Metavante Technologies, Inc. (NYSE:MV) today reported first
quarter 2009 revenue of $426.9 million, up 1 percent compared to
$424.6 million in the first quarter of 2008. Organic growth was
driven by higher processing activity that more than offset lower
termination fees and software license revenue.
Segment operating income for the first quarter of 2009 was
$123.2 million compared to $119.3 million in the first quarter of
2008. Segment operating margin for the first quarter of 2009
improved to 28.9 percent, an increase of 0.8 percentage points
compared to the first quarter of 2008.
Net income for the first quarter of 2009 increased 15 percent to
$40.3 million, or $0.34 per share, compared to net income of $35.0
million, or $0.29 per share, in the first quarter of 2008. Cash net
income for the first quarter of 2009 increased 13 percent to $46.6
million, or $0.39 per share, compared to cash net income of $41.4
million, or $0.35 per share, in the first quarter of 2008.
Cash provided by operating activities for the first quarter of
2009 was $51.4 million compared to $121.0 million for the first
quarter of 2008. Free cash flow for the first quarter of 2009 was
$19.9 million compared to $84.0 million for the first quarter of
2008. Cash provided by operating activities and free cash flow in
the first quarter of 2008 benefited from the timing of payment
transaction settlement, profit sharing contributions to Metavante�s
employee retirement plans, and other working capital items.
Commenting on the results, Frank R. Martire, chairman and chief
executive officer, said, �The results for the first quarter
continued the uninterrupted pattern since our launch as a
separately traded public company of growth in revenue and
profitability. Our ability to improve profitability on modest
organic revenue growth despite the difficult environment that our
clients are facing again demonstrated both the strength of our
business model and our ability to execute.�
Cash net income (including per share amounts) and free cash flow
are non-GAAP financial measures. These measures should not be
considered substitutes for GAAP measures. See the attachments to
this release under �Non-GAAP Financial Measures� for an explanation
of these measures and reconciliations to GAAP financial
measures.
Financial Solutions Group (FSG)
FSG�s first quarter 2009 revenue was $167.1 million, an increase
of 2 percent compared to $164.0 million in the first quarter of
2008. Segment operating income for the first quarter of 2009 was
$41.7 million compared to $38.0 million in the first quarter of
2008. The increase in segment operating income was due to volume
leverage and diligent cost discipline. Segment operating margin was
24.9 percent in the first quarter of 2009 compared to 23.2 percent
in the first quarter of 2008.
Payment Solutions Group (PSG)
PSG�s first quarter 2009 revenue was $259.7 million compared to
$260.6 million in the first quarter of 2008. Segment operating
income for the first quarter of 2009 was $81.5 million compared to
$81.3 million in the first quarter of 2008. Segment operating
margin was 31.4 percent in the first quarter of 2009 compared to
31.2 percent in the first quarter of 2008.
Income Taxes
The effective tax rate in the first quarter of 2009 was 37
percent compared to 39 percent in the first quarter of 2008. The
effective tax rate was higher in the first quarter of 2008 because
the federal research and experimentation credit was not extended
until October 2008, therefore, the full year benefit was recorded
in the fourth quarter of 2008.
Outlook
The company is affirming the guidance ranges for 2009 of 3 to 4
percent organic revenue growth and 12 to 16 percent diluted
earnings per share growth. The ranges do not reflect the impact of
the proposed transaction with Fidelity National Information
Services, Inc. (FIS) described below.
Transaction with Fidelity National Information Services,
Inc.
On April 1, 2009, FIS and Metavante announced that the boards of
directors of both companies have approved a definitive agreement
under which FIS will acquire Metavante. Under the terms of the
agreement, Metavante shareholders will receive a fixed exchange
ratio of 1.35 shares of FIS common stock for each share of
Metavante common stock they own. The transaction will be structured
as a tax-free reorganization whereby Metavante will be merged with
and into a newly formed subsidiary of FIS. The transaction is
subject to approval by FIS and Metavante shareholders, receipt of
regulatory approvals and the satisfaction of customary closing
conditions. FIS and Metavante expect to complete the transaction in
the third quarter of 2009.
Conference Call
A conference call to discuss our financial results will take
place today at 8:30 a.m. EDT. The call will be webcast and
accessible on the investor relations section of Metavante�s website
at (www.metavante.com). The accompanying slides will also be
available on Metavante�s website. A replay of the audio will be
available on the website following the call and accessible through
May 25, 2009.
