(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibits. |
Exhibit Number | Description | |
99.1 | ||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
FISERV, INC. | ||||
Date: | February 4, 2020 | By: | /s/ Robert W. Hau | |
Robert W. Hau | ||||
Chief Financial Officer and Treasurer |
Exhibit 99.1 | ||
News Release |
For more information contact: | |
Media Relations: Britt Zarling Corporate Communications Fiserv, Inc. 414-378-4040 britt.zarling@fiserv.com | Investor Relations: Peter Poillon Investor Relations Fiserv, Inc. 212-266-3565 peter.poillon@fiserv.com |
For Immediate Release |
News Release |
• | Adjusted revenue increased 4% in both the fourth quarter and full year to $3.71 billion and $14.45 billion, respectively, compared to the prior year periods. |
• | Internal revenue growth, on a constant currency basis, was 5% in the fourth quarter, with 6% growth in the First Data segment, 4% growth in the Payments segment and relatively consistent performance in the Financial segment compared to the prior year period. |
• | Internal revenue growth, on a constant currency basis, was 6% for the full year, with 7% growth in the First Data segment, 5% growth in the Payments segment and 3% growth in the Financial segment. |
• | Adjusted earnings per share increased 18% to $1.13 in the fourth quarter and 16% to $4.00 for the full year compared to the prior year periods. |
• | Adjusted operating margin increased 100 basis points in both the fourth quarter and full year to 31.4% and 29.7%, respectively, compared to the prior year periods. |
• | Free cash flow for 2019 increased 16% to $3.29 billion compared to the prior year. |
• | Sales results were up 15% in the fourth quarter and up 10% for the year compared to the prior year periods. |
• | The company repurchased 2.2 million shares of common stock for $238 million in the fourth quarter and 4.2 million shares of common stock for $394 million in 2019. |
• | As previously announced, in December 2019, the company entered into a definitive agreement to sell 60% of its Investment Services business ("Investment Services Transaction") for approximately $510 million in net after-tax proceeds. The company expects to complete the transaction, which is subject to customary closing conditions, in the first |
News Release |
• | In January 2020, Fiserv was named one of FORTUNE Magazine World's Most Admired Companies® for the seventh consecutive year. The company received high marks for its people management, use of corporate assets, quality of management and long-term investment value, and was also noted for its quality of products/services and financial soundness. |
News Release |
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Fiserv, Inc. | |||||||||||||||
Condensed Consolidated Statements of Income | |||||||||||||||
(In millions, except per share amounts, unaudited) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenue | |||||||||||||||
Processing and services | $ | 3,344 | $ | 1,307 | $ | 8,573 | $ | 4,975 | |||||||
Product | 701 | 244 | 1,614 | 848 | |||||||||||
Total revenue | 4,045 | 1,551 | 10,187 | 5,823 | |||||||||||
Expenses | |||||||||||||||
Cost of processing and services | 1,571 | 628 | 4,016 | 2,324 | |||||||||||
Cost of product | 538 | 194 | 1,293 | 745 | |||||||||||
Selling, general and administrative | 1,463 | 298 | 3,284 | 1,228 | |||||||||||
Gain on sale of businesses | (5 | ) | — | (15 | ) | (227 | ) | ||||||||
Total expenses | 3,567 | 1,120 | 8,578 | 4,070 | |||||||||||
Operating income | 478 | 431 | 1,609 | 1,753 | |||||||||||
Interest expense, net | (194 | ) | (55 | ) | (473 | ) | (189 | ) | |||||||
Debt financing activities | — | (6 | ) | (47 | ) | (14 | ) | ||||||||
Other (expense) income | (6 | ) | 2 | (6 | ) | 5 | |||||||||
Income before income taxes and income from investments in unconsolidated affiliates | 278 | 372 | 1,083 | 1,555 | |||||||||||
Income tax provision | (54 | ) | (88 | ) | (198 | ) | (378 | ) | |||||||
