FISERV INC. 10-Q Summary: Quarter Ended June 30, 1996
Business Context and Reporting Period
This Form 10-Q covers the quarterly and six-month periods ended June 30, 1996, for FISERV, Inc., a provider of financial services technology. The report includes unaudited consolidated financial statements and management discussion. As of June 30, 1996, 45,142,000 shares of common stock were outstanding.
Key Financial Metrics
| Metric | Q2 1996 | Q2 1995 | 6-Month 1996 | 6-Month 1995 |
|---|---|---|---|---|
| Revenues | $196.5M | $173.5M | $391.2M | $330.6M |
| Operating Income | $30.9M | $24.7M | $61.4M | $45.6M |
| Net Income | $15.2M | $12.0M | $29.9M | $23.2M |
| Diluted EPS | $0.33 | $0.28 | $0.65 | $0.55 |
| Operating Margin | 15.70% | 14.26% | 15.69% | 13.81% |
| Effective Tax Rate | 41.0% | 41.0% | 41.0% | 41.0% |
Liquidity and Debt: Cash and cash equivalents totaled $61.4 million at June 30, 1996. Long-term debt stood at $304.7 million, comprising $119.6 million in senior notes and $173.0 million drawn from a $300 million credit facility. Net cash provided by operating activities for the six months ended June 30, 1996, was $75.8 million.
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased 13.3% in Q2 and 18.3% for the six-month period compared to 1995. Approximately 65% of year-to-date growth is attributed to acquired companies, with the remainder driven by new clients, transaction volume growth, and price increases.
- Profitability: Operating income grew 24.7% in Q2 and 34.4% for the six-month period. Operating margins improved due to a favorable change in business mix and the impact of acquisitions.
- Interest Expense: Net interest expense increased by $0.6 million in Q2 and $4.5 million for the six-month period, primarily due to debt incurred for acquisitions since January 1, 1995.
- Debt Reduction: The company utilized cash flows to reduce long-term debt by $77.6 million during the first six months of 1996.
Outlook, Risks, and Management Commentary
Management expects the 41% effective tax rate to apply throughout the current year. The company believes cash flow from operations and available funding sources are adequate to meet requirements. However, significant future acquisitions may necessitate additional borrowings or securities issuance. The $300 million credit facility includes scheduled reductions of $45 million in May 1997 and 1998, $60 million in May 1999, and expires in May 2000.
Unusual Items/Contingencies: The filing notes a Form 8-K dated April 4, 1996, regarding an amendment to a processing contract with The Chase Manhattan Corporation. No other specific contingencies or unusual items were detailed in the provided text.
Investor Verification Checklist
- Verify the sustainability of the 65% revenue contribution from recent acquisitions versus organic growth.
- Confirm the repayment schedule and interest rate terms of the $300 million credit facility, specifically the upcoming reductions in 1997 and 1998.
- Review the details of the amended processing contract with The Chase Manhattan Corporation filed on Form 8-K.
- Assess the impact of increased amortization of intangible assets ($10.6M for six months) on future operating margins.
- Monitor the company's ability to maintain the 41% effective tax rate as projected by management.