Document and Entity Information
Document and Entity Information | ||
3 Months Ended
Mar. 31, 2010 | May. 04, 2010
| |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | 2010-03-31 | |
Document Fiscal Year Focus | 2,010 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | FISV | |
Entity Registrant Name | FISERV INC | |
Entity Central Index Key | 0000798354 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 152,610,235 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) | ||
In Millions, except Per Share data | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Revenue: | ||
Processing and services | $831 | $831 |
Product | 177 | 192 |
Total revenue | 1,008 | 1,023 |
Expenses: | ||
Cost of processing and services | 462 | 458 |
Cost of product | 136 | 142 |
Selling, general and administrative | 172 | 198 |
Total expenses | 770 | 798 |
Operating income | 238 | 225 |
Interest expense, net | (45) | (54) |
Income from continuing operations before income taxes and income from investment in unconsolidated affiliate | 193 | 171 |
Income tax provision | (73) | (66) |
Income from investment in unconsolidated affiliate, net of income taxes | 3 | 1 |
Income from continuing operations | 123 | 106 |
Loss from discontinued operations, net of income taxes | (2) | (3) |
Net income | $121 | $103 |
Net income (loss) per share - basic: | ||
Continuing operations | 0.81 | 0.68 |
Discontinued operations | -0.01 | -0.02 |
Total | 0.79 | 0.66 |
Net income (loss) per share - diluted: | ||
Continuing operations | 0.8 | 0.68 |
Discontinued operations | -0.01 | -0.02 |
Total | 0.79 | 0.66 |
Shares used in computing net income (loss) per share: | ||
Basic | 152.5 | 155.5 |
Diluted | 153.7 | 156 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 12 Months Ended
Dec. 31, 2009 |
ASSETS | ||
Cash and cash equivalents | $416 | $363 |
Trade accounts receivable, net | 514 | 554 |
Deferred income taxes | 44 | 46 |
Prepaid expenses and other current assets | 270 | 314 |
Total current assets | 1,244 | 1,277 |
Property and equipment, net | 281 | 293 |
Intangible assets, net | 1,970 | 2,006 |
Goodwill | 4,369 | 4,371 |
Other long-term assets | 445 | 431 |
Total assets | 8,309 | 8,378 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Accounts payable and accrued expenses | 510 | 565 |
Deferred revenue | 347 | 337 |
Current maturities of long-term debt | 133 | 259 |
Total current liabilities | 990 | 1,161 |
Long-term debt | 3,381 | 3,382 |
Deferred income taxes | 583 | 580 |
Other long-term liabilities | 237 | 229 |
Total liabilities | 5,191 | 5,352 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Preferred stock, no par value: 25.0 million shares authorized; none issued | ||
Common stock, $0.01 par value: 450.0 million shares authorized; 197.9 million shares issued | 2 | 2 |
Additional paid-in capital | 729 | 727 |
Accumulated other comprehensive loss | (70) | (69) |
Accumulated earnings | 4,492 | 4,371 |
Treasury stock, at cost, 45.3 million and 44.7 million shares | (2,035) | (2,005) |
Total shareholders' equity | 3,118 | 3,026 |
Total liabilities and shareholders' equity | $8,309 | $8,378 |
1_CONDENSED CONSOLIDATED BALANC
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | ||
Share data in Millions, except Per Share data | Mar. 31, 2010
| Dec. 31, 2009
|
Preferred stock, no par value | $0 | $0 |
Preferred stock, shares authorized | 25 | 25 |
Preferred stock, issued | 0 | 0 |
Common stock, par value | 0.01 | 0.01 |
Common stock, shares authorized | 450 | 450 |
Common stock, shares issued | 197.9 | 197.9 |
Treasury stock, shares | 45.3 | 44.7 |
2_CONDENSED CONSOLIDATED STATEM
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Cash flows from operating activities: | ||
Net income | $121 | $103 |
Adjustment for discontinued operations | 2 | 3 |
Adjustments to reconcile net income to net cash provided by operating activities from continuing operations: | ||
Depreciation and other amortization | 47 | 47 |
Amortization of acquisition-related intangible assets | 37 | 34 |
Share-based compensation | 10 | 11 |
Deferred income taxes | 5 | 3 |
Other non-cash items | (10) | (1) |
Changes in assets and liabilities: | ||
Trade accounts receivable | 39 | 52 |
Prepaid expenses and other assets | (12) | 4 |
Accounts payable and other liabilities | 11 | (13) |
Deferred revenue | 10 | (12) |
Net cash provided by operating activities from continuing operations | 260 | 231 |
Cash flows from investing activities: | ||
Capital expenditures, including capitalization of software costs | (42) | (45) |
Other investing activities | 7 | 3 |
Net cash used in investing activities from continuing operations | (35) | (42) |
Cash flows from financing activities: | ||
Repayments of long-term debt | (126) | (101) |
Issuance of common stock and treasury stock | 21 | 10 |
Purchases of treasury stock | (71) | (25) |
Other financing activities | 5 | 4 |
Net cash used in financing activities from continuing operations | (171) | (112) |
Net change in cash and cash equivalents from continuing operations | 54 | 77 |
Net cash transactions transferred to discontinued operations | (1) | |
Beginning balance | 363 | 230 |
Ending balance | 416 | 307 |
Discontinued operations cash flow information: | ||
Net cash (used in) provided by operating activities | (3) | 1 |
Net cash provided by investing activities | 2 | 1 |
