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Table of Contents



United States
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):
July 24, 2007

Fidelity National Information Services, Inc.

(Exact name of Registrant as Specified in its Charter)

1-16427
(Commission File Number)

     
Georgia   58-2606325
(State or Other Jurisdiction of Incorporation or Organization)   (IRS Employer Identification Number)

601 Riverside Avenue
Jacksonville, Florida 32204

(Addresses of Principal Executive Offices)

(904) 854-8100
(Registrant’s Telephone Number, Including Area Code)


(Former Name or Former Address, if Changed Since Last Report)

     
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
   
o
  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
   
o
  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
   
o
  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
   
o
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



 


TABLE OF CONTENTS

Item 2.02. Results of Operations and Financial Condition
Item 8.01. Other Events
Item 9.01. Financial Statements and Exhibits
SIGNATURE
EXHIBIT INDEX
EXHIBIT 99.1


Table of Contents

Item 2.02. Results of Operations and Financial Condition

On July 24, 2007, Fidelity National Information Services, Inc. issued an earnings release announcing its financial results for the Second Quarter of 2007. The information included in Items 2.02 and 9.01 within this Current Report are being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended or otherwise subject to the liabilities of that Section. The information included in Items 2.02 and 9.01 within this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.

A copy of the earnings release is attached as Exhibit 99.1.

Item 8.01. Other Events.

     On July 3, 2007, Fidelity National Information Services, Inc. announced the theft of consumer information by one of its former employees. The Company’s investigation into this matter has been on-going. To date, after elimination of duplications and invalid data, the Company has determined that approximately 8.5 million consumer records were stolen. Some of these records contained only identifying information (i.e., name, address, telephone number and in some cases, date of birth). However, approximately 5.7 million of the records included checking account records and approximately 1.5 million included credit card records. This is an incremental increase of approximately 3.5 million checking account records and approximately 1.4 million credit card records over our announcement on July 3, 2007. The Company has also determined that a portion of the stolen credit card information was derived from its credit card issuance business. Because the investigation is continuing, it is possible that more records may be identified in the future. The Company continues to see no evidence of the stolen information being used for anything other than marketing purposes. Although the Company does not anticipate significant liability to consumers or for financial fraud, there can be no assurance that this matter will not result in fines or other consequences that adversely impact the Company or its relationship with governing organizations, customers or regulators.

Item 9.01. Financial Statements and Exhibits

(c) Exhibits

     
Exhibit
  Description
99.1
  Press release announcing Fidelity National Information Services, Inc. Reports Second Quarter 2007 Earnings.

 


Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

         
  Fidelity National Information Services, Inc.
 
 
Date: July 24, 2007 By:   /s/ Jeffrey S. Carbiener  
    Name: Jeffrey S. Carbiener
Title: Executive Vice President and
Chief Financial Officer
 
       
 

 


Table of Contents

EXHIBIT INDEX

     
Exhibit
  Description
99.1
  Press release announcing Fidelity National Information Services, Inc. Reports Second Quarter 2007 Earnings.

 

exv99w1
 

Exhibit 99.1
(FIS LOGO)   PRESS RELEASE
FIDELITY NATIONAL INFORMATION SERVICES, INC.
REPORTS RECORD REVENUE GROWTH OF 15.1%
SECOND QUARTER REVENUES REACH $1.2 BILLION
     Jacksonville, Fla. – July 24, 2007 — Fidelity National Information Services, Inc. (NYSE:FIS), a leading global provider of technology services to financial institutions, today announced financial results for the second quarter of 2007. Consolidated revenue increased to $1.2 billion, net earnings increased to $148.0 million and net earnings per diluted share totaled $0.75, which includes a $58.0 million, or $0.29 per share, after-tax gain on the sale of Covansys Corporation common stock.
     FIS reported revenue growth of 15.1%, adjusted EBITDA growth of 10.9% and adjusted cash earnings per diluted share of $0.59. “We are very pleased with the outstanding second quarter results and the strong contribution from each of our businesses,” stated FIS Executive Chairman William P. Foley, II. “We are also very excited about our pending merger with eFunds, which will strengthen our competitive position adding scale, additional product capability, and broader global reach.”
     FIS’ operating results are presented on a U.S. generally accepted accounting principles (“GAAP”) basis and on an adjusted pro forma basis, which management believes provides more meaningful comparisons between the periods presented. FIS’ full year 2006 pro forma results reflect a January 1, 2006 effective date for the merger between FIS and Certegy. Additionally, the adjusted pro forma results exclude certain merger and acquisition and integration expenses, certain stock compensation charges, debt restructuring charges, and a gain on the sale of Covansys Corporation common stock. Reconciliations between GAAP and pro forma results are provided in the attachments to this press release, which are posted on the company’s website at http://www.fidelityinfoservices.com.
                 
