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Adjusted internal revenue growth of 2 percent and adjusted EPS growth of 13 percent in the fourth quarter;
Full year adjusted EPS of
Company expects 2011 adjusted internal revenue growth of 2 to 4 percent and adjusted EPS growth of 9 to 12 percent
GAAP revenue in the fourth quarter of 2010 was
GAAP earnings per share from continuing operations for the fourth
quarter was
Adjusted earnings per share in the fourth quarter increased 13 percent
to
"We delivered on our commitments of returning to positive revenue growth
while increasing earnings and generating a record level of free cash
flow," said
Fourth Quarter and Full Year 2010
Outlook for 2011
"Strong sales to new and existing clients reflects our focus on creating value for clients," said Yabuki. "The investments we are making in our industry-leading solutions are building momentum for 2011 and beyond."
Earnings Conference Call
The company will discuss its fourth quarter and full year 2010 results
on a conference call and webcast at
Use of Non-GAAP Financial Measures
We supplement our reporting of revenue, operating income, income from continuing operations and earnings per share information determined in accordance with GAAP by using "adjusted revenue," "adjusted operating income," "adjusted income from continuing operations," "adjusted earnings per share," "adjusted operating margin," "free cash flow" and "adjusted internal revenue growth" in this earnings release. Management believes that adjustments for certain non-cash or other revenue or expense items and the exclusion of certain pass-through revenue and expenses enhance our shareholders' ability to evaluate our performance because such items do not reflect how we manage our operations. Therefore, we exclude these items from GAAP revenue, operating income, income from continuing operations and earnings per share to calculate these non-GAAP measures.
Examples of non-cash or other items may include, but are not limited to, non-cash intangible asset amortization expense associated with acquisitions, severance costs, merger and integration expenses and non-cash deferred revenue adjustments arising from acquisitions. We exclude these items to more clearly focus on the factors we believe are pertinent to the management of our operations, and we use this information to allocate resources to our various businesses.
Free cash flow and adjusted internal revenue growth are non-GAAP financial measures and are described on pages 10 and 12. We believe free cash flow is useful to measure the funds generated in a given period that are available for strategic capital decisions. Free cash flow is calculated as net cash provided by operating activities less capital expenditures, as adjusted for other items as listed on page 10. We believe adjusted internal revenue growth percentage is useful because it presents revenue growth excluding acquired revenue, postage reimbursements in our Output Solutions business and deferred revenue purchase accounting adjustments. We believe this supplemental information enhances our shareholders' ability to evaluate and understand our core business performance.
These non-GAAP measures should be considered in addition to, and not as a substitute for, revenue, operating income, income from continuing operations and earnings per share or any other amount determined in accordance with GAAP. These non-GAAP measures reflect management's judgment of particular items and may not be comparable to similarly titled measures reported by other companies.
About
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements regarding anticipated adjusted earnings per share
and adjusted internal revenue growth. Statements can generally be
identified as forward-looking because they include words such as
"believes," "anticipates," "expects," "could," "should" or words of
similar meaning. Statements that describe the company's future plans,
objectives or goals are also forward-looking statements. Forward-looking
statements are subject to assumptions, risks and uncertainties that may
cause actual results to differ materially from those contemplated by
such forward-looking statements. The factors that may affect the
company's results include, among others: the impact on the company's