Income from investments in unconsolidated affiliates | 17 | 2 | 29 | 10 | |||||||||||
Net income | 241 | 286 | 914 | 1,187 | |||||||||||
Less: net income (loss) attributable to noncontrolling interests | (6 | ) | — | 21 | — | ||||||||||
Net income attributable to Fiserv | $ | 247 | $ | 286 | $ | 893 | $ | 1,187 | |||||||
GAAP earnings per share attributable to Fiserv - diluted | $ | 0.36 | $ | 0.71 | $ | 1.71 | $ | 2.87 | |||||||
Diluted shares used in computing earnings per share attributable to Fiserv | 694.7 | 404.7 | 522.6 | 413.7 | |||||||||||
Earnings per share is calculated using actual, unrounded amounts. |
News Release |
Fiserv, Inc. | |||||||||||||||
Reconciliation of GAAP to | |||||||||||||||
Adjusted Net Income and Adjusted Earnings Per Share | |||||||||||||||
(In millions, except per share amounts, unaudited) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
GAAP net income | $ | 247 | $ | 286 | $ | 893 | $ | 1,187 | |||||||
GAAP net income attributable to First Data 1 | — | 162 | 303 | 1,005 | |||||||||||
Combined net income attributable to Fiserv | 247 | 448 | 1,196 | 2,192 | |||||||||||
Combined adjustments: | |||||||||||||||
Merger and integration costs 2 | 148 | 5 | 467 | 55 | |||||||||||
Severance and restructuring costs 3 | 75 | 31 | 150 | 155 | |||||||||||
Amortization of acquisition-related intangible assets 4 | 533 | 149 | 1,222 | 594 | |||||||||||
Debt financing activities 5 | — | 156 | 287 | 167 | |||||||||||
Impact of divestitures 6 | — | — | — | (28 | ) | ||||||||||
Non wholly-owned entity activities 7 | (33 | ) | (7 | ) | (53 | ) | (33 | ) | |||||||
Tax impact of adjustments 8 | (169 | ) | (76 | ) | (480 | ) | (209 | ) | |||||||
(Gain) loss on sale of businesses 6 | (5 | ) | 5 | (12 | ) | (424 | ) | ||||||||
Tax impact of (gain) loss on sale of businesses 8 | 1 | (1 | ) | 3 | 90 | ||||||||||
Discrete tax items 9 | (13 | ) | (39 | ) | (5 | ) | (127 | ) | |||||||
Adjusted net income | $ | 784 | $ | 671 | $ | 2,775 | $ | 2,432 | |||||||
Weighted average common shares outstanding - diluted | 694.7 | 404.7 | 522.6 | 413.7 | |||||||||||
Issuance of shares for combination | — | 286.3 | 167.0 | 286.3 | |||||||||||
Dilutive impact of exchanged equity awards | — | 7.8 | 4.5 | 7.8 | |||||||||||
Combined weighted average common shares outstanding - diluted 10 | 694.7 | 698.8 | 694.1 | 707.8 | |||||||||||
GAAP earnings per share 10 | $ | 0.36 | $ | 0.71 | $ | 1.71 | $ | 2.87 | |||||||
Combined earnings per share 10 | $ | 0.36 | $ | 0.64 | $ | 1.72 | $ | 3.10 | |||||||
Combined adjustments - net of income taxes: | |||||||||||||||
Merger and integration costs 2 | 0.16 | 0.01 | 0.52 | 0.06 | |||||||||||
Severance and restructuring costs 3 | 0.08 | 0.04 | 0.17 | 0.17 | |||||||||||
Amortization of acquisition-related intangible assets 4 | 0.59 | 0.16 | 1.36 | 0.65 | |||||||||||
Debt financing activities 5 | — | 0.17 | 0.32 | 0.18 | |||||||||||
Impact of divestitures 6 | — | — | — | (0.03 | ) | ||||||||||
Non wholly-owned entity activities 7 | (0.04 | ) | (0.01 | ) | (0.06 | ) | (0.04 | ) | |||||||
(Gain) loss on sale of businesses 6 | (0.01 | ) | — | (0.01 | ) | (0.48 | ) | ||||||||
Discrete tax items 9 | (0.02 | ) | (0.06 | ) | (0.01 | ) | (0.18 | ) | |||||||
Adjusted earnings per share | $ | 1.13 | $ | 0.96 | $ | 4.00 | $ | 3.44 |
News Release |
1 | Represents the financial results of First Data prior to the date of acquisition. For the year ended December 31, 2019, this includes the results of First Data from January 1, 2019 through July 28, 2019. For the three months and year ended December 31, 2018, this includes the results of First Data from October 1, 2018 through December 31, 2018 and from January 1, 2018 through December 31, 2018, respectively. |