About Metavante
Metavante Technologies, Inc. (NYSE:MV) is the parent company of
Metavante Corporation. Metavante Corporation delivers banking and
payments technologies to approximately 8,000 financial services
firms and businesses worldwide. Metavante products and services
drive account processing for deposit, loan and trust systems,
image-based and conventional check processing, electronic funds
transfer, consumer healthcare payments, electronic presentment and
payment, outsourcing, and payment network solutions including the
NYCE� Network, a leading ATM/PIN debit network. Metavante
(www.metavante.com) is headquartered in Milwaukee.
Cautionary Language Regarding Forward-Looking
Statements
This press release contains "forward-looking statements"
intended to qualify for the safe harbor from liability established
by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include those that express a plan,
belief, expectation, estimation, anticipation, intent, contingency,
future development or similar expression, and can generally be
identified as forward-looking because they include words such as
"believes," "anticipates," "expects," "should� or words of similar
importance. Statements that describe our objectives or goals are
also forward-looking statements. The forward-looking statements in
this press release involve significant risks and uncertainties, and
a number of factors, both foreseen and unforeseen, could cause
actual results to differ materially from our current expectations.
Factors relating to the pending merger with FIS that could cause
actual results to differ materially include the possibilities that
: the companies may be unable to obtain shareholder or regulatory
approvals required for the merger; problems may arise in
successfully integrating the businesses of the two companies; the
merger may involve unexpected costs; the combined company may be
unable to achieve cost savings from synergies; and the businesses
may suffer as a result of uncertainty surrounding the merger. Other
factors that may affect our results include, among others, our debt
level, restrictions and limitations in our credit facilities, our
competitive industry, changes in customer demand for our products
or services, disruptions and instability in the credit and
financial markets, economic recession, general changes in economic
conditions, risks of damage to our data centers or associated
infrastructure, foreign currency fluctuations, intellectual
property risks, effect of regulation on our business, network and
operational risks, loss of significant customers and customer
consolidation risks, risks associated with future acquisitions, and
other factors discussed in Metavante�s Annual Report on Form 10-K
under the heading "Risk Factors�, and other filings with the SEC.
Shareholders, potential investors and other readers are urged to
consider these factors carefully in evaluating the forward-looking
statements. Readers are cautioned not to place undue reliance upon
forward-looking statements, which speak only as of the date hereof.
We undertake no obligation to update forward-looking statements to
reflect events or circumstances occurring after the date
hereof.
Additional Information and Where to Find It
In connection with the proposed transactions, FIS and Metavante
will file relevant materials with the SEC, including a registration
statement on Form S-4 that will include a joint proxy statement of
FIS and Metavante that also constitutes a prospectus of FIS. FIS
and Metavante will mail the final joint proxy statement/prospectus
to their respective shareholders. Investors and security holders
are urged to read these documents (if and when they become
available) and any other relevant documents filed with the SEC, as
well as any amendments or supplements to those documents, because
they will contain important information about FIS, Metavante and
the proposed transactions.
Investors and security holders may obtain these documents (and
any other documents filed by FIS or Metavante with the SEC) free of
charge at the SEC�s website at www.sec.gov. In addition, the
documents filed with the SEC by FIS may be obtained free of charge
by directing such request to: Investor Relations, 601 Riverside
Drive, Jacksonville, FL 32204, or from FIS�s Investor Relations
page on its corporate website at www.fidelityinfoservices.com. The
documents filed with the SEC by Metavante may be obtained free of
charge by directing such request to: Investor Relations, 4900 West
Brown Deer Road, Milwaukee, WI 53223 or from Metavante�s Investor
Relations page on its corporate website at www.metavante.com.
Participants in the Solicitation
FIS, Metavante and their respective executive officers,
directors and certain other members of management and employees may
be deemed to be participants in the solicitation of proxies from
the shareholders of Metavante and FIS in favor of the proposed
transactions. Information regarding the persons who may, under the
rules of the SEC, be considered participants in the solicitation of
the shareholders in connection with the proposed transactions will
be set forth in the joint proxy statement/prospectus when it is
filed with the SEC. Information about the executive officers and
directors of FIS and their ownership of FIS common stock is set
forth in the proxy statement for FIS's 2009 Annual Meeting of
Shareholders, which was filed with the SEC on April 15, 2009.
