(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: | August 5, 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 declined 12% to $3.22 billion in the second quarter and 6% to $6.70 billion in the first six months of 2020 compared to the prior year periods. |
• | Internal revenue declined 7% in the second quarter, with declines of 15% in the Acceptance segment, 1% in the Fintech segment and 3% in the Payments segment compared to the prior year period. |
• | Internal revenue declined 2% in the first six months of 2020, with a 5% decline in the Acceptance segment, and relatively consistent performance in both the Fintech and Payments segments compared to the prior year. |
• | Adjusted earnings per share decreased 4% to $0.93 in the second quarter and increased 6% to $1.92 in the first six months of 2020 compared to the prior year periods. |
• | Free cash flow increased by 23% to $895 million and by 13% to $1.66 billion in the second quarter and first six months of 2020, respectively, compared to $728 million and $1.47 billion in the prior year periods. |
• | Adjusted operating margin decreased 90 basis points to 28.8% in the second quarter and 50 basis points to 28.3% in the first six months of 2020 compared to the prior year periods. |
• | Sales results increased 38% in the second quarter and 20% in the first six months of 2020 compared to the prior year periods. |
News Release |
• | The company repurchased 5.7 million shares of common stock for $550 million in the second quarter, and 14.3 million shares of common stock for $1.44 billion in the first six months of 2020. |
• | The company refinanced $2.0 billion of its debt through a May 2020 public offering of 7-year and 10-year senior notes with a weighted average interest rate of 2.45% and term of 8.5 years. |
• | The Banc of America Merchant Services joint venture was successfully dissolved effective July 1, 2020. Fiserv received its share of the customers from the joint venture and signed a five-year agreement to provide processing and other services for new merchant clients of Bank of America. |
News Release |
News Release |
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News Release |
Fiserv, Inc. | |||||||||||||||
Condensed Consolidated Statements of Income | |||||||||||||||
(In millions, except per share amounts, unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenue | |||||||||||||||
Processing and services | $ | 2,890 | $ | 1,328 | $ | 5,965 | $ | 2,621 | |||||||
Product | 575 | 184 | 1,269 | 393 | |||||||||||
Total revenue | 3,465 | 1,512 | 7,234 | 3,014 | |||||||||||
Expenses | |||||||||||||||
Cost of processing and services | 1,466 | 617 | 3,101 | 1,241 | |||||||||||
Cost of product | 454 | 168 | 986 | 342 | |||||||||||
Selling, general and administrative | 1,377 | 343 | 2,781 | 684 | |||||||||||
(Gain) loss on sale of businesses | 3 | — | (428 | ) | (10 | ) | |||||||||
Total expenses | 3,300 | 1,128 | 6,440 | 2,257 | |||||||||||
Operating income | 165 | 384 | 794 | 757 | |||||||||||
Interest expense, net | (174 | ) | (58 | ) | (361 | ) | (115 | ) | |||||||
Debt financing activities | — | (37 | ) | — | (96 | ) | |||||||||
Other income | 1 | 2 | 21 | 3 | |||||||||||
Income (loss) before income taxes and loss from investments in unconsolidated affiliates | (8 | ) | 291 | 454 | 549 | ||||||||||
Income tax (provision) benefit | 27 | (60 | ) | (52 | ) | (91 | ) | ||||||||
Loss from investments in unconsolidated affiliates | (10 | ) | (8 | ) | (16 | ) | (10 | ) | |||||||
Net income | 9 | 223 | 386 | 448 | |||||||||||
Net income (loss) attributable to noncontrolling interests | 7 | — | (8 | ) | — | ||||||||||
Net income attributable to Fiserv | $ | 2 | $ | 223 | $ | 394 | $ | 448 | |||||||
GAAP earnings per share attributable to Fiserv - diluted | $ | — | $ | 0.56 | $ | 0.57 | $ | 1.12 | |||||||
Diluted shares used in computing earnings per share attributable to Fiserv | 680.8 | 399.6 | 686.0 | 399.4 | |||||||||||
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 June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
