SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 1996 Commission file number 0-14948
FISERV, INC.
_____________________________________________________
(Exact name of Registrant as specified in its charter)
WISCONSIN 39-1506125
_______________________________ __________________
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
255 FISERV DRIVE, BROOKFIELD, WI. 53045
_______________________________________ _________
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (414) 879 5000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
At March 31, 1996, 44,963,000 shares of common stock of the Registrant were
outstanding.
Exhibit Index appears at page 8.
1 PART I. FINANCIAL INFORMATION
FISERV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
for the Three Month Periods Ended March 31, 1996 and 1995
Three Months Ended
March 31,
1996 1995
___________ ___________
(In thousands except
per share amounts)
Revenues $194,710 $157,179
----------- -----------
Cost of revenues:
Salaries, commissions and
payroll related costs 90,692 75,220
Data processing expenses, rentals
and telecommunication costs 24,274 22,617
Other operating expenses 34,409 27,992
Depreciation and amortization
of property and equipment 10,309 9,113
Amortization of intangible assets 5,317 2,995
Capitalization of internally
generated computer software (796) (1,649)
----------- -----------
Total cost of revenues 164,205 136,288
----------- -----------
Operating income 30,505 20,891
Interest expense-net 5,655 1,837
----------- -----------
Income before income taxes 24,850 19,054
Income tax provision 10,189 7,813
----------- -----------
Net income $14,661 $11,241
=========== ===========
Net income per common and
common equivalent share $0.32 $0.27
=========== ===========
Shares used in computing
net income per share 45,919 40,943
=========== ===========
See notes to consolidated financial statements.
2
FISERV, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1996 1995
______________ ______________
(In thousands)
ASSETS
Cash and cash equivalents $48,893 $59,743
Accounts receivable 156,809 154,628
Prepaid expenses and other assets 66,903 63,893
Due on sale of securities 97,446
Trust account investments 1,067,112 834,286
Other investments 54,573 55,748
Deferred income taxes 33,755 39,527
Property and equipment-net 148,236 148,343
Internally generated computer 75,636 73,863
software-net
Identifiable intangible assets
relating to acquisitions-net 60,963 57,270
Goodwill-net 291,449 300,552
-------------- --------------
Total $2,004,329 $1,885,299
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $38,875 $43,948
Accrued expenses 52,763 59,614
Accrued income taxes 3,626 6,116
Deferred revenues 44,597 40,754
Trust account deposits 1,050,912 917,189
Long-term debt 362,657 381,361
Other long-term obligations 1,650 2,055
-------------- --------------
Total liabilities 1,555,080 1,451,037
-------------- --------------
Stockholders' equity:
Common stock outstanding, 44,963,000 and
44,887,000 shares, respectively 450 449
Additional paid-in capital 316,142 315,800
Unrealized gain on investments 15,400 15,268
Accumulated earnings 117,257 102,745
-------------- --------------
Total stockholders' equity 449,249 434,262
-------------- --------------
Total $2,004,329 $1,885,299
============== ==============
See notes to consolidated financial statements.
3
FISERV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the Three-Month Periods Ended March 31, 1996 and 1995
Three Months Ended
March 31,
1996 1995
_____________________
(In thousands)
Cash flows from operating activities:
Net income $14,661 $11,241
Adjustments to reconcile income to net
cash provided by operating activities:
Deferred income taxes 4,581 4,073
Depreciation and amortization of property
and equipment 10,309 9,362
Amortization of intangible assets 5,317 2,746
Capitalization of internally generated
computer software-net (796) (1,649)
--------- ---------
34,072 25,773
Cash provided (used) by changes in assets
and liabilities, net of effects from
acquisitions of businesses:
Accounts receivable (2,116) 317
Prepaid expenses and other assets (3,114) (7,413)
Accounts payable and accrued expenses (12,841) (13,024)
Deferred revenue 3,559 834
Income taxes payable (1,338) 1,079
--------- ---------
Net cash provided by operating activities 18,222 7,566
--------- ---------
Cash flows from investing activities:
Capital expenditures (9,525) (42,905)
Investments and other assets 1,175 (10,849)
Payment for acquisition of businesses (484) (6,699)
Trust account investments (135,107) (154,016)
--------- ---------
Net cash used by investing activities (143,941) (214,469)
--------- ---------
Cash flows from financing activities:
Borrowings and other long-term obligations-net (19,275) 13,122
Issuance of common stock 423 2,448
Trust account deposits 133,721 155,102
--------- ---------
Net cash provided by financing activities 114,869 170,672
--------- ---------
Change in cash (10,850) (36,231)
Beginning balance 59,743 36,349
--------- ---------
Ending balance $48,893 $118
========= =========
See notes to consolidated financial statements.
4
Fiserv, Inc. and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
1. Principles of Consolidation
The consolidated balance sheet as of March 31, 1996, and the related
consolidated statements of income and cash flows for the three-month periods
ended March 31, 1996 and 1995 are unaudited. In the opinion of management, all
adjustments necessary for a fair presentation of such financial statements have
been included. Such adjustments consisted only of normal recurring items.
Interim results are not necessarily indicative of results for a full year.
The financial statements and notes are presented as permitted by Form 10-Q, and
do not contain certain information included in the annual financial statements
and notes of Fiserv, Inc. and subsidiaries (the Company or the Registrant).
2. Shares Used in Computing Net Income per Share
Three Months Ended
March 31,
1996 1995
___________________
(In thousands)
Weighted average number of common
shares outstanding 44,944 40,129
Shares issuable upon exercise of
options reduced by the number of shares
which could have been purchased
with the proceeds of such exercise 975 814
------- -------
Shares used 45,919 40,943
------- -------
Income per common and common equivalent share is computed using the weighted
average number of common and dilutive common equivalent shares outstanding
during the periods.