business of the current state of the economy, including the risk of
reduction in revenue resulting from decreased spending on the products
and services that the company offers or from the elimination of existing
or potential clients due to consolidation or financial failures in the
financial services industry; legislative and regulatory actions in
| Fiserv, Inc. | ||||||||||||||||
| Condensed Consolidated Statements of Income | ||||||||||||||||
| (In millions, except per share amounts, unaudited) | ||||||||||||||||
| Three Months Ended | Years Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Revenue | ||||||||||||||||
| Processing and services | $ | 870 | $ | 844 | $ | 3,415 | $ | 3,329 | ||||||||
| Product | 208 | 218 | 718 | 748 | ||||||||||||
| Total revenue | 1,078 | 1,062 | 4,133 | 4,077 | ||||||||||||
| Expenses | ||||||||||||||||
| Cost of processing and services | 473 | 468 | 1,853 | 1,844 | ||||||||||||
| Cost of product | 140 | 143 | 533 | 536 | ||||||||||||
| Selling, general and administrative | 198 | 195 | 740 | 751 | ||||||||||||
| Total expenses | 811 | 806 | 3,126 | 3,131 | ||||||||||||
| Operating income | 267 | 256 | 1,007 | 946 | ||||||||||||
| Interest expense - net | (48 | ) | (51 | ) | (188 | ) | (212 | ) | ||||||||
| Loss on early debt extinguishment (1) | (26 | ) | - | (26 | ) | - | ||||||||||
| Income from continuing operations before income taxes | ||||||||||||||||
| and income from investment in unconsolidated affiliate | 193 | 205 | 793 | 734 | ||||||||||||
| Income tax provision | (77 | ) | (79 | ) | (301 | ) | (273 | ) | ||||||||
| Income from investment in unconsolidated affiliate | 3 | 2 | 14 | 12 | ||||||||||||
| Income from continuing operations | 119 | 128 | 506 | 473 | ||||||||||||
| Income (loss) from discontinued operations | (3 | ) | (10 | ) | (10 | ) | 3 | |||||||||
| Net income | $ | 116 | $ | 118 | $ | 496 | $ | 476 | ||||||||
| GAAP earnings (loss) per share - diluted: | ||||||||||||||||
| Continuing operations | $ | 0.80 | $ | 0.83 | $ | 3.34 | $ | 3.04 | ||||||||
| Discontinued operations | (0.02 | ) | (0.07 | ) | (0.07 | ) | 0.02 | |||||||||
| Total | $ | 0.78 | $ | 0.76 | $ | 3.27 | $ | 3.06 | ||||||||
| Diluted shares used in computing earnings (loss) per share | 149.8 | 154.7 | 151.7 | 155.4 | ||||||||||||
|
(1) |
During the third quarter of 2010, the company raised $750 million in a public offering of debt with a weighted average interest rate of 4.025%. In the fourth quarter of 2010, the company used a portion of the proceeds from the offering to repurchase $250 million of its 6.125% senior notes due in 2012. The company repurchased the notes at a premium, resulting in a pre-tax charge of $26 million ($0.11 per share after tax) including related costs. | |
| Fiserv, Inc. | ||||||||||||||||
| Reconciliation of GAAP to Adjusted Income and | ||||||||||||||||
| Earnings Per Share from Continuing Operations | ||||||||||||||||
| (In millions, except per share amounts, unaudited) | ||||||||||||||||
| Three Months Ended | Years Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| GAAP income from continuing operations | $ | 119 | $ | 128 | $ | 506 | $ | 473 | ||||||||
| Adjustments: | ||||||||||||||||
| Merger costs and other adjustments | - | (10 | ) | - | 6 | |||||||||||
| Severance costs | - | - | - | 15 | ||||||||||||
| Amortization of acquisition-related intangible assets | 38 | 37 | 148 | 145 | ||||||||||||
| Loss on early debt extinguishment (1) | 26 | - | 26 | - | ||||||||||||
| Tax impact of adjustments and merger-related tax items | (24 | ) | (10 | ) | (66 | ) | (70 | ) | ||||||||
| Adjusted income from continuing operations | $ | 159 | $ | 145 | $ | 614 | $ | 569 | ||||||||
| GAAP earnings per share - continuing operations | $ | 0.80 | $ | 0.83 | $ | 3.34 | $ | 3.04 | ||||||||
| Adjustments - net of income taxes: | ||||||||||||||||
| Merger costs and merger-related tax items | - | (0.04 | ) | - | (0.02 | ) | ||||||||||
| Severance costs | - | - | - | 0.06 | ||||||||||||
| Amortization of acquisition-related intangible assets | 0.15 | 0.15 | 0.60 | 0.58 | ||||||||||||
| Loss on early debt extinguishment (1) | 0.11 | - | 0.11 | - | ||||||||||||
| Adjusted earnings per share | $ | 1.06 | $ | 0.94 | $ | 4.05 | $ | 3.66 | ||||||||
|
(1) |
See footnote on Page 6. |
See page 4 for disclosures related to the use of non-GAAP financial information.