    2nd Quarter   2nd Quarter
               GAAP   2007   2006
Total Revenue
  $1,176.2 million   $1,021.9 million
Net Earnings
  $148.0 million   $66.0 million
Net Earnings Per Diluted Share
  $ 0.75     $ 0.34  

 


 

                         
Adjusted, excluding items            
described above   2nd Quarter   2nd Quarter   %
(see Appendix A)   2007   2006   Chg
Total Revenue
  $1,176.2 million   $1,021.9 million     15.1 %
EBITDA
  $299.6 million   $270.1 million     10.9 %
Net Earnings
  $91.4 million   $70.3 million     29.9 %
Net Earnings Per Diluted Share
  $ 0.46     $ 0.37       24.3 %
Cash Earnings
  $115.3 million   $98.9 million     16.6 %
Cash Earnings Per Diluted Share
  $ 0.59     $ 0.51       15.7 %
Diluted Shares Outstanding
  197.0 million   195.4 million        
     FIS presents its financial results in accordance with GAAP. However, in order to provide the investment community with a broader means of evaluating the operating performance of its operations, FIS also reports several non-GAAP measures, including earnings before interest, taxes, depreciation and amortization (“EBITDA”), net earnings plus depreciation and amortization less capital expenditures (“Free Cash Flow”) and net earnings plus other tax-adjusted purchase price amortization (“Cash Earnings”). Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP net earnings. Reconciliations between GAAP and non-GAAP results and schedules showing historical detail are provided in the attachments to this press release.
Segment Information
     FIS’ Transaction Processing Services generated revenue of $709.7 million, or 16.0% over the prior-year period, driven by 44.3% growth in International, 11.0% growth in Enterprise Solutions and 9.1% growth in Integrated Financial Solutions. Strong new sales, expansion within the existing client base and the Company’s item processing operation in Brazil contributed to the strong revenue growth. Transaction Processing Services’ EBITDA increased 16.3% over the prior-year quarter to $171.5 million. The EBITDA margin was 24.2%, which was comparable to the 24.1% margin reported for the second quarter of 2006.
     Lender Processing Services’ revenue increased 13.3% to $462.5 million, driven by 20.3% growth in Information Services, which continues to benefit from strong results within default solutions, appraisal, and title and settlement services. Lender Processing Services’ EBITDA was $149.0 million, or 5.4% above the prior year quarter. The EBITDA margin was 32.2%, compared to 31.5% in the first quarter of 2007, and 34.7% in the second quarter of 2006. The decline from the prior year quarter is primarily the result of significant growth in lower margin appraisal volumes.

 


 

     Additional segment information is provided in the following table. Certain prior year numbers have been adjusted to reflect subsequent reclassifications between business units:
                         
Segment Revenues   2nd Quarter     2nd Quarter        
(amounts in millions)   2007     2006     % Chg  
Transaction Processing Services:
                       
Integrated Financial Solutions
  $ 297.1     $ 272.4       9.1 %
Enterprise Solutions
    270.1       243.3       11.0 %
International
    143.3       99.3       44.3 %
Other
    (0.8 )     (2.9 )     73.2 %
 
  $ 709.7     $ 612.1       16.0 %
Lender Processing Services:
                       
Mortgage Processing
  $ 97.3     $ 93.2       4.5 %
Information Services
    365.2       303.5       20.3 %
Other
          11.4       (100.0 %)
 
  $ 462.5     $ 408.1       13.3 %
 
                       
Corporate
  $ 4.0     $ 1.7       124.8 %
 
                       
Total FIS
  $ 1,176.2     $ 1,021.9       15.1 %
     Corporate expense for the second quarter of 2007 totaled $21.0 million. The $2.1 million increase compared to the prior year quarter is attributable to a $4.0 million increase in stock option expense. The effective tax rate was 36.9%.
Outlook
     The Company reiterates its full year guidance for adjusted earnings per diluted share of $1.97 to $2.03, and adjusted cash earnings per diluted share of $2.47 to $2.53. Management expects 2007 pro forma revenue growth of 9% to 11% (compared to previous guidance of 7% to 9%) and adjusted pro forma EBITDA growth to approach the high end of its previously announced guidance of 10% to 12%.
     On June 27, 2007, FIS announced a definitive agreement to acquire EFD/eFunds Corporation in an all cash transaction valued at approximately $1.8 billion. The transaction is expected to be completed by the end of the third quarter of 2007, subject to certain regulatory approvals, approval by EFD shareholders and customary closing conditions. The transaction is expected to be neutral to cash earnings per diluted share in

 


 

