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JACKSONVILLE, Fla., Feb. 15 /PRNewswire-FirstCall/ -- Fidelity National Information Services, Inc. (NYSE:FIS) announced today that it expects pro forma full year 2006 diluted earnings per share of $1.50 to $1.55, compared to $1.28 pro forma diluted earnings per share in 2005, and pro forma diluted cash earnings per share of $2.11 to $2.17, compared to $1.92 pro forma diluted cash earnings per share in 2005. The company's outlook is based on the following assumptions:
-- Revenue growth of 4% to 6% over $3.9 billion combined revenue in 2005.
-- EBITDA growth of 9% to 11% over $1.0 billion pro forma combined EBITDA
in 2005.
-- Capital expenditures of approximately $225 million to $275 million.
-- Average weighted diluted common shares outstanding of approximately
197 million.
-- An effective tax rate of approximately 38.3%.
-- Free cash flow of approximately $475 million to $525 million.
The merger between Fidelity National Information Services, Inc. and Certegy Inc. was effective February 1, 2006. Projected pro forma results for 2006 will include full year 2006 results for both companies, and will exclude all merger related expenses and costs incurred in conjunction with Certegy's previously announced potential joint venture in Brazil. Also excluded will be approximately $24.5 million pre-tax expense associated with the vesting of certain FIS performance based options issued in conjunction with the recapitalization and sale of minority interests by FIS in March 2005, as described in Certegy's proxy statement filed with the Securities and Exchange Commission on December 22, 2005. On a GAAP basis, which will exclude January results for Certegy and include the aforementioned stock option expense and joint venture costs, the company expects full year 2006 diluted earnings per share of $1.39 to $1.44.
FIS presents its financial results in accordance with Generally Accepted Accounting Principles ("GAAP"). However, in order to provide the investment community with a more thorough means of evaluating the operating performance of its operations, FIS also reports several non-GAAP measures, including earnings before interest, taxes, depreciation and amortization ("EBITDA"), net earnings plus depreciation and amortization less capital expenditures ("Free Cash Flow") and net earnings plus other intangible amortization, net of income tax ("Cash Earnings"). Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP net earnings. Reconciliations between the aforementioned pro forma, non-GAAP and GAAP results are provided in the attachments to this press release.
FIS will host an investor and analyst meeting today at 8:30 a.m. EST. William P. Foley II, chairman, and Lee A. Kennedy, chief executive officer, will host the meeting. To listen to the broadcast and view the slide presentation, please log on to http://www.fidelityinfoservices.com/, and click on the link under the Investor Relations section at least 15 minutes prior to the start of the webcast. A replay of the webcast will be available on the company website shortly after the meeting ends until 5:00 p.m. EST March 14, 2006.
About Fidelity National Information Services, Inc.
Fidelity National Information Services, Inc. (NYSE:FIS) is a leading provider of core processing for financial institutions; card issuer and transaction processing services; mortgage loan processing and mortgage-related information products; and outsourcing services to financial institutions, retailers, mortgage lenders and real estate professionals. FIS has processing and technology relationships with 35 of the top 50 global banks, including nine of the top ten. Nearly 50 percent of all U.S. residential mortgages are processed using FIS software. Headquartered in Jacksonville, Florida, FIS maintains a strong global presence, serving over 7,800 financial institutions and over 100,000 retailers in more than 60 countries worldwide. For more information on Fidelity National Information Services, please visit http://www.fidelityinfoservices.com/. FIS is a majority-owned subsidiary of Fidelity National Financial Inc. (NYSE:FNF), number 261 on the Fortune 500. More information about FNF can be found at http://www.fnf.com/.
