Fiserv Reports Strong 2004 Third Quarter Results.BROOKFIELD, Wis adv. 1. Certainly; really; indeed.v. t. 1. To think; to suppose; to imagine; - used chiefly in the first person sing. present tense, I wis. See the Note under Ywis. . -- Fiserv, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :FISV FISV Fiserv, Inc (stock symbol) ) announced today continued strong financial results for the third quarter of 2004. For the three-month period ended September 30, 2004, Fiserv processing and services revenues were $866.3 million, a 23% increase over the $702.0 million for the third quarter of 2003. Net income per share-diluted for the third quarter of 2004 was $0.47 per share, compared to $0.41 per share for the third quarter of 2003. For the nine-month period ended September 30, 2004, Fiserv processing and services revenues were $2,562.2 million, a 31% increase over the $1,950.1 million for the first nine months of 2003. Net income per share-diluted for the first nine months of 2004 was $1.42 per share, compared to $1.19 per share for the first nine months of 2003. "Fiserv posted record revenues, earnings and free cash flow for the first nine months of 2004," said Leslie M. Muma, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Fiserv, Inc. "Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. free cash flow in 2004 rose to $395.9 million, an increase of 24% over the prior year period. Our business model that includes high recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenue, effective acquisition integration and operating our businesses in our traditional disciplined manner continue to drive strong earnings and cash flows. We also closed two acquisitions in the third quarter and announced another acquisition subsequent to the end of the quarter. We believe we are well positioned for 2005 with a solid sales pipeline to fuel organic growth and a promising outlook for acquisitions. Our target for 2004 full-year diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of is $1.90 to $1.92. "Fiserv reached a milestone during the third quarter as we celebrated our 20th anniversary," Muma added. "Fiserv was formed in 1984 through the combination of two bank processing organizations. At the time, we had $21 million in revenues, 160 clients, 350 employees and three locations. Through the efforts of our dedicated employees, we have since grown to $3.5 billion in annual revenues, 15,000 clients and 22,000 employees at over 200 locations. While it is nice to reflect on the results of the past, we are even more excited about the prospects for our next 20 years." During the third quarter, Fiserv completed two acquisitions: Results International Systems, Inc., a provider of outsourced solutions for the property-and-casualty insurance industry and Pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. Fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. , Inc., a provider of mail-order prescription services. Fiserv also announced earlier this month that it has purchased CheckAGAIN, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . CheckAGAIN converts paper and imaged checks that have been returned for insufficient funds into electronic automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. clearinghouse clearinghouse Institution established by firms engaged in similar activities to enable them to offset transactions with one another in order to limit payment settlements to net balances. (ACH (Automated Clearing House) A system of the U.S. Federal Reserve Bank that provides electronic funds transfer (EFT) between banks. It is used for all kinds of fund transfer transactions, including direct deposit of paychecks and monthly debits for routine payments to ) transactions for re-presentment to the check writer's account. Significant new relationships and client renewals signed during the third quarter include the following: America's Community Bankers, a trade association for community banks, endorsed Fiserv as the preferred provider of a comprehensive range of check-processing products and services to help ACB ACB American Council of the Blind ACB Asia Commercial Bank ACB America's Community Bankers ACB Adjusted Cost Base ACB Alliance for the Chesapeake Bay ACB Amphibious Construction Battalion (US Navy) ACB Australian Cricket Board member banks prepare for the implementation later this month of Check 21; Fiserv will supply credit processing services to the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. Division of CIT n. 1. A citizen; an inhabitant of a city; a pert townsman; - used contemptuously. Which past endurance sting the tender cit. - Emerson. Group, Inc., a commercial and consumer finance company with nearly $50 billion in assets, under a six-year, multimillion-dollar agreement; Fiserv will install its ICBS ICBS International Committee of the Blue Shield ICBS Incorporated Church Building Society ICBS International Conference of Banking Supervisors ICBS International Cigar Band Society ICBS Inter-Connected Business System core banking system at UK consumer finance company Cattles plc, one of the largest providers of financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. products to the non-standard consumer credit market in the UK; Innobeta Systems, Inc., a provider of transaction processing Updating the appropriate database records as soon as a transaction (order, payment, etc.) is entered into the computer. It may also imply that confirmations are sent at the same time. Transaction processing systems are the backbone of an organization because they update constantly. and terminal driving services for credit unions and community banks, will resell re·sell tr.v. re·sold , re·sell·ing, re·sells 1. To sell again. 