2007. Including synergies, the transaction is expected to be accretive to adjusted cash earnings per diluted share in 2008.
     FIS will host a call with investors and analysts to discuss second quarter results on Wednesday, July 25, 2007, beginning at 10:30 a.m. Eastern time. Those wishing to participate via the webcast should access the call through FIS’ Investor Relations website at http://www.fidelityinfoservices.com. Those wishing to participate via the telephone may do so by calling 800-553-0358 (USA) or 612-332-0720 (International). The webcast replay will be available on FIS’ Investor Relations website. The telephone replay will be available through August 1, 2007, by dialing 800-475-6701 (USA) or 320-365-3844 (International). The access code will be 877965.
About Fidelity National Information Services
     Fidelity National Information Services, Inc. (NYSE:FIS) is a leading provider of core processing for financial institutions; card issuer and transaction processing services; mortgage loan processing and mortgage-related information products; and outsourcing services to financial institutions, retailers, mortgage lenders and real estate professionals. FIS has processing and technology relationships with 35 of the top 50 global banks, including nine of the top 10. Approximately 50 percent of all U.S. residential mortgages are processed using FIS software. FIS is a member of Standard and Poor’s (S&P) 500® Index and has been ranked the number one banking service provider in the world by American Banker and the research firm Financial Insights and the number two overall financial technology provider in the annual FinTech 100 rankings. Headquartered in Jacksonville, Fla., FIS maintains a strong global presence, serving more than 7,800 financial institutions in more than 60 countries worldwide. For more information on Fidelity National Information Services, please visit www.fidelityinfoservices.com.
Forward-Looking Statements
     This press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future economic performance and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: changes in general economic, business and political conditions, including changes in the financial markets; the effects of our substantial leverage, which may limit the funds available to make acquisitions and invest in our business; the risks of reduction in revenue from the elimination of existing and potential customers due to consolidation in the banking, retail and financial services

 


 

industries; failures to adapt our services to changes in technology or in the marketplace; adverse changes in the level of real estate activity, which would adversely affect certain of our businesses; our potential inability to find suitable acquisition candidates or difficulties in integrating acquisitions; significant competition that our operating subsidiaries face; the risks and uncertainties related to our recently announced data theft, which continues to be investigated, and which includes the potential for fines, increased operating costs and loss of business; the possibility that our future acquisition of EFD/eFunds, which is subject to regulatory and EFD shareholder approval, may not be completed or may not be accretive to our earnings due to undisclosed liabilities, management or integration issues, loss of customers or other factors; and other risks detailed in the “Statement Regarding Forward-Looking Information,” “Risk Factors” and other sections of the Company’s Form 10-K and other filings with the Securities and Exchange Commission.
FIS-e
SOURCE: Fidelity National Information Services, Inc.
CONTACT: Mary Waggoner, Senior Vice President, Investor Relations, 904-854-3282,
mary.waggoner@fnis.com
Michelle Kersch, Senior Vice President, Corporate Communications, 904-854-5043,
michelle.kersch@fnis.com
###

 


 

FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
UNAUDITED CONSOLIDATED RESULTS FOR THE THREE AND SIX MONTHS ENDING JUNE 30, 2007 AND 2006
(In thousands)
                                 
    Three months ended June 30,     Six months ended June 30,  
    2007     2006     2007     2006  
Processing and services revenues
  $ 1,176,238     $ 1,021,946     $ 2,300,304     $ 1,922,882  
 
                               
Cost of revenues
    842,946       719,718       1,656,262       1,342,055  
Selling, general, and administrative expenses
    125,770       125,866       245,253       271,595  
Research and development costs
    23,588       23,646       50,697       51,706  
 
                       
 
                               
Operating income
    183,934       152,716       348,092       257,526  
 
Other income (expense)
                               
Interest income
    578       1,533       1,267       3,424  
Gain on sale of Covansys stock
    92,044             92,044        
Other income (expense)
    812       866       1,480       (1,244 )
Interest expense
    (42,991 )     (49,033 )     (115,106 )     (92,301 )
 
                       
Total other income (expense)
    50,443       (46,634 )     (20,315 )     (90,121 )
 
                       
 
                               
Earnings before income taxes, equity earnings and minority interest
    234,377       106,082       327,777       167,405  
Provision for income taxes
    86,533       40,629       121,278       64,116  
Equity in earnings of unconsolidated entities
    736       259       1,672       2,092  
Minority interest expense (income)
    576       (317 )     664       (6 )
 
                       
 
                               
Net earnings
  $ 148,004     $ 66,029     $ 207,507     $ 105,387  
 
                       
 
                               
Net earnings per share-basic
  $ 0.77     $ 0.34     $ 1.08     $ 0.58  
Weighted average shares outstanding-basic
    192,743       192,224       192,323       181,168  
 
                       
 
                               
Net earnings per share-diluted
  $ 0.75     $ 0.34     $ 1.06     $ 0.57  
Weighted average shares outstanding-diluted
    196,977       195,374       196,395       184,242  
 
                       

 


 

Appendix A- Historical Detail and Reconciliation of Non-GAAP Measures
EBITDA Detail
         
2007 Q2   FIS  
Net Earnings
  $ 148,004  
+ Interest Expense
    42,991  
+ Minority Interest
    576  
+ Income Taxes
    86,533  
+ Depreciation/Amort
    113,891  
- Interest Income
    (578 )
- Equity in (Earnings) Losses of Unconsolidated Entities, net of tax
    (736 )
- Other (Income) Expense
    (812 )
- Covansys Gain
    (92,044 )
 
     
EBITDA
  $ 297,825  
 
     
EBITDA Detail
         
2006 Q2   FIS  
Net Earnings
  $ 66,029  
+ Interest Expense
    49,033  
+ Minority Interest
    (317 )
+ Income Taxes
    40,629  
+ Depreciation/Amort
    110,374  
- Interest Income
    (1,533 )
- Equity in (Earnings) Loss of Unconsolidated Entities, net of tax
    (259 )
- Other (Income) Expense
    (866 )
- Covansys Gain
     
