 
66.3

 

 
305.5

Total current assets
9,661.0

 
9,493.5

 
1,615.7

 
(19,002.6
)
 
1,767.6

Property and equipment, net
1.6

 
344.3

 
68.5

 

 
414.4

Goodwill

 
7,401.1

 
1,144.4

 

 
8,545.5

Intangible assets, net

 
1,413.7

 
429.0

 

 
1,842.7

Computer software, net
32.8

 
669.3

 
175.9

 

 
878.0

Other noncurrent assets
97.3

 
241.3

 
117.6

 

 
456.2

Total assets
$
9,792.7

 
$
19,563.2

 
$
3,551.1

 
$
(19,002.6
)
 
$
13,904.4

Liabilities and Equity
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
$
80.2

 
$
186.5

 
$
256.6

 
$

 
$
523.3

Settlement payables

 
132.2

 
8.7

 

 
140.9

Current portion of long-term debt
105.0

 
10.4

 
0.3

 

 
115.7

Deferred revenues
5.7

 
203.7

 
77.6

 

 
287.0

Other current liabilites

 

 
37.7

 

 
37.7

Total current liabilities
190.9

 
532.8

 
380.9

 

 
1,104.6

Deferred income taxes

 
878.4

 
(0.2
)
 

 
878.2

Long-term debt, excluding current portion
4,716.5

 
11.8

 
0.1

 

 
4,728.4

Other long-term liabilities
18.3

 
109.6

 
298.2

 

 
426.1

Total liabilities
4,925.7

 
1,532.6

 
679.0

 

 
7,137.3

Total equity
4,867.0

 
18,030.6

 
2,872.1

 
(19,002.6
)
 
6,767.1

Total liabilities and equity
$
9,792.7

 
$
19,563.2

 
$
3,551.1

 
$
(19,002.6
)
 
$
13,904.4


13

Table of Contents
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


 
December 31, 2011
 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
FIS
 
subsidiaries
 
subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
19.4

 
$
163.3

 
$
232.8

 
$

 
$
415.5

Settlement deposits

 
43.9

 

 

 
43.9

Trade receivables, net

 
689.5

 
169.0

 

 
858.5

Investment in subsidiaries, intercompany and receivables from related parties
9,564.7

 
8,133.7

 
1,089.0

 
(18,730.5
)
 
56.9

Other current assets
11.9

 
231.7

 
64.3

 

 
307.9

Total current assets
9,596.0

 
9,262.1

 
1,555.1

 
(18,730.5
)
 
1,682.7

Property and equipment, net
1.4

 
347.7

 
65.4

 

 
414.5

Goodwill

 
7,398.5

 
1,144.3

 

 
8,542.8

Intangible assets, net

 
1,471.2

 
432.1

 

 
1,903.3

Computer software, net
32.7

 
673.9

 
174.9

 

 
881.5

Other noncurrent assets
77.6

 
230.5

 
115.4

 

 
423.5

Total assets
$
9,707.7

 
$
19,383.9

 
$
3,487.2

 
$
(18,730.5
)
 
$
13,848.3

Liabilities and Equity
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
$
152.0

 
$
256.9

 
$
232.6

 
$

 
$
641.5

Settlement payables

 
136.0

 
5.2

 

 
141.2

Current portion of long-term debt
248.4

 
10.5

 
0.3

 

 
259.2

Deferred revenues

 
205.8

 
70.7

 

 
276.5

Other current liabilites

 

 
36.5

 

 
36.5

Total current liabilities
400.4

 
609.2

 
345.3

 

 
1,354.9

Deferred income taxes

 
871.4

 
1.1

 

 
872.5

Long-term debt, excluding current portion
4,537.3

 
13.2

 
0.1

 

 
4,550.6

Other long-term liabilities
19.0

 
111.6

 
288.5

 

 
419.1

Total liabilities
4,956.7

 
1,605.4

 
635.0

 

 
7,197.1

Total equity
4,751.0

 
17,778.5

 
2,852.2

 
(18,730.5
)
 
6,651.2

Total liabilities and equity
$
9,707.7

 
$
19,383.9

 
$
3,487.2

 
$
(18,730.5
)
 
$
13,848.3


 
Three months ended March 31, 2012
 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
FIS
 
subsidiaries
 
subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Processing and services revenues
$

