10-QPeriod: Q1 FY2002

FISERV INC Quarterly Report for Q1 Ended Mar 31, 2002

Filed April 23, 2002For Securities:FISV

Summary

Fiserv Inc. reported strong financial performance for the first quarter ended March 31, 2002, demonstrating significant revenue and net income growth compared to the prior year. Total revenues increased by 19.8% to $631.9 million, driven primarily by a 21.1% surge in Processing and services revenues, particularly within its core Financial institution outsourcing, systems and services segment. Net income grew substantially by 28.3% to $65.1 million, or $0.33 per diluted share, up from $50.8 million ($0.27 per diluted share) in the first quarter of 2001. This improved profitability was bolstered by effective cost management and the adoption of SFAS No. 142, which eliminated goodwill amortization and positively impacted earnings per share. Despite robust top-line and bottom-line growth, investors should note a revenue decline in the Securities processing and trust services segment due to ongoing weakness in the U.S. retail financial markets. However, the company's overall financial health remains solid, with healthy operating income and a focus on strategic growth through acquisitions and organic expansion. The company's liquidity position appears adequate, supported by cash flow from operations, and management expressed confidence in meeting future funding requirements.

Key Highlights

  • 1Total revenues increased by 19.8% to $631.9 million for the three months ended March 31, 2002, compared to $527.7 million in the prior year.
  • 2Net income rose by 28.3% to $65.1 million ($0.33 per diluted share) from $50.8 million ($0.27 per diluted share) in the same period last year.
  • 3Processing and services revenues grew by 21.1% to $559.8 million, primarily driven by the Financial institution outsourcing segment.
  • 4The Securities processing and trust services segment experienced a revenue decline of $17.6 million due to weaker retail financial markets.
  • 5Operating income increased by 25.3% to $108.5 million, reflecting revenue growth and improved operational efficiency.
  • 6The company adopted SFAS No. 142 effective January 1, 2002, eliminating goodwill amortization and positively impacting net income per share by approximately $0.02.
  • 7Total assets grew to $5.49 billion at March 31, 2002, from $5.32 billion at December 31, 2001, with a significant increase in Securities processing receivables.

Frequently Asked Questions

The primary driver of Fiserv's revenue growth is its Processing and services segment, which saw a 21.1% increase. This growth was particularly strong in the Financial institution outsourcing, systems and services sub-segment, which benefited from new clients, increased transaction volumes, price adjustments, and revenue from acquired businesses.

The adoption of SFAS No. 142, which eliminates the amortization of goodwill and certain other intangible assets, had a positive impact on Fiserv's net income and earnings per share. For the first quarter of 2002, it reduced goodwill amortization expense by approximately $6.0 million, increasing diluted net income per share by about $0.02.

Yes, the Securities processing and trust services segment experienced a revenue decline of $17.6 million. This is attributed to lower transaction volumes resulting from continued weakness in the United States retail financial markets.

Fiserv believes its cash flow from operations, combined with other available sources of funds, will be adequate to meet its funding requirements. The company historically uses cash flow for acquisitions and capital expenditures and may raise additional funds through borrowings or securities issuances if significant future acquisitions are pursued.