Information about the executive officers and directors of Metavante
and their ownership of Metavante common stock is set forth in the
proxy statement for Metavante�s 2008 Annual Meeting of
Shareholders, which was filed with the SEC on April 11, 2008.
Metavante and NYCE are registered
trademarks of Metavante Corporation, which is the principal
subsidiary of Metavante Technologies, Inc.
Metavante Technologies, Inc. Condensed Consolidated
Statements of Income (In thousands, except per share
amounts) (unaudited) � � �
Three Months
Ended
March 31,
2009 2008 Revenue $
426,850 $ 424,564 �
Expenses: Cost of processing and
services 280,259 280,648 Selling, general, and administrative
57,138 �
58,724 � � Total expenses
337,397 �
339,372 � � Income from
operations 89,453 85,192 �
Other non-operating items:
Interest expense, net (26,059 ) (27,671 ) Other, net
(173 ) (370 )
Income before income taxes and noncontrolling interest 63,221
57,151 Income tax provision
23,537 �
22,479 � Net income before noncontrolling interest
39,684 34,672 Noncontrolling interest (1)
571 �
300 � Net income
$ 40,255 �
$
34,972 � � Cash net income
$ 46,590 �
$
41,406 � � Diluted earnings per share - GAAP
$
0.34 �
$ 0.29 � � Diluted cash earnings per
share
$ 0.39 �
$ 0.35 � � Average diluted
shares
119,778 �
119,889 �
(1)
� Metavante adopted FASB Statement No. 160 (SFAS 160) on January 1,
2009. Prior period statements have been updated to reflect the
requirements of SFAS 160.
Metavante Technologies, Inc.
Summary Revenue and Earnings Information (In
thousands) (unaudited) � � �
Three Months Ended
March 31, 2009
2008 Revenue: Financial Solutions Group
$ 167,133 $ 164,011 Payment Solutions Group
259,717 �
260,553 � Total revenue
$ 426,850 �
$ 424,564 � �
Segment operating income:
(1) Financial Solutions Group $ 41,671 $ 37,997 Payment
Solutions Group
81,549 �
81,257 � Total
segment operating income 123,220 119,254 � Corporate/other (23,855
) (26,874 ) Transaction costs (2) (2,162 ) - Acquisition intangible
amortization (7,352 ) (7,258 ) Interest expense, net (26,059 )
(27,671 ) Income tax provision
(23,537 )
(22,479 ) Net income
$
40,255 �
$ 34,972 �
(1)
� In the first quarter of 2009, the company revised the methodology
for allocating certain sales and marketing costs between the
Financial Solutions Group and the Payment Solutions Group. Prior
periods have been reclassified to conform to the current year
presentation. �
(2)
Transaction costs relate to the proposed transaction with Fidelity
National Information Services, Inc.
Metavante Technologies,
Inc. Condensed Consolidated Balance Sheet (In
thousands) (unaudited) � � � �
March 31,
December 31, 2009
2008 �
Assets Current assets: Cash and
cash equivalents $ 274,475 $ 268,781 Restricted funds 226,680
404,155 Accounts receivable, net 134,736 135,783 EFD processing
receivables 73,654 78,995 Unbilled revenues 112,954 120,351
Deferred income taxes 33,767 33,821 Other current assets
52,490 57,102 Total current assets
908,756 1,098,988 Capitalized software and conversions, net 266,334
258,300 Premises and equipment, net 131,450 136,003 Goodwill and
other intangibles, net 1,561,985 1,570,430 Other assets
91,248 93,251 Total
$
2,959,773 $ 3,156,972 �
Liabilities and
Shareholders' Equity Current liabilities: Current maturities of
long-term debt $ 17,500 $ 17,500 Accounts payable 20,648 28,279
Accrued compensation and related benefits 20,640 48,469 Accrued
expenses 169,947 160,849 Payments held for third party remittance
222,561 402,252 Deferred revenues 140,278 158,288 Other current
liabilities
10,078 9,489 Total current
liabilities 601,652 825,126 Long-term debt 1,715,005 1,719,380
Deferred income taxes 141,608 140,655 Other long-term liabilities
78,418 95,358 Total liabilities 2,536,683
2,780,519 Shareholders' equity (1)
423,090
376,453 Total
$ 2,959,773 $
3,156,972
(1)
� Metavante adopted FASB Statement No. 160 (SFAS 160) on January 1,
2009. Prior period statements have been updated to reflect the
requirements of SFAS 160.