Forward-Looking Statements
This presentation contains statements related to future events and expectations, including FIS's pro forma outlook for 2006 and the underlying assumptions, and as such, constitute forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the company to be different from those expressed or implied above. The Company expressly disclaims any duty to update or revise forward- looking statements. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to, the effects of governmental regulations, the economy, competition, the risk that the merger may fail to achieve beneficial synergies or that it may take longer than expected to do so, the effects of FIS's substantial leverage, which may limit the funds available to make acquisitions and invest in its business, the risk of reduction in revenue from the elimination of existing and potential customers due to consolidation in the banking, retail and financial services industries, potential overdependence on a limited number of customers due to consolidation in the banking, retail and financial services industries, the risk of a downturn in the level of real estate activity, which would adversely affect certain of FIS's businesses, failure to adapt to changes in technology or in the marketplace and other risks detailed from time to time in the Form 10-K and other reports and filings with the Securities and Exchange Commission.
Appendix A- Historical Detail and Reconciliation of Non-GAAP Measures
NOTE: The Adjustments Column represents pro forma adjustments relating to
the merger transaction between CEY and FIS, the recapitalization
transaction at FIS in March 2005 and certain 2004 FIS acquisitions
as if they occurred on January 1, 2004. FIS presents its financial
results in accordance with Generally Accepted Accounting Principles
("GAAP"). However, in order to provide the investment community
with a more thorough means of evaluating the operating performance
of its operations, FNF also reports several non-GAAP measures,
including earnings before interest, taxes, depreciation and
amortization ("EBITDA"), net earnings plus depreciation and
amortization less capital expenditures ("Free Cash Flow") and net
earnings plus other intangible amortization, net of income tax
("Cash Earnings"). Any non-GAAP measures should be considered in
context with the GAAP financial presentation and should not be
considered in isolation or as a substitute for GAAP net earnings.
EBITDA Detail
2005 YTD FIS CEY ADJ Pro Forma
Net Earnings $196,550 $105,514 $(53,923) $248,141
+ Interest Expense 126,778 12,832 21,031 160,641
+ Minority Interest 4,450 117 - 4,567
+ Income Taxes 116,085 68,927 (31,942) 153,070
+ Depreciation/Amort 299,637 51,858 82,279 433,774
- Interest Income (6,392) (2,435) - (8,827)
- Equity in (Earnings) Loss
of Non-Consolidated
Entities, net of tax (5,029) - - (5,029)
- Other (Income) Expense 4,237 - - 4,237
EBITDA $736,316 $236,813 $17,445 $990,574
EBITDA Margin
2005 YTD FIS CEY ADJ Pro Forma
EBITDA $736,316 $236,813 $17,445 $990,574
Revenue $2,766,085 $1,117,141 $- $3,883,226
EBITDA Margin 26.6% 21.2% 25.5%
EBIT Detail
2005 YTD FIS CEY ADJ Pro Forma
Net Earnings $196,550 $105,514 $(53,923) $248,141
+ Interest Expense 126,778 12,832 21,031 160,641
+ Minority Interest 4,450 117 - 4,567
+ Income Taxes 116,085 68,927 (31,942) 153,070
- Interest Income (6,392) (2,435) - (8,827)
- Equity in (Earnings) Loss
of Non-Consolidated
Entities, net of tax (5,029) - - (5,029)
- Other (Income) Expense 4,237 - - 4,237
EBIT $436,679 $184,955 $(64,834) $556,800
EBIT Margin
2005 YTD FIS CEY ADJ Pro Forma
EBIT $436,679 $184,955 $(64,834) $556,800
Revenue $2,766,085 $1,117,141 $ - $3,883,226
EBIT Margin 15.8% 16.6% 14.3%
Adjusted Diluted EPS