 
$
1,154.0

 
$
292.9

 
$

 
$
1,446.9

Operating expenses
64.5

 
893.4

 
259.5

 

 
1,217.4

Operating income
(64.5
)
 
260.6

 
33.4

 

 
229.5

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest expense, net
(58.1
)
 
(0.1
)
 
(1.2
)
 

 
(59.4
)
Other income (expense)
(16.4
)
 
(3.8
)
 
(0.7
)
 

 
(20.9
)
Net earnings (loss) of equity affiliates
191.4

 

 

 
(191.4
)
 

Total other income (expense)
116.9

 
(3.9
)
 
(1.9
)
 
(191.4
)
 
(80.3
)
Earnings (loss) from continuing operations before income taxes
52.4

 
256.7

 
31.5

 
(191.4
)
 
149.2

Provision for income taxes
(46.4
)
 
85.7

 
11.1

 

 
50.4

Net earnings (loss) from continuing operations
98.8

 
171.0

 
20.4

 
(191.4
)
 
98.8

Earnings (loss) from discontinued operations, net of tax
(8.7
)
 

 
(8.7
)
 
8.7

 
(8.7
)
Net earnings (loss)
90.1

 
171.0

 
11.7

 
(182.7
)
 
90.1

Net (earnings) loss attributable to noncontrolling interest
(3.0
)
 
0.3

 
(3.3
)
 
3.0

 
(3.0
)
Net earnings (loss) attributable to FIS common stockholders
$
87.1

 
$
171.3

 
$
8.4

 
$
(179.7
)
 
$
87.1

Comprehensive earnings (loss) attributable to FIS
$
113.8

 
$
172.4

 
$
35.3

 
$
(207.7
)
 
$
113.8




14

Table of Contents
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


 
Three months ended March 31, 2011
 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
FIS
 
subsidiaries
 
subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Processing and services revenues
$

 
$
1,083.5

 
$
299.9

 
$

 
$
1,383.4

Operating expenses
45.3

 
836.7

 
287.5

 

 
1,169.5

Operating income
(45.3
)
 
246.8

 
12.4

 

 
213.9

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest expense, net
(64.7
)
 

 
(3.3
)
 

 
(68.0
)
Other income (expense)
(0.8
)
 
(0.9
)
 
5.0

 

 
3.3

Net earnings (loss) of equity affiliates
165.6

 

 

 
(165.6
)
 

Total other income (expense)
100.1

 
(0.9
)
 
1.7

 
(165.6
)
 
(64.7
)
Earnings (loss) from continuing operations before income taxes
54.8

 
245.9

 
14.1

 
(165.6
)
 
149.2

Provision for income taxes
(42.1
)
 
90.2

 
4.2

 

 
52.3

Net earnings (loss) from continuing operations
96.9

 
155.7

 
9.9

 
(165.6
)
 
96.9

Earnings (loss) from discontinued operations, net of tax
(3.3
)
 

 
(3.3
)
 
3.3

 
(3.3
)
Net earnings (loss)
93.6

 
155.7

 
6.6

 
(162.3
)
 
93.6

Net (earnings) loss attributable to noncontrolling interest
(0.8
)
 
0.1

 
(0.9
)
 
0.8

 
(0.8
)
Net earnings (loss) attributable to FIS common stockholders
$
92.8

 
$
155.8

 
$
5.7

 
$
(161.5
)
 
$
92.8

Comprehensive earnings (loss) attributable to FIS
$
109.9

 
$
154.9

 
$
16.6

 
$
(171.5
)
 
$
109.9


 
Three months ended March 31, 2012
 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
FIS
 
subsidiaries
 
subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Cash flows from operating activities
$
(68.7
)
 
$
218.4

 
$
45.4

 
$
8.7

 
$
203.8

Cash flows from investing activities
(2.1
)
 
(54.5
)
 
(8.4
)
 

 
(65.0
)
Cash flows from financing activities
64.1

 
(153.4
)
 
22.2

 
(8.7
)
 
(75.8
)
Effect of foreign currency exchange rates on cash

 

 
3.2

 

 
3.2

Net increase (decrease) in cash
$
(6.7
)
 