GAAP net income | $ | 2 | $ | 223 | $ | 394 | $ | 448 | |||||||
GAAP net income attributable to First Data 1 | — | 275 | — | 444 | |||||||||||
Combined net income attributable to Fiserv | 2 | 498 | 394 | 892 | |||||||||||
Combined adjustments: | |||||||||||||||
Merger and integration costs 2 | 229 | 38 | 463 | 102 | |||||||||||
Severance and restructuring costs 3 | 32 | 17 | 79 | 38 | |||||||||||
Amortization of acquisition-related intangible assets 4 | 521 | 144 | 1,046 | 289 | |||||||||||
Debt financing activities 5 | — | 41 | — | 101 | |||||||||||
Impact of divestitures 6 | — | (12 | ) | — | (29 | ) | |||||||||
Non wholly-owned entity activities 7 | 36 | (6 | ) | 19 | (18 | ) | |||||||||
Tax impact of adjustments 8 | (191 | ) | (52 | ) | (370 | ) | (112 | ) | |||||||
(Gain) loss on sale of businesses 6 | 3 | 2 | (428 | ) | (7 | ) | |||||||||
Tax impact of (gain) loss on sale of businesses 8 | (1 | ) | — | 112 | 2 | ||||||||||
Adjusted net income | $ | 631 | $ | 670 | $ | 1,315 | $ | 1,258 | |||||||
Weighted average common shares outstanding - diluted | 680.8 | 399.6 | 686.0 | 399.4 | |||||||||||
Issuance of shares for combination | — | 286.3 | — | 286.3 | |||||||||||
Dilutive impact of exchanged equity awards | — | 7.8 | — | 7.8 | |||||||||||
Combined weighted average common shares outstanding - diluted 9 | 680.8 | 693.7 | 686.0 | 693.5 | |||||||||||
GAAP earnings per share 9 | $ | — | $ | 0.56 | $ | 0.57 | $ | 1.12 | |||||||
Combined earnings per share 9 | $ | — | $ | 0.72 | $ | 0.57 | $ | 1.29 | |||||||
Combined adjustments - net of income taxes: | |||||||||||||||
Merger and integration costs 2 | 0.26 | 0.04 | 0.52 | 0.11 | |||||||||||
Severance and restructuring costs 3 | 0.04 | 0.02 | 0.09 | 0.04 | |||||||||||
Amortization of acquisition-related intangible assets 4 | 0.59 | 0.16 | 1.17 | 0.32 | |||||||||||
Debt financing activities 5 | — | 0.05 | — | 0.11 | |||||||||||
Impact of divestitures 6 | — | (0.01 | ) | — | (0.03 | ) | |||||||||
Non wholly-owned entity activities 7 | 0.04 | (0.01 | ) | 0.02 | (0.02 | ) | |||||||||
(Gain) loss on sale of businesses 6 | — | — | (0.46 | ) | (0.01 | ) | |||||||||
Adjusted earnings per share | $ | 0.93 | $ | 0.97 | $ | 1.92 | $ | 1.81 |
News Release |
1 | Represents the financial results of First Data prior to the date of acquisition. For the three and six months ended June 30, 2019, this includes the results of First Data from April 1, 2019 through June 30, 2019 and from January 1, 2019 through June 30, 2019, respectively. |
2 | Represents acquisition and related integration costs incurred as a result of the company's various acquisitions. Merger and integration costs include $219 million and $23 million in the second quarter of 2020 and 2019, respectively, and $440 million and $80 million in the first six months of 2020 and 2019, respectively, related to the First Data acquisition. First Data integration-related costs in the second quarter and first six months of 2020 primarily include $56 million and $103 million, respectively, of third party professional service fees associated with integration-related activities; $40 million and $92 million, respectively, of incremental share-based compensation, including the fair value of stock awards assumed by Fiserv; $33 million and $80 million, respectively, of accelerated depreciation and amortization associated with the termination of certain vendor contracts; $28 million and $78 million, respectively, of other integration-related compensation costs; and a $40 million non-cash impairment charge in both the second quarter and first six months of 2020 associated with the early exit of certain leased facilities. Merger and integration costs related to the First Data acquisition in the second quarter and first six months of 2019 include $16 million and $53 million, respectively, of legal and other professional service fees, primarily consisting of transaction costs. |