2005 YTD FIS CEY ADJ Pro Forma
Net Earnings $196,550 $105,514 $(53,923) $248,141
Adjusted EPS $1.02 $0.55 $(0.28) $1.28
Diluted Shares Outstanding 193,424 193,424 193,424 193,424
Cash Earnings
2005 YTD FIS CEY ADJ Pro Forma
Net Earnings $196,550 $105,514 $(53,923) $248,141
+ Tax Adjusted Purchase
Price Amortization 78,733 2,721 42,425 123,879
Cash Earnings $275,283 $108,235 $(11,498) $372,020
Diluted Cash EPS $1.42 $0.56 $(0.06) $1.92
Diluted Shares Outstanding 193,424 193,424 193,424 193,424
Free Cash Flow
2005 YTD FIS CEY ADJ Pro Forma
Net Earnings $196,550 $105,514 $(53,923) $248,141
+ Depreciation/Amort 299,637 51,858 82,279 433,774
- Capital Expenditures (239,006) (63,566) - (302,572)
Free Cash Flow $257,181 $93,806 $28,356 $379,343
EBITDA Detail
2004 YTD FIS CEY ADJ Pro Forma
Net Earnings $189,417 $97,678 $(110,097) $176,998
+ Interest Expense 4,496 12,914 88,475 105,885
+ Minority Interest 3,673 - 53 3,726
+ Income Taxes 118,343 59,111 (67,830) 109,624
+ Depreciation/Amort 238,400 47,449 130,114 415,963
- Interest Income (1,232) (1,207) - (2,439)
- Equity in (Earnings)
Loss of Non-Consolidated
Entities, net of tax 3,308 - - 3,308
- Other (Income) Expense (18,175) - - (18,175)
EBITDA $538,230 $215,945 $40,715 $794,890
EBITDA Margin
2004 YTD FIS CEY ADJ Pro Forma
EBITDA $538,230 $215,945 $40,715 $794,890
Revenue $2,331,527 $1,039,506 $318,426 $3,689,459
EBITDA Margin 23.1% 20.8% 21.5%
EBIT Detail
2004 YTD FIS CEY ADJ Pro Forma
Net Earnings $189,417 $97,678 $(110,097) $176,998
+ Interest Expense 4,496 12,914 88,475 105,885
+ Minority Interest 3,673 - 53 3,726
+ Income Taxes 118,343 59,111 (67,830) 109,624
- Interest Income (1,232) (1,207) - (2,439)
- Equity in (Earnings)
Loss of Non-Consolidated
Entities, net of tax 3,308 - - 3,308
- Other (Income) Expense (18,175) - - (18,175)
EBIT $299,830 $168,496 $(89,399) $378,927
EBIT Margin
2004 YTD FIS CEY ADJ Pro Forma
EBIT $299,830 $168,496 $(89,399) $378,927
Revenue $2,331,527 $1,039,506 $318,426 $3,689,459
EBIT Margin 12.9% 16.2% 10.3%
Adjusted Diluted EPS
2004 YTD FIS CEY ADJ Pro Forma
Net Earnings $189,417 $97,678 $(110,097) $176,998
Adjusted EPS $0.99 $0.51 $(0.58) $0.92
Diluted Shares Outstanding 191,886 191,886 191,886 191,886
Cash Earnings
2004 YTD FIS CEY ADJ Pro Forma
Net Earnings $189,417 $97,678 $(110,097) $176,998
+ Tax Adjusted Purchase
Price Amortization 64,436 2,489 56,663 123,588
Cash Earnings $253,853 $100,167 $(53,434) $300,586
Diluted Cash EPS $1.32 $0.52 $(0.28) $1.57
Diluted Shares Outstanding 191,886 191,886 191,886 191,886
Free Cash Flow
2004 YTD FIS CEY ADJ Pro Forma
Net Earnings $189,417 $97,678 $(110,097) $176,998
+ Depreciation/Amort 238,400 47,449 130,114 415,963
- Capital Expenditures (177,502) (40,908) - (218,410)
Free Cash Flow $250,315 $104,219 $20,017 $374,551
Appendix B
Unaudited Pro Forma Combined Statement of Continuing
Operations for the Year Ended December 31, 2004
(In thousands Except Per Share Data)
Pro Forma
Adjust- Pro
Certegy FIS ments Note Forma
Total revenue $1,039,506 $2,331,527 $3,371,033
Total cost of revenue 741,331 1,525,174 85,111 (1) 2,349,804
(1,812) (2)
Gross profit (loss) 298,175 806,353 (83,299) 1,021,229
General and
administrative 129,679 432,310 (8,510) (2) 553,479
Research and development
costs - 74,214 - 74,214
Income (loss) from
operations 168,496 299,829 (74,789) 393,536
Interest income
(expense) and other (11,707) 14,911 - 3,204
Income from continuing
operations before tax
and minority interest 156,789 314,740 (74,789) 396,740
Provision for income tax 59,111 118,343 (28,121) (4) 149,333
Income from continuing
operations 97,678 196,397 (46,668) 247,407
Equity in earnings
(loss) of
unconsolidated
entities, net - (3,308) - (3,308)
Minority interests in
earnings, net of tax - (3,673) - (3,673)