 
     
EBITDA
  $ 263,090  
 
     
EBITDA Margin
         
2007 Q2   FIS
EBITDA
  $ 297,825  
Revenue
  $ 1,176,238  
EBITDA Margin
    25.3 %
EBITDA Margin
         
2006 Q2   FIS
EBITDA
  $ 263,090  
Revenue
  $ 1,021,946  
EBITDA Margin
    25.7 %
EBIT Detail
         
2007 Q2   FIS  
Net Earnings
  $ 148,004  
+ Interest Expense
    42,991  
+ Minority Interest
    576  
+ Income Taxes
    86,533  
- Interest Income
    (578 )
- Equity in (Earnings) Losses of Unconsolidated Entities, net of tax
    (736 )
- Other (Income) Expense
    (812 )
- Covansys Gain
    (92,044 )
 
     
EBIT
  $ 183,934  
 
     
EBIT Detail
         
2006 Q2   FIS  
Net Earnings
  $ 66,029  
+ Interest Expense
    49,033  
+ Minority Interest
    (317 )
+ Income Taxes
    40,629  
- Interest Income
    (1,533 )
- Equity in (Earnings) Loss of Unconsolidated Entities, net of tax
    (259 )
- Other (Income) Expense
    (866 )
- Covansys Gain
     
 
     
EBIT
  $ 152,716  
 
     
EBIT Margin
         
2007 Q2   FIS
EBIT
  $ 183,934  
Revenue
  $ 1,176,238  
EBIT Margin
    15.6 %
EBIT Margin
         
2006 Q2   FIS
EBIT
  $ 152,716  
Revenue
  $ 1,021,946  
EBIT Margin
    14.9 %
Adjusted Diluted EPS
         
2007 Q2   FIS
Net Earnings
  $ 148,004  
Adjusted diluted EPS
  $ 0.75  
Diluted Shares Outstanding
    196,977  
Adjusted Diluted EPS
         
2006 Q2   FIS
Net Earnings
  $ 66,029  
Adjusted EPS
  $ 0.34  
Diluted Shares Outstanding
    195,374  
Cash Earnings
         
2007 Q2   FIS  
Net Earnings
  $ 148,004  
+ Tax Adjusted Purchase Price Amortization
    23,901  
 
     
Cash Earnings
  $ 171,905  
 
     
 
       
Diluted Cash EPS
  $ 0.87  
Diluted Shares Outstanding
    196,977  
Cash Earnings
         
2006 Q2   FIS  
Net Earnings
  $ 66,029  
+ Tax Adjusted Purchase Price Amortization
    28,597  
 
     
Cash Earnings
  $ 94,626  
 
     
 
       
Diluted Cash EPS
  $ 0.48  
Diluted Shares Outstanding
    195,374  
Free Cash Flow
         
2007 Q2   FIS  
Net Earnings
  $ 148,004  
+ Depreciation/Amort
    113,891  
- Capital Expenditures
    (79,894 )
 
     
Free Cash Flow
  $ 182,001  
 
     
Free Cash Flow
         
2006 Q2   FIS  
Net Earnings
  $ 66,029  
+ Depreciation/Amort
    110,374  
- Capital Expenditures
    (80,156 )
 
     
Free Cash Flow
  $ 96,247  
         
2007 Q2        
Stock Compensation
  $ 8,752  
         
2006 Q2        
Stock Compensation
  $ 4,829  

 


 

2007 Q2 Financial Measures Excluding Non Recurring Items
         
EBITDA
  $ 297,825  
Merger and Acquisition, and Integration Costs
    1,802  
 
     
EBITDA, excluding non recurring items
  $ 299,627  
 
     
 
       
Net Earnings
  $ 148,004  
Merger and Acquisition, and Integration Costs, net of tax
    1,385  
Covansys Gain, net of tax
    (57,988 )
 
     
Net Earnings, excluding non recurring items
  $ 91,401  
 
     
 
       
Diluted Shares Outstanding
    196,977  
 
       
Net Earnings per diluted share
  $ 0.75  
Merger and Acquisition, and Integration Costs per share
    0.01  
Covansys Gain, net of tax
    (0.29 )
 
     
Net Earnings per diluted share, excluding non recurring items
  $ 0.46  
 
     
 
       
Cash Earnings
  $ 171,905  
Merger and Acquisition, and Integration Costs, net of tax
    1,385  
Covansys Gain, net of tax
    (57,988 )
 
     
Cash Earnings, excluding non recurring items
  $ 115,302  
 
     
 
       
Cash Earnings per diluted share
  $ 0.87  
Merger and Acquisition, and Integration Costs per share
    0.01  
Covansys Gain, net of tax
    (0.29 )
 
     
Cash Earnings per diluted share, excluding non recurring items
  $ 0.59  
 
     
 
       
Free Cash Flow
  $ 182,001  
Merger and Acquisition, and Integration Costs, net of tax
    1,132  
Covansys Gain, net of tax
    (57,988 )
 
