filings.toolsItem 6. Selected Financial Data
12K characters. Original on sec.gov · Markdown
Item 6. Selected Financial Data
The selected financial data set forth below constitutes historical financial data of FIS and should be read in conjunction with "Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations," and "Item 8, Financial Statements and Supplementary Data," included elsewhere in this report.
On July 31, 2017, FIS closed on the sale of a majority ownership stake in its Capco consulting business and risk and compliance consulting business to Clayton, Dubilier & Rice L.P., by and through certain funds that it manages ("CD&R"), for cash proceeds of approximately $469 million, resulting in a pre-tax loss of $41 million. The divestiture is consistent with our strategy to focus on our IP-led businesses. CD&R acquired preferred units convertible into 60% of the common units of the venture, Cardinal Holdings, L.P. ("Cardinal") and FIS obtained common units representing the remaining 40%, in each case
before equity is issued to management. The preferred units are entitled to a quarterly dividend at an annual rate of 12%, payable in cash (if available) or additional preferred units at FIS' option. The businesses sold were included within the GFS and IFS segments. The sale did not meet the standard necessary to be reported as discontinued operations; therefore, the pre-tax loss and related prior period earnings remain reported within earnings from continuing operations.
FIS' 40% ownership in Cardinal was initially valued at $172 million and was recorded as an equity method investment included within other noncurrent assets on the Consolidated Balance Sheet. After the sale on July 31, 2017, FIS began to recognize the earnings in after-tax equity method investment earnings outside of operating income and segment Adjusted EBITDA. For periods prior to July 31, 2017, the Capco consulting business and risk and compliance consulting business were included within operating income and segment Adjusted EBITDA.
On February 1, 2017, FIS completed the sale of the SunGard Public Sector and Education ("PS&E") business for $850 million, resulting in a pre-tax gain of $85 million. The transaction included all PS&E solutions, which provided a comprehensive set of technology solutions to address public safety and public administration needs of government entities as well as the needs of K-12 school districts. The divestiture is consistent with our strategy to serve the financial services markets. Cash proceeds were used to reduce outstanding debt (see Note 10 of the Notes to Consolidated Financial Statements). Net cash proceeds, after payment of taxes and transaction-related expenses, were approximately $500 million. The PS&E business was included in the Corporate and Other segment. The sale did not meet the standard necessary to be reported as discontinued operations; therefore, the pre-tax gain and related prior period earnings remain reported within earnings from continuing operations.
On November 30, 2015, we completed the SunGard acquisition. The results of operations and financial position of SunGard are included in the Consolidated Financial Statements since the date of acquisition.
During the second quarter of 2015, we sold certain assets associated with our gaming industry check warranty business, resulting in a pre-tax gain of $139 million, which is included in Other income (expense), net. The sale did not meet the standard necessary to be reported as discontinued operations; therefore, the gain and related prior period earnings remain reported within earnings from continuing operations.
The purchase price for our 2010 acquisition of Capco included future contingent consideration in addition to cash paid at closing. The liability for the earn-out provisions and for an employee incentive plan established in conjunction with the acquisition were adjusted in 2013 as a result of amendments based on management's outlook and increased projections of Capco's future results.
As discussed in Note 15 of the Notes to Consolidated Financial Statements, we have sold a number of businesses and certain of those businesses have been classified as discontinued for all periods presented.
| Year Ended December 31, | |||||||||||||||||||
| 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
| (In millions, except per share data) | |||||||||||||||||||
| Statement of Earnings Data: | |||||||||||||||||||
| Processing and services revenues | $ | 9,123 | $ | 9,241 | $ | 6,596 | $ | 6,413 | $ | 6,063 | |||||||||
| Cost of revenues | 6,181 | 6,233 | 4,395 | 4,327 | 4,092 | ||||||||||||||
| Gross profit | 2,942 | 3,008 | 2,201 | 2,086 | 1,971 | ||||||||||||||
| Selling, general and administrative expenses | 1,450 | 1,710 | 1,102 | 815 | 908 | ||||||||||||||
| Operating income | 1,492 | 1,298 | 1,099 | 1,271 | 1,063 | ||||||||||||||
| Total other income (expense) | (456 | ) | (392 | ) | (62 | ) | (218 | ) | (239 | ) | |||||||||
