Fiserv Reports Continued Strong Earnings During Third Quarter of 2002
Fiserv Reports Continued Strong Earnings During Third Quarter of 2002
October 21, 2002
For the three-month period ended September 30, 2002, Fiserv revenues (excluding customer reimbursements) were $563.7 million, an 18% increase over the $476.1 million for the third quarter of 2001. Net income per share-diluted (excluding realized gains from sale of investment) for the third quarter of 2002 was $0.34 per share, compared to $0.27 per share for the third quarter of 2001.
For the nine-month period ended September 30, 2002, Fiserv revenues (excluding customer reimbursements) were $1,686.5 million, a 19% increase over the $1,419.6 million for the first nine months of 2001. Net income per share-diluted (excluding realized gains from sale of investment) for the first nine months of 2002 was $1.01 per share, compared to $0.80 per share for the first nine months of 2001.
Effective January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 requires that intangible assets with definite lives be amortized over their useful lives and that goodwill and other intangible assets with indefinite lives not be amortized but evaluated for impairment. The effect of adopting SFAS No. 142 would have increased 2001 diluted net income per share (excluding realized gains from sale of investment) by approximately $0.03 per share in the third quarter and $0.07 per share on a year-to-date basis, due to the elimination of goodwill amortization.
"Fiserv continued its solid performance in the third quarter of 2002, and we're pleased to report strong earnings growth for the quarter," said Leslie M. Muma, President and CEO of Fiserv, Inc. "Most of our business units continue to perform at or above our expectations in both internal revenue growth from existing clients and new sales contracts. Our year-to-date sales efforts have generated new contracted revenues exceeding the prior year and our pipelines for new client growth, cross sales and acquisitions continue to be robust.
"Our estimate for full-year earnings per share for 2002 (excluding realized gains from sale of investment) continues to be $1.35 to $1.37 per share," concluded Muma.
Major new clients for the third quarter include the following: Fifth Third Bank, a $75 billion diversified financial services company headquartered in Cincinnati, Ohio, selected the Fiserv UniFi® PRO Mortgage loan origination and processing solution to automate its mortgage unit. In addition, EMC Mortgage, a subsidiary of The Bear Stearns Companies, Inc. (NYSE: BSC), will use the Fiserv UniFi PRO system to expand into a new line of business. New Century Mortgage Corporation, one of the nation's fastest growing mortgage loan originators and a subsidiary of New Century Financial Corporation (Nasdaq: NCEN), has just re-entered the loan servicing business with the Fiserv MortgageServ loan servicing system. Liberty Savings Bank added MortgageServ, item processing, EasyLender and imaging solutions to its current suite of Fiserv products, which include core processing and ATM services. Fiserv will provide an integrated suite of account processing services from its Information Technology, Inc. unit to North Valley Bancorp, a $600 million, multi-bank holding company based in Redding, California. Amica Life Insurance Company, a subsidiary of Amica Mutual Insurance Company, expanded its relationship with Fiserv by licensing the Fiserv Life Portraits(TM) life insurance marketing solution to support Amica's telemarketing efforts.
In August, Fiserv acquired the correspondent clearing business of Investec Ernst & Company, a division of international banking group Investec. This acquisition enhanced the servicing capabilities and securities processing volumes of Fiserv Securities, and expanded the base of retail and institutional broker-dealer clients serviced by Fiserv. Based in New York, Investec Ernst has more than 80 correspondent clearing relationships.
"In September, we announced the promotion of Norm Balthasar to the newly created position of Senior Executive Vice President and Chief Operating Officer," said Muma. "At the same time, we created four new operating groups from our former Financial Institution Group and promoted division presidents to lead those operations. These moves help to set the stage for the future; Norm has demonstrated outstanding skills in leading our largest group through some significant growth and is uniquely qualified to be our Chief Operating Officer," Muma concluded.
Fiserv, Inc. (Nasdaq: FISV) is an independent, full-service provider of integrated data processing and information management systems to the financial industry. As a leading technology resource, Fiserv serves more than 13,000 financial services providers worldwide, including banks, broker-dealers, credit unions, financial planners and investment advisers, insurance companies and agents, mortgage banks and savings institutions. Headquartered in Brookfield, Wisconsin, Fiserv also can be found on the Internet at www.fiserv.com.
