01—Abstract
Summary
Summary of the 10-K filed February 29, 2008. Cited figures are marked; the original filing is the authoritative source.
Fidelity National Information Services, Inc. (FIS) reported strong revenue growth in its 2007 annual filing, driven by significant acquisitions and organic expansion in both its Transaction Processing Services (TPS) and Lender Processing Services (LPS) segments.
The company processed substantial transaction volumes for major financial institutions globally and held a leading position in mortgage servicing platforms. A key strategic development during 2007 was the announcement of a plan to spin off its LPS segment into a separate publicly traded entity, Lender Processing Services, Inc. (LPS, Inc.), expected in mid-2008. This move aimed to unlock value and allow each entity to focus on its respective core business.
The company also completed the acquisition of eFunds Corporation, further strengthening its TPS segment. Despite the positive growth, FIS maintained a significant debt load, largely due to its acquisition strategy. The company highlighted ongoing investments in technology and R&D to maintain its competitive edge in the rapidly evolving financial services technology landscape.
02—Key points
Key Highlights
- Significant revenue growth in 2007, driven by acquisitions (e.g., eFunds) and organic expansion across both TPS and LPS segments.
- Announcement of a strategic plan to spin off the Lender Processing Services (LPS) segment into a separate public company (LPS, Inc.) in mid-2008.
- Strong market position in core processing, card issuer services, and mortgage servicing platforms, serving a significant portion of top global banks.
- Completion of the eFunds acquisition, bolstering the Transaction Processing Services (TPS) segment.
- Ongoing investment in technology and research and development to enhance service offerings and maintain competitive advantage.
- Management expressed confidence in its ability to adapt to technological changes and market demands.
- The company maintained a consistent quarterly dividend of $0.05 per share.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2007, Fidelity National Information Services, Inc. kept $0.19.
- Revenue$2.89B100.0%
- Cost of revenue−$2.32B80.0%
- Gross profit$577.6M20.0%
- Operating costs−$316.0M10.9%
- Operating income$261.6M9.0%
- Interest, other & tax$299.6M10.4%
- Net income$561.2M19.4%
Where FY2007 revenue went
$2.89B- Cost of revenue: $2.32B, 80% of revenue
- Operating income: $261.6M, 9.0% of revenue
- SG&A: $302.5M, 10% of revenue
Kept 9.0% as operating incomeOperating income $261.6M · 9.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2007filed February 29, 2008Financial Statements
| Revenue | $2.89B |
| Gross Profit | $577.60M |
| SG&A Expenses | $302.50M |
| Operating Income | $261.60M |
| Interest Expense | $190.20M |
| Net Income | $561.20M |
| EPS (Basic) | $2.91 |
| EPS (Diluted) | $2.86 |
| Shares Outstanding (Basic) | 193.10M |
| Shares Outstanding (Diluted) | 196.50M |
05—Questions
Frequently Asked Questions
What are FIS's primary business segments and their contributions to revenue?
FIS operates through two main segments: Transaction Processing Services (TPS) and Lender Processing Services (LPS). For the year ended December 31, 2007, the TPS segment generated approximately 63% of the company's revenue, while the LPS segment contributed approximately 37%.
What is the planned spin-off of the Lender Processing Services (LPS) segment?
FIS announced in October 2007 its intention to spin off the businesses that comprise its LPS segment into a separate, publicly traded company named Lender Processing Services, Inc. (LPS, Inc.). The company expects this spin-off to occur in mid-2008. This strategic move is intended to allow each company to focus on its distinct business operations and strategic objectives.
How has FIS's financial performance evolved over the past few years leading up to 2007?
FIS has demonstrated a strong upward trend in revenue and net earnings. Revenue grew from $2.69 billion in 2005 to $4.04 billion in 2006, and further to $4.76 billion in 2007. This growth was significantly influenced by major acquisitions, including Certegy in 2006 and eFunds in 2007, as well as organic growth within its core services.
What are the key risks and challenges identified by FIS in its 2007 filing?
Key risks include the need to adapt to technological changes, intense competition, the impact of substantial debt levels and debt service requirements, challenges in integrating acquisitions, potential adverse effects from consolidation in the banking industry, sensitivity of revenue to economic slowdowns, reluctance of customers to switch vendors, and the potential impact of decreased lending and real estate activity. Additionally, the company noted potential conflicts of interest related to its executive chairman's roles at both FIS and Fidelity National Financial (FNF).
06—Continue