$
10.5

 
$
62.4

 
$

 
$
66.2


 
Three months ended March 31, 2011
 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
FIS
 
subsidiaries
 
subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Cash flows from operating activities
$
(124.6
)
 
$
323.8

 
$
51.2

 
$
9.8

 
$
260.2

Cash flows from investing activities
(1.5
)
 
(52.9
)
 
(24.1
)
 

 
(78.5
)
Cash flows from financing activities
134.7

 
(269.9
)
 
4.9

 
(9.8
)
 
(140.1
)
Effect of foreign currency exchange rates on cash

 

 
4.5

 

 
4.5

Net increase (decrease) in cash
$
8.6

 
$
1.0

 
$
36.5

 
$

 
$
46.1


(8) Commitments and Contingencies
Litigation
     In the ordinary course of business, the Company is involved in various pending and threatened litigation matters related to operations, some of which include claims for punitive or exemplary damages. The Company believes that no actions, other than the matters listed below, depart from customary litigation incidental to its business. As background to the disclosures below, please note the following:


15

Table of Contents
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


These matters raise difficult and complicated factual and legal issues and are subject to many uncertainties and complexities.

The Company reviews these matters on an on-going basis and follows the authoritative provisions for accounting for contingencies when making accrual and disclosure decisions. A liability must be accrued if (a) it is probable that a liability has been incurred and (b) the amount of loss can be reasonably estimated. If one of these criteria has not been met, disclosure is required when there is at least a reasonable possibility that a loss may have been incurred. When assessing reasonably possible and probable outcomes, the Company bases decisions on the assessment of the ultimate outcome following all appeals. Legal fees associated with defending these matters are expensed as incurred.

     Searcy, Gladys v. eFunds Corporation

     This is a nationwide putative class action that was filed against our subsidiary eFunds and its affiliate Deposit Payment Protection Services, Inc. in the U.S. District Court for the Northern District of Illinois during the first quarter of 2008. The complaint seeks damages for an alleged willful violation of the Fair Credit Reporting Act (“FCRA”) in connection with the operation of the Shared Check Authorization Network. Plaintiff's principal allegation is that consumers did not receive appropriate disclosures pursuant to §1681g of the FCRA because the disclosures did not include: (i) all information in the consumer's file at the time of the request; (ii) the source of the information in the consumer's file; and/or (iii) the names of any persons who requested information related to the consumer's check writing history during the prior year. Plaintiff filed a motion for class certification, which was granted with respect to two subclasses during the first quarter of 2010. The motion was denied with respect to all other subclasses. The Company filed a motion for reconsideration. The motion was granted and the two subclasses were decertified. The plaintiff also filed motions to amend her complaint to add two additional plaintiffs to the lawsuit. The court granted the motions. During the second quarter of 2010, the Company filed a motion for summary judgment as to the original plaintiff and a motion for sanctions against the plaintiff and her counsel based on plaintiff's alleged false statements that were filed in support of the motion for class certification. In the third quarter of 2010, the court denied the motion for summary judgment and granted in part and denied in part the motion for sanctions. The Company filed a motion requesting the court to allow it to file an interlocutory appeal on the order denying the motion for summary judgment. The court granted the motion; however, in the first quarter of 2011, the Seventh Circuit Court of Appeals denied the Company's petition for interlocutory appeal. Discovery regarding the new plaintiffs and other matters has been completed. In the first quarter of 2012, plaintiffs filed a renewed motion for class certification. Class certification briefing is ongoing. An estimate of a possible loss or range of loss, if any, for this action cannot be made at this time. 

CheckFree Corporation and CashEdge, Inc. v. Metavante Corporation and Fidelity National Information Services, Inc.
This is a patent infringement action that was filed by CheckFree Corporation and CashEdge, Inc., wholly-owned subsidiaries of Fiserv, Inc., against Fidelity National Information Services, Inc. and our subsidiary, Metavante Corporation (collectively the “Defendants”) in the U.S. District Court for the Middle District of Florida, Jacksonville Division on January 5, 2012. The complaint seeks damages, injunctive relief and attorneys' fees for the alleged infringement of three patents. Plaintiffs allege that the Defendants infringe the patents at issue by providing customers financial and payment solutions that process payment instructions, provide electronic biller notifications, and/or process account-to-account funds transfer transactions and have requested financial damages and injunctive relief. On March 13, 2012, the Defendants filed their Answer and Counterclaims to Plaintiffs' complaint for patent infringement denying the claims of patent infringement and asserting defenses, including non-infringement and invalidity. Additionally, Defendants filed counterclaims asserting patent infringement of three patents and adding Fiserv, Inc. as a Counter Defendant. Defendants seek damages, injunctive relief and attorneys' fees. On April 6, 2012, Plaintiffs and Counter Defendant Fiserv, Inc., filed their Answer to Defendants' counterclaims denying the claims of patent infringement and asserting defenses, including non-infringement and invalidity. Due to the early stage of this matter, an estimate of a possible loss or range of loss, if any, for this action cannot be made at this time.
 Indemnifications and Warranties