| Fiserv, Inc. | ||||||||||||||||
| Financial Results by Segment | ||||||||||||||||
| (In millions, unaudited) | ||||||||||||||||
| Three Months Ended | Years Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Total Company | ||||||||||||||||
| Revenue | $ | 1,078 | $ | 1,062 | $ | 4,133 | $ | 4,077 | ||||||||
| Output Solutions postage reimbursements | (51 | ) | (56 | ) | (204 | ) | (211 | ) | ||||||||
| Deferred revenue adjustment | - | 1 | - | 5 | ||||||||||||
| Adjusted revenue | $ | 1,027 | $ | 1,007 | $ | 3,929 | $ | 3,871 | ||||||||
| Operating income | $ | 267 | $ | 256 | $ | 1,007 | $ | 946 | ||||||||
| Merger costs and other adjustments | - | (10 | ) | - | 6 | |||||||||||
| Severance costs | - | - | - | 15 | ||||||||||||
| Amortization of acquisition-related intangible assets | 38 | 37 | 148 | 145 | ||||||||||||
| Adjusted operating income | $ | 305 | $ | 283 | $ | 1,155 | $ | 1,112 | ||||||||
| Operating margin | 24.8 | % | 24.1 | % | 24.4 | % | 23.2 | % | ||||||||
| Adjusted operating margin | 29.7 | % | 28.1 | % | 29.4 | % | 28.7 | % | ||||||||
| Payments and Industry Products ("Payments") | ||||||||||||||||
| Revenue | $ | 581 | $ | 569 | $ | 2,208 | $ | 2,160 | ||||||||
| Output Solutions postage reimbursements | (51 | ) | (56 | ) | (204 | ) | (211 | ) | ||||||||
| Adjusted revenue | $ | 530 | $ | 513 | $ | 2,004 | $ | 1,949 | ||||||||
| Operating income | $ | 167 | $ | 164 | $ | 625 | $ | 617 | ||||||||
| Operating margin | 28.7 | % | 28.9 | % | 28.3 | % | 28.6 | % | ||||||||
| Adjusted operating margin | 31.5 | % | 32.1 | % | 31.2 | % | 31.7 | % | ||||||||
| Financial Institution Services ("Financial") | ||||||||||||||||
| Revenue | $ | 506 | $ | 497 | $ | 1,951 | $ | 1,942 | ||||||||
| Operating income | $ | 161 | $ | 141 | $ | 591 | $ | 569 | ||||||||
| Operating margin | 31.7 | % | 28.5 | % | 30.3 | % | 29.3 | % | ||||||||
| Corporate and Other | ||||||||||||||||
| Revenue | $ | (9 | ) | $ | (4 | ) | $ | (26 | ) | $ | (25 | ) | ||||
| Deferred revenue adjustment | - | 1 | - | 5 | ||||||||||||
| Adjusted revenue | $ | (9 | ) | $ | (3 | ) | $ | (26 | ) | $ | (20 | ) | ||||
| Operating loss | $ | (61 | ) | $ | (49 | ) | $ | (209 | ) | $ | (240 | ) | ||||
| Merger costs and other adjustments | - | (10 | ) | - | 6 | |||||||||||
| Severance costs | - | - | - | 15 | ||||||||||||
| Amortization of acquisition-related intangible assets | 38 | 37 | 148 | 145 | ||||||||||||
| Adjusted operating loss | $ | (23 | ) | $ | (22 | ) | $ | (61 | ) | $ | (74 | ) | ||||
See page 4 for disclosures related to the use of non-GAAP financial information. Operating margin percentages are calculated using actual, unrounded amounts.
