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FIS Reports Fourth Quarter Results
Posted by: gurufocus (IP Logged)
Date: February 10, 2009 04:03PM

Press Release: FIS Reports Fourth Quarter Results

JACKSONVILLE, Fla., Feb. 10 /PRNewswire-FirstCall/ -- Fidelity NationalInformation Services, Inc. (NYSE: FIS), a leading global provider oftechnology services to financial institutions, today reported financialresults for the quarter and year ended December 31, 2008.

Fourth quarter consolidated revenue increased 0.8% to $862.0 million inU.S. dollars and increased 4.3% on a constant currency basis. GAAP netearnings from continuing operations totaled $49.9 million, or $0.26 per sharecompared to $0.24 per share in the 2007 quarter.

Non-GAAP adjusted net earnings from continuing operations increased 41.2%to $0.48 per share, compared to $0.34 in the prior year, and increased 44.1%to $0.49 per share in constant currency. The increase in earnings per sharewas attributable to improved operating performance, supplemented by lowerinterest expense, a reduction in the company's effective tax rate and a lowershare count. Free cash flow (cash from operations less capital expenditures)increased to a record $148.8 million in the fourth quarter of 2008.

For the full year 2008, revenue increased 18.0% to $3.4 billion in U.S.dollars and 17.3% in constant currency. GAAP net earnings from continuingoperations totaled $0.61 per share compared to $1.28 in 2007, which includedan after-tax gain of $0.88 from the sale of Covansys stock. Non-GAAPadjusted net earnings from continuing operations totaled $1.49 per share in2008, an increase of 26.3% compared to $1.18 per share in 2007. Pro formafree cash flow more than doubled to $358.1 million in 2008 compared to $168.4million in 2007.

"It was a solid quarter and a very good year for FIS. Full year revenueand earnings per share came in at the high end of our expectations, and proforma free cash flow grew to a record $358 million," stated William P. Foley,II, executive chairman of FIS. "Our management team and employees have donean excellent job managing through a very difficult environment to achievethese results."

"FIS is well positioned to generate solid growth in profitability,earnings per share and free cash flow in 2009," added Lee A. Kennedy,president and chief executive officer. "We will continue to pursue key growthand efficiency initiatives, while remaining intently focused on helping ourcustomers manage through this difficult economic environment."

Divestitures and Discontinued Operations

On October 13, 2008, FIS completed the sale of the operating assets ofCertegy Australia, Ltd. Certegy Australia, along with previously disclosedbusiness divestitures, is reported as a discontinued operation for the periodspresented.

Reclassifications

During the first quarter of 2008, the Company reclassified certainrevenues related to eFunds, which was acquired in September 2007, from theInternational revenue channel to the Integrated Financial Solutions andEnterprise Solutions revenue channels. Accordingly, certain revenues relatedto eFunds in the third and fourth quarters of 2007 have been reclassified toconform to our current presentation.

Supplemental Information

Consolidated fourth quarter revenue increased 0.8% to $862.0 million inU.S. dollars, including a $30.1 million unfavorable impact related to foreigncurrency exchange rates. Excluding the adverse effect of currency, revenueincreased 4.3%, driven by 6.4% growth in Integrated Financial Solutions and9.7% growth in International. Enterprise Solutions revenue declined 2.4%compared to the prior year quarter, driven by a $12.8 million decline in theCompany's retail check guarantee business. Excluding Check Services' revenuefrom both periods, Enterprise Solutions revenue increased 2.8%.

Adjusted EBITDA increased 4.3% to $226.9 million in the fourth quarter of2008. The adjusted EBITDA margin improved 90 basis points to 26.3% comparedto 25.4% in the prior-year quarter and increased 110 basis points sequentiallyfrom 25.2% in the third quarter of 2008. The improvement was driven byincreased operating leverage, improved cost management and realizedacquisition synergies, and slightly higher software license and equipmentsales.

The effective tax rate in the fourth quarter of 2008 was 32.0% compared to35.8% in the fourth quarter of 2007. The current period tax rate wasfavorably impacted by the geographic distribution of income, a federalresearch and development tax credit and state tax planning.

Balance Sheet

As of December 31, 2008, the company had $220.9 million in cash and cashequivalents. FIS repaid $134 million of debt during the fourth quarter,reducing the year-end total outstanding to $2.5 billion, of which $2.1 billionhas been swapped to fixed interest rates. The effective interest rate was5.1% as of December 31, 2008.

