FIS posts solid second quarter

Adjusted revenue (which excludes a $5 million negative impact to deferred revenue from purchase accounting) increased 2.4% to $1.29 billion in U.S. dollars in the second quarter of 2010 compared to pro forma revenue of $1.26 billion in the second quarter of 2009, and increased 1.7% in constant currency. Adjusted EBITDA was $385.8 million, 7.2% higher as compared to pro forma EBITDA of $359.8 million in the prior year quarter. The adjusted EBITDA margin expanded 140 basis points to 29.9% driven primarily by synergy cost savings. Adjusted net earnings from continuing operations totaled $176.5 million, or $0.46 per diluted share. Adjusted free cash flow totaled $108 million in the second quarter. On a GAAP basis, second quarter consolidated revenue totaled $1.286 billion. During the quarter, FIS recorded after-tax merger and integration costs and recapitalization costs totaling $41.2 million, or $0.11 per share. The deferred revenue adjustment impacted after-tax earnings by $3.3 million, or $0.01 per share. These combined charges, along with purchase price amortization of intangible assets acquired through various acquisitions, resulted in GAAP net earnings from continuing operations attributable to common stockholders of $90.2 million, or $0.23 per diluted share.

"We are pleased with the solid second quarter operating results, and we remain focused on the goals that we established early in the year," stated Frank R. Martire, president and chief executive officer of FIS. "Importantly, we are winning in the marketplace and continue to further strengthen our industry leading position."

"The Metavante integration is proceeding according to plan, and we are well on our way to achieving the $260 million in targeted synergy cost savings," added William P. Foley, II, executive chairman of FIS. "In addition, we have successfully completed the financing for the previously announced recapitalization plan and we are on track to complete the share repurchase in early August."

The financing condition to FIS' previously announced tender offer for shares of its common stock was satisfied by the completion of the financing announced by FIS on July 16, 2010.

Acquisitions and Discontinued Operations

On October 1, 2009, FIS completed the acquisition of Metavante Technologies, Inc. The transaction was treated as a purchase and the results of Metavante are included in the consolidated results of FIS beginning October 1, 2009. For comparative purposes, in accordance with management's desire to improve the understanding of the company's operating performance, the supplemental information provided below assumes the merger was completed on January 1, 2009, and combines Metavante's results with FIS's historical results on a pro forma basis.

In addition, FIS completed the sale of its ClearPar automated syndicated loan trade settlement business on January 1, 2010. The results of ClearPar are reported as discontinued operations for all periods presented.

Supplemental Information

The following supplemental information is presented on an adjusted pro forma basis, which management believes provides meaningful comparisons between the periods presented. Reconciliations of non-GAAP measures to related GAAP measures are provided in the attached schedules and in the Investor Relations section of the FIS Web site, www.fisglobal.com.

Consolidated second quarter revenue increased 2.4% to $1.291 billion in U.S. dollars, compared with $1.261 billion in the second quarter of 2009. Excluding a $9.2 million favorable foreign currency impact, consolidated revenue increased 1.7%.

-- Financial Solutions revenue increased 3.0% to $458.3 million compared to $445.0 million in the 2009 quarter driven by higher professional services revenue and software license fees.

-- Payment Solutions revenue of $630.6 million was comparable to $631.1 million in the 2009 quarter as growth in electronic payment solutions was offset by lower item processing and retail check activity.

-- International Solutions revenue increased 8.0% to $200.7 million in U.S. dollars, and 3.1% in constant currency compared to $185.8 million in the 2009 quarter. The increase was driven primarily by increased card processing volumes in Brazil. Software and professional services revenue was comparable to prior year.

Adjusted EBITDA increased 7.2% to $385.8 million in the second quarter of 2010 compared to $359.8 million in the 2009 quarter. The adjusted EBITDA margin improved 140 basis points to 29.9% compared to 28.5% in the prior-year quarter, driven primarily by the realization of synergy cost savings and ongoing expense management.

-- Financial Solutions EBITDA increased 5.0% to $200.6 million, while the margin improved 90 basis points to 43.8% compared to 42.9% in the prior year quarter.

-- Payment Solutions EBITDA increased 4.0% to $232.3 million, and the margin increased 140 basis points to 36.8% compared to 35.4% in the prior year.

-- International EBITDA increased 1.1% to $36.4 million. The currency impact was not material to EBITDA. The reported EBITDA margin was 18.1%, and 19.0% in constant currency, compared to 19.4% in the prior year quarter.

Balance Sheet

FIS had $502 million in cash and cash equivalents and total debt outstanding of approximately $3.0 billion at June 30, 2010.

Capital expenditures totaled $76.0 million in the quarter, compared to $78.9 million in pro forma capital expenditures in the prior year.