Fiserv, Inc. (NASDAQ:FISV), a leading provider of information management systems and services solutions, today reported financial results for the fourth quarter and full year.
The 2007 financial results reflect the dispositions of certain businesses, including Fiserv Health, which was reported as discontinued operations in the fourth quarter of 2007 and for all prior periods presented.
Total revenues increased 19 percent to $1.11 billion for the fourth quarter compared with $930.1 million in 2006. For the full year, revenues were $3.92 billion, up 10 percent compared with $3.57 billion in 2006. Adjusted internal revenue growth in the company's financial segment was 4 percent in the fourth quarter and 5 percent for the full year 2007.
GAAP earnings per share for the fourth quarter of 2007 were $0.58 per share, including $0.54 from continuing operations, compared with $0.52 in 2006. GAAP earnings per share for 2007 were $2.60 per share, including $2.42 from continuing operations, compared with $2.19 in 2006.
Adjusted earnings per share from continuing operations were $0.69 for the fourth quarter of 2007, compared with $0.58 for the fourth quarter of 2006, an increase of 19 percent. Adjusted earnings per share from continuing operations for 2007 were $2.66, compared with $2.31 for 2006, an increase of 15 percent.
Overall adjusted operating margin increased 110 basis points to 25.8 percent for the fourth quarter, and was 26.1 percent for the full year, an increase of 100 basis points compared with the prior year. Financial segment adjusted operating margin increased 200 basis points to 27.0 percent for the quarter, and for the full year was up 270 basis points to 27.1 percent compared to the prior year periods.
"Our fourth quarter financial results validate the strength of our recurring-revenue business model and cap a very strong year," said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. "We delivered on our financial goals while significantly re-shaping the company to enhance our financial profile."ACQUISITION AND DIVESTITURE ACTIVITY
Fiserv recently completed a number of transformative transactions:
- On Dec. 3, 2007, the company completed its acquisition of CheckFree Corporation ("CheckFree") for approximately $4.4 billion in cash, significantly enhancing its presence in the fast-growing markets of on-line bill payment, Internet banking, operational risk management and investment services.
- On Jan. 10, 2008, Fiserv completed the disposition of a majority of its health businesses to UnitedHealthcare. The company estimates net proceeds from this transaction of approximately $460 million after income taxes, final net working capital adjustments and transaction costs.
- On Feb. 4, 2008, Fiserv completed the sale of the majority of the Fiserv Investment Support Services ("Fiserv ISS") business to TD Ameritrade, the first of two transactions related to the sale of these assets. The company estimates net proceeds from the TD Ameritrade transaction - including excess capital and excluding any contingent earn-out payment - of approximately $200 million. The second part of the sale - to Robert Beriault Holdings, Inc. - is expected to close by the end of the second quarter of 2008.
- On Dec. 31, 2007, Fiserv completed the disposition of CredStar, a mortgage credit reporting unit, and, on Jan. 24, 2008, the company divested Del Mar Database, a provider of loan broker management products.
"We made great progress over the last year, focusing the company in areas that have attractive growth characteristics and will translate to more value for our clients," said Yabuki. "We will continue to refine our mix of businesses to strengthen our leadership position in serving the financial services industry."OTHER BUSINESS AND OPERATING HIGHLIGHTS
OUTLOOK FOR 2008
- Full-year free cash flow from continuing operations was up 15 percent to $438 million compared with 2006;
- Overall adjusted operating margin in the fourth quarter of 2007 was 25.8 percent, up 110 basis points year over year. For the full year 2007, adjusted operating margin was 26.1 percent, up 100 basis points compared with 2006. Adjusted operating margin in the financial segment was 27.0 percent in the fourth quarter of 2007 and 27.1 percent for the full year 2007, up 200 and 270 basis points versus the prior year, respectively;
- Fiserv EFT completed 46 new sales in the quarter with 90 percent made within the Fiserv core processing client base;
- In the quarter, the company added 90 clients for its branch capture product and 142 clients for its merchant capture product;
- In the quarter, the company signed 97 new clients for its electronic bill payment services and now has nearly 3,300 electronic bill pay clients;
- CheckFree's Electronic Biller Services added significant content by implementing e-Bills for American Express's 20 million U.S. consumer cardholders, and for more than 17 million U.S. policyholders of Allstate Insurance;
- American Chartered Bank, a $2.6 billion financial institution based in Schaumburg, Ill., signed a three-year renewal agreement with Fiserv ITI Outsourcing. The bank also selected Fiserv EFT to handle processing of its debit card and ATM processing business, a competitive takeaway for Fiserv;
- Personix, a Fiserv business unit, was selected by Misys Healthcare Systems to provide print and electronic fulfillment for clients' billing statements and explanations of benefits. Headquartered in Raleigh, N.C., Misys Healthcare serves more than 100,000 health care professionals delivering software and services to physicians, caregivers, and the healthcare community;
- In 2007, Fiserv added a total of 52 new de novo bank clients to its roster, an increase of 44 percent over the signings in 2006.
Fiserv expects full-year 2008 adjusted earnings from continuing operations to be within a range of $3.33 to $3.47 per share, which represents growth of 25 to 30 percent compared with adjusted earnings per share from continuing operations of $2.66 in 2007. Fiserv expects full-year 2008 overall company adjusted internal revenue growth of 5 to 7 percent, with the financial segment at the upper end of the range and the insurance segment at the lower end of the range.
"We expect to achieve strong results in 2008 even in the face of market variability," said Yabuki. "And given the nature of our business model, we believe we are positioned to achieve similarly strong results in 2009."
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