     The Company generally indemnifies its customers, subject to certain exceptions, against damages and costs resulting from claims of patent, copyright, or trademark infringement associated with its customers' use of the Company's products or services. Historically, the Company has not made any significant payments under such indemnifications, but continues to monitor the conditions that are subject to the indemnifications to identify whether it is probable that a loss has occurred, and would recognize any such losses when they are estimable. In addition, the Company warrants to customers that its software

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AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


operates substantially in accordance with the software specifications. Historically, no significant costs have been incurred related to software warranties and no accruals for warranty costs have been made.

(9) Share Repurchase Program

On February 7, 2012, our Board of Directors approved a plan authorizing repurchases of up to $1.0 billion of our outstanding common stock in the open market, at prevailing market prices or in privately negotiated transactions, through December 31, 2015. In January 2012, we repurchased 3.7 million shares of our common stock for $101.0 million at an average price of $27.32 under a previous authorization. The previous authorization was replaced by the February 7, 2012 plan, under which $1.0 billion remained available to repurchase as of March 31, 2012.

(10) Stock Purchase Right
As of the Metavante acquisition date, WPM, L.P., a Delaware limited partnership affiliated with Warburg Pincus Private Equity IX, L.P. (collectively “Warburg Pincus”) owned 25% of the outstanding shares of Metavante common stock, and was a party to a purchase right agreement with Metavante that granted Warburg Pincus the right to purchase additional shares of Metavante common stock under certain conditions in order to maintain its relative ownership interest. The Company and Warburg Pincus entered into a replacement stock purchase right agreement effective upon consummation of the merger, granting Warburg Pincus the right to purchase comparable FIS shares in lieu of Metavante shares. The purchase right agreement relates to Metavante employee stock options that were outstanding as of the date of Warburg Pincus' initial investment in Metavante. The stock purchase right may be exercised quarterly for a number of shares equal to one-third of the number of said employee stock options exercised during the preceding quarter, at a price equal to one-third of the aggregate exercise prices for such options. Alternatively, the right may be exercised for a number of shares equal to the difference between (i) one-third of the number of said employee stock options exercised during the preceding quarter and (ii) the quotient of one-third of the aggregate exercise prices of such options exercised divided by the quoted closing price of a common share on the day immediately before exercise of the purchase right, at a price equal to $0.01 per share (“Net Settlement Feature”). During the year ended December 31, 2011, 0.2 million shares were issued relative to fourth quarter 2010 and first, second and third quarter 2011 activity. During the three months ended March 31, 2012, 0.1 million shares were issued to Warburg Pincus relative to 2011 fourth quarter activity. Warburg Pincus paid a nominal amount for these shares under the Net Settlement Feature of the agreement. As of March 31, 2012, approximately 2.4 million employee stock options remained outstanding that were subject to this purchase right; therefore, the right will permit Warburg Pincus to purchase, at most, an additional 0.8 million shares.

