10-QPeriod: Q1 FY2003

FISERV INC Quarterly Report for Q1 Ended Mar 31, 2003

Filed April 23, 2003For Securities:FISV

Summary

Fiserv, Inc. (FISV) reported a solid first quarter for 2003, with total revenues reaching $707.5 million, an 11% increase over the same period in 2002. This growth was primarily driven by acquisitions, which contributed 9% to the revenue increase, alongside a 2% internal revenue growth stemming from new clients, cross-sales, increased transaction volumes, and price adjustments. Net income rose by 14% to $74.2 million, with diluted earnings per share (EPS) increasing to $0.38 from $0.33 in the prior year. Despite challenges in international banking and U.S. retail markets impacting the Securities processing segment, the company demonstrated operational strength, particularly in its Financial Institution Outsourcing, Systems and Services (FIS) segment, which saw a 17% increase in operating income. The company also successfully managed its liquidity, generating $142.1 million in cash from operations and completing significant strategic actions, including two acquisitions and a $150 million senior notes issuance to fund debt repayment and general corporate purposes, underscoring a proactive approach to financial management and growth.

Key Highlights

  • 1Total revenues grew by 11% to $707.5 million in Q1 2003 compared to Q1 2002.
  • 2Net income increased by 14% to $74.2 million, with diluted EPS rising to $0.38.
  • 3Acquisitions contributed 9% to revenue growth, while internal growth accounted for 2%.
  • 4Operating income saw a robust 14% increase, reaching $124.6 million.
  • 5The company completed two acquisitions for $46.0 million in cash plus stock, and an additional $33.1 million in contingent consideration.
  • 6On April 11, 2003, Fiserv issued $150 million in 4% senior notes due 2008 to repay debt and for general corporate purposes.
  • 7Shareholders approved an increase in authorized common stock from 300 million to 450 million shares.

Frequently Asked Questions

Fiserv's revenue growth in Q1 2003 was driven by a combination of acquisitions, which contributed 9% to the increase, and internal revenue growth of approximately 2%. Internal growth resulted from new client sales, cross-selling to existing clients, increased transaction volumes, and price increases.

Profitability improved significantly. Net income rose by 14% to $74.2 million, and diluted earnings per share increased to $0.38, up from $0.33 in the prior year's first quarter. Operating income also increased by 14% to $124.6 million.

During the quarter, Fiserv completed two acquisitions. Shortly after the quarter ended, on April 11, 2003, the company issued $150 million in 4% senior notes due 2008. The proceeds are intended for debt repayment and general corporate purposes, including future acquisitions. Additionally, shareholders approved an increase in authorized common stock to 450 million shares.

Yes, the report noted that continued weakness in international banking markets and prolonged weakness in the U.S. retail financial markets negatively impacted the Securities processing and trust services segment's revenue growth. Additionally, the company incurred a decrease in revenues of $17.0 million due to a fraudulent trading scheme at one of its broker-dealer clients, although insurance coverage is being pursued.