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Fidelity National Information Services, Inc. Quarterly Report for Q3 Ended Sep 30, 2006

Filing Date
Filed November 9, 2006
Period End
September 30, 2006
Security
FIS
In the record · 2016–202610-K1110-Q338-K168

FIS filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 168 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Jul ’17Jul ’17
  2. Deal closed8-K · Jul ’19Jul ’19
  3. Leadership change8-K · Jun ’21Jun ’21
  4. Material agreement8-K · May ’25May ’25

01—Abstract

Summary

Summary of the 10-Q filed November 9, 2006. Cited figures are marked; the original filing is the authoritative source.

Fidelity National Information Services, Inc. (FIS) reported significant growth in its third-quarter 2006 filing, driven primarily by the acquisition of Certegy Inc. in February 2006.

Total assets more than doubled to $7.43 billiona from $4.19 billion at the end of 2005, largely due to the integration of Certegy. Processing and services revenue also saw a substantial increase, reaching $1.08 billion for the quarter, up from $698.1 million in the prior year's comparable period. This growth reflects the combined entity's expanded market reach and service offerings in both Transaction Processing Services (TPS) and Lender Processing Services (LPS) segments.

Despite the revenue uplift, the company's gross profit margin declined to 28.5% from 35.9% year-over-year, attributed to the lower-margin profile of Certegy's business and increased amortization from purchase accounting. Operating income increased to $169.5 millionb, but the operating margin compressed slightly.

The company continues to manage a substantial debt load, with long-term debt standing at $2.84 billionc, though it is actively exploring refinancing options. Overall, the filing indicates a company in a period of significant integration and expansion, with a strategic focus on consolidating its market position in financial and payment processing services.

02—Key points

Key Highlights

  1. Total assets significantly increased to $7.43 billion as of September 30, 2006, up from $4.19 billion at December 31, 2005, largely due to the acquisition of Certegy Inc.
  2. Processing and services revenues increased by approximately 55% to $1.08 billion for the three months ended September 30, 2006, compared to $698.1 million for the same period in 2005.
  3. Gross profit margin decreased to 28.5% from 35.9% year-over-year, primarily due to the inclusion of Certegy's lower-margin businesses and purchase accounting amortization.
  4. Operating income grew to $169.5 million for the three months ended September 30, 2006, from $123.7 million in the prior year, though operating margin saw a slight compression.
  5. The company reported strong growth in its Transaction Processing Services (TPS) segment, with revenues increasing substantially due to the Certegy merger, while Lender Processing Services (LPS) saw more modest revenue growth.
  6. Long-term debt remained substantial at $2.84 billion as of September 30, 2006, although the company is exploring refinancing options for its credit facilities.
  7. The company is actively repurchasing its stock, with $2.83 million shares bought back during the nine-month period ended September 30, 2006, as part of a program to limit dilution.

03—Questions

Frequently Asked Questions

  1. What was the primary driver of the significant increase in FIS's total assets?

    The primary driver of the substantial increase in FIS's total assets, which more than doubled to $7.43 billion from $4.19 billion, was the acquisition of Certegy Inc., which was completed on February 1, 2006. This acquisition significantly expanded the company's asset base.

  2. How did the Certegy acquisition impact FIS's revenue and profitability?

    The Certegy acquisition significantly boosted FIS's processing and services revenues, contributing substantially to the year-over-year increase. However, it also led to a decrease in the consolidated gross profit margin due to Certegy's typically lower-margin business model and the impact of purchase accounting amortization.

  3. What is the company's current debt situation and outlook?

    As of September 30, 2006, FIS had $2.84 billion in long-term debt. While this represents a significant leverage position, the company is actively engaged in refinancing efforts for its credit facilities, indicating a proactive approach to managing its debt structure.

  4. How does the company plan to manage stock dilution from employee stock options?

    FIS is committed to limiting stock dilution. The company has a share repurchase program in place, and during the nine months ended September 30, 2006, it repurchased approximately 2.83 million shares. Further share repurchases were authorized, indicating a strategy to offset the dilutive effects of equity awards.

04—Continue

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