10-KPeriod: FY2004

Fidelity National Information Services, Inc. Annual Report, Year Ended Dec 31, 2004

Filed March 11, 2005For Securities:FIS

Summary

Certegy Inc.'s 2004 10-K filing reveals a year of substantial growth and strategic acquisitions, positioning the company for continued expansion in the transaction processing and risk management sectors. Revenue increased by 12.8% to $1.0 billion, driven by strong performance in both Card Services and Check Services segments. The company successfully integrated acquisitions, including Game Financial and Crittson, bolstering its market share and service offerings. Certegy also made significant progress in its strategic objective to streamline operations, notably by initiating the sale of its non-strategic merchant acquiring business. Financially, Certegy demonstrated improved profitability with a 21.2% increase in operating income and a 25.0% rise in diluted EPS, reaching $1.75. The company also managed its debt effectively, repaying outstanding balances under its revolving credit facility and ending the year with a solid liquidity position. Key initiatives for the upcoming year include continued investment in product development and market penetration, particularly in international markets.

Key Highlights

  • 1Revenue growth of 12.8% to $1.0 billion, driven by both Card Services (7.2%) and Check Services (21.1%).
  • 2Operating income increased by 21.2% to $179.7 million, with operating margin improving to 17.3%.
  • 3Diluted Earnings Per Share (EPS) grew by 25.0% to $1.75.
  • 4Completed strategic acquisitions of Game Financial, Crittson, and CariCard, strengthening market position and service offerings.
  • 5Initiated the sale of the non-strategic merchant acquiring business, classifying it as discontinued operations.
  • 6Repurchased approximately 2.7 million shares of common stock for $96.5 million as part of a $100 million repurchase program.
  • 7Maintained strong cash flow from operations, enabling reinvestment in the business and shareholder returns.

Frequently Asked Questions

Certegy's revenue growth in 2004 was driven by a combination of factors including acquisitions (Game Financial, Crittson, CariCard), strong growth in North American card issuing operations, expansion of global check services, and favorable currency exchange rates. The company also benefited from a shift in business mix within its Check Services segment and the continued expansion of cash access services.

Certegy generated strong cash flows from operations, which were used for reinvestment in the business, strategic acquisitions, and share repurchases. The company repaid outstanding balances under its revolving credit facility and ended the year with $48.6 million outstanding on a new $200 million facility. They also made dividend payments to shareholders.

Certegy's strategy focuses on strengthening its position in card payment processing and check risk management services. This includes leveraging competitive strengths in the U.S. card market, growing its customer base and processing volumes internationally, increasing revenues from debit card and other card-related products, and expanding its market share in check risk management. The company also continues to consider strategic alliances, investments, and acquisitions to achieve these goals.

Certegy's Board of Directors approved a plan to sell its merchant acquiring business, deemed non-strategic. This business has been classified as a discontinued operation, meaning its assets, liabilities, and results of operations are presented separately from continuing operations. This move is part of Certegy's strategy to focus on its core, more profitable businesses.