Net income $97,678 $189,416 $(46,668) $240,426
Net income per share-
basic $1.55 $0.95 $1.26
Pro forma Weighted
average shares-basic 62,818 200,000 190,738
Net income per share-
diluted $1.53 $0.95 $1.25
Pro forma Weighted
average shares-diluted 63,966 200,000 191,886
Acquisition/
Recapitalization
2004 FIS Adjust- Pro Forma,
Acquisitions ments Note as adjusted
Total revenue $318,426 $ - $3,689,459
Total cost of revenue 208,250 23,453 (6) $2,581,507
Gross profit (loss) 110,176 (23,453) 1,107,952
General and administrative 100,338 994 (7) 654,811
Research and development costs - 74,214
Income (loss) from operations 9,838 (24,447) 378,927
Interest income (expense) and
other 2,607 (91,082) (8) (85,271)
Income from continuing operations
before tax and minority interest 12,445 (115,529) 293,656
Provision for income tax 3,730 (43,439) (9) 109,624
Income from continuing operations 8,715 (72,090) 184,032
Equity in earnings (loss) of
unconsolidated entities, net - - (3,308)
Minority interests in earnings,
net of tax (53) - (3,726)
Net income $8,662 $(72,090) $176,998
Net income per share-basic $0.93
Pro forma Weighted average shares-
basic 190,738
Net income per share-diluted $0.92
Pro forma Weighted average shares-
diluted 191,886
Unaudited Pro Forma Combined Statement of Continuing
Operations for the Year Ended December 31, 2005
(In thousands Except Per Share Data)
Pro Forma
adjust-
Certegy FIS ments Note
Total revenue $1,117,141 $2,766,085 $ -
Total cost of revenue 791,581 1,793,285 82,279 (1)
(1,044) (2)
Gross profit (loss) 325,560 972,800 (81,235)
General and administrative 129,443 422,623 (5,239) (2)
Research and development costs 113,498
Merger and Acquisition Costs 11,162 (11,162) (3)
Income (loss) from operations 184,955 436,679 (64,834)
Interest income (expense) and other (10,397) (124,623) -
Income from continuing operations
before tax and minority interest 174,558 312,056 (64,834)
Provision for income tax 68,927 116,085 (24,118) (4)
Income from continuing operations 105,631 195,971 (40,716)
Equity in earnings (loss) of
unconsolidated entities, net (117) 5,029 -
Minority interests in earnings, net
of tax - (4,450) -
Net income $105,514 $196,550 $(40,716)
Net income per share-basic $1.70 $0.98
Pro forma Weighted average shares-
basic 62,011 200,000
Net income per share-diluted $1.66 $0.97
Pro forma Weighted average shares-
diluted 63,391 203,304
Recapitalization
Adjustments Pro Forma,
Pro Forma Note as adjusted
Total revenue $3,883,226 $ - $3,883,226
Total cost of revenue 2,666,101 - $2,666,101
Gross profit (loss) 1,217,125 - 1,217,125
General and administrative 546,827 - 546,827
Research and development costs 113,498 113,498
Merger and Acquisition Costs - - -
Income (loss) from operations 556,800 - 556,800
Interest income (expense) and
other (135,020) (21,031) (8) (156,051)
Income from continuing
operations before tax and
minority interest 421,780 (21,031) 400,749
Provision for income tax 160,894 (7,824) (9) 153,070
Income from continuing
operations 260,886 (13,207) 247,679
Equity in earnings (loss) of
unconsolidated entities, net 4,912 - 4,912
Minority interests in earnings,
net of tax (4,450) - (4,450)
Net income $261,348 $(13,207) $248,141
Net income per share-basic $1.38 $1.31
Pro forma Weighted average
shares-basic 189,931 189,931
Net income per share-diluted $1.35 $1.28
Pro forma Weighted average
shares-diluted 193,424 193,424
Appendix B
Notes to Unaudited Pro Forma Combined Statements of Continuing Operations for the Year Ended December 31, 2005 and Year Ended December 31, 2004
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, 2004, 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 commencing 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.
