Fiserv Reports Record Earnings During Second Quarter of 2002
Fiserv Reports Record Earnings During Second Quarter of 2002
July 22, 2002
For the three-month period ended June 30, 2002, Fiserv revenues (excluding customer reimbursements) were $563.0 million, a 17% increase over the $481.4 million for the second quarter of 2001. Net income per share-diluted (excluding realized gains from sale of investment) for the second quarter of 2002 was $0.34 per share, compared to $0.27 per share for the second quarter of 2001.
For the six-month period ended June 30, 2002, Fiserv revenues (excluding customer reimbursements) were $1,122.9 million, a 19% increase over the $943.5 million for the first six months of 2001. Net income per share-diluted (excluding realized gains from sale of investment) for the first six months of 2002 was $0.67 per share, compared to $0.53 per share for the first six 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 $0.02 per share in the second quarter and $0.04 on a year-to-date basis, due to the elimination of goodwill amortization.
"Fiserv management is pleased to report record earnings for the second quarter of 2002," said Leslie M. Muma, President and CEO of Fiserv, Inc. "We are seeing a continuation of consistent growth within our various lines of business, with most of our business units performing at or above our expectations in both internal revenue growth from existing clients and new sales contracts.
"Our Financial Institution Outsourcing, Systems and Services Segment, which accounts for approximately 85% to 90% of our total revenue, once again reported strong growth. Our sales efforts for the second quarter generated a record number of new banking, lending, securities and insurance relationships company-wide.
"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," Muma concluded.
Fiserv continued to see new sales growth across all of its business lines during the second quarter, including the following major agreements: GMAC Mortgage, one of the top residential mortgage lenders and servicers in the country, selected the Fiserv mortgage loan servicing solution to be its single platform for the servicing of both residential and consumer loan products. Fiserv also will provide a comprehensive range of technology services, including account and check processing, for Community Bank, a $1.3 billion banking company in Pasadena, California. Fiserv was successful in expanding its relationship with Isuzu Motors Acceptance Corporation to include proactively managing all sport-utility vehicle remarketing in the vehicle manufacturer's portfolio. Regions Bank, Birmingham, Alabama, chose Fiserv for a full suite of automotive lease services, including complete account management and collections. United Trust Group of Springfield, Illinois, signed a license agreement for the Fiserv life, annuity and health insurance administration system to provide business process outsourcing services. The State of Nevada selected Fiserv as third-party administrator for the 31,000 employees covered by its Public Employees' Benefits Program. Also during the quarter, Fiserv significantly expanded its relationship with WR Hambrecht + Company, LLC, a San Francisco investment firm, to include execution and clearing services for Hambrecht's large-volume institutional account business.
In the second quarter, Fiserv announced the acquisition of Case Shiller Weiss, Inc. (CSW), the nationally recognized provider of automated home valuation services and collateral risk management products. Based in Cambridge, Massachusetts, and founded in 1991, CSW serves mortgage banks, consumer home loan companies, mortgage insurers, mortgage servicers, investment banks and bond-rating agencies.
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
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
------------------------------------------------
Revenues(1)
Processing and
services $ 563,032 $ 481,355 $1,122,856 $ 943,518
Customer
reimbursements 69,394 62,269 141,498 127,757
---------- ----------- ---------- ----------
Total Revenues 632,426 543,624 1,264,354 1,071,275
---------- ---------- ---------- ----------
Cost of revenues(1)
Salaries, commissions
and payroll related
costs 267,606 230,638 539,238 452,851
Customer reimbursement
expenses 69,394 62,269 141,498 127,757
Data processing costs
and equipment rentals 41,665 36,213 80,773 70,551
Other operating
expenses 117,676 98,490 234,026 190,400
Depreciation and
amortization 25,220 27,635 49,440 54,732
---------- ---------- ---------- ----------
Total cost of revenues 521,561 455,245 1,044,975 896,291
---------- ---------- ---------- ----------
Operating income 110,865 88,379 219,379 174,984
Interest expense - net (2,178) (3,237) (4,865) (7,054)
Realized gain from
sale of investment 567 1,506 1,482 3,327
---------- ---------- ---------- ----------
Income before income
taxes 109,254 86,648 215,996 171,257
Income tax provision 42,609 34,659 84,238 68,503
---------- ---------- ---------- ----------
Net income $ 66,645 $ 51,989 $ 131,758 $ 102,754
========== ========== ========== ==========
Net income per share:
Basic $0.35 $0.28 $0.69 $0.55
Diluted $0.34 $0.27 $0.67 $0.54
Excluding realized
gain from sale of
investment:
Diluted $0.34 $0.27 $0.67 $0.53
Diluted (excluding
goodwill
amortization) $0.34 $0.29 $0.67 $0.57
Shares used in
computing net income
per share:
Basic 191,420 186,558 191,044 186,360
Diluted 195,474 191,252 195,313 191,051
(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 six months ended June 30,
2002 and 2001, the Company has presented customer reimbursement
revenue and expenses of $141.5 million and $127.8 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 $18.7 million and $17.0 million for the six months ended June 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 Six Months Ended
June 30, June 30,
2002 2001 2002 2001
------------------------------------------------
Processing and services
revenues:
Financial institution
outsourcing, systems
and services $ 487,061 $ 383,461 $ 968,764 $ 752,184
Securities processing
and trust services 54,513 78,049 109,276 150,443
All other and corporate 21,458 19,845 44,816 40,891
---------- ---------- ---------- ----------
Total $ 563,032 $ 481,355 $1,122,856 $ 943,518
========== ========== ========== ==========
Operating income:
Financial institution
outsourcing, systems
and services $ 107,667 $ 78,848 $ 209,456 $ 158,710
Securities processing
and trust services 5,924(a) 11,803 13,490(a) 19,925
All other and corporate (2,726) (2,272) (3,567) (3,651)
---------- ---------- ---------- ----------
Total $ 110,865 $ 88,379 $ 219,379 $ 174,984
========== ========== ========== ==========
(a) Includes a $3.2 million net charge related to the write-down of
WorldCom, Inc. debt securities to market value. These debt securities
were acquired by Fiserv through its acquisition of Resources Trust
Company in May of 2000.