10-QPeriod: Q1 FY2001

FISERV INC Quarterly Report for Q1 Ended Mar 31, 2001

Filed April 24, 2001For Securities:FISV

Summary

Fiserv Inc. (FISV) reported a solid first quarter for 2001, demonstrating revenue growth and improved net income compared to the prior year. Total revenues increased by 14.5% to $453.9 million, driven by new client acquisitions, cross-selling, price increases, and contributions from recent acquisitions. Net income rose by 17.6% to $50.8 million, with diluted earnings per share (EPS) reaching $0.40. The company's core Financial Institution Outsourcing, Systems, and Services segment showed strong performance with significant revenue and operating income growth. However, the Securities Processing and Trust Services segment experienced a decline in both revenue and operating income, primarily due to lower transaction volumes in a weak retail financial market and a notable litigation reserve.

Key Highlights

  • 1Revenues grew 14.5% year-over-year to $453.9 million, indicating strong top-line performance.
  • 2Net income increased 17.6% to $50.8 million, leading to diluted EPS of $0.40, up from $0.34 in the prior year.
  • 3The Financial Institution Outsourcing, Systems, and Services segment was a key growth driver, with revenues up and operating income more than doubling.
  • 4Acquisitions played a significant role in revenue growth, accounting for approximately 60% of the increase in the first quarter of 2001.
  • 5The Securities Processing and Trust Services segment faced headwinds, with revenues down 12% and operating income sharply declining due to market weakness and a $7.8 million litigation reserve.
  • 6The company adopted SFAS 133 for derivative instruments, resulting in a minor reduction to accumulated other comprehensive income.
  • 7Fiserv completed four acquisitions in the first quarter of 2001 for approximately $90.9 million, demonstrating continued M&A activity.

Frequently Asked Questions

Revenue growth was primarily driven by sales to new clients, cross-selling to existing clients, price increases, and significant contributions from four recent acquisitions that accounted for approximately 60% of the total revenue growth.

The decline in this segment was attributed to significantly lower transaction volumes due to overall weakness in the U.S. retail financial markets. Additionally, a litigation reserve of $7.8 million related to a prior acquisition negatively impacted operating income.

Profitability improved significantly. Net income increased by 17.6% to $50.8 million, and diluted EPS grew to $0.40 from $0.34 in the prior year. This improvement was driven by higher revenues and operational efficiencies, despite increased costs.

The effective income tax rate for Q1 2001 was 40%, and management expects it to remain at approximately 40% for the remainder of the current year.