(11) Segment Information
Summarized financial information for the Company’s segments is shown in the following tables.
As of and for the three months ended March 31, 2012 (in millions):

 
FSG
 
PSG
 
ISG
 
Corporate
and Other
 
Total
Processing and services revenues
$
538.9

 
$
630.6

 
$
276.8

 
$
0.6

 
$
1,446.9

Operating expenses
370.6

 
404.5

 
243.8

 
198.5

 
1,217.4

Operating income
$
168.3

 
$
226.1

 
$
33.0

 
$
(197.9
)
 
229.5

Other income (expense) unallocated
 
 
 
 
 
 
 
 
(80.3
)
Income from continuing operations
 
 
 
 
 
 
 
 
$
149.2

Depreciation and amortization
$
40.7

 
$
23.3

 
$
18.4

 
$
75.7

 
$
158.1

Capital expenditures (1)
$
40.3

 
$
11.3

 
$
10.7

 
$
4.2

 
$
66.5

Total assets
$
5,217.9

 
$
4,903.0

 
$
1,890.2

 
$
1,889.4

 
$
13,900.5

Goodwill
$
3,908.5

 
$
4,038.2

 
$
598.8

 
$

 
$
8,545.5

(1)
Includes capital leases of $1.5 million for certain computer hardware and software.

As of and for the three months ended March 31, 2011 (in millions):


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AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


 
FSG
 
PSG
 
ISG
 
Corporate
and Other
 
Total
Processing and services revenues
$
503.7

 
$
614.5

 
$
268.1

 
$
(2.9
)
 
$
1,383.4

Operating expenses
347.5

 
418.5

 
237.6

 
165.9

 
1,169.5

Operating income
$
156.2

 
$
196.0

 
$
30.5

 
$
(168.8
)
 
213.9

Other income (expense) unallocated
 
 
 
 
 
 
 
 
(64.7
)
Income from continuing operations
 
 
 
 
 
 
 
 
$
149.2

Depreciation and amortization
$
38.9

 
$
23.3

 
$
18.4

 
$
73.8

 
$
154.4

Capital expenditures
$
51.7

 
$
11.3

 
$
7.0

 
$
1.6

 
$
71.6

Total assets
$
5,085.4

 
$
4,873.7

 
$
1,878.8

 
$
2,266.4

 
$
14,104.3

Goodwill
$
3,908.5

 
$
4,053.7

 
$
606.2

 
$

 
$
8,568.4


Customers in Brazil, Germany and the United Kingdom accounted for the majority of the revenues from non-U.S. based customers. Total assets as of March 31, 2012, exclude $3.9 million related to discontinued operations.

Financial Solutions Group

FSG focuses on serving the processing needs of financial institutions, commercial lenders, finance companies and other businesses in North America. FSG's primary software applications function as the underlying infrastructure of a financial institution's processing environment. These applications include core bank processing software, which banks use to maintain the primary records of their customer accounts, and complementary applications and services that interact directly with the core processing applications. FSG offers applications and services through a range of delivery and service models, including on-site outsourcing and remote processing arrangements, as well as on a licensed software basis for installation on customer-owned and operated systems. With the December 2010 acquisition of Capco, we broadened our capabilities to provide strategic integrated consulting, technology and complex, large-scale transformation services.

Payment Solutions Group

PSG provides a comprehensive set of software and services for EFT, network, card processing, image, bill payment, government and healthcare solutions for North America. PSG is focused on servicing the payment and EFT needs of North American headquartered banks and credit unions and independent community and savings institutions.

International Solution Group

ISG offers both financial solutions and payment solutions to a wide array of international financial institutions. Also, this segment includes the Company's consolidated Brazilian Venture (Note 2) and the international operations of Capco. Included in this segment are long-term assets, excluding goodwill and other intangible assets, located outside of the United States totaling $400.0 million and $471.2 million as of March 31, 2012 and 2011, respectively. These assets are predominantly located in Germany, Brazil, the United Kingdom and India.

Corporate and Other

The Corporate and Other segment consists of the corporate overhead costs that are not allocated to operating segments. Corporate overhead costs relate to human resources, finance, legal, accounting, domestic sales and marketing, merger and acquisition activity and amortization of acquisition-related intangibles and other costs that are not considered when management evaluates segment performance.

The Company recorded compensation charges of $18.5 million in the first quarter of 2012 for the accelerated vesting of certain stock option and restricted stock grants pursuant to the changes in roles of William P. Foley, II, Vice Chairman, and Brent B. Bickett, Executive Vice President of Corporate Finance, and for a non-compete and change in role cash payment to Mr. Foley. These charges are included in selling, general and administrative expenses in the Corporate and Other segment.

The Company incurred a loss of approximately $13.0 million during the first quarter of 2011 related to unauthorized

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AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


activities on our Sunrise card-processing platform, as previously disclosed in the Company's Annua