3. Accounting for Income Taxes
Deferred income taxes reflect the net tax effects of (a) temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes, and (b) operating and tax
credit carryforwards. Significant components of the Company's net deferred tax
liability as of March 31, 1996 and December 31,1995 are as follows:
March, 31 December 31,
1996 1995
______________ ______________
Allowance for doubtful accounts $2,319,000 $2,319,000
Accrued expenses not currently
deductible 6,323,000 7,769,000
Deferred revenue 9,122,000 9,122,000
Other 1,058,000 1,728,000
Net operating loss and credit
carryforwards 5,794,000 6,739,000
Purchased incomplete software
technology 65,152,000 66,305,000
Deferred costs (9,967,000) (9,143,000)
Internally generated capitalized
software (31,010,000) (30,283,000)
Excess of tax over book
depreciation and amortization (4,335,000) (4,419,000)
Unrealized gain on investments (10,701,000) (10,610,000)
------------- -------------
Total $33,755,000 $39,527,000
============= =============
4. Supplemental Cash Flow Information
Quarter Ended March 31,
1996 1995
____________________
(In thousands)
Income taxes paid $6,729 $1,379
Interest paid 4,012 1,690
Liabilities assumed in acquisitions
of businesses 1,236 2,639
____________________
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
The following table sets forth, for the periods indicated, the results of
operations as a percentage of revenues represented by certain income and expense
items and the percentage change in those items.
Three Months Ended
March 31, Percentage
1996 1995 Increase
____________________
Percent of Revenues (Decrease)
Revenues 100.00% 100.00% 23.88%
------- -------
Salaries and related costs 46.58 47.86 20.57
Data processing costs 12.47 14.39 7.33
Other operating expenses 17.67 17.81 22.92
Depreciation and amortization 5.29 5.80 13.12
Amortization of intangible assets 2.73 1.91 77.53
Capitalization of software-net (0.41) (1.05) (51.73)
------- -------
Total cost of revenues 84.33 86.72 20.48
------- -------
Operating income 15.67 13.28 46.02
======= =======
REVENUES
Revenues increased 23.9% from $157.2 million in the first quarter of 1995 to
$194.7 in the current first quarter. Approximately 70% of this growth resulted
from the inclusion of revenues from the date of purchase of acquired companies
and approximately 30% from increases in revenue from the addition of new
clients, growth in the transaction volume experienced by existing clients and
price increases.
COST OF REVENUES
Cost of revenues increased 20.5% from $136.3 million in the first quarter of
1995 to $164.2 million in the current first quarter. Salaries, data processing,
other operating expenses and depreciation and amortization all increased
at a rate that was lower than the rate of increase for revenues. Amortization
of intangible assets increased at a disproportionate rate due to the intangible
assets recorded in the acquisition of Information Technology, Inc.
Capitalization of software decreased as a percentage of revenue, a trend which
is expected to continue as the amortization of such software begins to
approximate the capitalizable portion of software development costs.
OPERATING INCOME
Operating income increased 46% from $20.9 million in the first quarter of 1995
to $30.5 million in the current first quarter. As a percentage of revenues,
operating income improved 2.4% in the first quarter of 1996 as compared to the
prior year period.
NET INTEREST EXPENSE
As a result of acquisitions since the first quarter of 1995, which were
partially funded through borrowing, net interest expense increased from $1.8
million in the first quarter of 1995 to $5.7 million in the current first
quarter.
INCOME TAX PROVISION
Income taxes were computed at 41% in both 1996 and 1995. The 41% rate is
expected to apply throughout the current year.
NET INCOME
Net income grew 30% from $11.2 million in the first quarter of 1995 to $14.7
million in the first quarter of 1996, and net income per share increased 19%
from $.27 per share in the first quarter of 1995 to $.32 in the corresponding
period of 1996.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1996, cash and cash equivalents
decreased $10.9 million comprising primarily $18.2 million net cash provided
from operating activities and $.4 million from the sale of common stock offset
by $9.5 million capital expenditures, $.5 million for acquisition of businesses,
$1.2 million net increase in investments and $19.3 million net decrease in long-
term debt.
Long-term obligations amounted to $364.3 million at March 31, 1996. The
majority of this debt comprises $126.4 million senior notes due 1996 to 2005
and $223.0 million advanced under a $300 million unsecured line of credit
and commercial paper facility expiring May 17, 2000. A facility fee ranging
from .175% to .325% per annum is required on the entire bank line regardless of
usage.
The Company has historically applied a significant portion of its cash flow from
operating activities together with proceeds of its common stock offerings and
long-term borrowings to acquisitions.
The Company believes that its cash flow from operating activities together with
other available sources of funds will be adequate to meet its funding
requirements.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Index to exhibits
(11) Statement regarding computation of per share earnings (included on
page 5, Part 1).
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Fiserv, Inc.
_____________
(Registrant)
Date April 23, 1996 by /S/ EDWARD P. ALBERTS
_____________________
EDWARD P. ALBERTS
Senior Vice President,
Finance and Controller
5
1,000
YEAR
DEC-31-1996
MAR-31-1996
48,893
1,067,112
156,809
0
0
1,339,717
148,236
0
2,004,329
1,190,773
0
0
0
450
448,799
2,004,329
0
194,710
0
159,684
4,521
0
5,655
24,850
10,189
14,661
0
0
0
14,661
.32
.32