2. To sell (a product or service) to the public or to an end user, especially as an authorized dealer. Fiserv EFT eft: see newt. (Electronic Funds Transfer) The transfer of money from one account to another by computer. See ACH. EFT - electronic funds transfer services to its community bank and credit union clients; and Mercantile Relating to trade or commerce; commercial; having to do with the business of buying and selling; relating to merchants. A mercantile agency is an individual or company in the business of collecting data about the financial status, ability, and credit of individuals National Bank of Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). , an $800 million-asset bank headquartered in Hammond, Ind., has outsourced its core processing to Fiserv in a multiyear agreement. Fiserv, Inc. (Nasdaq:FISV) provides information management systems and services to the financial industry including transaction processing, business process outsourcing Business process outsourcing (BPO) is the contracting of a specific business task, such as payroll, to a third-party service provider. Usually, BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain its position in and software and systems solutions. The company serves more than 15,000 clients, including banks, broker-dealers, credit unions, financial planners Financial Planner A qualified investment professional who assists individuals and corporations meet their long-term financial objectives by analyzing the client's status and setting a program to achieve these goals. and investment advisers, insurance companies and agents, self-funded employers, lenders and savings institutions. Headquartered in Brookfield, Wisconsin
Brookfield is a city in Waukesha County, Wisconsin, United States. The population was 38,649 at the 2000 census, but the city's population recently exceeded 40,000 people. , Fiserv reported $2.7 billion in processing and services revenues for 2003. Fiserv can be found on the Internet at www.fiserv.com. The disclosure set forth above contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , specifically Mr. Muma's statements regarding earnings targets, sales pipelines and acquisition prospects. These statements are "forward-looking statements" intended to qualify for the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. from liability established by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as "believes," "anticipates," or "expects," or words of similar import. Similarly, statements that describe future plans, objectives or goals of the Company are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those currently anticipated. Factors that could affect results include, among others, economic, competitive, governmental, regulatory and technological factors affecting the Company's operations, markets, services and related products, prices and other factors discussed in the Company's prior filings with the Securities and Exchange Commission. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The Company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
FISERV, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
----------- ----------- ----------- -----------
Revenues:
Processing and services $866,320 $701,956 $2,562,223 $1,950,106
Customer reimbursements 91,774 84,005 279,371 246,239
----------- ----------- ----------- -----------
Total revenues 958,094 785,961 2,841,594 2,196,345
----------- ----------- ----------- -----------
Cost of revenues:
Salaries, commissions
and payroll related
costs 339,844 325,222 1,016,851 926,352
Customer reimbursement
expenses 91,774 84,005 279,371 246,239
Data processing costs
and equipment rentals 52,822 55,537 164,948 159,532
Prescription costs 114,920 21,001 319,305 32,335
Other operating
expenses 152,606 120,232 442,941 317,884
Depreciation and
amortization 45,411 43,669 140,321 121,051
----------- ----------- ----------- -----------
Total cost of revenues 797,377 649,666 2,363,737 1,803,393
----------- ----------- ----------- -----------
Operating income 160,717 136,295 477,857 392,952
Interest expense - net (4,395) (4,472) (13,613) (10,923)
----------- ----------- ----------- -----------
Income before income
taxes 156,322 131,823 464,244 382,029
Income tax provision 63,965 51,411 184,055 148,991
----------- ----------- ----------- -----------
Net income $92,357 $80,412 $280,189 $233,038
=========== =========== =========== ===========
Net income per share:
Basic $0.47 $0.42 $1.44 $1.21
Diluted(1, 2) $0.47 $0.41 $1.42 $1.19
Shares used in computing
net income per share:
Basic 195,334 193,626 194,980 193,019
Diluted 197,472 196,528 197,305 195,695
(1, 2) See notes on page 5.
