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Fidelity National Information Services I Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 5, 2010 04:00PM

Fidelity National Information Services I (FIS) filed Quarterly Report for the period ended 2010-09-30. Fidelity National Information Services I has a market cap of $8.27 billion; its shares were traded at around $27.81 with a P/E ratio of 15.6 and P/S ratio of 2.1. The dividend yield of Fidelity National Information Services I stocks is 0.7%.

FIS is in the portfolios of Larry Robbins of Glenview Capital, Eric Mindich of Eton Park Capital Management, L.P., Steven Cohen of SAC Capital Advisors, RS Investment Management, John Keeley of Keeley Fund Management, John Buckingham of Al Frank Asset Management, Inc., Richard Perry of Perry Capital, George Soros of Soros Fund Management LLC, Louis Moore Bacon of Moore Capital Management, LP, Mario Gabelli of GAMCO Investors, Jean-Marie Eveillard of First Eagle Investment Management, LLC, Murray Stahl of Horizon Asset Management, David Dreman of Dreman Value Management, Chuck Royce of Royce& Associates, Jean-Marie Eveillard of First Eagle Investment Management, LLC.

Highlight of Business Operations:

Processing and services revenues totaled $1,367.2 million and $828.7 million during the three-month periods and $3,873.2 million and $2,428.1 million during the nine-month periods ended September 30, 2010 and 2009, respectively. The increases in revenue of $538.5 million, or 65.0% during the three-month period and $1,445.1 million or 59.5% during the nine-month period ended September 30, 2010, as compared to the 2009 periods are primarily attributable to incremental revenues from the Metavante Acquisition and to a lesser extent the recognition of an $83.3 million termination fee in connection with Banco Santander’s exit from the Brazilian card processing venture. In addition, increased demand for software and professional services and higher debit and credit transaction volumes increased revenues. The increase in revenues for the 2010 nine month period also included a favorable foreign currency impact resulting from a weaker U.S. dollar. These increases were partially offset by declines in our paper-based retail check businesses.

Cost of revenues totaled $897.3 million and $605.4 million during the three-month periods and $2,680.9 million and $1,822.2 million during the nine-month periods ended September 30, 2010 and 2009, respectively, resulting in gross profit of $469.9 million and $223.3 million for the three-month periods and $1,192.3 million and $605.9 million for the nine-month periods ended September 30, 2010 and 2009, respectively. Gross profit as a percentage of revenues (“gross margin”) was 34.4% and 26.9% in the three-month periods and 30.8% and 25.0% in the nine-month periods ended September 30, 2010 and 2009, respectively. The increases in cost of revenues of $291.9 million during the three-month period and $858.7 million in the nine-month period ended September 30, 2010, as compared to the 2009 periods are directly attributable to the revenue variances addressed above. The increases in gross margin of 750 basis points and 580 basis points during the three-month and nine-month periods ended September 30, 2010 as compared to the 2009 periods were driven by the termination fee received in connection with Banco Santander’s exit from the Brazilian card processing venture, as well as the continuing results from the synergy initiatives associated with the Metavante Acquisition.

Selling, general and administrative expenses totaled $138.9 million and $89.4 million during the three-month periods and $489.8 million and $275.7 million during the nine-month periods ended September 30, 2010 and 2009, respectively. The increases of $49.5 million in the three-month period and $214.1 million in the nine-month period ended September 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 nonrecurring costs related to facility consolidations and technology platform integrations contributed $22.5 million and $91.5 million of the increases during the three-month and nine-month periods ended September 30, 2010, respectively. These increases in the 2010 periods were partially offset by a $10.1 million recovery in September 2010 of legal costs previously incurred as the result of a favorable court ruling.

Total other income (expense) was ($43.0) million and ($30.4) million during the three-month periods and ($108.4) million and ($86.3) million during the nine-month periods ended September 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 increases of $29.1 million and $14.1 million in interest expense during the three-month and nine-month periods ended September 30, 2010 as compared to the 2009 periods resulted from higher overall debt levels as a result of our recapitalization during 2010 and higher interest rates on our debt. The three-month and nine-month periods ended September 30, 2010 include $0.9 million and $13.7

Participacoes had revenues of $14.6 million, $15.1 million and $14.8 million for the three-month periods ended March 31, June 30 and September 30, 2010, respectively. Participacoes had revenues of $17.8 million, operating expenses of $20.5 million and net loss of ($1.8) million for the three-month period ended December 31, 2009.

Net earnings from continuing operations attributable to FIS common stockholders totaled $134.3 million and $66.6 million for the three-month periods ended September 30, 2010 and 2009, respectively, or $0.40 and $0.34 per diluted share, respectively, due to the factors described above. Net earnings from continuing operations attributable to FIS common stockholders totaled $326.3 million and $158.6 million for the nine-month periods ended September 30, 2010 and 2009 respectively, or $0.89 and $0.82 per diluted share, respectively, due to the factors described above.

Read the The complete Report



Stocks Discussed: FIS,
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