3 | Represents severance and other costs associated with the achievement of ongoing expense management initiatives, including real estate and data center consolidation activities. Amounts during the second quarter of 2020 consisted entirely of severance costs. |
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 expenses associated with entering into and maintaining a bridge term loan facility for the purpose of refinancing certain indebtedness of First Data upon the closing date of the acquisition. |
6 | Represents the earnings attributable to divested businesses and the gain/loss on the associated divestiture transactions, including two businesses acquired as part of the First Data acquisition that were sold in October 2019 and the sale of a 60% interest in the Investment Services business in February 2020. |
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. |
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 gain/loss on sale of businesses. |
9 | GAAP earnings per share is computed by dividing GAAP net income by the weighted average 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. |
News Release |
Fiserv, Inc. | |||||||||||||||
Financial Results by Segment | |||||||||||||||
(In millions, unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Total Company | |||||||||||||||
Revenue | $ | 3,465 | $ | 1,512 | $ | 7,234 | $ | 3,014 | |||||||
First Data revenue 1 | — | 2,485 | — | 4,801 | |||||||||||
Combined revenue | 3,465 | 3,997 | 7,234 | 7,815 | |||||||||||
Combined adjustments: | |||||||||||||||
Intercompany eliminations 2 | — | (2 | ) | — | (4 | ) | |||||||||
Output Solutions postage reimbursements | (198 | ) | (243 | ) | (433 | ) | (493 | ) | |||||||
Deferred revenue purchase accounting adjustments | 11 | — | 23 | — | |||||||||||
Merchant Services adjustment 3 | (58 | ) | (109 | ) | (126 | ) | (202 | ) | |||||||
Adjusted revenue | $ | 3,220 | $ | 3,643 | $ | 6,698 | $ | 7,116 | |||||||
Operating income | $ | 165 | $ | 384 | $ | 794 | $ | 757 | |||||||
First Data operating income 1 | — | 565 | — | 989 | |||||||||||
Combined operating income | 165 | 949 | 794 | 1,746 | |||||||||||
Combined adjustments: | |||||||||||||||
Merger and integration costs | 229 | 38 | 463 | 102 | |||||||||||
Severance and restructuring costs | 32 | 17 | 79 | 38 | |||||||||||
Amortization of acquisition-related intangible assets | 521 | 144 | 1,046 | 289 | |||||||||||
Merchant Services adjustment 3 | (23 | ) | (66 | ) | (59 | ) | (121 | ) | |||||||
(Gain) loss on sale of businesses | 3 | 2 | (428 | ) | (7 | ) | |||||||||
Adjusted operating income | $ | 927 | $ | 1,084 | $ | 1,895 | $ | 2,047 | |||||||
Operating margin | 4.7 | % | 25.4 | % | 11.0 | % | 25.1 | % | |||||||
Adjusted operating margin | 28.8 | % | 29.7 | % | 28.3 | % | 28.8 | % | |||||||
Merchant Acceptance ("Acceptance") | |||||||||||||||
Revenue | $ | 1,223 | $ | — | $ | 2,624 | $ | — | |||||||
First Data revenue 1 | — | 1,576 | — | 3,003 | |||||||||||
Combined revenue | 1,223 | 1,576 | 2,624 | 3,003 | |||||||||||
Combined adjustments: | |||||||||||||||
Deferred revenue purchase accounting adjustments | 2 | — | 4 | — | |||||||||||
Merchant Services adjustment 3 | (58 | ) | (109 | ) | (126 | ) | (202 | ) | |||||||
Adjusted revenue | $ | 1,167 | $ | 1,467 | $ | 2,502 | $ | 2,801 | |||||||
Operating income | $ | 245 | $ | — | $ | 562 | $ | — | |||||||
First Data operating income 1 | — | 486 | — | 882 | |||||||||||
Combined operating income | 245 | 486 | 562 | 882 | |||||||||||
Combined adjustments: | |||||||||||||||
Merger and integration costs | 1 | — | 3 | — | |||||||||||
Merchant Services adjustment 3 | (23 | ) | (66 | ) | (59 | ) | (121 | ) | |||||||
Adjusted operating income | $ | 223 | $ | 420 | $ | 506 | $ | 761 | |||||||
Operating margin | 20.0 | % | — | 21.4 | % | — | |||||||||
Adjusted operating margin | 19.1 | % | 28.6 | % | 20.2 | % | 27.2 | % | |||||||
News Release |
Fiserv, Inc. | |||||||||||||||
Financial Results by Segment (cont.) | |||||||||||||||
(In millions, unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Financial Technology ("Fintech") 4 | |||||||||||||||
