10-QPeriod: Q3 FY2004

Fidelity National Information Services, Inc. Quarterly Report for Q3 Ended Sep 30, 2004

Filed November 9, 2004For Securities:FIS

Summary

Fidelity National Information Services, Inc. (FIS) reported strong financial performance for the quarter ended September 30, 2004. Revenues increased by 13.2% year-over-year, reaching $262.7 million, driven by robust growth in both the Card Services and Check Services segments. This revenue growth translated into a 10.5% increase in net income, which rose to $29.1 million, or $0.46 per diluted share. The company demonstrated effective cost management, with operating expenses increasing at a slightly lower rate than revenue, leading to a 12.6% rise in operating income to $47.1 million. Significant strategic acquisitions, including Game Financial, Crittson Financial Services, and CariCard, contributed to this performance and are expected to drive future growth. Furthermore, the company is strategically divesting its non-core merchant acquiring business, which is now classified as a discontinued operation.

Key Highlights

  • 1Consolidated revenues increased 13.2% to $262.7 million, compared to $232.0 million in the prior year period.
  • 2Net income rose 10.5% to $29.1 million, or $0.46 per diluted share, up from $26.3 million, or $0.40 per diluted share, in the prior year.
  • 3Operating income grew 12.6% to $47.1 million, reflecting strong revenue growth and effective cost management.
  • 4The company completed several strategic acquisitions: Game Financial, Crittson Financial Services, and CariCard, which are expected to enhance market position and product offerings.
  • 5The merchant acquiring business has been classified as a discontinued operation, with a plan in place for its sale within the next year.
  • 6Repurchased approximately 1.2 million shares of common stock during the quarter for $47.8 million as part of a $100 million repurchase program.
  • 7Card Services revenues grew 6.7% and Check Services revenues increased 23.3%, demonstrating broad-based segment strength.

Frequently Asked Questions

Revenue growth was primarily driven by a 23.3% increase in global Check Services, fueled by increased retail check volumes, new customer signings, and the acquisition of Game Financial. Additionally, international card issuing saw robust growth of 26.0% due to existing customer growth, the CariCard acquisition, and positive currency trends.

The acquisitions of Game Financial, Crittson Financial Services, and CariCard contributed to revenue growth and strengthened the company's market position. Game Financial expanded its presence in the gaming industry, while Crittson bolstered its community bank and credit union processing capabilities. CariCard expanded its reach in the Caribbean. These acquisitions' results have been included in the consolidated statements of income from their respective acquisition dates.

The merchant acquiring business is considered non-strategic and has been classified as a discontinued operation. The Board of Directors approved a plan to sell this business in September 2004, and it is expected to be sold within a year. Related assets and liabilities are presented separately on the balance sheet.

The company continued its share repurchase program, buying back approximately 1.2 million shares during the quarter for $47.8 million. This, along with prior repurchases, reduced the weighted average shares outstanding, favorably impacting earnings per share. The company also continued to pay a quarterly dividend of $0.05 per share.