2 | Represents acquisition and related integration costs incurred as a result of the company's various acquisitions. Merger and integration costs include $128 million and $408 million in the fourth quarter and full year 2019, respectively, related to the acquisition of First Data and primarily consist of legal and other professional service fees and incremental share-based compensation including the fair value of stock awards assumed by Fiserv in connection with the First Data acquisition. Legal and other professional service fees were $37 million and $199 million in the fourth quarter and full year 2019, respectively. Incremental share-based compensation including the fair value of assumed stock awards was $51 million and $108 million in the fourth quarter and full year 2019, respectively. |
3 | Represents severance and other costs associated with the achievement of ongoing expense management initiatives, including real estate and data center consolidation activities. Severance and restructuring costs includes a non-cash impairment charge of $48 million in both the fourth quarter and full year 2019 primarily related to an international core processing platform. |
4 | Represents amortization of intangible assets acquired through various acquisitions, including customer relationships, software/technology, and trade names. This adjustment does not exclude the amortization of other intangible assets such as contract assets (sales commissions and deferred conversion costs), capitalized and purchased software, and financing costs and debt discounts. See additional information on page 17 for an analysis of the company's amortization expense. |
5 | Represents losses on early debt extinguishments and other costs associated with the refinancing of certain indebtedness, including that of First Data in 2019. Debt financing activities in 2019 include $220 million of early debt extinguishment costs and $98 million of bridge term loan facility expenses, partially offset by $50 million of net currency transaction gains related to foreign currency denominated debt. Debt financing activities in 2018 represent the loss on early debt extinguishment associated with the company's cash tender offer for and redemption of its $450 million aggregate principal amount of 4.625% senior notes. |
6 | Represents the earnings attributable to divested businesses and the gain on the associated divestiture transactions. The divested businesses include First Data’s card processing business in Central and Southeastern Europe, First Data’s remittance processing business, and a 55% interest in Fiserv's Lending Solutions business in September 2018, August 2018 and March 2018, respectively. |
7 | Represents the company’s share of amortization of acquisition-related intangible assets at its unconsolidated affiliates, as well as the minority interest share of amortization of acquisition-related intangible assets at its subsidiaries in which it holds a controlling financial interest. This adjustment also includes a $14 million net gain on the merger of a joint venture that occurred in the third quarter of 2019. |
8 | The tax impact of adjustments is calculated using a tax rate of 23%, which approximates the combined company's annual effective tax rate, exclusive of the actual tax impacts associated with the net (gain) loss on sale of businesses. |
9 | Represents certain discrete tax items, such as tax effects associated with U.S. federal tax reform, deferred tax on basis difference related to the Investment Services Transaction and tax impacts from valuation allowance releases, tax reserves and non-deductible transaction costs associated with the acquisition of First Data. |
10 | GAAP earnings per share is computed by dividing GAAP net income by the weighted-average number of common shares outstanding - diluted during the period. Combined earnings per share is computed by dividing combined net income attributable to Fiserv by the combined weighted average common shares outstanding - diluted during the period. The combined weighted average common shares outstanding - diluted is computed based on the historical Fiserv weighted average shares outstanding - diluted determined in accordance with GAAP, adjusted to include the Fiserv shares issued as merger consideration and shares subject to First Data equity awards assumed by Fiserv in connection with the First Data acquisition for all periods presented. |
