10-QPeriod: Q3 FY2001

Fidelity National Information Services, Inc. Quarterly Report for Q3 Ended Sep 30, 2001

Filed November 14, 2001For Securities:FIS

Summary

Fidelity National Information Services, Inc. (FIS), operating as Certegy Inc. during this period, reported its third-quarter and nine-month results for 2001. For the three months ended September 30, 2001, the company saw revenues increase by 12.0% year-over-year to $218.0 million, while net income decreased slightly to $24.1 million from $24.9 million in the prior year. This was primarily due to increased interest expense related to debt incurred for the recent spin-off from Equifax and higher operating costs. For the nine months ended September 30, 2001, revenues grew by 9.4% to $618.4 million, with net income declining to $60.6 million from $62.3 million in the same period last year. The company experienced growth in its Card Services segment, which was partially offset by challenges in Check Services, including higher guarantee loss rates. The filing also highlights the impact of the September 11th terrorist attacks, which led to an estimated reduction in revenue and income for the quarter. The company's balance sheet shows a significant increase in total assets, driven by acquisitions and an increase in intangible assets. The company also raised $400 million in credit facilities to fund its operations and the distribution payment to Equifax.

Key Highlights

  • 1Total revenue for the third quarter of 2001 increased by 12.0% to $218.0 million compared to the prior year.
  • 2Net income for the third quarter of 2001 decreased to $24.1 million from $24.9 million in the prior year, impacted by higher interest expenses and operating costs.
  • 3For the first nine months of 2001, revenue grew by 9.4% to $618.4 million, while net income decreased to $60.6 million from $62.3 million in 2000.
  • 4The Card Services segment demonstrated strong revenue growth (11.4% for Q3, 9.3% for 9 months), while Check Services saw revenue increases but faced challenges with higher guarantee loss rates.
  • 5The company experienced a negative impact from the September 11, 2001 terrorist attacks, estimated to have reduced Q3 2001 revenue by $2.3 million and net income by $0.7 million.
  • 6Total assets increased significantly to $619.1 million as of September 30, 2001, compared to $502.4 million at December 31, 2000, largely due to acquisitions and increased intangible assets.
  • 7The company raised $400 million in unsecured credit facilities to fund its operations and the $275 million cash payment made to Equifax during the spin-off.

Frequently Asked Questions

The spin-off, which was completed on July 7, 2001, involved Certegy (FIS) making a $275 million cash payment to Equifax. This was funded by new credit facilities, leading to a significant increase in interest expense in the third quarter and for the nine months ended September 30, 2001. The company also incurred incremental corporate expenses associated with becoming a standalone public entity.

The company experienced a decline in volumes following the September 11th attacks. Management estimates that the attacks reduced third-quarter 2001 revenue by $2.3 million, operating income by $1.1 million, and net income by $0.7 million, resulting in a $0.01 reduction in diluted earnings per share.

Total assets grew substantially to $619.1 million at September 30, 2001, from $502.4 million at December 31, 2000. This growth was driven by acquisitions, including Unnisa Ltda. in Brazil and Accu Chek, Inc., as well as an increase in intangible assets, reflecting the integration of these businesses and the accounting for the spin-off.

Management believes that the company's current cash balance, expected future cash flows from operations, and available credit facilities (including the $400 million facility, net of the $275 million payment to Equifax) are sufficient to meet existing operations and planned requirements. The company may seek additional funding from bank financing or capital markets if needed for future growth and acquisitions.