Fiserv (FISV) Q4 2004 earnings summary

Executive summary

• FY 2004 processing and services revenue grew 29% to $3.351B; operating income rose 26% to $659.6M and net income increased to $377.6M from $315.0M.

• Internal revenue growth accelerated to 10% from 5% in 2003, driven primarily by Health; acquisition-related growth also contributed.

• Q4 processing and services revenue was $866.1M, operating income $162.6M and net income $97.5M; diluted EPS was $0.49, including a $0.01 discontinued-operations loss.

Financial highlights

• FY total revenue was $3.730B, including $379.2M of customer reimbursements; processing and services revenue was $3.351B.

• FY income from continuing operations was $394.9M; diluted continuing-operations EPS was $2.00 versus $1.58 in 2003.

• FY diluted EPS was $1.91 versus $1.61; reported net income was $377.6M versus $315.0M.

• Adjusted for the $27M increase in one-time early termination and assignment fees, 2004 Financial segment internal growth was 2%; those fees added about $0.08 to continuing-operations diluted EPS versus 2003.

Outlook and guidance

• 2005 effective tax rate on continuing operations expected at 38.7%, versus 38.4% in 2004.

• Cash flow and other available funding expected to cover operating needs, debt repayments, acquisition contingent payments and ordinary capital spending; significant acquisitions may require additional borrowing or securities issuance.

• Management planned to pursue complementary acquisitions and continue reducing acquisition-related costs through gradual elimination of operating redundancies.