     
Free Cash Flow, excluding non recurring items
  $ 125,145  
 
     
2006 Q2 Financial Measures Excluding Selected Items
         
EBITDA
  $ 263,090  
Merger and Acquisition, and Integration Costs
    6,978  
 
     
EBITDA, excluding non recurring items
  $ 270,068  
 
     
 
       
Net Earnings
  $ 66,029  
Merger and Acquisition, and Integration Costs, net of tax
    4,305  
 
     
Net Earnings, excluding non recurring items
  $ 70,334  
 
     
 
       
Diluted Shares Outstanding
    195,374  
 
       
Net Earnings per diluted share
  $ 0.34  
Merger and Acquisition, and Integration Costs per share
    0.03  
 
     
Net Earnings per diluted share, excluding non recurring items
  $ 0.37  
 
     
 
       
Cash Earnings
  $ 94,626  
Merger and Acquisition, and Integration Costs, net of tax
    4,305  
 
     
Cash Earnings, excluding non recurring items
  $ 98,931  
 
     
 
       
Cash Earnings per diluted share
  $ 0.48  
Merger and Acquisition, and Integration Costs per share
    0.03  
 
     
Cash Earnings per diluted share, excluding non recurring items
  $ 0.51  
 
     
 
       
Free Cash Flow
  $ 96,247  
Merger and Acquisition, and Integration Costs, net of tax
    4,305  
 
     
Free Cash Flow, excluding non recurring items
  $ 100,552  
 
     

 


 

NOTE: The Adjustments Column (2006 only) represents pro forma adjustments relating to the merger transaction between CEY and FIS to reflect as if the merger occurred January 1, 2006
EBITDA Detail
         
2007 Six Months   FIS  
Net Earnings
  $ 207,507  
+ Interest Expense
    115,106  
+ Minority Interest
    664  
+ Income Taxes
    121,278  
+ Depreciation/Amort
    224,503  
- Interest Income
    (1,267 )
 
       
- Equity in (Earnings) Losses of Unconsolidated Entities, net of tax
    (1,672 )
- Other (Income) Expense
    (1,480 )
- Covansys Gain
    (92,044 )
 
     
EBITDA
  $ 572,595  
 
     
EBITDA Detail
                                 
2006 Six Months   FIS   CEY-Jan   ADJ   Pro Forma
Net Earnings
  $ 105,387     $ (42,523 )   $ (3,708 )   $ 59,156  
+ Interest Expense
    92,301       1,081             93,382  
+ Minority Interest
    (6 )                 (6 )
+ Income Taxes
    64,116       (26,396 )     (2,626 )     35,094  
+ Depreciation/Amort
    207,169       4,274       6,856       218,299  
- Interest Income
    (3,424 )                 (3,424 )
 
                               
- Equity in (Earnings) Loss of Unconsolidated Entities, net of tax
    (2,092 )                   (2,092 )
- Other (Income) Expense
    1,244       123               1,367  
- Covansys Gain
                       
     
EBITDA
  $ 464,695     $ (63,441 )   $ 522     $ 401,776  
     
EBITDA Margin
         
2007 Six Months   FIS
EBITDA
  $ 572,595  
Revenue
  $ 2,300,304  
EBITDA Margin
    24.9 %
EBITDA Margin
                                 
2006 Six Months   FIS   CEY-Jan   ADJ   Pro Forma
EBITDA
  $ 464,695     $ (63,441 )   $ 522     $ 401,776  
Revenue
  $ 1,922,882     $ 92,915     $     $ 2,015,797  
EBITDA Margin
    24.2 %     -68.3 %             19.9 %
EBIT Detail
         
2007 Six Months   FIS  
Net Earnings
  $ 207,507  
+ Interest Expense
    115,106  
+ Minority Interest
    664  
+ Income Taxes
    121,278  
- Interest Income
    (1,267 )
 
       
- Equity in (Earnings) Losses of Unconsolidated Entities, net of tax
    (1,672 )
- Other (Income) Expense
    (1,480 )
- Covansys Gain
    (92,044 )
 
     
EBIT
  $ 348,092  
 
     
EBIT Detail
                                 
2006 Six Months   FIS   CEY-Jan   ADJ   Pro Forma
Net Earnings
  $ 105,387     $ (42,523 )   $ (3,708 )   $ 59,156  
+ Interest Expense
    92,301       1,081             93,382  
+ Minority Interest
    (6 )                 (6 )
+ Income Taxes
    64,116       (26,396 )     (2,626 )     35,094  
- Interest Income
    (3,424 )                 (3,424 )
 
                               
- Equity in (Earnings) Loss of Unconsolidated Entities, net of tax
    (2,092 )                 (2,092 )
- Other (Income) Expense
    1,244       123             1,367  
- Covansys Gain
                       
     
EBIT
  $ 257,526     $ (67,715 )   $ (6,334 )   $ 183,477  
     
EBIT Margin
         
2007 Six Months   FIS
EBIT
  $ 348,092  
Revenue
  $ 2,300,304  
EBIT Margin
    15.1 %
EBIT Margin
                                 
2006 Six Months   FIS   CEY-Jan   ADJ   Pro Forma
EBIT
  $ 257,526     $ (67,715 )   $ (6,334 )   $ 183,477  
Revenue
  $ 1,922,882     $ 92,915     $     $ 2,015,797  
EBIT Margin
    13.4 %     -72.9 %             9.1 %
Adjusted Diluted EPS
         
