10-QPeriod: Q2 FY2002

FISERV INC Quarterly Report for Q2 Ended Jun 30, 2002

Filed July 23, 2002For Securities:FISV

Summary

Fiserv Inc. reported a solid performance for the six months ended June 30, 2002, with total revenues increasing by 17.9% to $1.26 billion compared to the prior year period. Net income saw a significant rise of 28.2% to $131.8 million, translating to diluted earnings per share of $0.67, up from $0.54 in the prior year period. This growth was primarily driven by the Financial Institution Outsourcing, Systems, and Services segment, which experienced strong revenue and operating income increases. The adoption of SFAS No. 142, which eliminated goodwill amortization, positively impacted net income and earnings per share. While the Securities Processing and Trust Services segment faced headwinds from lower transaction volumes and a write-down related to WorldCom debt, the company's core business demonstrated robust growth. Fiserv's liquidity remains adequate, with substantial cash provided by operating activities supporting its strategy of complementary business acquisitions and capital expenditures.

Key Highlights

  • 1Total revenues for the six months ended June 30, 2002, increased by 17.9% to $1.26 billion.
  • 2Net income for the six months ended June 30, 2002, rose by 28.2% to $131.8 million.
  • 3Diluted earnings per share for the six months ended June 30, 2002, were $0.67, up from $0.54 in the prior year.
  • 4The Financial Institution Outsourcing, Systems, and Services segment showed strong growth, with revenues up 28.8% year-to-date.
  • 5Adoption of SFAS No. 142 eliminated goodwill amortization, positively impacting net income and EPS.
  • 6The Securities Processing and Trust Services segment experienced a revenue decline due to lower transaction volumes and a write-down on WorldCom debt securities.
  • 7Cash provided by operating activities was strong at $201.1 million for the six months ended June 30, 2002.

Frequently Asked Questions

The primary driver of revenue growth is the Financial Institution Outsourcing, Systems, and Services segment, which saw a substantial increase in revenues due to new client acquisitions, cross-sales, increased transaction volumes, price adjustments, and acquired businesses.

The adoption of SFAS No. 142, effective January 1, 2002, eliminated the amortization of goodwill and intangible assets with indefinite lives. This resulted in a reduction of goodwill amortization expense, which positively impacted net income and earnings per share for the reporting periods.

The Securities Processing and Trust Services segment is facing challenges primarily due to lower transaction volumes, attributed to continued weakness in the U.S. retail financial markets. Additionally, the segment recorded a write-down of WorldCom, Inc. debt securities to market value.

Fiserv generates substantial cash flow from operations, which is used for acquisitions and capital expenditures. The company also has access to credit facilities. Management believes its current cash flow and other available sources are adequate to meet funding requirements, though significant future acquisitions may necessitate additional borrowings or securities issuance.