Net cash used in financing activities | (2) | |
Net change in cash and cash equivalents from discontinued operations | (1) | |
Net cash transactions transferred from continuing operations | 1 | |
Beginning balance - discontinued operations | 38 | |
Ending balance - discontinued operations | $38 |
Principles of Consolidation
Principles of Consolidation | |
3 Months Ended
Mar. 31, 2010 | |
Principles of Consolidation | 1. Principles of Consolidation The condensed consolidated financial statements for the three-month periods ended March31, 2010 and 2009 are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments consisted of normal recurring items. Interim results are not necessarily indicative of results for a full year. The condensed consolidated financial statements and accompanying notes are presented as permitted by Form 10-Q and do not contain certain information included in the annual consolidated financial statements and accompanying notes of Fiserv, Inc. (the Company). These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Companys Annual Report on Form 10-K for the year ended December31, 2009. The condensed consolidated financial statements include the accounts of Fiserv, Inc. and all 100% owned subsidiaries. Investments in less than 50% owned affiliates in which the Company has significant influence are accounted for using the equity method of accounting. All intercompany transactions and balances have been eliminated in consolidation. |
Fair Value Measurements
Fair Value Measurements | |
3 Months Ended
Mar. 31, 2010 | |
Fair Value Measurements | 2. Fair Value Measurements Assets and liabilities which are measured at fair value are classified in the following categories: Level 1 At March31, 2010 and December31, 2009, the fair values of available-for-sale investments in asset-backed securities of $10 million and $11 million, respectively, were based on quoted prices in active markets for identical instruments as of the reporting date. Level 2 At March31, 2010 and December31, 2009, the fair values of available-for-sale investments in asset-backed securities of $5 million and $6 million, respectively, and liabilities for interest rate hedge contracts of $93 million and $92 million, respectively, were determined from market based valuation models for which pricing inputs were either directly or indirectly observable as of the reporting date. Level 3 At March31, 2010 and December31, 2009, the fair values of available-for-sale investments of $23 million were based on valuation models with unobservable pricing inputs and management estimates. Unrealized losses of $2 million were recorded in accumulated other comprehensive loss at March31, 2010 and December31, 2009. The fair value of the Companys total debt was estimated using discounted cash flows based on the Companys current incremental borrowing rates or quoted prices in active markets and totaled $3.6 billion and $3.8 billion at March31, 2010 and December31, 2009, respectively. |
Share-Based Compensation
Share-Based Compensation | |
3 Months Ended
Mar. 31, 2010 | |
Share-Based Compensation | 3. Share-Based Compensation The Company recognized $10 million and $11 million of share-based compensation during the first quarter of 2010 and 2009, respectively. The Companys annual grant of share-based awards generally occurs in the first quarter. During the first quarter of 2010, the Company granted 1.1million stock options and 0.4million restricted stock units at weighted-average estimated fair values of $17.48 and $47.73, respectively. During the first quarter of 2009, the Company granted 1.4million stock options and 0.5million restricted stock units at weighted-average estimated fair values of $12.40 and $32.78, respectively. During the first quarter of 2010 and 2009, stock options to purchase 0.8million shares and 0.2million shares, respectively, were exercised. |
Shares Used in Computing Net In
Shares Used in Computing Net Income Per Share | |
3 Months Ended
Mar. 31, 2010 | |
Shares Used in Computing Net Income Per Share | 4. Shares Used in Computing Net Income Per Share Basic weighted-average outstanding shares used in calculating net income per share were 152.5million and 155.5million for the first quarter of 2010 and 2009, respectively. Diluted weighted-average outstanding shares used in calculating net income per share were 153.7million and 156.0million for the first quarter of 2010 and 2009, respectively, and included 1.2million and 0.5million common stock equivalents, respectively. For the first quarter of 2010 and 2009, stock options for 2.5million shares and 6.4million shares, respectively, were excluded from the calculation of diluted weighted-average outstanding shares because their impact was anti-dilutive. |
Interest Rate Hedge Contracts
Interest Rate Hedge Contracts | |
3 Months Ended
Mar. 31, 2010 | |