2007 Six Months   FIS
Net Earnings
  $ 207,507  
Adjusted diluted EPS
  $ 1.06  
Diluted Shares Outstanding
    196,395  
Adjusted Diluted EPS
                                 
2006 Six Months   FIS   CEY-Jan   ADJ   Pro Forma
Net Earnings
  $ 105,387     $ (42,523 )   $ (3,708 )   $ 59,156  
Adjusted EPS
  $ 0.57                     $ 0.30  
Diluted Shares Outstanding
    184,242                       195,244  
Cash Earnings
         
2007 Six Months   FIS  
Net Earnings
  $ 207,507  
+ Tax Adjusted Purchase Price Amortization
    49,513  
 
     
Cash Earnings
  $ 257,020  
 
     
 
       
Diluted Cash EPS
  $ 1.31  
Diluted Shares Outstanding
    196,395  
Cash Earnings
                                 
2006 Six Months   FIS   CEY-Jan   ADJ   Pro Forma
Net Earnings
  $ 105,387     $ (42,523 )   $ (3,708 )   $ 59,156  
+ Tax Adjusted Purchase Price Amortization
    53,117       233       3,524       56,874  
     
Cash Earnings
  $ 158,504     $ (42,290 )   $ (184 )   $ 116,030  
     
 
                               
Diluted Cash EPS
  $ 0.86                     $ 0.59  
Diluted Shares Outstanding
    184,242                       195,244  
Free Cash Flow
         
2007 Six Months   FIS  
Net Earnings
  $ 207,507  
+ Depreciation/Amort
    224,503  
- Capital Expenditures
    (154,010 )
 
     
Free Cash Flow
  $ 278,000  
 
     
Free Cash Flow
                                 
2006 Six Months   FIS   CEY-Jan   ADJ   Pro Forma
Net Earnings
  $ 105,387     $ (42,523 )   $ (3,708 )   $ 59,156  
+ Depreciation/Amort
    207,169       4,274       6,856       218,299  
- Capital Expenditures
    (149,420 )     (5,200 )           (154,620 )
     
Free Cash Flow
  $ 163,136     $ (43,449 )   $ 3,148     $ 122,835  
         
2007 Six Months        
Stock Compensation
  $ 17,241  
                                 
2006 Six Months                                
Stock Compensation
  $ 32,787     $ 552     $ (552 )   $ 32,787  

 


 

2007 Six Months Financial Measures Excluding Non Recurring Items
         
EBITDA
  $ 572,595  
Merger and Acquisition, and Integration Costs
    6,080  
 
     
EBITDA, excluding non recurring items
  $ 578,675  
 
     
 
       
Net Earnings
  $ 207,507  
Merger and Acquisition, and Integration Costs, net of tax
    4,501  
Debt Restructure Charge, net of tax
    17,059  
Covansys Gain, net of tax
    (57,988 )
 
     
Net Earnings, excluding non recurring items
  $ 171,079  
 
     
 
       
Diluted Shares Outstanding
    196,395  
 
       
Net Earnings per diluted share
  $ 1.06  
Merger and Acquisition, and Integration Costs per share
    0.02  
Debt Restructure Charge per share
    0.09  
Covansys Gain, net of tax
    (0.30 )
 
     
Net Earnings per diluted share, excluding non recurring items
  $ 0.87  
 
     
 
       
Cash Earnings
  $ 257,020  
Merger and Acquisition, and Integration Costs, net of tax
    4,501  
Debt Restructure Charge, net of tax
    17,059  
Covansys Gain, net of tax
    (57,988 )
 
     
Cash Earnings, excluding non recurring items
  $ 220,592  
 
     
 
       
Cash Earnings per diluted share
  $ 1.31  
Merger and Acquisition, and Integration Costs per share
    0.02  
Debt Restructure Charge per share
    0.09  
Covansys Gain, net of tax
    (0.30 )
 
     
Cash Earnings per diluted share, excluding non recurring items
  $ 1.12  
 
     
 
       
Free Cash Flow
  $ 278,000  
Merger and Acquisition, and Integration Costs, net of tax
    3,564  
Debt Restructure Charge, net of tax
    17,059  
Covansys Gain, net of tax
    (57,988 )
 
     
Free Cash Flow, excluding non recurring items
  $ 240,635  
 
     
2006 Six Months Pro Forma Measures Excluding Selected Items
         
Pro Forma EBITDA
  $ 401,776  
Merger and Acquisition, and Integration Costs
    88,729  
Performance Based Stock Option Costs
    24,130  
 
     
Pro Forma EBITDA, excluding non recurring items
  $ 514,635  
 
     
 
       
Pro Forma Net Earnings
  $ 59,156  
Merger and Acquisition, and Integration Costs, net of tax
    54,914  
Performance Based Stock Option Costs, net of tax
    14,888  
 
     
Pro Forma Net Earnings, excluding non recurring items
  $ 128,958  
 
     
 