Revenue | $ | 714 | $ | 731 | $ | 1,432 | $ | 1,456 | |||||||
Operating income | $ | 252 | $ | 221 | $ | 456 | $ | 424 | |||||||
Operating margin | 35.4 | % | 30.2 | % | 31.9 | % | 29.1 | % | |||||||
Payments and Network ("Payments") | |||||||||||||||
Revenue | $ | 1,320 | $ | 662 | $ | 2,706 | $ | 1,313 | |||||||
First Data revenue 1 | — | 732 | — | 1,448 | |||||||||||
Combined revenue | 1,320 | 1,394 | 2,706 | 2,761 | |||||||||||
Combined adjustments: | |||||||||||||||
Intercompany eliminations 2 | — | (2 | ) | — | (4 | ) | |||||||||
Deferred revenue purchase accounting adjustments | 9 | — | 19 | — | |||||||||||
Adjusted revenue | $ | 1,329 | $ | 1,392 | $ | 2,725 | $ | 2,757 | |||||||
Operating income | $ | 548 | $ | 288 | $ | 1,113 | $ | 562 | |||||||
First Data operating income 1 | — | 267 | — | 516 | |||||||||||
Combined operating income | 548 | 555 | 1,113 | 1,078 | |||||||||||
Combined adjustments: | |||||||||||||||
Merger and integration costs | 10 | — | 20 | — | |||||||||||
Adjusted operating income | $ | 558 | $ | 555 | $ | 1,133 | $ | 1,078 | |||||||
Operating margin | 41.5 | % | 43.4 | % | 41.2 | % | 42.8 | % | |||||||
Adjusted operating margin | 42.0 | % | 39.8 | % | 41.6 | % | 39.1 | % | |||||||
Corporate and Other | |||||||||||||||
Revenue | $ | 208 | $ | 119 | $ | 472 | $ | 245 | |||||||
First Data revenue 1 | — | 177 | — | 350 | |||||||||||
Combined revenue | 208 | 296 | 472 | 595 | |||||||||||
Combined adjustments: | |||||||||||||||
Output Solutions postage reimbursements | (198 | ) | (243 | ) | (433 | ) | (493 | ) | |||||||
Adjusted revenue | $ | 10 | $ | 53 | $ | 39 | $ | 102 | |||||||
Operating loss | $ | (880 | ) | $ | (125 | ) | $ | (1,337 | ) | $ | (229 | ) | |||
First Data operating loss 1 | — | (188 | ) | — | (409 | ) | |||||||||
Combined operating loss | (880 | ) | (313 | ) | (1,337 | ) | (638 | ) | |||||||
Combined adjustments: | |||||||||||||||
Merger and integration costs | 218 | 38 | 440 | 102 | |||||||||||
Severance and restructuring costs | 32 | 17 | 79 | 38 | |||||||||||
Amortization of acquisition-related intangible assets | 521 | 144 | 1,046 | 289 | |||||||||||
(Gain) loss on sale of businesses | 3 | 2 | (428 | ) | (7 | ) | |||||||||
Adjusted operating loss | $ | (106 | ) | $ | (112 | ) | $ | (200 | ) | $ | (216 | ) | |||
See pages 3-5 for disclosures related to the use of non-GAAP financial measures. | |||||||||||||||
Operating margin percentages are calculated using actual, unrounded amounts. |
News Release |
1 | Represents the financial results of First Data prior to the date of acquisition. For the three and six months ended June 30, 2019, this includes the results of First Data from April 1, 2019 through June 30, 2019 and from January 1, 2019 through June 30, 2019, respectively. |
2 | Represents the elimination of intercompany revenue and expense between First Data and the company. |
3 | Represents an adjustment primarily related to the company's joint venture with Bank of America. The Banc of America Merchant Services joint venture ("BAMS") was dissolved effective July 1, 2020. As of June 30, 2020, the company owned 51% of BAMS and BAMS' financial results were 100% consolidated into the company's financial statements for GAAP reporting purposes. In connection with the dissolution of the joint venture, the company received a 51% share of the joint venture's value via an agreed upon contractual separation. In addition, the company will continue providing merchant processing and related services to Bank of America's merchant clients. 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. |
4 | For all periods presented in the Fintech 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) | |||||||
Six Months Ended June 30, | |||||||
2020 | 2019 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 386 | $ | 448 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and other amortization | 550 | 202 | |||||
Amortization of acquisition-related intangible assets | 1,099 | 89 | |||||