Interest Rate Hedge Contracts | 5. Interest Rate Hedge Contracts To manage exposure to fluctuations in interest rates, the Company maintains a series of interest rate swap agreements (Swaps) with total notional values of $1.2 billion at March31, 2010 and December31, 2009. The Swaps have been designated by the Company as cash flow hedges, effectively fix interest rates on floating rate term loan borrowings at a weighted-average rate of approximately 4.8% prior to financing spreads and related fees, and have expiration dates through September 2012. The fair values of the Swaps, as discussed in Note 2, were recorded in other long-term liabilities and in accumulated other comprehensive loss, net of income taxes, in the condensed consolidated balance sheets. The components of other comprehensive income (loss) pertaining to interest rate hedge contracts are presented in Note 6. In the first quarter of 2010 and 2009, interest expense recognized due to hedge ineffectiveness was not significant, and no amounts were excluded from the assessments of hedge effectiveness. Based on the amounts recorded in accumulated other comprehensive loss at March31, 2010, the Company estimates that it will recognize approximately $40 million in interest expense related to interest rate hedge contracts during the next twelve months. |
Comprehensive Income
Comprehensive Income | |
3 Months Ended
Mar. 31, 2010 | |
Comprehensive Income | 6. Comprehensive Income Comprehensive income was as follows: ThreeMonthsEnded March31, (In millions) 2010 2009 Net income $ 121 $ 103 Other comprehensive income (loss), net of income taxes: Fair market value adjustments on investments 1 10 Fair market value adjustments on cash flow hedges (8 ) (3 ) Reclassification adjustment for net realized losses on cash flow hedges included in interest expense 8 8 Foreign currency translation adjustments (2 ) (1 ) Other comprehensive income (loss) (1 ) 14 Comprehensive income $ 120 $ 117 |
Business Segment Information
Business Segment Information | |
3 Months Ended
Mar. 31, 2010 | |
Business Segment Information | 7. Business Segment Information The Companys operations are comprised of the Payments and Industry Products (Payments) segment, the Financial Institution Services (Financial) segment, and the Corporate and Other segment. The Payments segment primarily provides electronic bill payment and settlement, electronic funds transfer, and debit processing products and services to meet the electronic transaction processing needs of the financial services industry. The businesses in this segment also provide card and print personalization services, Internet banking, investment account processing services for separately managed accounts, and fraud and risk management products and services. The Financial segment provides banks, thrifts and credit unions with account processing services, item processing services, loan origination and servicing products, cash management and consulting services, and other products and services that support numerous types of financial transactions. The Corporate and Other segment primarily consists of unallocated corporate overhead expenses, amortization of acquisition-related intangible assets and intercompany eliminations. (In millions) Payments Financial Corporate and Other Total Three Months Ended March31, 2010 Processing and services revenue $ 397 $ 432 $ 2 $ 831 Product revenue 143 40 (6 ) 177 Total revenue $ 540 $ 472 $ (4 ) $ 1,008 Operating income $ 148 $ 136 $ (46 ) $ 238 Three Months Ended March31, 2009 Processing and services revenue $ 386 $ 445 $ $ 831 Product revenue 158 43 (9 ) 192 Total revenue $ 544 $ 488 $ (9 ) $ 1,023 Operating income $ 155 $ 142 $ (72 ) $ 225 |
Subsidiary Guarantors of Long-T
Subsidiary Guarantors of Long-Term Debt | |
3 Months Ended
Mar. 31, 2010 | |
Subsidiary Guarantors of Long-Term Debt | 8. Subsidiary Guarantors of Long-Term Debt Certain of the Companys 100% owned domestic subsidiaries (Guarantor Subsidiaries) jointly and severally, and fully and unconditionally guarantee the Companys indebtedness under its revolving credit facility, senior term loan and senior notes. The following condensed consolidating financial information is presented on the equity method and reflects the summarized financial information for: (a)the Company; (b)the Guarantor Subsidiaries on a combined basis; and (c)the Companys non-guarantor subsidiaries on a combined basis. CONDENSED CONSOLIDATING STATEMENT OF INCOME THREE MONTHS ENDED MARCH 31, 2010 (In millions) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenue: Processing and services $ $ 589 $ 260 $ (18 ) $ 831 Product 156 30 (9 ) 177 Total revenue 745 290 (27 ) 1,008 Expenses: Cost of processing and services (1 ) 322 161 (20 ) 462 Cost of product 120 22 (6 ) 136 Selling, general and administrative 18 109 45 172 Total expenses 17 551 228 (26 ) 770 Operating income (loss) (17 ) 194 62 (1 ) 238 Interest (expense) income, net 14 (57 ) (2 ) (45 ) Income (loss) from continuing operations before income taxes and income from investment in unconsolidated affiliate (3 ) 137 60 (1 ) 193 Income tax (provision) benefit 2 (52 ) (23 ) (73 ) Income from investment in unconsolidated affiliate, net of income taxes 3 3 Income (loss) from continuing operations (1 ) 85 40 (1 ) 123 Equity in earnings of consolidated affiliates 124 (124 ) Loss from discontinued operations, net of income taxes (2 ) (2 ) Net income $ 121 $ 85 $ 40 $ (125 ) $ 121 CONDENSED CONSOLIDATING STATEMENT OF INCOME THREE MONTHS ENDED MARCH 31, 2009 (In millions) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenue: Processing and services $ $ 584 $ 264 $ (17 ) $ 831 Product 171 27 (6 ) 192 Total revenue 755 291 (23 ) 1,023 Expenses: Cost of processing and services 2 311 |