News Release |
Fiserv, Inc. | |||||||||||||||
Financial Results by Segment | |||||||||||||||
(In millions, unaudited) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Total Company | |||||||||||||||
Revenue | $ | 4,045 | $ | 1,551 | $ | 10,187 | $ | 5,823 | |||||||
First Data revenue 1 | — | 2,399 | 5,609 | 9,498 | |||||||||||
Combined revenue | 4,045 | 3,950 | 15,796 | 15,321 | |||||||||||
Combined adjustments: | |||||||||||||||
Intercompany eliminations 2 | — | (3 | ) | (4 | ) | (9 | ) | ||||||||
Output Solutions postage reimbursements 3 | (248 | ) | (261 | ) | (978 | ) | (1,016 | ) | |||||||
Deferred revenue purchase accounting adjustments | 12 | — | 18 | 3 | |||||||||||
Merchant Services adjustment 4 | (97 | ) | (100 | ) | (387 | ) | (397 | ) | |||||||
Adjusted revenue | $ | 3,712 | $ | 3,586 | $ | 14,445 | $ | 13,902 | |||||||
Operating income | $ | 478 | $ | 431 | $ | 1,609 | $ | 1,753 | |||||||
First Data operating income 1 | — | 529 | 1,088 | 2,092 | |||||||||||
Combined operating income | 478 | 960 | 2,697 | 3,845 | |||||||||||
Combined adjustments: | |||||||||||||||
Merger and integration costs | 148 | 5 | 467 | 55 | |||||||||||
Severance and restructuring costs | 75 | 31 | 150 | 155 | |||||||||||
Amortization of acquisition-related intangible assets | 533 | 149 | 1,222 | 594 | |||||||||||
Merchant Services adjustment 4 | (61 | ) | (60 | ) | (230 | ) | (232 | ) | |||||||
(Gain) loss on sale of businesses | (5 | ) | 5 | (12 | ) | (424 | ) | ||||||||
Adjusted operating income | $ | 1,168 | $ | 1,090 | $ | 4,294 | $ | 3,993 | |||||||
Operating margin | 11.8 | % | 27.8 | % | 15.8 | % | 30.1 | % | |||||||
Adjusted operating margin | 31.4 | % | 30.4 | % | 29.7 | % | 28.7 | % | |||||||
First Data 5 | |||||||||||||||
First Data revenue | $ | 2,464 | $ | 2,399 | $ | 9,687 | $ | 9,498 | |||||||
Adjustments: | |||||||||||||||
Intercompany eliminations 2 | — | (2 | ) | (2 | ) | (6 | ) | ||||||||
Output Solutions postage reimbursements | (163 | ) | (177 | ) | (684 | ) | (708 | ) | |||||||
Deferred revenue purchase accounting adjustments | 12 | — | 18 | — | |||||||||||
Merchant Services adjustment 4 | (97 | ) | (100 | ) | (387 | ) | (397 | ) | |||||||
First Data adjusted revenue | $ | 2,216 | $ | 2,120 | $ | 8,632 | $ | 8,387 | |||||||
First Data operating income | $ | 635 | $ | 599 | $ | 2,410 | $ | 2,345 | |||||||
Adjustments: | |||||||||||||||
Merger and integration costs | 30 | — | 60 | 3 | |||||||||||
Severance and restructuring costs | 7 | 16 | 14 | 70 | |||||||||||
Amortization of acquisition-related intangible assets | 97 | 106 | 397 | 431 | |||||||||||
Merchant Services adjustment 4 | (61 | ) | (60 | ) | (230 | ) | (232 | ) | |||||||
(Gain) loss on sale of businesses | — | 5 | — | (83 | ) | ||||||||||
First Data adjusted operating income | $ | 708 | $ | 666 | $ | 2,651 | $ | 2,534 | |||||||
First Data operating margin | 25.8 | % | 25.0 | % | 24.9 | % | 24.7 | % | |||||||
First Data adjusted operating margin | 31.9 | % | 31.4 | % | 30.7 | % | 30.2 | % | |||||||
News Release |
Fiserv, Inc. | |||||||||||||||
Financial Results by Segment (cont.) | |||||||||||||||
(In millions, unaudited) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Payments and Industry Products ("Payments") | |||||||||||||||
Revenue | $ | 987 | $ | 944 | $ | 3,744 | $ | 3,467 | |||||||
Adjustments: | |||||||||||||||
Intercompany eliminations 2 | — | (1 | ) | (2 | ) | (3 | ) | ||||||||
Output Solutions postage reimbursements 3 | (85 | ) | (84 | ) | (294 | ) | (308 | ) | |||||||
Deferred revenue purchase accounting adjustments | — | — | — | 3 | |||||||||||
Adjusted revenue | $ | 902 | $ | 859 | $ | 3,448 | $ | 3,159 | |||||||
Operating income | $ | 353 | $ | 315 | $ | 1,252 | $ | 1,122 | |||||||
Adjustments: | |||||||||||||||
Merger and integration costs | — | — | — | 2 | |||||||||||
Adjusted operating income | $ | 353 | $ | 315 | $ | 1,252 | $ | 1,124 | |||||||