| Fiserv, Inc. | ||||||||
| Condensed Consolidated Statements of Cash Flows - Continuing Operations | ||||||||
| (In millions, unaudited) | ||||||||
| Years Ended | ||||||||
| December 31, | ||||||||
| 2010 | 2009 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 496 | $ | 476 | ||||
| Adjustment for discontinued operations | 10 | (3 | ) | |||||
| Adjustments to reconcile net income to net cash | ||||||||
| provided by operating activities: | ||||||||
| Depreciation and other amortization | 191 | 188 | ||||||
| Amortization of acquisition-related intangible assets | 148 | 145 | ||||||
| Share-based compensation | 39 | 36 | ||||||
| Deferred income taxes | 37 | 64 | ||||||
| Loss on early debt extinguishment | 26 | - | ||||||
| Dividend from unconsolidated affiliate | 40 | - | ||||||
| Other non-cash items | (21 | ) | (13 | ) | ||||
| Changes in assets and liabilities, net of effects from acquisitions: | ||||||||
| Trade accounts receivable | (12 | ) | 44 | |||||
| Prepaid expenses and other assets | 4 | (9 | ) | |||||
| Accounts payable and other liabilities | (26 | ) | (71 | ) | ||||
| Deferred revenue | 26 | (7 | ) | |||||
| Net cash provided by operating activities | 958 | 850 | ||||||
| Cash flows from investing activities | ||||||||
| Capital expenditures, including capitalization of software costs | (175 | ) | (198 | ) | ||||
| Payments from (advances to) unconsolidated affiliate | 49 | (57 | ) | |||||
| Other investing activities | 10 | 7 | ||||||
| Net cash used in investing activities | (116 | ) | (248 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from long-term debt | 748 | - | ||||||
| Repayments of long-term debt, including premium and costs | (1,060 | ) | (475 | ) | ||||
| Issuance of common stock and treasury stock | 62 | 45 | ||||||
| Purchases of treasury stock | (413 | ) | (175 | ) | ||||
| Other financing activities | (8 | ) | 4 | |||||
| Net cash used in financing activities | (671 | ) | (601 | ) | ||||
| Change in cash and cash equivalents | 171 | 1 | ||||||
| Net cash transactions from discontinued operations | 29 | 132 | ||||||
| Beginning balance | 363 | 230 | ||||||
| Ending balance | $ | 563 | $ | 363 | ||||
| Fiserv, Inc. | ||||||||
| Free Cash Flow | ||||||||
| (In millions, unaudited) | ||||||||
| Years Ended | ||||||||
| December 31, | ||||||||
| 2010 | 2009 | |||||||
| Income from continuing operations | $ | 506 | $ | 473 | ||||
| Depreciation and other amortization | 191 | 188 | ||||||
| Amortization of acquisition-related intangible assets | 148 | 145 | ||||||
| Share-based compensation | 39 | 36 | ||||||
| Loss on early debt extinguishment | 26 | - | ||||||
| Dividend from unconsolidated affiliate(1) | 40 | - | ||||||
| Capital expenditures | (175 | ) | (198 | ) | ||||
| Free cash flow before changes in working capital | 775 | 644 | ||||||
| Changes in working capital - net | 8 | 8 | ||||||
| Dividend from unconsolidated affiliate(1) | (40 | ) | - | |||||
| Other adjustments(2) | (8 | ) | 16 | |||||
| Free cash flow | $ | 735 | $ | 668 | ||||
| Net cash provided by operating activities | $ | 958 | $ | 850 | ||||
| Capital expenditures | (175 | ) | (198 | ) | ||||
| Dividend from unconsolidated affiliate(1) | (40 | ) | - | |||||
| Other adjustments(2) | (8 | ) | 16 | |||||
| Free cash flow | $ | 735 | $ | 668 | ||||
|
(1) |
In the fourth quarter of 2010, the company received a cash dividend from StoneRiver Group, L.P., a company in which Fiserv owns a 49% interest. The portion of this dividend that represents a return on the company's investment is reported in cash flows from operating activities. Management believes it is appropriate to exclude this dividend from the calculation of free cash flow because it may not be indicative of the future free cash flow of the company. | |
|
(2) |
Free cash flow excludes the net change in settlement assets and obligations, after-tax merger and severance costs, and the tax benefit from the loss on early debt extinguishment. Management believes it is appropriate to exclude these items from the calculation of free cash flow because they may not be indicative of the future free cash flow of the company. |
See page 4 for disclosures related to the use of non-GAAP financial information.
