JACKSONVILLE, Fla./PRNewswire-FirstCall via COMTEX News Network/ – Fidelity National Information Services, Inc. (NYSE: FIS), a leading global provider of technology services, today announced that it has completed an assessment of non-strategic businesses that do not meet the company's long-term growth and profit objectives or do not serve the company's primary customer base of financial institutions and mortgage lenders.
In connection with this assessment, disinterested members of FIS' Board of Directors approved the sale of Property Insight to Fidelity National Financial, Inc. (NYSE: FNF) for $95 million in cash. Property Insight manages, maintains and updates title plants that are owned by FNF, and manages title plant construction activities for FNF. It also provides title plant management services for national and regional title companies. The transaction is expected to be completed during the third quarter of 2007, subject to certain regulatory approvals and customary closing conditions. A valuation was obtained from an independent third party, and a fairness opinion will be issued at closing.
The FIS Board of Directors also authorized management to investigate strategic alternatives for its U.S. and Australian Check Services businesses. FIS Check Services is a leading provider of retail point-of-sale check risk management solutions and cash access services to the gaming industry.
"These actions will enable FIS to focus on strategic businesses that meet the company's growth and profitability objectives and generate higher long-term shareholder value," stated Lee A. Kennedy, president and chief executive officer for FIS. "These initiatives are consistent with our goal of being the premier provider of core processing and related services to financial institutions and mortgage lenders."
Additional information, including the financial impact of the actions described above, are included in the supplemental schedules attached to this press release. FIS presents its financial results in accordance with GAAP and on an adjusted pro forma basis, which management believes provides more meaningful comparisons between the periods presented. FIS' full year 2006 and 2005 pro forma results reflect a January 1, 2005, effective date for the merger between FIS and Certegy. Additionally, the adjusted pro forma results exclude certain merger and acquisition and integration expenses and certain stock compensation charges. FIS also reports several non-GAAP measures, including earnings before interest, taxes, depreciation and amortization ("EBITDA"), and net earnings plus other tax-adjusted purchase price amortization ("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 GAAP, pro forma and non-GAAP results are provided in the attachments to this press release.
Fidelity National Information Services, Inc. Review of Non-Strategic Assets Supplemental Information
- What is the impact on FIS' pro forma growth rates for revenue, operating income and EBITDA for full year 2006, assuming the divestiture of Property Insight and Check Services?
For full year 2006, pro forma revenue growth would have been 9.5% (compared to 8.8%); pro forma operating income would have increased 19.5% (compared to 17.3%); and pro forma EBITDA growth would have been 11.7% (compared to 10.6%). See attached table for additional details.
- What is the impact on FIS' pro forma growth rates for revenue, operating income and EBITDA for the first six months of 2007, assuming the divestiture of Property Insight and Check Services?
For the first six months of 2007, pro forma revenue growth would have been 16.5% (compared to 14.1%); pro forma operating income would have increased 25.6% (compared to 19.5%); and pro forma EBITDA growth would have been 16.9% (compared to 12.4%). See attached table for additional details.
- What is the estimated contribution of Property Insight and Check Services to projected full year 2007 and historical full year 2006 diluted earnings per share?
Full Year
2007 2006
GAAP earnings per diluted share $0.13 $0.20
Plus: Tax adjusted purchase price
amortization per share 0.03 0.03
Cash earnings per diluted share $0.16 $0.23
- How will the proceeds from the proposed sale of these businesses be used?
The Company anticipates using proceeds from the proposed sale of these assets to pay down debt and repurchase shares of its common stock.
- What are total annual capital expenditures for the Property Insight and Check Services businesses?
Combined annual capital expenditures approximate $11 million.
- How would a potential sale of the retail risk management business impact your ability to provide risk management solutions to financial institutions?
The risk management platforms used for retail customers are separate and distinct from the risk management platforms used for financial institutions. Long-term contracts to ensure access to check writing data utilized in our risk analytic models will be secured as part of any transaction.
- How would a potential sale of the FIS retail risk management business impact your plans for the eFunds Scan product?
A determination regarding Scan will be made once we have completed the analysis of alternatives for FIS' Check Services businesses.
- Why do you consider risk management services to be a core service offering for financial institutions, but not for retailers?
As previously stated, FIS' core customer base is comprised primarily of financial institutions and mortgage lenders. Check Services is the only business focused primarily on serving the retail industry.
About Fidelity National Information Services
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 10. Approximately 50 percent of all U.S. residential mortgages are processed using FIS software. FIS is a member of Standard and Poor's (S&P) 500(R) Index and has been ranked the number one banking service provider in the world by American Banker and the research firm Financial Insights and the number two overall financial technology provider in the annual FinTech 100 rankings. Headquartered in Jacksonville, Fla., FIS maintains a strong global presence, serving more than 7,800 financial institutions in more than 60 countries worldwide. For more information on Fidelity National Information Services, please visit www.fidelityinfoservices.com.
Forward-Looking Statements
This press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future economic performance and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: changes in general economic, business and political conditions, including changes in the financial markets; the effects of our substantial leverage, which may limit the funds available to make acquisitions and invest in our business; the risks of reduction in revenue from the elimination of existing and potential customers due to consolidation in the banking, retail and financial services industries; failures to adapt our services to changes in technology or in the marketplace; adverse changes in the level of real estate activity, which would adversely affect certain of our businesses; our potential inability to find suitable acquisition candidates or difficulties in integrating acquisitions; significant competition that our operating subsidiaries face; the risks and uncertainties related to our recently announced data theft, which continues to be investigated, and which includes the potential for fines, increased operating costs and loss of business; the possibility that our future acquisition of EFD/eFunds, which is subject to regulatory and EFD shareholder approval, may not be completed or may not be accretive to our earnings due to undisclosed liabilities, management or integration issues, loss of customers or other factors; and other risks detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of the Company's Form 10-K and other filings with the Securities and Exchange Commission.
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