Operating margin | 35.8 | % | 33.4 | % | 33.4 | % | 32.3 | % | |||||||
Adjusted operating margin | 39.2 | % | 36.7 | % | 36.3 | % | 35.6 | % | |||||||
Financial Institution Services ("Financial") 6 | |||||||||||||||
Revenue | $ | 609 | $ | 615 | $ | 2,407 | $ | 2,395 | |||||||
Operating income | $ | 207 | $ | 208 | $ | 805 | $ | 798 | |||||||
Operating margin | 34.1 | % | 33.7 | % | 33.5 | % | 33.3 | % | |||||||
Corporate and Other | |||||||||||||||
Revenue | $ | (15 | ) | $ | (8 | ) | $ | (42 | ) | $ | (39 | ) | |||
Operating loss | $ | (717 | ) | $ | (92 | ) | $ | (1,479 | ) | $ | (167 | ) | |||
First Data operating loss | — | (70 | ) | (291 | ) | (253 | ) | ||||||||
Combined adjustments: | |||||||||||||||
Merger and integration costs | 118 | 5 | 407 | 50 | |||||||||||
Severance and restructuring costs | 68 | 15 | 136 | 85 | |||||||||||
Amortization of acquisition-related intangible assets | 436 | 43 | 825 | 163 | |||||||||||
Gain on sale of businesses | (5 | ) | — | (12 | ) | (341 | ) | ||||||||
Adjusted operating loss | $ | (100 | ) | $ | (99 | ) | $ | (414 | ) | $ | (463 | ) | |||
See pages 3-5 for disclosures related to the use of non-GAAP financial measures. | |||||||||||||||
Operating margin percentages are calculated using actual, unrounded amounts. |
1 | Represents the financial results of First Data prior to the date of acquisition. For the year ended December 31, 2019, this includes the results of First Data from January 1, 2019 through July 28, 2019. For the three months and year ended December 31, 2018, this includes the results of First Data from October 1, 2018 through December 31, 2018 and from January 1, 2018 through December 31, 2018, respectively. |
2 | Represents the elimination of intercompany revenue and expense between First Data and the company. |
3 | Adjustment reflects the conformity of historical amounts to be consistent with the combined company's Output Solutions postage reimbursements. |
News Release |
4 | Represents an adjustment primarily related to the company's joint venture with Bank of America. The company and Bank of America jointly announced the dissolution of the Banc of America Merchant Services joint venture ("BAMS"), to be effective June 2020. The company owns 51% of BAMS and BAMS' financial results are 100% consolidated into the company's financial statements for GAAP reporting purposes. Upon dissolution of the joint venture, the company is entitled to receive a 51% share of the joint venture's value via an agreed upon contractual separation process. In addition, Bank of America has the right to require the company to continue providing merchant processing and related services to the joint venture clients allocated to Bank of America in the dissolution of the joint venture through June 2023 at current pricing. The company anticipates an ongoing relationship with Bank of America to provide processing and other support services to other Bank of America merchant clients following the joint venture's dissolution. The non-GAAP adjustment reduces adjusted revenue and adjusted operating income by the joint venture revenue and expense that is not expected to be retained by the company upon dissolution and is partially offset by an increase to processing and services revenue. |
5 | Represents the results of First Data less amounts included in Corporate and Other consisting of intercompany eliminations, unallocated corporate expenses and other activities that are not considered when management evaluates First Data segment performance. |
6 | For all periods presented in the Financial segment, there were no adjustments to GAAP measures presented and thus the adjusted measures are equal to the GAAP measures presented. |
News Release |
Fiserv, Inc. | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
(In millions, unaudited) | |||||||
Year Ended December 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 914 | $ | 1,187 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and other amortization | 615 | 382 | |||||
