10-QPeriod: Q3 FY2002

FISERV INC Quarterly Report for Q3 Ended Sep 30, 2002

Filed October 22, 2002For Securities:FISV

Summary

Fiserv Inc. (FISV) reported strong financial results for the nine months ended September 30, 2002, demonstrating robust revenue growth and improved profitability. Total revenues increased by 18%, driven primarily by the Financial Institution Outsourcing, Systems, and Services segment, which saw significant growth in processing and services revenue. This segment also benefited from the adoption of SFAS No. 142, which eliminated goodwill amortization, positively impacting operating income. Despite some headwinds in the Securities Processing and Trust Services segment due to market weakness, the company's overall performance indicates a healthy business with strong operational execution. The company's liquidity remains solid, supported by strong operating cash flows, and management believes it has adequate resources to meet its funding requirements.

Key Highlights

  • 1Total revenues grew 18.8% year-over-year for the nine months ended September 30, 2002, reaching $1.9 billion.
  • 2Net income increased by a substantial 27.4% to $197.9 million for the nine months ended September 30, 2002.
  • 3Diluted earnings per share (EPS) grew to $1.01 for the nine months ended September 30, 2002, up from $0.81 in the prior year, excluding realized investment gains.
  • 4The Financial Institution Outsourcing, Systems and Services segment was the primary growth driver, with revenues up 25.7% and operating income up 29.2% year-over-year for the nine months.
  • 5The company adopted SFAS No. 142, discontinuing goodwill amortization, which positively impacted net income by $13.8 million (net of tax) for the nine-month period.
  • 6Operating income increased by 24.6% to $329.2 million for the nine months ended September 30, 2002, reflecting improved operational efficiency.
  • 7Cash flow from operations remained strong, providing $291.9 million for the nine months ended September 30, 2002, supporting investments and debt reduction.

Frequently Asked Questions

The primary driver of Fiserv's revenue growth is its Financial Institution Outsourcing, Systems and Services segment. This segment experienced significant increases in processing and services revenue due to new client acquisitions, existing client growth, cross-sales, and price adjustments.

The adoption of SFAS No. 142, which requires goodwill and certain intangible assets to be tested for impairment rather than amortized, has benefited Fiserv. For the nine months ended September 30, 2002, this resulted in a $13.8 million (net of tax) increase in net income by eliminating goodwill amortization. It also contributed to a lower effective income tax rate and increased operating income in the Financial Institution Outsourcing segment.

Yes, the Securities Processing and Trust Services segment experienced a year-to-date revenue decrease of $23.8 million (excluding a prior-year termination fee). This was primarily attributed to continued weakness in the United States retail financial markets, leading to lower transaction volumes.

Fiserv maintains strong liquidity, with substantial cash flow generated from operations. The company utilizes these funds for acquisitions, capital expenditures, debt reduction, and stock repurchases. Management believes its current cash flow and other funding sources are adequate to meet its financial obligations.