10-QPeriod: Q3 FY2001

FISERV INC Quarterly Report for Q3 Ended Sep 30, 2001

Filed October 23, 2001For Securities:FISV

Summary

Fiserv Inc. reported solid financial performance for the nine months ended September 30, 2001, with a notable increase in both revenues and net income compared to the same period in the prior year. Total revenues grew by 14.3%, driven primarily by strong performance in the Financial Institution Outsourcing, Systems, and Services segment and contributions from recent acquisitions. Despite a decline in the Securities Processing and Trust Services segment due to market weakness, overall revenue growth remained robust. The company also demonstrated effective cost management, with cost of revenues increasing at a slightly lower rate than revenues, leading to improved operating income. This indicates the company's ability to scale its operations efficiently and integrate new businesses successfully. Investors should note the strategic importance of acquisitions and the ongoing integration efforts, which are key drivers of the company's growth trajectory. The company's ability to generate strong operating cash flow further supports its growth initiatives and financial stability.

Key Highlights

  • 1Total revenues increased by 14.3% year-over-year for the nine months ended September 30, 2001, reaching $1,393.7 million.
  • 2Net income grew by 16.9% for the nine months ended September 30, 2001, to $155.4 million, with diluted EPS rising to $0.81.
  • 3The Financial Institution Outsourcing, Systems, and Services segment was the primary growth engine, with revenues up 23.6% and operating income up 45.0% for the nine months.
  • 4Acquisitions contributed approximately 50% of the total revenue growth in the first nine months of 2001, highlighting the company's active M&A strategy.
  • 5Operating income for the nine months increased by 11.7% to $264.2 million, demonstrating operational efficiency despite segment mix changes.
  • 6Net cash provided by operating activities increased by 8.3% to $287.9 million for the nine months ended September 30, 2001, underscoring strong cash generation.
  • 7The company adopted SFAS No. 133 for derivative instruments, resulting in a $2.7 million after-tax reduction to accumulated other comprehensive income.

Frequently Asked Questions

Revenue growth was primarily driven by sales to new clients, cross-selling to existing clients, price increases, and revenues from acquired businesses. The Financial Institution Outsourcing, Systems, and Services segment showed particularly strong growth, contributing significantly to the overall increase.

This segment experienced a revenue decline of $54.2 million for the first nine months of 2001 compared to the prior year. This was mainly due to significantly lower transaction volumes resulting from overall weakness in the United States retail financial markets. Operating income also decreased substantially in this segment.

Fiserv Inc. actively pursued acquisitions, completing seven during the first nine months of 2001 for approximately $141.2 million in cash, plus issuing common stock for one acquisition. These acquisitions contributed significantly, accounting for about 50% of the total revenue growth during the period.

Yes, Fiserv adopted SFAS No. 133 'Accounting for Derivative Instruments and Hedging Activities' on January 1, 2001, which requires derivatives to be reported at fair value. Additionally, the company will adopt SFAS No. 142 'Goodwill and Other Intangible Assets' in 2002, which will change how goodwill is treated by eliminating amortization and requiring annual impairment testing.