Metavante Technologies, Inc.
Condensed Consolidated Statement of Cash Flows (In
thousands) (unaudited) � �
Three Months Ended
March 31, 2009 �
2008 Operating Activities: Net income $
40,255 $ 34,972 Adjustments to reconcile net income to net cash
from operating activities: Depreciation and amortization 36,159
37,669 Deferred income taxes 169 242 Stock-based compensation
expense 2,950 3,405 Other non-cash items 1,884 2,487
Changes in assets and liabilities
- net of acquisitions of businesses and foreign currency
adjustments:
Accounts receivable 1,150 2,798 EFD processing receivables 5,347
10,963 Unbilled revenues 7,429 (2,276 ) Accounts payable and
accrued liabilities (26,989 ) 23,348 Deferred revenues (18,029 )
7,863 Other assets and liabilities
1,079 �
(451 ) Net cash provided by operating
activities
51,404 �
121,020 � �
Investing Activities: Capital expenditures (31,458 ) (37,027
) Change in restricted funds 177,475 (42,202 ) Acquisitions - net
of cash acquired
(7,731 )
(67,578 ) Net cash provided by (used for)
investing activities
138,286 �
(146,807
) �
Financing Activities: Repayment of debt and
capital lease obligations (4,375 ) (3 ) Proceeds from stock options
and stock purchase right 531 958 Change in payments held for third
party remittance
(179,691 )
38,262 � Net cash provided by (used for) financing
activities
(183,535 ) 39,217
� Effect of exchange rate changes on cash and cash equivalents
(461 ) (570 )
Change in cash and cash equivalents 5,694 12,860 Cash and cash
equivalents - beginning of period
268,781 �
185,528 � Cash and cash equivalents - end of period
$ 274,475 �
$ 198,388 �
Metavante
Technologies, Inc. Non-GAAP Financial Measures �
Cash Net Income (Including Per Share Amounts)
Metavante's management defines
"cash net income" as net income before (1) the amortization of
intangible assets resulting from business acquisitions, net of
tax,��(2) stock-based compensation expense, net of tax, and (3)
non-cash impairment charges, net of tax. The per share amounts are
calculated by dividing cash net income by the average diluted
shares for the respective period. Metavante's management uses cash
net income (including per share amounts) to assess business
performance and believes that it is useful for evaluating
performance against peer companies within its industry, as well as
providing investors additional transparency to a financial measure
used by management in its financial and operational
decision-making.��Metavante's definition of cash net income
(including per share amounts) may differ from definitions used by
other companies.
�
The following is a reconciliation
of net income to cash net income and diluted earnings per share -
GAAP to diluted cash earnings per share:
�
Three Months Ended March 31, (in thousands
except per share amounts)
2009 �
2008 Net income $ 40,255 $ 34,972 Add:
Acquisition intangible asset amortization, net of tax 4,521 4,463
Stock-based compensation expense, net of tax
1,814
1,971 Cash net income $ 46,590
$ 41,406 � �
Diluted earnings per share - GAAP
$ 0.34 $ 0.29 Add: Acquisition intangible asset amortization, net
of tax 0.04 0.04 Stock-based compensation expense, net of tax
0.01 0.02 Diluted cash earnings per
share $ 0.39 $ 0.35 Metavante
Technologies, Inc. Non-GAAP Financial Measures
(continued) �
Free Cash Flow
Metavante's management defines
"free cash flow" as cash��provided by operating activities less
capital expenditures.��Metavante's management believes that free
cash flow provides useful information to investors regarding
Metavante's ability to generate cash from business operations that
is available for acquisitions and other investments, and debt
service.��Metavante's definition of free cash flow may differ from
definitions used by other companies.
�
The following is a reconciliation
of cash provided by operating activities to free cash flow (in
thousands):
� � �
Three Months Ended March 31, 2009
�
2008 Cash provided by operating
activities $ 51,404 $ 121,020 Less capital expenditures:
(31,458 ) (37,027
) Free cash flow $ 19,946 �
$ 83,993 �
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