FISERV INC. 10-Q Summary: Quarter Ended September 30, 2000
Business Context and Reporting Period
This report covers the quarterly period ended September 30, 2000, and the nine-month period ended on the same date. FISERV, Inc. is a leading independent provider of financial data processing systems and information management services to financial institutions. Operations are classified into three segments: Financial institution outsourcing, systems and services; Securities processing and trust services; and All other and corporate.
Key Financial Metrics
| Metric | Q3 2000 | Q3 1999 | 9M 2000 | 9M 1999 |
|---|---|---|---|---|
| Revenues | $406.2M | $352.7M | $1,219.0M | $1,033.0M |
| Operating Income | $78.2M | $64.6M | $236.6M | $187.7M |
| Net Income | $44.7M | $35.2M | $132.9M | $103.0M |
| Diluted EPS | $0.35 | $0.28 | $1.05 | $0.81 |
| Operating Margin | 19.3% | 18.3% | 19.4% | 18.2% |
| Cash from Operations (9M) | $271.7M (vs $175.3M prior year) | |||
| Cash & Equivalents | $93.9M (as of Sept 30, 2000) | |||
| Long-Term Debt | $466.2M (as of Sept 30, 2000) |
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased 15.2% in Q3 and 18.0% for the nine months ended September 30, 2000, compared to the prior year. Approximately 45% of the nine-month revenue growth was attributed to acquired businesses.
- Profitability: Operating income grew 21.1% in Q3 and 26.0% for the nine-month period. Net income increased 27.1% in Q3 and 29.1% for the nine months.
- Segment Performance:
- Financial Institution Outsourcing: Revenues rose to $307.1M (Q3) and $913.3M (9M).
- Securities Processing: Revenues rose to $82.7M (Q3) and $256.8M (9M), driven by new clients, volume growth, and acquisitions (JWGenesis Clearing Corp. and Resources Trust Company).
- Unusual Items: The Company recorded a realized gain of $5.8 million for the nine months ended September 30, 2000, from the sale of 200,000 shares of Knight Trading Group, Inc.
Guidance, Outlook, and Risks
Liquidity and Capital Resources: The Company generated $271.7 million in cash from operating activities for the nine months ended September 30, 2000. Long-term obligations totaled $466.2 million, with $369.2 million advanced under revolving credit facilities. Management believes cash flow from operations and available funds are adequate for current requirements, though future significant acquisitions may require additional borrowings or securities issuances.
Tax Rate: The effective income tax rate was 41% for both 2000 and 1999 and is expected to apply throughout the current year.
Risks: The filing includes a Safe Harbor statement noting that forward-looking statements involve risks and uncertainties, including economic, competitive, governmental, and technological factors. There is no assurance that objectives will be achieved.
Investor Verification Checklist
- Verify the sustainability of the 45% revenue growth contribution from acquisitions versus organic growth.
- Confirm the impact of the $5.8 million realized gain on investment on the reported net income and EPS.
- Review the utilization of the $575.0 million revolving credit facility and the trend in short-term borrowings.
- Assess the integration progress of recent acquisitions (JWGenesis Clearing Corporation and Resources Trust Company) in the Securities Processing segment.
- Monitor the 41% effective tax rate assumption for the remainder of the fiscal year.