The disclosure set forth above contains forward-looking statements, specifically Mr. Muma's statements regarding estimates of future earnings, earnings and revenue targets and business prospects. Such forward-looking statements are subject to inherent risks and uncertainties that may cause actual results to differ materially from those contemplated by such forward-looking statements. The factors that may cause actual results to differ materially from those contemplated by the forward-looking statements include, among others, changes in customers' demand for the Corporation's products, pricing and other actions by competitors, and general changes in economic conditions or U.S. financial markets. These factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements.
FISERV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
--------- --------- ----------- -----------
Revenues(1)
Processing and services $563,663 $476,102 $1,686,519 $1,419,620
Customer reimbursements 72,009 63,129 213,507 190,886
--------- --------- ----------- -----------
Total Revenues 635,672 539,231 1,900,026 1,610,506
--------- --------- ----------- -----------
Cost of revenues(1)
Salaries, commissions and
payroll related costs 269,239 231,341 808,477 684,192
Customer reimbursement
expenses 72,009 63,129 213,507 190,886
Data processing costs and
equipment rentals 39,275 38,067 120,048 108,618
Other operating expenses 119,171 89,042 353,197 279,442
Depreciation and
amortization 26,155 28,437 75,595 83,169
--------- --------- ----------- -----------
Total cost of revenues 525,849 450,016 1,570,824 1,346,307
--------- --------- ----------- -----------
Operating income 109,823 89,215 329,202 264,199
Interest expense - net (1,804) (2,501) (6,669) (9,555)
Realized gain from sale of
investment 426 1,000 1,908 4,327
--------- --------- ----------- -----------
Income before income taxes 108,445 87,714 324,441 258,971
Income tax provision 42,294 35,085 126,532 103,588
--------- --------- ----------- -----------
Net income $66,151 $52,629 $197,909 $155,383
========= ========= =========== ===========
Net income per share:
Basic $0.34 $0.28 $1.03 $0.83
Diluted $0.34 $0.27 $1.01 $0.81
Excluding realized gain
from sale of
investment:
Diluted $0.34 $0.27 $1.01 $0.80
Diluted (excluding
goodwill amortization) $0.34 $0.30 $1.01 $0.87
Shares used in computing
net income per share:
Basic 192,048 186,944 191,379 186,555
Diluted 195,025 191,541 195,217 191,214
(1) Effective January 1, 2002, the Company adopted Emerging Issues
Task Force Issue No. 01-14, "Income Statement Characterization of
Reimbursements Received for 'Out of Pocket' Expenses Incurred,"
which requires that customer reimbursements received for direct
costs paid to third parties and related expenses be characterized
as revenue. Comparative financial statements for 2001 have been
reclassified to provide consistent presentation. For the nine
months ended September 30, 2002 and 2001, the Company has
presented customer reimbursement revenue and expenses of $213.5
million and $190.9 million, respectively, in accordance with Issue
No. 01-14. Customer reimbursements represent direct costs paid to
third parties primarily for postage and data communication costs.
In addition, processing and services revenues and salaries / data
processing costs were increased by $28.4 million and $25.9 million
for the nine months ended September 30, 2002 and 2001,
respectively. The adoption of Issue No. 01-14 did not impact the
Company's financial position, operating income or net income.
FISERV, INC. AND SUBSIDIARIES
SELECTED SEGMENT INFORMATION
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
--------- --------- ----------- -----------
Processing and services
revenues:
Financial institution
outsourcing, systems
and services $482,145 $402,678 $1,450,909 $1,154,862
Securities processing and
trust services 58,773 53,421 168,049 203,864
All other and corporate 22,745 20,003 67,561 60,894
--------- --------- ----------- -----------
Total $563,663 $476,102 $1,686,519 $1,419,620
========= ========= =========== ===========
Operating income:
Financial institution
outsourcing, systems
and services $103,950 $83,800 $313,406 $242,510
Securities processing and
trust services 7,922 7,370 21,412 27,295
All other and corporate (2,049) (1,955) (5,616) (5,606)
--------- --------- ----------- -----------
Total $109,823 $89,215 $329,202 $264,199
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