8-KEarnings & ResultsOther EventsExhibits & Filings

Fidelity National Information Services, Inc. 8-K Report, Financial Results (Oct 12, 2005)

Filed October 12, 2005For Securities:FIS

Summary

Fidelity National Information Services, Inc. (FIS), through its subsidiary Certegy Inc., filed this Form 8-K on October 12, 2005, primarily to disclose the adoption of new accounting standards related to share-based payments, specifically SFAS 123(R). This new standard requires companies to recognize the fair value of stock options and other share-based compensation in their income statements, a significant change from the previous intrinsic value method used by Certegy. The company adopted SFAS 123(R) effective January 1, 2005, employing a modified retrospective method and restating all prior periods. This restatement impacts financial data, management's discussion and analysis, and financial statements. Investors should note that this change will lead to the recognition of compensation costs previously not expensed, potentially affecting reported earnings. Additionally, the classification of tax benefits from stock option exercises will shift from operating cash flows to financing cash flows under the new standard.

Key Highlights

  • 1Certegy Inc. adopted SFAS 123(R) "Share-Based Payment" effective January 1, 2005.
  • 2The adoption requires expensing stock options and other share-based payments at fair value, a change from the previous intrinsic value method.
  • 3A modified retrospective method was used, meaning prior periods have been restated to reflect the new accounting treatment.
  • 4This adoption will result in the recognition of compensation costs previously not recorded in the income statement.
  • 5Tax benefits from stock option exercises will now be classified as financing cash flows instead of operating cash flows.
  • 6The filing includes restated financial data, MD&A, and financial statements for fiscal years ended December 31, 2004, and 2003, and for the three-year period ended December 31, 2004.

Frequently Asked Questions

The primary reason for this 8-K filing is Certegy Inc.'s adoption of the new accounting standard SFAS 123(R) regarding share-based payments. This requires a change in how stock options and other equity-based compensation are accounted for.

Previously, Certegy used the intrinsic value method under APB 25, where stock options were only expensed if their exercise price was below the market value at the grant date (which was rare). Under SFAS 123(R), the fair value of all stock options granted to employees must be recognized as an expense in the income statement, impacting reported profitability.

The modified retrospective method means that Certegy has restated its financial statements for all prior periods presented to reflect the impact of SFAS 123(R). This allows investors to compare financial results under the new accounting standard consistently across periods.

The most significant change to cash flows relates to tax benefits from stock option exercises. Previously classified as operating cash flows, these benefits will now be reported as financing cash flows under SFAS 123(R).