Amortization of acquisition-related intangible assets | 1,036 | 163 | |||||
Amortization of financing costs, debt discounts and other | 127 | 11 | |||||
Net foreign currency gain on financing activities | (50 | ) | — | ||||
Share-based compensation | 229 | 73 | |||||
Deferred income taxes | 47 | 133 | |||||
Gain on sale of businesses | (15 | ) | (227 | ) | |||
Income from investments in unconsolidated affiliates | (29 | ) | (10 | ) | |||
Distributions from unconsolidated affiliates | 23 | 2 | |||||
Settlement of interest rate hedge contracts | (183 | ) | — | ||||
Non-cash impairment charges | 48 | 3 | |||||
Other operating activities | (3 | ) | 4 | ||||
Changes in assets and liabilities, net of effects from acquisitions and dispositions: | |||||||
Trade accounts receivable | (7 | ) | (108 | ) | |||
Prepaid expenses and other assets | (82 | ) | (6 | ) | |||
Contract costs | (212 | ) | (137 | ) | |||
Accounts payable and other liabilities | 238 | 116 | |||||
Contract liabilities | 99 | (34 | ) | ||||
Net cash provided by operating activities | 2,795 | 1,552 | |||||
Cash flows from investing activities | |||||||
Capital expenditures, including capitalization of software costs | (721 | ) | (360 | ) | |||
Proceeds from sale of businesses | 51 | 419 | |||||
Payments for acquisitions of businesses, net of cash acquired | (16,005 | ) | (712 | ) | |||
Distributions from unconsolidated affiliates | 113 | — | |||||
Purchases of investments, net | (45 | ) | (3 | ) | |||
Other investing activities | 5 | (7 | ) | ||||
Net cash used in investing activities | (16,602 | ) | (663 | ) | |||
Cash flows from financing activities | |||||||
Debt proceeds | 20,260 | 5,039 | |||||
Debt repayments | (5,273 | ) | (4,005 | ) | |||
Payments of debt financing, redemption and other costs | (247 | ) | — | ||||
Proceeds from issuance of treasury stock | 156 | 75 | |||||
Purchases of treasury stock, including employee shares withheld for tax obligations | (561 | ) | (1,946 | ) | |||
Distributions paid to noncontrolling interests and redeemable noncontrolling interests | (118 | ) | — | ||||
Other financing activities | (26 | ) | (5 | ) | |||
Net cash provided by (used in) financing activities | 14,191 | (842 | ) | ||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 1 | — | |||||
Net change in cash, cash equivalents and restricted cash | 385 | 47 | |||||
Net cash flows from discontinued operations | 133 | 43 | |||||
Cash, cash equivalents and restricted cash, beginning balance | 415 | 325 | |||||
Cash, cash equivalents and restricted cash, ending balance | $ | 933 | $ | 415 | |||
News Release |
Fiserv, Inc. | |||||||
Condensed Consolidated Balance Sheets | |||||||
(In millions, unaudited) | |||||||
December 31, | |||||||
2019 | 2018 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 893 | $ | 415 | |||
Trade accounts receivable – net | 2,782 | 1,049 | |||||
Prepaid expenses and other current assets | 1,503 | 274 | |||||
Settlement assets | 11,868 | 486 | |||||
Total current assets | 17,046 | 2,224 | |||||
Property and equipment – net | 1,606 | 398 | |||||
Customer relationships - net | 14,042 | 1,348 | |||||
Other intangible assets – net | 3,600 | 795 | |||||
Goodwill | 36,038 | 5,702 | |||||
Contract costs - net | 533 | 419 | |||||
Investments in unconsolidated affiliates | 2,720 | 65 | |||||
Other long-term assets | 1,954 | 311 | |||||
Total assets | $ | 77,539 | $ | 11,262 | |||
Liabilities and Equity | |||||||
Accounts payable and accrued expenses | $ | 3,080 | $ | 1,146 | |||
Short-term and current maturities of long-term debt | 287 | 4 | |||||
Contract liabilities | 492 | 380 | |||||
Settlement obligations | 11,868 | 480 | |||||
Total current liabilities | 15,727 | 2,010 | |||||
Long-term debt | 21,612 | 5,955 | |||||
Deferred income taxes | 4,247 | 745 | |||||
Long-term contract liabilities | 155 | 89 | |||||
Other long-term liabilities | 941 | 170 | |||||
Total liabilities | 42,682 | 8,969 | |||||