The increase in amortization expense is $111.7 million offset by
historical amortization of $26.6 million, or $85.1 million for the
year ended December 31, 2004, and $111.7 million offset by historical
amortization of $29.4 million, or $82.3 million for the year ended
December 31, 2005. For comparison purposes, the first year purchase
amortization for the Certegy purchase accounting is used for both
2004 and 2005.
(2) Under the merger agreement, all Certegy stock options and restricted
stock and restricted stock units will vest 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 2004 and 2005, because such expense will be
reflected at the time of closing of the merger. This adjustment
amounts to a reduction in cost of revenues of $1.8 million and $1.0
million and in selling, general and administrative costs of $14.4
million and $11.2 million for the years ended December 31, 2004 and
2005, respectively. Also, at closing, Certegy will grant
approximately (1) 1.1 million options, which based on current
assumptions, would have a fair value under SFAS No. 123R of
approximately $11 per option, vesting over four years, and (2)
750,000 options, which based on current assumptions would have a fair
value under SFAS No. 123R of approximately $12 per option, vesting
over three years. The pro forma adjustment to increase stock
compensation expense for these option grants is $5.9 million in 2004
and 2005, all of which is reflected in selling, general and
administrative costs.
(3) Reflects the removal of merger and acquisition costs that were
recognized as expense by Certegy in 2005. A tax benefit for these
costs was not recorded because the ultimate tax treatment of these
costs cannot be determined with adequate certainty at this time.
(4) Reflects the tax benefit relating to the pro forma adjustments at the
FIS tax rate of approximately 37.6% for the year ended December 31,
2004, and approximately 37.2% for the year ended December 31, 2005.
(5) This column is the sum of the historical activity of Aurum, Sanchez,
Kordoba and InterCept from January 1, 2004, through their respective
acquisition dates in 2004. The details for these acquisitions are
noted as follows:
Aurum Sanchez Kordoba InterCept
Historical Historical Historical Historical
(through (through (through (through
March 10) April 13) September 29) November 7) Combined
Processing and
services revenues $33,560 $25,269 $70,126 $189,471 $318,426
Cost of revenues 21,948 16,526 45,862 123,914 208,250
Gross profit 11,612 8,743 24,264 65,557 110,176
Selling, general
and administrative
expenses 13,984 15,376 10,769 60,209 100,338
Operating income
(loss) (2,372) (6,633) 13,495 5,348 9,838
Interest income
(expense), net (743) 52 790 2,508 2,607
Earnings (loss)
before income
taxes and minority
interest (3,115) (6,581) 14,285 7,856 12,445
Income tax expense
(benefit) 52 (2,269) 2,854 3,093 3,730
Minority interest
expense - - - (53) (53)
Net earnings (loss) $(3,167) $(4,312) $11,431 $4,710 $8,662
(6) Reflects the increase in amortization expense as a result of
allocating the purchase price of each acquisition to intangible
assets, namely customer relationship intangibles and computer
software, and amortizing such intangibles over their estimated useful
lives commencing as of the assumed acquisition date. The increase in
amortization expense is $23.4 million for the year ended December 31,
2004 (Aurum-$1.6 million; Sanchez-$1.6 million; Kordoba-$5.9 million;
and Intercept-$14.3 million).