During the quarter, FIS recorded an after-tax impairment charge of $35.3million, or $0.18 per share, in conjunction with the Certegy Check Servicestrademark. As a result of the sale of our Australian business, approximately$0.09 per share is recorded in discontinued operations, while the remaining$0.09 per share is included in continuing operations. The write-down isexcluded from adjusted net earnings for comparative purposes.

2009 Outlook
    FIS provided full year guidance for 2009 as follows:

    -- Reported revenue growth of 0 to 2%, and 3 to 5% in constant currency.
    -- Adjusted net earnings of $1.60 to $1.66 per share, representing
       approximately 7 to 11% growth on a reported basis, and 10 to 14% growth
       in constant currency
    -- Free cash flow of $410 to $430 million

The Company expects to report first quarter 2009 revenue of $820 to $830million and adjusted net earnings of $0.30 to $0.32.

Use of Non-GAAP Financial Information

FIS reports several non-GAAP measures, including earnings before interest,taxes, depreciation and amortization ("EBITDA") and adjusted net earnings,free cash flow and organic revenues. The adjusted results exclude the after-tax impact of merger and acquisition and integration expenses, certain stockcompensation charges, LPS spin-off related costs, debt restructuring and othercharges, gains (losses) on the sale of certain non-strategic assets andacquisition related amortization. Any non-GAAP measures should be consideredin context with the GAAP financial presentation and should not be consideredin isolation or as a substitute for GAAP net earnings. Further, FIS' non-GAAPmeasures may be calculated differently from similarly titled measures of othercompanies. A reconciliation of these non-GAAP measures to related GAAPmeasures is included in the attachments to this release.

Conference Call and Webcast

FIS will host a call with investors and analysts to discuss fourth quarterand full year 2008 results on Tuesday, February 10, 2009, beginning at 5:00p.m. Eastern daylight time. To register for the live event and to access asupplemental slide presentation, go to the Investor Relations section atwww.fidelityinfoservices.com and click on "Events and Multimedia." A webcastreplay will be available on FIS' Investor Relations website, and a telephonereplay will be available through February 24, 2009, by dialing 800-475-6701(USA) or 320-365-3844 (International). The access code will be 981914. Toaccess a PDF version of this release and accompanying financial tables, go to:552f:http://www.investor.fidelityinfoservices.com:/552f:.

About Fidelity National Information Services, Inc.

Fidelity National Information Services, Inc. (NYSE: FIS), a Fortune 500company and member of the S&P 500 Index, is a leading provider of coreprocessing for financial institutions; card issuer and transaction processingservices; and outsourcing services to financial institutions and retailers.FIS has processing and technology relationships with 40 of the top 50 globalbanks, including nine of the top 10 and was ranked the number one bankingtechnology provider in the world by American Banker and the research firmFinancial Insights in the 2008 FinTech 100 rankings. Headquartered inJacksonville, Fla., FIS maintains a strong global presence, serving more than13,000 financial institutions in more than 80 countries worldwide. For moreinformation on Fidelity National Information Services, please visitwww.fidelityinfoservices.com.

Forward-Looking Statements

This press release contains forward-looking statements that involve anumber of risks and uncertainties. Statements that are not historical facts,including statements about our beliefs and expectations, are forward-lookingstatements. Forward-looking statements are based on management's beliefs, aswell as assumptions made by, and information currently available to,management. Because such statements are based on expectations as to futureeconomic performance and are not statements of fact, actual results may differmaterially from those projected. We undertake no obligation to update anyforward-looking statements, whether as a result of new information, futureevents or otherwise. The risks and uncertainties which forward-lookingstatements are subject to include, but are not limited to: changes in generaleconomic, business and political conditions, including changes in thefinancial markets; the effects of our substantial leverage which may limit thefunds available to make acquisitions and invest in our business; the risks ofreduction in revenue from the elimination of existing and potential customersdue to consolidation in the banking, retail and financial services industriesor due to financial failures suffered by firms in those industries; failuresto adapt our services to changes in technology or in the marketplace; ourpotential inability to find suitable acquisition candidates or difficulties inintegrating acquisitions; significant competition that our operatingsubsidiaries face; and other risks detailed in the "Statement RegardingForward-Looking Information," "Risk Factors" and other sections of theCompany's Form 10-K and other filings with the Securities and ExchangeCommission.

Source: PRNewsWire

Gurus who own FIS

FIS is in the portfolios of Ronald Muhlenkamp.


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