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Fidelity National Information Services I Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 5, 2010 02:15PM
Fidelity National Information Services I (FIS) filed Quarterly Report for the period ended 2010-03-31. Fidelity National Information Services I has a market cap of $9.73 billion; its shares were traded at around $25.96 with a P/E ratio of 15 and P/S ratio of 2.6. The dividend yield of Fidelity National Information Services I stocks is 0.8%.FIS is in the portfolios of RS Investment Management, Ronald Muhlenkamp of Muhlenkamp Fund, Steven Cohen of SAC Capital Advisors, John Keeley of Keeley Fund Management, Paul Tudor Jones of The Tudor Group, John Buckingham of Al Frank Asset Management, Inc., George Soros of Soros Fund Management LLC, Jeremy Grantham of GMO LLC, Murray Stahl of Horizon Asset Management, Chuck Royce of Royce& Associates.
Highlight of Business Operations:
Cost of revenues totaled $907.2 million and $618.4 million during the three-month periods ended March 31, 2010 and 2009, respectively, resulting in gross profit of $342.4 million and $175.7 million in 2010 and 2009, respectively. Gross profit as a percentage of revenues (gross margin) was 27.4% and 22.1% in 2010 and 2009, respectively. The increase in cost of revenues of $288.8 million in the 2010 period as compared to the 2009 period is directly attributable to the revenue variances addressed above. The increase in gross margin of 530 basis points for 2010 over 2009 was driven by the continuing results from the synergy initiatives associated with the Metavante Acquisition and the Companys continued effort to reduce costs and improve operating efficiency.
Selling, general and administrative expenses totaled $158.6 million and $95.9 million during the three-month periods ended March 31, 2010 and 2009, respectively. The increase of $62.7 million in 2010 as compared to 2009 was primarily due to incremental costs associated with the Metavante operations. Also, integration and merger related charges, including severance, incentive bonuses and lease adjustments contributed $17.3 million of the year-over-year increase. Stock-based compensation increased from $9.5 million in 2009 to $16.0 million in 2010. Stock-based compensation in the 2010 period included vesting acceleration charges of $0.9 million due to change in control provisions triggered by the Metavante acquisition and subsequent termination of employment and $4.5 million of expense for merger-related grants.
Revenues for ISG totaled $195.0 million and $164.0 million during the three-month periods ended March 31, 2010 and 2009, respectively. The overall segment increase of $31.0 million in 2010 as compared to 2009 primarily resulted from a $24.2 million favorable foreign currency impact resulting from a weaker U.S. Dollar. Excluding the impact of currency, ISG increased $6.8 million principally due to incremental revenues from the Metavante Acquisition, partially offset by a decrease in software sales.
On January 18, 2007, we entered into a five-year syndicated unsecured credit agreement (the FIS Credit Agreement). The FIS Credit Agreement provides total committed capital of $3,000.0 million comprised of $2,100.0 million of term notes (the Term Loan A) and $900.0 million of revolving capacity (the Revolving Loan). The Revolving Loan is bifurcated into two tranches; a $165.0 million tranche that allows borrowings in U.S. Dollars only and a $735.0 million multicurrency tranche that allows borrowings in U.S. Dollars, Euros, British Pounds Sterling, and Australian Dollars. The multicurrency tranche of the Revolving Loan includes a sublimit of $250.0 million for swing line loans and a $250.0 million sublimit for the issuance of letters of credit. In addition, the FIS Credit Agreement originally provided for an uncommitted incremental loan facility in the maximum principal amount of $600.0 million.
On November 1, 2007, Metavante entered into a credit agreement (the MV Credit Agreement) for an aggregate principal amount of $2,000.0 million comprised of $1,750.0 million of seven-year term loans (the MV Term Loan) and a six-year revolving capacity of $250.0 million (the MV Revolving Loan). Immediately preceding the merger of FIS and Metavante, the outstanding balances of the MV Term Loan and MV Revolving Loan were $1,723.8 million and $0, respectively.
On October 1, 2009, contemporaneous with the closing of the Metavante merger, FIS obtained $500.0 million of term loans (the Term Loan C), utilizing the $500.0 million of remaining uncommitted incremental loans under the September 12, 2007 amendment of the FIS Credit Agreement. FIS exchanged the $500.0 million of Term Loan C for $500.0 million of the MV Term Loan (which portion was subsequently cancelled). In addition, on October 1, 2009, FIS purchased $423.8 million of the remaining MV Term Loan, which loans were deemed to be contemporaneously cancelled. After giving effect to the exchange, purchase and cancellation, the aggregate principal amount of the MV Term Loan outstanding as of October 1, 2009 was $800.0 million.
Stocks Discussed: FIS,