FISERV INC 10-Q Summary: Period Ended June 30, 2000
Business Context and Reporting Period
This is an unaudited quarterly report (Form 10-Q) for Fiserv, Inc., a leading independent provider of financial data processing systems and information management services. The report covers the three and six-month periods ended June 30, 2000. As of July 14, 2000, 123,224,000 shares of common stock were outstanding.
Key Financial Metrics
| Metric | 3 Months Ended Jun 30, 2000 | 6 Months Ended Jun 30, 2000 |
|---|---|---|
| Revenues | $416.4 million | $812.8 million |
| Operating Income | $79.4 million | $158.3 million |
| Net Income | $45.0 million | $88.2 million |
| Diluted EPS | $0.36 | $0.70 |
| Operating Margin | 19.1% | 19.5% |
| Cash from Operations | N/A (Quarterly not provided) | $102.9 million |
| Cash and Equivalents | $72.5 million | $72.5 million |
| Long-Term Debt | $457.2 million | $457.2 million |
| Short-Term Borrowings | $271.3 million | $271.3 million |
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased 21.3% year-over-year for the quarter and 19.5% for the six-month period. Approximately 45% of the six-month revenue growth was attributed to acquired businesses.
- Profitability: Operating income rose 27.0% for the quarter and 28.6% for the six-month period. Net income increased 31.1% for the quarter and 30.2% for the six-month period.
- Cost Structure: Cost of revenues increased 20.1% for the quarter. Amortization of intangible assets surged from $4.8 million to $15.6 million in the quarter, driven by an $8.0 million goodwill impairment charge related to ancillary software product lines.
- Unusual Items: The company recorded a $2.9 million realized gain from the sale of 100,000 shares of Knight Trading Group, Inc. in the second quarter.
Outlook, Risks, and Management Commentary
- Segment Performance: The "Financial institution outsourcing" segment drove growth with revenues of $313.1 million (quarter) and operating income of $60.5 million. The "Securities processing" segment saw revenue growth to $87.7 million, aided by acquisitions of JWGenesis Clearing Corporation and Resources Trust Company, though margins were slightly lower due to a mix shift toward lower-margin trust services.
- Liquidity: The company maintains $575 million in revolving credit facilities, with $343.6 million advanced as of June 30, 2000. Management believes cash flow from operations and available funds are adequate for current requirements, though future acquisitions may require additional borrowings or equity issuances.
- Tax Rate: The effective income tax rate was 41% for both 2000 and 1999, and is expected to remain consistent for the year.
- Risks: Forward-looking statements are subject to economic, competitive, governmental, and technological risks. The filing includes a Safe Harbor statement noting that actual results may differ materially from projections.
Investor Verification Checklist
- Verify the sustainability of the 45% revenue growth contribution from acquisitions versus organic growth.
- Review the details of the $8.0 million goodwill impairment charge to assess future asset valuation risks.
- Monitor the impact of the $2.9 million investment gain on normalized earnings per share.
- Assess the liquidity position given the high level of securities processing receivables ($2.7 billion) and payables ($2.2 billion).
- Confirm the stability of the 41% effective tax rate for the remainder of the fiscal year.