(7) In accordance with SFAS No. 123, unearned compensation cost was
measured upon consummation of the Sanchez acquisition for the
unearned portion of the fair value of the unvested Sanchez options
that were exchanged for unvested FNF options. The amortization of the
unearned compensation cost over the remaining vesting periods results
in compensation expense, which is charged to the combined statements
of earnings, of $1.0 million for the year ended December 31, 2004.
(8) Reflects an increase in interest expense for the years ended December
31, 2004, and 2005, of $91.1 million and $21.0 million, respectively,
as if the recapitalization completed on March 9, 2005 was completed
on January 1, 2004.
(9) Reflects the tax benefit relating to the pro forma adjustments at
FIS's tax rate of approximately 37.6% for the year ended December 31,
2004, and approximately 37.2% for the year ended December 31, 2005.
Appendix C
Fidelity National Information Services, Inc.
Reconciliation of Non-GAAP Measures-2006 Projections
(All amounts in millions, except per share amounts)
FIS presents its financial results in accordance with Generally Accepted
Accounting Principles ("GAAP"). However, in order to provide the
investment community with a more thorough means of evaluating the
operating performance of its operations, FIS also reports several non-GAAP
measures, including earnings before interest, taxes, depreciation and
amortization ("EBITDA"), net earnings plus depreciation and amortization
less capital expenditures ("Free Cash Flow") and net earnings plus other
intangible amortization, net of income tax ("Cash Earnings"). Any non-
GAAP measures should be considered in context with the GAAP financial
presentation and should not be considered in isolation or as a substitute
for GAAP net earnings.
The amounts below are projections based on the guidance range given by
FIS regarding its 2006 results. The tables below are reconciliations of
pro forma projections of non-GAAP measures to the nearest GAAP
measurement.
Pro Forma 2006 Revenue-Projected
Projected 2006 Revenue $3,983
Budgeted Certegy Revenue for
January 2006 90
Pro Forma Projected Revenue $4,073
Pro Forma 2006 Net Earnings-Projected
Projected 2006 Net Earnings $279
Budgeted Certegy Net Earnings for
January 2006 7
Stock Compensation Charge for FIS
Performance Based Options, net of
tax 15
Pro Forma Projected Net Earnings $300
Pro-Forma 2006 Diluted Earnings Per Share-Projected
Projected Earnings Per Share-Diluted $1.41
Budgeted Certegy Results for
January 2006 0.03
Stock Compensation Charge for FIS
Performance Based Options 0.08
Pro Forma Projected Net Earnings
Per Share-Diluted $1.52
Projected Weighted Average Shares
Diluted 197
Pro Forma 2006 Cash Earnings-Projected
Pro Forma Projected Net Earnings $300
Tax Adjusted Purchase Price
Amortization 119
Pro Forma Cash Earnings $420
Pro Forma 2006 Cash Earnings Per Share-Projected
Pro forma Projected Net Earnings
Per Share $1.52
Tax Adjusted Purchase Price
Amortization Per Share 0.61
Pro Forma Cash Earnings Per Share $2.13
Pro Forma EBITDA-Projected
Pro Forma Projected Net Earnings $300
Projected Income Tax Expense 186
Projected Interest Expense 170
Projected Depreciation and
Amortization 460
Projected Other Income/Minority
Interest & Interest Income (27)
Pro Forma EBITDA $1,090
Pro Forma EBITDA Margin - Projected
Pro Forma Projected Revenue $4,073
Pro Forma EBITDA $1,090
Pro Forma EBITDA Margin - Projected 27%
Pro Forma Free Cash Flow-Projected
Pro Forma Projected Net Earnings $300
Projected Depreciation and
Amortization 460
Projected Capital Expenditures (260)
Pro Forma Free Cash Flow $500
FCMN Contact: JFleetwood@fnf.com
DATASOURCE: Fidelity National Information Services
CONTACT: Michelle Kersch, Senior Vice President, Corporate
Communications, +1-904-854-5043, , or Mary Waggoner,
Senior Vice President, Investor Relations, +1-904-854-3282,
, both of Fidelity National Information Services
Web site: http://www.fnf.com/