Redeemable noncontrolling interests | 262 | — | |||||
Fiserv shareholders' equity | 32,979 | 2,293 | |||||
Noncontrolling interests | 1,616 | — | |||||
Total equity | 34,595 | 2,293 | |||||
Total liabilities and equity | $ | 77,539 | $ | 11,262 | |||
News Release |
Internal Revenue Growth 1 | Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||
2019 | 2018 | Growth | 2019 | 2018 | Growth | |||||||||||||||
Total Company | ||||||||||||||||||||
Adjusted revenue | $ | 3,712 | $ | 3,586 | $ | 14,445 | $ | 13,902 | ||||||||||||
Currency impact 2 | 38 | — | 231 | — | ||||||||||||||||
Acquisition adjustments | (27 | ) | — | (178 | ) | — | ||||||||||||||
Divestiture adjustments | (53 | ) | (75 | ) | (81 | ) | (283 | ) | ||||||||||||
Internal revenue | $ | 3,670 | $ | 3,511 | 5% | $ | 14,417 | $ | 13,619 | 6% | ||||||||||
First Data | ||||||||||||||||||||
Adjusted revenue | $ | 2,216 | $ | 2,120 | $ | 8,632 | $ | 8,387 | ||||||||||||
Currency impact 2 | 38 | — | 224 | — | ||||||||||||||||
Acquisition adjustments | (11 | ) | — | (31 | ) | — | ||||||||||||||
Divestiture adjustments | — | (8 | ) | — | (142 | ) | ||||||||||||||
Internal revenue | $ | 2,243 | $ | 2,112 | 6% | $ | 8,825 | $ | 8,245 | 7% | ||||||||||
Payments | ||||||||||||||||||||
Adjusted revenue | $ | 902 | $ | 859 | $ | 3,448 | $ | 3,159 | ||||||||||||
Currency impact 2 | — | — | 4 | — | ||||||||||||||||
Acquisition adjustments | (16 | ) | — | (147 | ) | — | ||||||||||||||
Divestiture adjustments | (42 | ) | (48 | ) | (42 | ) | (48 | ) | ||||||||||||
Internal revenue | $ | 844 | $ | 811 | 4% | $ | 3,263 | $ | 3,111 | 5% | ||||||||||
Financial | ||||||||||||||||||||
Adjusted revenue | $ | 609 | $ | 615 | $ | 2,407 | $ | 2,395 | ||||||||||||
Currency impact 2 | — | — | 3 | — | ||||||||||||||||
Divestiture adjustments | (6 | ) | (11 | ) | (7 | ) | (65 | ) | ||||||||||||
Internal revenue | $ | 603 | $ | 604 | —% | $ | 2,403 | $ | 2,330 | 3% | ||||||||||
Corporate and Other | ||||||||||||||||||||
Adjusted revenue | $ | (15 | ) | $ | (8 | ) | $ | (42 | ) | $ | (39 | ) | ||||||||
Divestiture adjustments | (5 | ) | (8 | ) | (32 | ) | (28 | ) | ||||||||||||
Internal revenue | $ | (20 | ) | $ | (16 | ) | n/m | $ | (74 | ) | $ | (67 | ) | n/m |
1 | Internal revenue growth is measured as the increase in adjusted revenue (see pages 10-11) for the current period excluding the impact of foreign currency fluctuations and revenue attributable to acquisitions (except for revenue attributable to First Data which is presented on a combined company basis) and dispositions, divided by adjusted revenue from the prior period excluding revenue attributable to dispositions. Revenue attributable to dispositions includes transition services revenue within Corporate and Other. |
2 | Currency impact is measured as the increase or decrease in adjusted revenue for the current period by applying prior period foreign currency exchange rates to present a constant currency comparison to prior periods. |
News Release |
Free Cash Flow | Year Ended December 31, | |||||||
2019 | 2018 | |||||||
Net cash provided by operating activities | $ | 2,795 | $ | 1,552 | ||||
First Data net cash provided by operating activities 1 | 1,370 | 2,307 | ||||||
First Data payments for contract assets 2 | (51 | ) | (78 | ) | ||||
Combined net cash provided by operating activities | 4,114 | 3,781 | ||||||
Combined capital expenditures | (1,118 | ) | (886 | ) | ||||
Combined adjustments: | ||||||||
Distributions paid to noncontrolling interests and redeemable noncontrolling interests | (271 | ) | (255 | ) | ||||
Distributions from unconsolidated affiliates 3 | 113 | — | ||||||
Severance, restructuring, merger and integration payments | 375 | 209 | ||||||
Settlement of interest rate hedge contracts | 183 | — | ||||||
Tax reform payments | — | 23 | ||||||
Tax payments on adjustments and debt financing | (105 | ) | (35 | ) | ||||
Other | (4 | ) | (2 | ) | ||||
Free cash flow | $ | 3,287 | $ | 2,835 |