| Fiserv, Inc. | ||||||
| Condensed Consolidated Balance Sheets | ||||||
| (In millions, unaudited) | ||||||
| December 31, | December 31, | |||||
| 2010 | 2009 | |||||
| Assets | ||||||
| Cash and cash equivalents | $ | 563 | $ | 363 | ||
| Trade accounts receivable — net | 572 | 554 | ||||
| Deferred income taxes | 37 | 46 | ||||
| Prepaid expenses and other current assets | 245 | 314 | ||||
| Total current assets | 1,417 | 1,277 | ||||
| Property and equipment — net | 267 | 293 | ||||
| Intangible assets — net | 1,879 | 2,006 | ||||
| Goodwill | 4,377 | 4,371 | ||||
| Other long-term assets | 341 | 431 | ||||
| Total assets | $ | 8,281 | $ | 8,378 | ||
| Liabilities and Shareholders' Equity | ||||||
| Accounts payable and accrued expenses | $ | 537 | $ | 565 | ||
| Current maturities of long-term debt | 3 | 259 | ||||
| Deferred revenue | 351 | 337 | ||||
| Total current liabilities | 891 | 1,161 | ||||
| Long-term debt | 3,353 | 3,382 | ||||
| Deferred income taxes | 627 | 580 | ||||
| Other long-term liabilities | 181 | 229 | ||||
| Total liabilities | 5,052 | 5,352 | ||||
| Shareholders' equity | 3,229 | 3,026 | ||||
| Total liabilities and shareholders' equity | $ | 8,281 | $ | 8,378 | ||
| Fiserv, Inc. | ||||||
| Selected Key Metrics | ||||||
| Adjusted Internal Revenue Growth (1) |
Three Months Ended
December 31, 2010 |
Year Ended
December 31, 2010 |
||||
| Payments Segment | 3% | 3% | ||||
| Financial Segment | 2% | -- | ||||
| Total Company | 2% | 1% | ||||
|
Fiserv 2.0 Metrics
(in millions) |
2010 Attainment | |||||
| 2010 Objective | Dollars | Percentage | ||||
| Integrated Sales (2) | $105 | $132 | 126% | |||
| Operational Effectiveness (3) | $ 40 | $ 55 | 138% | |||
| Selected Electronic Payment Metrics | Three Months Ended | Year Ended | ||||
|
(in millions) |
December 31, 2010 | December 31, 2010 | ||||
| Bill Payment Transactions (4) | 362 | 1,402 | ||||
| Bill Payment Year-Over-Year Transaction Growth (4) | 6% | 7% | ||||
| e-Bills Delivered | 83 | 330 | ||||
| e-Bill Year-Over-Year Growth | 4% | 3% | ||||
|
(1) |
Adjusted internal revenue growth is measured as the increase or decrease in adjusted revenue (see page 8), excluding acquired revenue, for the current period divided by adjusted revenue from the prior year period. Acquired revenue in the Payments segment, and for the total company, was $2 million in the fourth quarter of 2010 and $3 million for the full year. | |
|
(2) |
Integrated Sales include sales from a designated list of products sold to account processing clients. Dollar amounts represent the amount of estimated recurring annual revenue. | |
|
(3) |
Operational Effectiveness is the amount of savings from our Fiserv 2.0 initiative and the combination of CheckFree with Fiserv. Dollar amounts represent the targeted or actual savings in the measurement period, which are incremental to the amounts attained prior to 2010. | |
|
(4) |
Bill Payment Transactions represent online bill payment transactions occurring through financial institutions, brokerage firms or portals. Transaction growth in 2010 excludes volume associated with a remittance only client acquired by a third party in 2008 for which we continued to process through the third quarter of 2009. |
See page 4 for disclosures related to the use of non-GAAP financial information.
(FISV-E)
Media Relations:
Vice President
Communications
678-375-1595
judy.wicks@fiserv.com
or
Investor
Relations:
Vice President Investor Relations
262-879-5055
peter.holbrook@fiserv.com
Source:
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