       
Diluted Shares Outstanding
    184,242  
Adjustment as if transaction took place 1/1/2005
    11,002  
 
     
Pro Forma Diluted Shares Outstanding
    195,244  
 
     
 
       
Pro Forma Net Earnings per diluted share
  $ 0.30  
Merger and Acquisition, and Integration Costs per share
    0.28  
Performance Based Stock Option Costs per share
    0.08  
 
     
Pro Forma Net Earnings per diluted share, excluding non recurring items
  $ 0.66  
 
     
 
       
Cash Earnings
  $ 116,030  
Merger and Acquisition, and Integration Costs, net of tax
    54,914  
Performance Based Stock Option Costs, net of tax
    14,888  
 
     
Cash Earnings, excluding non recurring items
  $ 185,832  
 
     
 
       
Cash Earnings per diluted share
  $ 0.59  
Merger and Acquisition, and Integration Costs per share
    0.28  
Performance Based Stock Option Costs per share
    0.08  
 
     
Cash Earnings per diluted share, excluding non recurring items
  $ 0.95  
 
     
 
       
Free Cash Flow
  $ 122,835  
Merger and Acquisition, and Integration Costs, net of tax
    54,914  
Performance Based Stock Option Costs, net of tax
    14,888  
 
     
Free Cash Flow, excluding non recurring items
  $ 192,637  
 
     

 


 

Appendix B
Unaudited Pro Forma Combined Statement of Continuing Operations
for the Six Months Ended June 30, 2006
(In thousands Except Per Share Data)
                                                         
                                            Tax Adjusted        
                    Pro Forma                     Purchase Price     Cash  
    Certegy-Jan     FIS     Adjustments     Note     Pro Forma     Amortization     Earnings  
Total revenue
  $ 92,915     $ 1,922,882                     $ 2,015,797                  
Total cost of revenue
    73,218       1,342,055       6,856       (1 )     1,422,129                  
 
                                               
Gross profit (loss)
    19,697       580,827       (6,856 )             593,668                  
General and administrative
    7,645       271,595       (522 )     (2 )     278,718                  
Research and development costs
          51,706                       51,706                  
Merger and Acquisition costs
    79,767                             79,767                  
 
                                               
Income (loss) from operations
    (67,715 )     257,526       (6,334 )             183,477                  
Interest income (expense) and other
    (1,204 )     (90,121 )                   (91,325 )                
 
                                               
Income from continuing operations before tax and min. int
    (68,919 )     167,405       (6,334 )             92,152                  
Provision for income tax
    (26,396 )     64,116       (2,626 )     (3 )     35,094                  
 
                                               
Income from continuing operations
    (42,523 )     103,289       (3,708 )             57,058                  
Equity in earnings (loss) of unconsolidated entities, net
          2,092                     2,092                  
Minority interests in earnings, net of tax
          6                     6                  
 
                                           
Net income
  $ (42,523 )   $ 105,387     $ (3,708 )           $ 59,156     $ 56,874     $ 116,030  
 
                                           
 
                                                       
 
                                               
Net income per share-basic
  $ (0.68 )   $ 0.58                     $ 0.31             $ 0.60  
 
                                               
Pro forma Weighted average shares-basic
    62,326       181,168                       192,017               192,017  
 
                                               
 
                                                       
 
                                               
Net income per share-diluted
  $ (0.67 )   $ 0.57                     $ 0.30             $ 0.59  
 
                                               
Pro forma Weighted average shares-diluted
    63,796       184,242                       195,244               195,244  
 
                                               
 
                                                       
Pro Forma Net Earnings
                                  $ 59,156                  
Merger and Acquisition Costs, net of tax
                                    54,914                  
Performance Based Stock Option Costs, net of tax
                                    14,888                  
Pro Forma Net Earnings, excluding selected items
                                  $ 128,958                  

 


 

Appendix B
Notes to Unaudited Pro Forma Combined Statements of Continuing Operations
for the six months ended June 30, 2006
These combined statements of continuing operations include the historical statements of continuing operations of Certegy and FIS as though the merger had occurred on January 1, 2006, adjusted for items related to the transaction as described below:
  (1)   Reflects the increase in amortization expense as a result of allocating an assumed portion of the merger consideration to intangible assets of Certegy, namely customer relationship intangibles and acquired software, and amortizing such intangibles over their estimated useful lives as of the assumed acquisition date, offset by the amortization expense for such intangibles actually recorded by Certegy during the respective periods. Customer relationships are being amortized over 10 years on an accelerated method. Acquired computer software is being amortized over its estimated useful life of up to 10 years on an accelerated method. The acquired trademarks are considered to have indefinite useful lives and, therefore, are not reflected in these adjustments.
  (2)   Under the merger agreement, all Certegy stock options and restricted stock and restricted stock units vested upon the closing of the merger. Accordingly, this adjustment reflects the elimination of historical stock compensation expense relating to the vesting of Certegy options in January 2006 (prior to merger), because such expense was reflected at the time of closing of the merger offset by option costs relating to options granted by FIS to certain employees of Certegy who remained with the merged entity.
  (3)   Reflects the tax benefit relating to the pro forma adjustments for the six months ended June 30, 2006.

