Adjusted EPS increases 26 percent to $0.78 per share;
Company extends Bank of America bill payment contract to 2013
Brookfield, Wis., April 30, 2008-Fiserv, Inc. (NASDAQ: FISV), a leading provider of information technology solutions for the financial and insurance industries, today reported financial results for the first quarter of 2008. First quarter results include new operating business segments which reflect the company's significant 2007 transformation activity, including the broad expansion of its existing payment-related businesses resulting primarily from the acquisition of CheckFree and the dispositions of several businesses.
Total revenues increased 39 percent to $1.31 billion for the first quarter of 2008 compared with $944 million in 2007. Adjusted internal revenue growth in the quarter was 4 percent for the overall company, and a combined 4 percent for the two new segments focused on the Financial Industry: the Financial Institution Services segment and the Payments and Industry Products segment.
GAAP earnings per share for the first quarter of 2008 were $1.99, including $1.40 from discontinued operations due primarily to gains on dispositions, compared with $0.66 in 2007 which included $0.07 from discontinued operations. Adjusted earnings per share from continuing operations were up 26 percent to $0.78 for the quarter compared with $0.62 for the first quarter of 2007.
Adjusted operating margin increased 200 basis points to 25.0 percent in the quarter as compared to the first quarter of 2007. The margin expansion resulted primarily from continuing improvements in the business mix, CheckFree results, and a continuing focus on operating efficiencies.
"Our results for the first quarter are indicative of a strong start to 2008," said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. "We have significantly re-shaped our business mix over the last 12 months while continuing to make progress against our Fiserv 2.0 initiatives. Our solid performance in the quarter is even more distinctive given the challenges of the economic environment on our mortgage-related businesses."
Also during the quarter, Fiserv and Bank of America agreed to an extension of their strategic relationship for Fiserv to provide bill payment services to 2013.
"We are pleased to continue our relationship with Bank of America, helping them enhance their leading position serving consumers in online banking and bill payment," Yabuki added.
FIRST QUARTER BUSINESS AND OPERATING HIGHLIGHTS
OUTLOOK FOR 2008
"We have revised our 2008 revenue and earnings per share guidance to reflect the new terms in our electronic bill payment contract with Bank of America which had not been considered in our previous guidance," said Yabuki. "We expect the new contract to provide long-term, multi-year revenue growth as bill payment volumes and consumer subscribers continue to grow."
Due to the revised terms of the Bank of America agreement, Fiserv now expects full-year 2008 adjusted earnings from continuing operations to be within a range of $3.28 to $3.40 per share, which represents growth of 23 to 28 percent compared with adjusted earnings per share from continuing operations of $2.66 in 2007, and full-year 2008 adjusted internal revenue growth of 4 to 6 percent.
EARNINGS CONFERENCE CALL
The company will discuss its first quarter 2008 results on a conference call and web cast at 4 p.m. CDT on April 30. To register for the event and to access supporting materials, go to www.fiserv.com and click on the link for the event in the "Upcoming Events" section of the home page. From there, click "Access Event."
USE OF NON-GAAP FINANCIAL INFORMATION
We supplement our reporting of total revenues, operating income, income from continuing operations and earnings per share information determined in accordance with GAAP by using "adjusted revenues," "adjusted operating income," "adjusted income from continuing operations," "adjusted earnings per share from continuing operations," "adjusted operating margin," "free cash flow," and "adjusted internal revenue growth," in this earnings release. Management believes that adjustments for certain non-cash or unusual revenue or expense items, and the exclusion of certain pass-through revenues 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 such non-cash or unusual items may include, but are not limited to, non-cash deferred revenue adjustments arising from acquisitions, non-cash intangible asset amortization expense associated with acquisitions, and merger and integration expenses, all offset by the income tax impact of these items. We exclude these items to more clearly focus on the factors we believe are pertinent to the management of our operations. We regularly report our adjusted results to our chief executive officer, who uses this information to allocate resources to our various businesses.
Free cash flow and adjusted internal revenue growth are described in detail on page 10. 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, revenues, 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 Fiserv, Inc.
Fiserv, Inc. (NASDAQ: FISV), a Fortune 500 company, provides information management and electronic commerce systems and services to the financial and insurance industries. Leading services include transaction processing, outsourcing, electronic bill payment and presentment, investment management solutions, business process outsourcing (BPO), software, risk management and systems solutions. Headquartered in Brookfield, Wis., the company is the leading provider of core processing solutions for U.S. banks, credit unions and thrifts. Fiserv was ranked the largest provider of information technology services to the financial services industry worldwide in the 2004, 2005 and 2006 FinTech 100 surveys. In 2007, the company completed the acquisition of CheckFree, a leading provider of electronic commerce services. Fiserv reported nearly $4 billion in total revenue from continuing operations for 2007. For more information, please visit www.fiserv.com.
Please see the attached press release for more information.