| Earnings from continuing operations before income taxes and equity method investment earnings | 1,036 | 906 | 1,037 | 1,053 | 824 | ||||||||||||||
| Provision (benefit) for income taxes | (319 | ) | 317 | 379 | 335 | 309 | |||||||||||||
| Equity method investment earnings | (3 | ) | — | — | — | — | |||||||||||||
| Earnings from continuing operations, net of tax | 1,352 | 589 | 658 | 718 | 515 | ||||||||||||||
| Earnings (loss) from discontinued operations, net of tax | — | 1 | (7 | ) | (11 | ) | 3 | ||||||||||||
| Net earnings | 1,352 | 590 | 651 | 707 | 518 | ||||||||||||||
| Net (earnings) loss attributable to noncontrolling interest | (33 | ) | (22 | ) | (19 | ) | (28 | ) | (25 | ) | |||||||||
| Net earnings attributable to FIS common stockholders | $ | 1,319 | $ | 568 | $ | 632 | $ | 679 | $ | 493 | |||||||||
| Net earnings per share — basic from continuing operations attributable to FIS common stockholders | $ | 4.00 | $ | 1.74 | $ | 2.24 | $ | 2.42 | $ | 1.69 | |||||||||
| Net earnings (loss) per share — basic from discontinued operations attributable to FIS common stockholders | — | — | (0.03 | ) | (0.04 | ) | 0.01 | ||||||||||||
| Net earnings per share — basic attributable to FIS common stockholders | $ | 4.00 | $ | 1.74 | $ | 2.22 | $ | 2.38 | $ | 1.70 | |||||||||
| Weighted average shares — basic | 330 | 326 | 285 | 285 | 290 | ||||||||||||||
| Net earnings per share — diluted from continuing operations attributable to FIS common stockholders | $ | 3.93 | $ | 1.72 | $ | 2.21 | $ | 2.39 | $ | 1.67 | |||||||||
| Net earnings (loss) per share — diluted from discontinued operations attributable to FIS common stockholders | — | — | (0.03 | ) | (0.04 | ) | 0.01 | ||||||||||||
| Net earnings per share — diluted attributable to FIS common stockholders | $ | 3.93 | $ | 1.72 | $ | 2.19 | $ | 2.35 | $ | 1.68 | |||||||||
| Weighted average shares — diluted | 336 | 330 | 289 | 289 | 294 | ||||||||||||||
| Amounts attributable to FIS common stockholders: | |||||||||||||||||||
| Earnings from continuing operations, net of tax | $ | 1,319 | $ | 567 | $ | 639 | $ | 690 | $ | 490 | |||||||||
| Earnings (loss) from discontinued operations, net of tax | — | 1 | (7 | ) | (11 | ) | 3 | ||||||||||||
| Net earnings attributable to FIS common stockholders | $ | 1,319 | $ | 568 | $ | 632 | $ | 679 | $ | 493 |
| As of December 31, | |||||||||||||||||||
| 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
| (In millions, except per share data) | |||||||||||||||||||
| Balance Sheet Data: | |||||||||||||||||||
| Cash and cash equivalents | $ | 665 | $ | 683 | $ | 682 | $ | 493 | $ | 548 | |||||||||
| Goodwill | 13,730 | 14,178 | 14,745 | 8,878 | 8,500 | ||||||||||||||
| Other intangible assets, net | 3,950 | 4,664 | 5,159 | 1,268 | 1,339 | ||||||||||||||
| Total assets | 24,517 | 26,031 | 26,200 | 14,521 | 13,960 | ||||||||||||||
| Total long-term debt | 8,763 | 10,478 | 11,444 | 5,068 | 4,469 | ||||||||||||||
| Total FIS stockholders’ equity | 10,835 | 9,741 | 9,321 | 6,557 | 6,581 | ||||||||||||||
| Noncontrolling interest | 109 | 104 | 86 | 135 | 157 | ||||||||||||||
| Total equity | 10,944 | 9,845 | 9,407 | 6,692 | 6,737 | ||||||||||||||
| Cash dividends declared per share | $ | 1.16 | $ | 1.04 | $ | 1.04 | $ | 0.96 | $ | 0.88 |
Selected Quarterly Financial Data
Selected unaudited quarterly financial data is as follows:
| Quarter Ended | |||||||||||||||
| March 31 | June 30 | September 30 | December 31 | ||||||||||||
| (In millions, except per share data) | |||||||||||||||
| 2017 | |||||||||||||||
| Processing and services revenues | $ | 2,255 | $ | 2,341 | $ | 2,198 | $ | 2,329 | |||||||
| Gross profit | 673 | 729 | 715 | 825 | |||||||||||
| Earnings from continuing operations before income taxes and equity method investment earnings | 223 | 272 | 122 | 419 | |||||||||||
| Net earnings attributable to FIS common stockholders | 138 | 132 | 61 | 988 | |||||||||||
| Net earnings per share — basic attributable to FIS common stockholders | $ | 0.42 | $ | 0.40 | $ | 0.18 | $ | 2.98 | |||||||
| Net earnings per share — diluted attributable to FIS common stockholders | $ | 0.41 | $ | 0.40 | $ | 0.18 | $ | 2.93 | |||||||
| 2016 | |||||||||||||||
| Processing and services revenues | $ | 2,181 | $ | 2,305 | $ | 2,309 | $ | 2,445 | |||||||
| Gross profit | 628 | 705 | 782 | 892 | |||||||||||
| Earnings from continuing operations before income taxes | 90 | 189 | 294 | 333 | |||||||||||
| Net earnings attributable to FIS common stockholders | 55 | 121 | 185 | 207 | |||||||||||
| Net earnings per share — basic attributable to FIS common stockholders | $ | 0.17 | $ | 0.37 | $ | 0.57 | $ | 0.63 | |||||||
| Net earnings per share — diluted attributable to FIS common stockholders | $ | 0.17 | $ | 0.37 | $ | 0.56 | $ | 0.63 |
Previous: Item 12. of Part III contains information concerning securities authorized for issuance under our equity compensation plans. · Next: Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations