Fidelity National Information Services, Inc. (FIS) Q1 2011 Earnings Report, Transcript and Summary

Ladies and gentlemen, we'd like to thank you for standing by, and welcome to the FIS First Quarter Earnings Teleconference Call. [Operator Instructions] As a reminder, today's call will be recorded. I would now like to turn the conference over to your hostess and facilitator, as well as Senior Vice President of Investor Relations, Ms. Mary Waggoner. Please go ahead, ma'am.

Thank you, Steven, and welcome to everyone joining us this morning. Today's news release and supplemental slide presentation have been posted to our website. A webcast replay of the audio portion of this call will also be available on the website shortly after the call. With us today morning are Frank Martire, President and Chief Executive Officer; Gary Norcross, Chief Operating Officer; and Mike Hayford, Chief Financial Officer. Today's comments will focus on results from continuing operations and will include references to non-GAAP financial measures in order to provide more meaningful comparisons between the periods presented. Reconciliations between GAAP and non-GAAP results are provided in the attachments to the news release and the supplemental slide presentation. Please refer to the Safe Harbor language on Page 2 of the presentation. Today's discussion will contain forward-looking statements. These statements are subject to risks and uncertainties as described in the news release and other filings with the SEC. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. I will now turn the call over to Frank Martire.

Thanks, Mary. Good morning, everyone, and thank you for joining us on today's call. I'll begin today's business review with a brief summary of financial results and business highlights for the first quarter of 2011. Gary will follow with the operations report, and then Mike will provide additional insight into our financial results and outlook for 2011. Revenue increased at $1.4 billion in the quarter, which represents organic growth of 6.2%, driven by excellent results within our Financial Solutions and International segments. Growth within capital also contributed to the strong top line performance. Earnings per share came in at $0.45 for the quarter and free cash flow totaled $189 million. We are pleased with the progress we are making in our strategy to drive higher organic revenue growth through cross-selling existing clients and expanding into higher opportunity markets such as large FIs and international markets, which we believe will drive sustainable earnings growth and greater value for our shareholders over the long run. In April, we hosted one of several client conferences scheduled for 2011. The feedback from this meeting was very positive, and we feel good about the strength of our client relationships. The conference was well attended and we continue to see increased interest in our solutions to our client base that further supports our belief that the recovery is continuing. We are looking forward to hosting our first international client conference in Dubai next month. Global expansion is one of our key growth initiatives and we are making good progress in improving our visibility in high-growth international markets that we are currently serving. These client conference help us to continue to be the best -- to build the best relationships in the industry and expand our cross sell success. Although we are only a few months into…

. Thank you, Frank, and thanks to everyone on the call. I will begin today's review with a few comments on the business environment, followed by the operating segment highlights. The resurgence in core upgrade decisions and strong new signings across all of our segments in 2010 has created a robust implementation pipeline that extends throughout the remainder of this year. In addition to the implementation pipeline, we have seen significant demand for professional services to support our clients' business and growth strategies. In order to support this demand, we have added resources and redirected a number of our employees to better serve our clients' needs. This strong demand increases our confidence in achieving our revenue target for the year. Before I get into specific sales and project accomplishments for the quarter, I'd like to describe the global sales climate for FIS. In general, the sales pipeline continues to expand on a consecutive quarter basis. The time to close new sales is trending down, which points to a continuing economic recovery. While the ongoing regulatory uncertainty has caused some delay in the closing of deals for Payment Solutions, the demand for outsourcing services continues to grow, which placed our strengths and leadership position in application outsourcing and back office and professional services. These trends should generate higher reoccurring revenue for us, but obviously the revenue comes on at lower margins than licensed sales. Next I'll highlight some of our recent sales wins. In March, we announced that the Bank of Oklahoma, with more than $24 billion in assets, has completed the first phase of implementing TouchPoint Teller across this 180-branch network. Based on this implementation, TouchPoint is running at approximately 10% of the bank branches in the United States. Given this scale, ongoing demand for TouchPoint continues to be strong…

Thanks, Gary. I'll begin on Slide 4 of the supplemental materials. Adjusted revenue growth was 11.2% for the quarter. Organic revenue growth, which is normalized for acquisitions and currency, was 6.2%, driven by strong results in Financial Solutions and our International business. First quarter EBITDA totaled $368 million, compared to $365 million in the first quarter of 2010. EBITDA margin was 26.6% compared to 29.4% in the prior year. If you turn to Slide 5, we have provided a bridge that illustrates the impact of acquisitions and the one-time items on our margin in the first quarter. Starting on the left-hand side with reported margin of 26.6% in the first quarter of 2010, we adjust for the margin impact of the Capco acquisition, which we had shared with you at Investor Day last December. Next is the $13 million Sunrise incident that Frank described, and then $7 million in integration and severance costs that are included in the first quarter results. And as you recall, those integration and severance costs were not included in the margins for 2010. If you look at those, this brings you to a normalized margin that is comparable to the prior year quarter, even slightly larger. Next I'll provide additional detail on the operating segments, starting on Slide 6, with FSG. Financial Solutions revenue increased 13.6% to $504 million, and was 7.1% organically. The increase was driven by a continued strong demand for professional services, higher outsourcing revenue, including new client implementations and the growth within Capco's current American operations, which are included in the FSG segment. Financial Solutions EBITDA increased 4.6% to $195 million. The EBITDA margin was 38.7% compared to 42% in the prior year quarter, reflecting the higher mix in professional services revenue. On Slide 7, Payment Solutions revenue totaled $615 million…

[Operator Instructions] Our first question will come from the line of Dave Koning of Baird. David Koning - Robert W. Baird & Co. Incorporated: And I guess first of all of, just with the Sunrise incident, it sounds like you mentioned that, that was not included in original guidance, so nice job considering that. But is there any ongoing restriction regarding that? Or is the $13 million that you took in charges or expenses this quarter kind of fully factoring any ongoing legal costs or anything like that?

Yes. Dave, this is Mike. We do believe that $13 million is the amount of the incident, so we don't expect any additional costs related to that. David Koning - Robert W. Baird & Co. Incorporated: Okay. And then on the gross side, I think it's right to say that organic growth would've been 7% to 8%, excluding the accounting adjustment. Is that fair to say?

If you look at gross versus net, that would be correct. David Koning - Robert W. Baird & Co. Incorporated: Okay. And I guess there'd be no reason that if you did make that change, growth would've been a little better. And I guess is that sort of the ongoing more underlying growth that seems to be generated maybe over the next several quarters? Was there something in this quarter that seemed unsustainably high or is this quarter a pretty good representation?

Again, this is Mike. I think as you know, our long-term goal is 6% to 9% and we've stated that coming out of '08 and '09 as we've kind of seen the market recover that we certainly believe in the long term we can get there. For 2011, we said 4% to 6%. So I think you'd say that we're very pleased with the revenue growth. Gary and Frank both spoke to the strength of the market. You can see a little bit we're getting more professional services, which is how we would expect growth to come out of a slowdown. People initiate new projects and hire our resources to help them drive those projects. So a, we're very pleased with the growth and I think b, it does confirm that our long-term guidance is something we're very comfortable we can get to. David Koning - Robert W. Baird & Co. Incorporated: Great. And then just one final one is just interest expense seemed a little lower than what we had thought. Was there anything non-recurring in that line or is that a pretty good kind of ongoing rate?

No, I think we've stated full year 270 to 280, I think that's kind of what we expected it to be. There's nothing unusual in that number.

Our next question will come from the line of Brett Huff of Stephens.

A couple of things. On ELO, have you guys shared just kind of the size or just any kind of color commentary that you can give us on when that's going to come on in earnest and what kind of difference that can make to the international growth rate in your margin?

Yes, Brett, this is Gary. We haven't really provided guidance on that. I think you've read a lot of information around what's going on in ELO in Brazil. It's clearly targeted at the Tier 3, Tier 4 consumers in that country. Banco do Brasil is also bringing out ELO. Right now, we have confirmed that we'll be processing for Bradesco. They wanted to do a pilot launch first and then as I shared in my comments, in June they'll be bringing on the prepaid offering. But during the summer, they'll be ramping this up very quickly. We think it'll add to our growth. We're continuing to be very bullish on Brazil. Our growth in cards per month, each month is exceeding our expectations. So we think that ELO will continue to add to that.

And then on the Sunrise issue, I know you talked about the expense hit. Was there any impact that, that had on revenue?

No, that would have no impact on revenue.

Okay. And then last question for me is on the payment segment, right now we all know that the check business is really creating a drag. Any additional thoughts on what we can do there? I believe the last thing you guys were talking about in the way you're operating it now, is primarily just to really try and keep the costs down, drive some cash flow and go from there. Is our strategy on that any different right now?

I think, Brett, when you look at it, there's several things going on here, right? So we've got a conversion from paper to electronic and we're cycling through that. We also have declining check volumes, so we really have 2 significant headwinds. We really rationalized through a lot of the conversion from paper to electronic, which is positive for us. During that time, we've consolidated a lot of our centers, we're leveraging a lot of our services capabilities to get scale across it and we're still competing in the market. We continue to sign a number of clients because as scale declines, keep in mind institutions are no longer to be able to cost effectively deliver this. So really our strategy hasn't changed. We're continuing to ramp down costs and continuing to focus on sales to make up for volume reductions.

Brett, I'll just add to that. I mean, I would expect a change in that business, to both item processing and the check guarantee, check verification business. As Gary said, we're going to continue to operate and we continue to focus on efficiency. I would say that the team's done a very good job of maintaining our margins and our profits in those businesses, so some of the margin drag is from some of the other businesses. But they've done a pretty good job in the declining market. So it's impacting revenue more than it's impacting our earnings.

Great, that’s what I needed. I appreciate your time this morning.

Our next question will come from the line of John T. Williams of Goldman Sachs.

Really quickly, your biggest competitor has said a good amount about bill payment on their earnings call. I was just curious, you guys don't really talk about that, but it's a pretty big business for you. What are you seeing now? Are you seeing more intense competition in bill payments and are you expecting an inflection point as you sort of head back towards a higher growth rate? Or they're not really a turn quite yet?

Well, I mean, in general, we continue to see competition across the enterprise. So it's a very competitive market. During this recovery, everybody is executing the best they can with their sales forces. Bill payment specifically, we've won a number of significant transactions so far this year, and so we're very pleased with -- very pleased with our signings. We continue to see our volumes come up and our adoption come up, so we feel very good about our bill payment business overall. As you said, it is a very competitive market and so we have to compete in the market and win those new transactions or win that new business.

But yes, we have other products that are just as competitive, as Gary just stated. We've been pleased with our performance in signing new clients recently and in the recent past.

Well, Frank, I guess that's actually a good segue to my next question, which was back in the old Metavante days, you used to talk a lot about the emerging formats like the healthcare payments. Obviously the NYCE Network kind of fits in there nicely as well. But what other emerging catalysts do you see in the Payments business that could start to show up and be relevant in the next, I don't know, call it 6 to 12 months?

Well, we can't call it relevant, but we obviously, with the healthcare payments and the initiatives that we took there that we talked about in the past but mobile, do you hear something [ph] about mobile, right? Large transaction volumes with mobile. How much revenue it's going to generate time will tell, right? In the adoption that will take place. But clearly, there's a big initiative on mobile payments and you see that by a lot of the large, the top tier banks, right? And then the money and the investment they're putting into it.

Yes, and they just build on that, John. I mean, we also continue to see strong growth and demand for our prepaid. There's a lot of things that we're seeing in the market that the regulatory changes could actually drive more prepaid volume, so we're excited about that. We're seeing it in our sales activities around that product line. We're also seeing, as I mentioned, GIFTS, we're starting to see far more demand for ACH and other types of payment processing across the enterprise. So there's a lot of areas. Like Frank mentioned, he mentioned mobile, we're seeing a tremendous amount of demand in that. We're waiting for a tremendous amount of volume to flow through that, but we've got to get our clients first. So that's all that's very positive for us.

And the good news is we're well positioned with those different product initiatives.

. And one last question, I guess, just quickly on your customer conversations that you have on the payment side. What are the 2 or 3 things that your customers are focused on? Obviously, it's a different discussion with the small and midsize versus say the regional banks. But are you leading with the NYCE Network product and then selling everything else in? Or is it other things that you're finding the clients are generally more interested in, like bill payments and other things?

Well, it's a great question. I'll tell you depending on the customer, we try to leave with the breath of our solution with our services capabilities wrapped around that and so we're seeing a lot of demand for those kind of things. But clearly, NYCE is at the forefront of our discussions, especially with the Durbin Amendment. People are looking for alternative networks, and so we're having a tremendous amount of conversations around NYCE. We've also had a tremendous number of signings on the NYCE offering as well. So frankly, it didn't really break across institution size. In general, people are looking at more cost effective and creative ways to deliver their payment processing.

Our next question will come from the line of David Togut of Evercore Partners.

Gary, you highlighted an expanding pipeline in Financial Solutions and also reduction in implementation times. Could you differentiate among the different segments within Financial Solutions, starting with credit unions and community banks up to megas to give us a sense of what's happening from a demand and a pricing standpoint?

Yes. Let me clarify one comment. We're seeing an expanding pipeline on sequential quarters and we're actually seeing the time to close that pipeline descend. Our implementation pipeline is as full as I've seen it in recent years, which is a great situation. It just shows the success of our sales channel and our solutions. To get to your specific question, I think you went in this order, if we start with community banks and credit unions, we're still seeing strong demand for our core processing and payment solutions. There is clear evidence that those type of size of institutions are looking for a single source provider to help drive their cost to the lowest possible amount they can by leveraging their overall relationship. We're having very strong success in that market and we continue to see not only good sales closings, but good financial growth in those markets as well. When we go up into the mid-tier banking marketplace, I think we shared last year the strong demand in the mid-tier for our core banking systems, we continue to see demand there around core. But what we're also seeing there is more and more people are looking for a broader solution as well. So we're starting to see those guys embrace payments, bill payment, et cetera, as well. When we get up into the very large financial institutions, we end up doing more point-related sales activities. So depending on what projects are being driven in those large institutions, the nice thing about FIS is we have the capabilities to square off against those projects. Capco has been very helpful here in the early part of our relationship where they're bringing in these transformational discussions and then we're able to provide subject matter expertise around the particular need. So that's really how the market's breaking down for us is the U.S. When we get over into our international markets, we can't discount that. We're seeing tremendous opportunities in Asia around both payments and core processing. Still more demand around core processing and services in Europe than we see payments related. And then we talked about South America and our payments capabilities and the growth in those payments.

And can you comment, Gary, on pricing trends broadly in the Financial Solutions business?

Well, pricing -- we always have to compete on price. So at the end of the day, we have to provide an excellent product, an excellent service and we have to be price competitive. Depending on what type of solution that we're competing with or for, if it's a single-point solution like an individual payment product as an example, you tend to see more pricing compression because you're typically competing more against with a monoline player, where this is their only product or service they have to open the market. When we're really dealing with breath of solution, we're not seeing as much compression but still price, as I said, you always have to be competitive to win.

Our next question will come from the line of Mr. Peter Heckmann of Avondale Partners.

. Yes, I wanted to follow-up on a couple of questions. Can you talk a little bit more in revisiting this Sunrise issue on the prepaid platforms? What are the different prepaid platforms that you have in the U.S. and who might be some of the representative clients for them? Is the Sunrise platform the platform that American Express is using?

Yes. We have 2 primary prepaid platforms. We label Sunrise [ph] obviously the location, but we sometimes call them prepaid north and prepaid south. They're both very large. They serve the markets somewhat different, one is more of a high-efficiency focused kind of shared platform. The other one is a little bit more customized. We do provide a service to American Express. They were not impacted directly by the incident and we continue to have -- we went very aggressively with our communication out to the clients who were on the affected Sunrise platform and the interaction that Gary had and Frank D'Angelo, who heads up Payments, talking to clients. They were very appreciative that we communicated. And again, the impact is limited to one client, a very small number of accounts. Financial impact was limited to FIS. So I think we were very proactive in addressing this issue.

. Okay. So the Sunrise is more of the turnkey platform?

Sunrise is actually more of the customizable platform, so some of the different clients have their own custom platform and are isolated.

Yes. We actually run multiple instances down in Sunrise.

Okay, okay. And so to the extent that banks are looking at adopting a general-purpose reloadable prepaid card, they would probably look at the most -- well, I guess they could look at either one, right?

Correct. We evaluate through the sales cycle, Peter, what's the appropriate solution. So as Mike mentioned, if you're looking for a highly customized solution, then we'll typically go in with one solution set. If you're looking for more low-volume card issues, issuance in a more packaged capability, then we'll go with a different one.

. Okay, okay. And then just one last question here. I'm starting to see a little bit more instances and maybe it's perhaps just the media coverage, but some of these largest software integrators, large offshore providers starting to win some domestic core upgrades, and we've seen some of those from Oracle and Accenture, Infosys and Tata. Can you talk about how you view those competitors, as well as how the balance of most of your customers view those competitors?

Well, I mean clearly, Peter. I mean, clearly, we view them as competitors and we do see them from time to time in the market. We had to be real clear on some of the winnings. I can think of only 2 of the top of my head that are dealing around core. One is not -- my understanding it's not going very well. One is related to a more broader global instances where an international financial institution acquired a domestic financial institution and they're rolling their international solutions that they've built through one of those providers and into the States. So do we see them as competition? Yes. I would tell you we see them probably more, it's safe to say, in our international markets today than we do in our domestic markets. But we're very, very careful. We realize they're formidable competitors and we have to make sure that -- that's why it's so important that we build out our services practice and we continue to build out our services practice. We now have more than 18,000 FIS badge resources to help us compete with those kind of providers in and around our intellectual property. So are they competitors? Yes. But we continue to be cautiously optimistic for the states. International markets, we continue to run into them much more. And obviously, as you move up into the larger financial institutions, they're going to be more of a competitive presence than in other areas.

Our next question will come from the line of Wayne Johnson of Raymond James. Wayne Johnson - Raymond James & Associates, Inc.: Just a quick follow-up here on the Durbin Amendment. So how is FIS proceeding? Are you assuming that the amendment is going to be implemented as it's written by the Fed to date by July 21? Like how do you approach that, given the delay and the finality of the specifics that Bernanke was supposed to come out with last month? So how do you approach that limbo status, if you will?

Well, obviously, Wayne, we're waiting for some clarity on the amendment first. But at this point in time, we can only assume that the way it was drafted is the way it's going to be implemented. But we continue to work with our clients on this. We continue to -- as you're probably very aware, there was a tremendous amount of feedback on the amendment given to the Fed and they've had to postpone their final decision as they review all of that. But we're assuming that the general construct of how the amendment is drafted today it will be implemented. And we are working with our clients around that front. I mean, clearly, one of the benefits we would see to Durbin is there are a lot of financial institutions greater than $10 billion that have a single network presence. Obviously, we see benefit that with our NYCE network. But we're continuing to monitor and watch for clarity like others in that industry. Wayne Johnson - Raymond James & Associates, Inc.: Okay, terrific. I appreciate that color. And just one quick follow-up on a different topic. The check volumes which continue to retreat and that's not a surprise, but what should we be thinking about in terms of rate of decline? Should we be thinking like a volume decline of 8%, 9%? How should we be thinking about that going forward?

Yes, I think that's pretty fair. I mean, given our scale in that business, we pretty much decline at about the same rate, maybe a little slower than what the national average is. Because keep in mind we are bringing on new sales, so that offsets some of that decline. But depending on the region of the country, we tend to look and model about that rate of decline.

Our next question will come from the line of Ashwin Shirvaikar of Citigroup.

Good quarter, guys, especially adjusted for one timers. Since this is a relatively recent change from a reporting perspective, I just wanted to first confirm, are there any other one-time factors that are included in your EPS guidance?

Yes, again, Ashwin, starting this year, we're going to project earnings only include the amortization of intangibles related to acquisitions, so everything else is embedded in there. And we'll call those out, but they are in the numbers, first quarter and they'll be in the numbers throughout the year.

Okay. And with regards to sort of a revenue mix factor that we're seeing more and more, obviously international growth, professional services growth. Within professional services, what kind of projects are being executed? What are your clients asking you to do and does it lead down at all to product sales?

Yes. I mean, that's a great question, Ashwin. We're really seeing across-the-board type of professional services engagements. So we're obviously seeing a lot of demand for enhancement and customization services around not only our products, but third-party offerings where we can bring development and application management expertise. We're seeing strong demand in our project management resources. On the Capco side, our consulting engagements, Frank mentioned the growth in Europe, we're seeing a lot of demand around transformational services, especially on the capital markets side and then that's also coming over into retail banking. In all instances, professional services is either augmenting a product we already serve or in many instances, it does allow us to bring in other solutions into that engagement. So we see it as a very good relationship and a very important piece of our business going forward.

Okay. And the second part of that same question, in international, down the road, does it have an impact on your tax rate as an international growth factor?

Yes, it will. I mean, you can see that our rate is down a little bit this quarter. We guided 35% to 36%, we're at the low end of that range. That's where we ended up last year and the tax team has done a nice job of some tax planning. But as we get a higher percentage and we brought on a fair amount of revenue internationally at the Capco transaction, as well as you see the growth in Brazil, that does help the rate go down.

Okay. But you're still comfortable with the same rate though, low end?

Around 35% to 36% spread.

Our next question will come from the line of Kartik Mehta of Northcoast Research.

. Gary, I think in your prepared remarks, you talked about expecting increased consolidation in the industry in 2011. And I'm just wondering as you model or provide guidance, how much of revenue attrition you've built in for a consolidation?

Yes, it's a good question. We continue to feel that there's going to be somewhere between 3% to 5% of the industry attrit through any given year. What we're seeing is, while we're still seeing some failed institutions, we're seeing a higher appetite for acquisitions as well. Frankly, given the diversification of our revenue, we've kind of been the net benefactor of a lot of these acquisitions activities because we have volume as it typically is larger financial institutions that are doing the acquiring. And we tend to have broad relationships in those areas, and so the volume's actually coming on. But we've -- all of the -- any acquisition impact, any failure impact's fully within our guidance.

I think what we have historically said is about 150 to 250 basis points is the total impact on consolidation of the industry. 2010 as we talked about we had a minimal impact, so we were in the low end of that based on just what Gary said, that as institutions have failed, they've been taken over mid-tier institutions and our market share in mid-tier is very strong. We've picked up accounts. We expect that to be similar in '11, that the type of consolidation we've seen at the end of '10 and into early '11 we don't see a big impact. I think we're a little more cautious about going forward because we're seeing some larger institutions to traditional M&A starting here at the end of '10 and into early '11, so I think we'll have to watch that going into '12. For 2011, a minimal impact on consolidation.

And then on the FSG side, you put up a really strong organic growth number. And I'm wondering is this just pent-up demand that's catching up or it was just a sales cycle and a lot of sales volume this quarter? And just trying to figure out why this quarter was so strong, because you said that for the remainder of the year, I don't know if you anticipated it to be this strong going throughout the full year.

Well, you have -- I think 3 things. One is, as Gary talked about in the past, we've had very solid sales success all the way back to fourth quarter of '09. So that sales success translates into revenue on a lag basis, anywhere from 6 to 9 months, maybe even 12 months in FSG, when you convert them to larger core transactions. So that phenomenon is coming on board and as Gary said, our backlog of conversions is still pretty solid going up through the year, so we expect that to continue. And then we've seen projects picking up, so we've seen in these [ph] projects conversion activity, we've seen work with the FDIC. We've seen work with just institutions who are now starting to spend money on projects as much as even software, so more customization. And then the third thing is with the addition of Capco. Capco is split between international and North America, and so Capco year-over-year has had tremendous growth and that is also included in FSG growth.

And then just one last question, you talked a little bit about Sunrise. I'm wondering, has there been a loss of business or have any customers come back because of what has happened that they need to rebid the business they're doing with you or planning to do with you?

No, not this time. I think all of our clients were very pleased with how responsive we were. Everybody is always concerned. They felt like we'd been very proactive on this front and have been very transparent and worked through those issues in a very positive way.

Again, the key here is our customers have not sustained an impact or loss. We're very, very narrowly focused on the cards that were compromised. Again, we were just very proactive in notifying everybody that we had an incident and there might have been some exposure. But to Gary's point, the clients have been very appreciative of the fact that we've reached out to them in a proactive manner.

We have had heavy communications with our clients since day one and they've been very confident in the approach we've taken and the process we've gone through and the communications we've had with them.

Our next question will come from the line of Bryan Keane of Credit Suisse. Ashish Sabadra - Crédit Suisse AG: This is Ashish Sabadra on behalf of Brian Keane. I had a couple of quick questions and these are mostly follow-ups to the answers that you might have given. Specifically around the good growth in the FSG segment, I just want to understand what are the drivers for the Professional Services, like why are the banks spending money on professional services? Is it M&A or regulatory, or any color on that? And a follow-up question to that would be, are these share gains or it's just an increase in demand?

Yes, well, the professional services activities are around a number of things. So especially in our large and mid-tier financial institution in North America, we're seeing a lot of demand around not only installing our products, but integrating those into other solutions that's within the financial institution. We're seeing strong demand around M&A. Mike counted we had a number of large clients do some fairly significant M&A towards the end of last year and we think that trend will continue. We're also seeing project work in and around enhancements and management around non-FIS solutions. So really, it's around all those components. But most of our professional services growth is occurring in that mid to large financial institution space.

I would say versus share growth versus just increased relationship, Frank spoke to the strategy of having strong relationships and then being able to cross sell products. Services is a big piece of that, so we're very focused on having very deep relationships and are continuing to provide more product solutions and services to the existing clients. So that's been a very big piece of it. As they've started to be more confident about their business and about the recovery, they've started to invest in more projects. So I think we saw a slowdown starting the fourth quarter of '08 that lasted literally for 12 months. And I think we're continuing to see people become more confident and maybe spend on some products that they've held off on the last couple of years.

Yes. We've clearly seen how the banks are feeling much more comfortable and confident in the future, in the short term and in the long term. The ones who have done well and survived and recovered well and are confident of the long-term plans and their long-term projections for their institutions. Ashish Sabadra - Crédit Suisse AG: Thanks for the color. Just a follow up to the question, so have you seen an increase in IT budgets? Or is it just more spending on third-party services or a combination of both?

Well, I think to Mike's points, I mean, we're seeing an increase in project funding in our large institution in mid-tier marketplace and so that IT dollars, we're being the benefactor of those product activities in those banks.

Yes, I think you have to be a little careful. Overall, I see budgeting, I think you can, to some degree, split the market. I think there's some entities who came through the environment the last couple of years very strong and they see opportunities to grow market share and they are increasing their spend, increasing their budgets. You see other entities with the challenges they've had on the balance sheet, coupled with some of the payment regulation, probably more challenged to cut costs and actually both of those help us. The entities that need to do some transformation or maybe restructure their internal costs tend to look a little bit more to outsourcing, tend to look at someone who's got scale and leverage, so we've seen actually benefits on both sides of that side. Ashish Sabadra - Crédit Suisse AG: A quick question on the FX considering international has been one of the fastest-growing segment and the U.S. dollar has been weakening. Can you just provide some color on the impact of FX deal wins on the model?

Yes. For first quarter, it's approximately $10 million was the FX in the quarter. We pulled it out when we do organic growth calculation. I think for the year, again we're probably going to have a little higher FX impact. You can assume that $10 million going forward [indiscernible] international growth continuing to grow is probably going to have -- in the couple of markets that we're seeing the growth in are having a positive effect on currency based on the dollar weakening. So both Latin America and Europe, that's occurring side. I think the $10 million is probably a good go forward, it might bump up a little bit from that each quarter.

Due to time constraints, I'd like to turn the conference back over to Ms. Waggoner and the panelists.

Thank you for your time this morning. We look forward to speaking with you again soon.

Ladies and gentlemen, that does conclude our conference call for today. On behalf of today's panel, I'd like to take you for your participation and thank you for using AT&T. Have a wonderful day. You may now disconnect.