FISERV, INC. AND SUBSIDIARIES
SELECTED SEGMENT INFORMATION
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
----------- ----------- ----------- -----------
Processing and services
revenues:
Financial outsourcing,
systems and services
("Financial")(1) $559,180 $510,115 $1,655,303 $1,439,438
Health plan management
services ("Health") 224,066 111,875 648,917 274,172
Investment support and
securities processing
services ("Investment
Services") 54,524 55,728 170,977 165,913
All other and corporate
("Other") 28,550 24,238 87,026 70,583
----------- ----------- ----------- -----------
Total $866,320 $701,956 $2,562,223 $1,950,106
=========== =========== =========== ===========
Operating income:
Financial(1) $148,780 $119,360 $423,062 $344,213
Health 20,353 13,120 58,409 36,119
Investment Services(2) (7,502) 5,926 (4,022) 19,685
Other (914) (2,111) 408 (7,065)
----------- ----------- ----------- -----------
Total $160,717 $136,295 $477,857 $392,952
=========== =========== =========== ===========
(1) In the third quarter of 2004, revenue associated with customer
contractual termination and assignment fees increased by
approximately $10.7 million, or $.03 per share-diluted, over the
prior year comparable period.
(2) During 2004, the Company's broker-dealer subsidiary, Fiserv
Securities, Inc. ("FSI"), has been responding to inquiries from
the Securities and Exchange Commission (the "SEC") as part of its
industry-wide review of mutual fund trading practices. FSI has
engaged in settlement discussions with the SEC as a result of an
SEC investigation of FSI with respect to these matters. As a
result of these discussions, FSI recorded an additional $10
million charge in the third quarter of 2004, or $.05 per share, to
bring its total reserve recorded with respect to these matters to
$16 million. A portion of any settlement amount with the SEC may
be non-deductible for tax purposes. While no settlement with the
SEC has been reached and no assurance can be given that these
matters will be settled consistent with the amounts reserved, FSI
does not anticipate any further material liability arising out of
the SEC investigation.
FISERV, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)
Free Cash Flow
Nine months ended
September 30,
--------------------
(In thousands) 2004 2003
--------------------
Net cash provided by operating activities $430,264 $403,555
Changes in securities processing receivables and
payables-net 75,244 35,574
--------------------
Net cash provided by operating activities before
changes in securities processing receivables and
payables-net 505,508 439,129
Capital expenditures, including capitalization of
software costs for external customers (109,631) (118,787)
--------------------
Free cash flow $395,877 $320,342
====================
Free cash flow is measured as net cash provided by operating activities before changes in securities processing receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed and payables less capital expenditures including capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. of software costs for external customers, as reported in the Company's condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated statements of cash flows. As the changes in securities processing receivables and payables are generally offset by changes in short-term borrowings and investments, which are included in financing and investing activities, management believes it is more meaningful to analyze changes in operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. before the changes in securities processing receivables and payables. Free cash flow is a non-GAAP financial measure that the Company believes is useful to investors because it provides another measure of available cash flow after the Company has satisfied the capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. of its operations.
Internal Revenue Growth Percentages by Segment
Three months Nine months
ended ended
September 30, September 30,
---------------- ----------------
2004 2003 2004 2003
---------------- ----------------
Financial 1% 4% 1% 3%
Health 28% 37% 39% 28%
Investment Services (2)% (12)% 3% (10)%
Other 18% 7% 23% 2%
---------------- ----------------
Total 7% 7% 9% 4%
================ ================
Internal revenue growth percentages are measured as the increase or decrease in total processing and services revenue for the current period less "acquired revenue from acquisitions" divided by total processing and services revenues from the prior year period plus "acquired revenue from acquisitions." "Acquired revenue from acquisitions" was $394.6 million ($202.4 million in the Financial segment and $192.2 million in the Health segment) for the nine months ended September 30, 2004 and represents pre-acquisition normalized revenue of acquired companies for the comparable prior year period. Internal revenue growth percentage is a non-GAAP financial measure that the Company believes is useful to investors because it provides an alternative to measure revenue growth excluding the impact of acquired revenues. |
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