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Fidelity National Information Services I Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 4, 2010 12:19PM

Fidelity National Information Services I (FIS) filed Quarterly Report for the period ended 2010-06-30. Fidelity National Information Services I has a market cap of $10.84 billion; its shares were traded at around $28.79 with a P/E ratio of 16.2 and P/S ratio of 2.9. The dividend yield of Fidelity National Information Services I stocks is 0.7%.

FIS is in the portfolios of RS Investment Management, Ronald Muhlenkamp of Muhlenkamp Fund, Steven Cohen of SAC Capital Advisors, John Buckingham of Al Frank Asset Management, Inc., John Keeley of Keeley Fund Management, Paul Tudor Jones of The Tudor Group, George Soros of Soros Fund Management LLC, Murray Stahl of Horizon Asset Management, Jeremy Grantham of GMO LLC, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Processing and services revenues totaled $1,286.1 million and $829.2 million during the three-month periods and $2,535.7 million and $1,623.3 million during the six-month periods ended June 30, 2010 and 2009, respectively. The increases in revenue of $456.9 million, or 55.1% during the three-month period and $912.4 million or 56.2% during the six-month period ended June 30, 2010, as compared to the 2009 periods are primarily attributable to incremental revenues from the Metavante Acquisition. In addition to the Metavante Acquisition, increased demand for software and professional services, higher debit and credit transaction volumes and favorable foreign currency impact resulting from a weaker U.S. dollar increased revenues. These increases were partially offset by declines in our paper-based retail check businesses.

Cost of revenues totaled $912.2 million and $622.8 million during the three-month periods and $1,819.4 million and $1,241.2 million during the six-month periods ended June 30, 2010 and 2009, respectively, resulting in gross profit of $373.9 million and $206.4 million for the three-month periods and $716.3 million and $382.1 million for the six-month periods ended June 30, 2010 and 2009, respectively. Gross profit as a percentage of revenues (“gross margin”) was 29.1% and 24.9% in the three-month periods and 28.2% and 23.5% in the six-month periods ended June 30, 2010 and 2009, respectively. The increases in cost of revenues of $289.4 million during the three-month period and $578.2 million in the six-month period ended June 30, 2010, as compared to the 2009 periods are directly attributable to the revenue variances addressed above. The increases in gross margin of 420 basis points and 470 basis points during the three-month and six-month periods ended June 30, 2010 as compared to the 2009 periods were driven by the continuing results from the synergy initiatives associated with the Metavante Acquisition and the Company’s continued effort to reduce costs and improve operating efficiency.

Selling, general and administrative expenses totaled $197.0 million and $93.0 million during the three-month periods and $355.6 million and $188.9 million during the six-month periods ended June 30, 2010 and 2009, respectively. The increases of $104.0 million in the three-month period and $166.7 million in the six-month period ended June 30, 2010, as compared to 2009 were primarily due to incremental costs associated with the Metavante operations. Also, integration and merger related charges, including severance costs, relocation and integration costs, synergy incentives and facility and technology platform activity contributed $49.5 million and $54.1 million of the increases during the three-month and six-month periods ended June 30, 2010, respectively. Stock-based compensation during the six-month period ended June 30, 2010 included vesting acceleration charges of $0.9 million due to change in control provisions triggered by the Metavante Acquisition and subsequent terminations of employment and $4.5 million of expense for merger-related grants.

Total other income (expense) was ($31.9) million and ($25.8) million during the three-month periods and ($65.5) million and ($55.8) million during the six-month periods ended June 30, 2010 and 2009, respectively. The two primary components of total other income (expense) are interest expense and, for the 2010 periods, costs relating to the leveraged recapitalization. The decreases of $12.0 million and $14.9 million in interest expense during the three-month and six-month periods ended June 30, 2010 as compared to the 2009 periods resulted from lower interest rates on our debt due to the expiration of higher fixed interest rate swaps, partially offset by higher debt levels in the 2010 periods. The three-month and six-month periods ended June 30, 2010 include $12.8 million of debt extinguishment expense relating to certain previously capitalized costs and fees and other expenses relating to our leveraged recapitalization.

Net earnings from continuing operations attributable to FIS common stockholders totaled $90.2 million and $57.1 million for the three-month periods ended June 30, 2010 and 2009, respectively, or $0.23 and $0.30 per diluted share, respectively, due to the factors described above. Net earnings from continuing operations attributable to FIS common stockholders totaled $184.9 million and $90.1 million for the six-month periods ended June 30, 2010 and 2009 respectively, or $0.48 and $0.47 per diluted share, respectively, due to the factors described above.

Revenues for ISG totaled $200.7 million and $180.7 million during the three-month periods and $395.7 million and $344.7 million during the six-month periods ended June 30, 2010 and 2009, respectively. The overall segment increases of $20.0 million and $51.0 million during the three-month and six-month periods ended June 30, 2010, respectively, as compared to 2009 periods resulted primarily from a $9.2 million and $33.4 million favorable foreign currency impact resulting from a weaker U.S. dollar during the respective 2010 three-month and six-month periods. For the June 2010 quarter, incremental revenues from Metavante and increasing revenues in our Brazilian Venture contributed significantly to the remainder of the increase in revenues. The majority of the increase during the 2010 six-month period was due to incremental 2010 revenues from Metavante.

Read the The complete Report



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