 


 

Appendix C
Unaudited Pro Forma and Historical Segment Information
For the Three and Six Months Ended June 30, 2007 and 2006
(In thousands Except Per Share Data)
2007 — Quarter 2
                                 
            Historical        
    Transaction   Lender   Corporate    
    Processing Services   Processing Services   and Other   Total
Processing and services revenue
    709,724       462,493       4,021       1,176,238  
Cost of revenues
    550,691       292,255             842,946  
 
                               
Gross profit
    159,033       170,238       4,021       333,292  
Selling, general and admin costs
    45,989       48,110       31,671       125,770  
Research development costs
    14,905       8,683             23,588  
 
                               
Operating income
    98,139       113,445       (27,650 )     183,934  
 
                               
Depreciation and amortization
    73,397       33,796       6,698       113,891  
 
                               
EBITDA
    171,536       147,241       (20,952 )     297,825  
 
                               
EBITDA
    171,536       147,241       (20,952 )     297,825  
Merger and Acquisition, and Integration costs
          1,802             1,802  
EBITDA, excluding non-recurring items
    171,536       149,043       (20,952 )     299,627  
2007- Year to Date
                                 
            Historical        
    Transaction   Lender   Corporate    
    Processing Services   Processing Services   and Other   Total
Processing and services revenue
    1,390,269       902,882       7,153       2,300,304  
Cost of revenues
    1,080,742       575,520             1,656,262  
 
                               
Gross profit
    309,527       327,362       7,153       644,042  
Selling, general and admin costs
    89,028       95,066       61,159       245,253  
Research development costs
    32,423       18,274             50,697  
 
                               
Operating income
    188,076       214,022       (54,006 )     348,092  
 
                               
Depreciation and amortization
    144,165       67,552       12,786       224,503  
 
                               
EBITDA
    332,241       281,574       (41,220 )     572,595  
 
                               
EBITDA
    332,241       281,574       (41,220 )     572,595  
Merger and Acquisition, and Integration costs
          6,080             6,080  
EBITDA, excluding selected items
    332,241       287,654       (41,220 )     578,675  
2006- Quarter 2
                                 
            Historical        
    Transaction   Lender   Corporate    
    Processing Services   Processing Services   and Other   Total
Processing and services revenue
    612,076       408,081       1,789       1,021,946  
Cost of revenues
    474,648       245,070             719,718  
 
                               
Gross profit
    137,428       163,011       1,789       302,228  
Selling, general and admin costs
    51,089       50,173       24,604       125,866  
Research development costs
    15,268       8,378             23,646  
 
                               
Operating income
    71,071       104,460       (22,815 )     152,716  
 
                               
Depreciation and amortization
    72,906       35,104       2,364       110,374  
 
                               
EBITDA
    143,977       139,564       (20,451 )     263,090  
 
                               
EBITDA
    143,977       139,564       (20,451 )     263,090  
Merger and Acquisition costs
    3,530       1,842       1,606       6,978  
Acceleration of performance-based shares
                       
 
                               
EBITDA, excluding selected items
    147,507       141,406       (18,845 )     270,068  
2006- Year to Date
                                 
            Historical        
    Transaction   Lender   Corporate    
    Processing Services   Processing Services   and Other   Total
Processing and services revenue
    1,113,624       808,581       677       1,922,882  
Cost of revenues
    862,464       479,591             1,342,055  
 
                               
Gross profit
    251,160       328,990       677       580,827  
Selling, general and admin costs
    90,605       109,236       71,754       271,595  
Research development costs
    34,345       17,361             51,706  
 
                               
Operating income
    126,210       202,393       (71,077 )     257,526  
 
                               
Depreciation and amortization
    132,500       71,224       3,445       207,169  
 
                               
EBITDA
    258,710       273,617       (67,632 )     464,695  
 
                               
EBITDA
    258,710       273,617       (67,632 )     464,695  
Merger and Acquisition costs
    4,283       2,012       82,434       88,729  
Acceleration of performance-based shares
                24,130       24,130  
 
                               
EBITDA, excluding selected items
    262,993       275,629       38,932       577,554  
                                 
            Pro Forma        
    Transaction   Lender   Corporate    
    Processing Services   Processing Services   and Other   Total
Processing and services revenue
    1,204,587       808,581       2,629       2,015,797  
Cost of revenues
    942,538       479,591             1,422,129  
 
                               
Gross profit
    262,049       328,990       2,629       593,668  
Selling, general and admin costs
    95,015       109,236       154,234       358,485  
Research development costs
    34,345       17,361             51,706  
 
                               
Operating income
    132,689       202,393       (151,605 )     183,477  
 
                               
Depreciation and amortization
    143,540       71,224       3,535       218,299  
 
                               
EBITDA
    276,229       273,617       (148,070 )     401,776  
 
                               
ProForma EBITDA
    276,229       273,617       (148,070 )     401,776  
Merger and Acquisition costs
    4,283       2,012       82,434       88,729  
Acceleration of performance-based shares
                24,130       24,130  
 
                               
ProForma EBITDA, excluding selected items
    280,512       275,629       (41,506 )     514,635