1 | Represents the financial results of First Data prior to the date of acquisition. For the year ended December 31, 2019, this includes the results of First Data from January 1, 2019 through July 28, 2019. For the year ended December 31, 2018, this includes the results of First Data from January 1, 2018 through December 31, 2018. |
2 | Represents the conformity of First Data's historical classification of payments for contract assets to be consistent with the company's classification and treatment. |
3 | Distributions from unconsolidated affiliates totaled $234 million and $255 million in 2019 and 2018, respectively, of which $121 million and $255 million of the distributions are recorded within First Data net cash provided by operating activities. |
News Release |
Total Amortization 1 | Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Acquisition-related intangible assets | $ | 560 | $ | 43 | $ | 1,036 | $ | 163 | ||||||||
Capitalized software | 43 | 36 | 160 | 137 | ||||||||||||
Purchased software | 46 | 12 | 103 | 47 | ||||||||||||
Financing costs, debt discounts and other | 11 | 2 | 127 | 11 | ||||||||||||
Sales commissions | 22 | 20 | 83 | 78 | ||||||||||||
Deferred conversion costs | 6 | 13 | 22 | 28 | ||||||||||||
Total amortization | $ | 688 | $ | 126 | $ | 1,531 | $ | 464 | ||||||||
First Data acquisition-related intangible assets | $ | — | $ | 106 | $ | 233 | $ | 431 | ||||||||
First Data capitalized software | — | 26 | 62 | 94 | ||||||||||||
First Data purchased software | — | 34 | 72 | 123 | ||||||||||||
First Data financing costs, debt discounts and other | — | 4 | 7 | 17 | ||||||||||||
First Data sales commissions | — | — | — | — | ||||||||||||
First Data deferred conversion costs | — | 11 | 22 | 41 | ||||||||||||
Total First Data amortization 2 | $ | — | $ | 181 | $ | 396 | $ | 706 | ||||||||
Combined acquisition-related intangible assets | $ | 560 | $ | 149 | $ | 1,269 | $ | 594 | ||||||||
Combined capitalized software | 43 | 62 | 222 | 231 | ||||||||||||
Combined purchased software | 46 | 46 | 175 | 170 | ||||||||||||
Combined financing costs, debt discounts and other | 11 | 6 | 134 | 28 | ||||||||||||
Combined sales commissions | 22 | 20 | 83 | 78 | ||||||||||||
Combined deferred conversion costs | 6 | 24 | 44 | 69 | ||||||||||||
Total combined amortization | $ | 688 | $ | 307 | $ | 1,927 | $ | 1,170 |
1 | The company adjusts its non-GAAP results to exclude amortization of acquisition-related intangible assets as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions (see corresponding adjustment on page 8). The adjustment for acquired First Data software/technology excludes only the incremental amortization related to the fair value purchase accounting allocation. Management believes that the adjustment of acquisition-related intangible asset amortization supplements the GAAP information with a measure that can be used to assess the comparability of operating performance. Although the company excludes amortization from acquisition-related intangible assets from its non-GAAP expenses, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets. |
2 | Represents the financial results of First Data prior to the date of acquisition. For the year ended December 31, 2019, this includes the results of First Data from January 1, 2019 through July 28, 2019. For the three months and year ended December 31, 2018, this includes the results of First Data from October 1, 2018 through December 31, 2018 and from January 1, 2018 through December 31, 2018, respectively. |
News Release |
2019 adjusted earnings per share 1 | $ | 4.00 | |
Net impact from divestitures, including the Investment Services Transaction | (0.05 | ) | |
2019 adjusted earnings per share, as adjusted for divestitures | $ | 3.95 | |
2020 adjusted earnings per share outlook | $4.86 - $5.02 | ||
2020 adjusted earnings per share growth outlook | 23% - 27% | ||
1 | See page 8 for a reconciliation of GAAP earnings per share to adjusted earnings per share. |
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