10-KPeriod: FY2009

Fidelity National Information Services, Inc. Annual Report, Year Ended Dec 31, 2009

Filed February 26, 2010For Securities:FIS

Summary

Fidelity National Information Services (FIS) reported strong revenue growth in its 2009 10-K, driven by the significant acquisition of Metavante in October 2009. This acquisition substantially expanded FIS's scale, service offerings, and market reach, particularly in core processing, payments, and emerging markets like healthcare and government payments. The company operates across four segments: Financial Solutions Group (FSG), Payment Solutions Group (PSG), International Solutions Group (ISG), and Corporate and Other. Despite a challenging economic environment impacting consumer transactions, FIS demonstrated resilience with recurring revenue comprising about 85% of its total. The company's strategy focuses on solution integration, superior execution, enterprise sales, global diversification, strategic acquisitions, and expense management to drive profitable growth. Investors should note the significant goodwill generated from acquisitions, the company's leverage, and ongoing efforts to integrate the Metavante acquisition and realize expected synergies. The company's financial performance in 2009 showed increased revenues and gross profit compared to 2008, benefiting from the Metavante acquisition in the latter part of the year. However, operating income and margins were impacted by substantial restructuring, integration, and merger-related charges, as well as significant impairment charges related to rebranding efforts. Despite these one-time expenses, the core business operations, particularly in the FSG and PSG segments, showed robust performance. FIS also continued its commitment to returning value to shareholders through consistent quarterly dividends.

Financial Highlights

55 data points
Beta

Revenue

$3.71B

26.1% Gross Margin

Net Income

$105.90M

2.9% Net Margin

EPS (Diluted)

$0.44

Total Assets

$14.00B

Cash & Equivalents

$430.90M

Free Cash Flow

$661.60M

Financial Statements
Beta
Revenue$3.71B
Gross Profit$969.60M
SG&A Expenses$547.10M
Operating Expenses$3.43B
Operating Income$285.60M
Interest Expense$134.00M
Net Income$105.90M
EPS (Basic)$0.45
EPS (Diluted)$0.44
Shares Outstanding (Basic)236.40M
Shares Outstanding (Diluted)239.40M

Key Highlights

  • 1Completed the significant acquisition of Metavante on October 1, 2009, expanding service offerings and market presence.
  • 2Reported consolidated revenues of $3,769.5 million in 2009, an increase of 10.0% over 2008, driven by the Metavante acquisition.
  • 3Achieved a gross margin of 25.7% in 2009, an improvement from 21.5% in 2008, attributed to cost efficiencies and Metavante synergies.
  • 4Experienced increased Selling, General, and Administrative (SG&A) expenses in 2009, largely due to $108.5 million in restructuring, integration, and merger-related charges.
  • 5Recorded significant impairment charges of $136.9 million in 2009, primarily related to rebranding and software asset write-offs.
  • 6Maintained a strong recurring revenue base, with approximately 85% of total revenue derived from multiyear agreements.
  • 7Continued to pay a consistent quarterly dividend of $0.05 per share.

Frequently Asked Questions

The acquisition of Metavante, completed on October 1, 2009, was a major driver of FIS's revenue growth in 2009. It contributed $404.1 million in revenue in the fourth quarter alone. While this boosted overall revenues by 10.0% year-over-year, the integration of Metavante also led to significant restructuring, integration, and merger-related charges, impacting operating income and margins in the short term.

FIS acknowledged that the economic downturn impacted consumer transactions, which, in turn, affected transaction-based revenue streams. Sales of software licenses and professional services, considered discretionary spending, also faced pressure. However, the company's substantial base of recurring revenue (around 85%) provided a degree of stability. FIS managed costs prudently by reducing headcount and capital expenditures.

Key risks include industry consolidation and failures that could reduce customer base, the need to adapt to technological changes, intense competition, long sales cycles for applications, and risks associated with its significant leverage. Additionally, the company highlighted the potential for impairment charges on goodwill and intangible assets if economic conditions worsen and the integration risks associated with acquisitions like Metavante.

FIS's strategy is built on several pillars: continuing to invest in solution integration and internal innovation, ensuring superior execution in delivering value, leveraging enterprise sales for cross-selling and up-selling, pursuing global diversification, making strategic acquisitions, and maintaining a strong focus on expense management for operational efficiencies.