Amortization of financing costs, debt discounts and other | 24 | 105 | |||||
Share-based compensation | 202 | 34 | |||||
Deferred income taxes | (94 | ) | 12 | ||||
Gain on sale of businesses | (428 | ) | (10 | ) | |||
Loss from investments in unconsolidated affiliates | 16 | 10 | |||||
Distributions from unconsolidated affiliates | 12 | — | |||||
Settlement of interest rate hedge contracts | — | (183 | ) | ||||
Non-cash impairment charge | 40 | — | |||||
Other operating activities | (3 | ) | (3 | ) | |||
Changes in assets and liabilities, net of effects from acquisitions and dispositions: | |||||||
Trade accounts receivable | 278 | 60 | |||||
Prepaid expenses and other assets | 62 | (62 | ) | ||||
Contract costs | (158 | ) | (93 | ) | |||
Accounts payable and other liabilities | (54 | ) | (28 | ) | |||
Contract liabilities | (13 | ) | (2 | ) | |||
Net cash provided by operating activities | 1,919 | 579 | |||||
Cash flows from investing activities | |||||||
Capital expenditures, including capitalization of software costs | (488 | ) | (210 | ) | |||
Proceeds from sale of businesses | 584 | 10 | |||||
Payments for acquisition of businesses, net of cash acquired and including working capital adjustments | (136 | ) | 54 | ||||
Distributions from unconsolidated affiliates | 66 | 7 | |||||
Purchases of investments | — | (3 | ) | ||||
Other investing activities | — | 6 | |||||
Net cash provided by (used in) investing activities | 26 | (136 | ) | ||||
Cash flows from financing activities | |||||||
Debt proceeds | 5,812 | 9,894 | |||||
Debt repayments | (6,219 | ) | (2,018 | ) | |||
Short-term borrowings, net | (1 | ) | — | ||||
Payments of debt financing, redemption and other costs | (16 | ) | (164 | ) | |||
Proceeds from issuance of treasury stock | 86 | 56 | |||||
Purchases of treasury stock, including employee shares withheld for tax obligations | (1,574 | ) | (185 | ) | |||
Distributions paid to noncontrolling interests and redeemable noncontrolling interests | (52 | ) | — | ||||
Other financing activities | 5 | — | |||||
Net cash (used in) provided by financing activities | (1,959 | ) | 7,583 | ||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (12 | ) | — | ||||
Net change in cash, cash equivalents and restricted cash | (26 | ) | 8,026 | ||||
Cash, cash equivalents and restricted cash, beginning balance | 933 | 415 | |||||
Cash, cash equivalents and restricted cash, ending balance | $ | 907 | $ | 8,441 | |||
News Release |
Fiserv, Inc. | |||||||
Condensed Consolidated Balance Sheets | |||||||
(In millions, unaudited) | |||||||
June 30, 2020 | December 31, 2019 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 869 | $ | 893 | |||
Trade accounts receivable – net | 2,512 | 2,782 | |||||
Prepaid expenses and other current assets | 1,114 | 1,503 | |||||
Settlement assets | 12,987 | 11,868 | |||||
Total current assets | 17,482 | 17,046 | |||||
Property and equipment – net | 1,688 | 1,606 | |||||
Customer relationships – net | 12,897 | 14,042 | |||||
Other intangible assets – net | 3,739 | 3,600 | |||||
Goodwill | 36,088 | 36,038 | |||||
Contract costs – net | 606 | 533 | |||||
Investments in unconsolidated affiliates | 2,763 | 2,720 | |||||
Other long-term assets | 1,830 | 1,954 | |||||
Total assets | $ | 77,093 | $ | 77,539 | |||
Liabilities and Equity | |||||||
Accounts payable and accrued expenses | $ | 2,933 | $ | 3,080 | |||
Short-term and current maturities of long-term debt | 359 | 287 | |||||
Contract liabilities | 481 | 492 | |||||
Settlement obligations | 12,987 | 11,868 | |||||
Total current liabilities | 16,760 | 15,727 | |||||
Long-term debt | 21,515 | 21,612 | |||||
Deferred income taxes | 4,481 | 4,247 | |||||
Long-term contract liabilities | 159 | 155 | |||||
Other long-term liabilities | 892 | 941 | |||||
Total liabilities | 43,807 | 42,682 | |||||
Redeemable noncontrolling interests | 258 | 262 | |||||
Fiserv shareholders' equity | 31,583 | 32,979 | |||||
Noncontrolling interests | 1,445 | 1,616 | |||||
Total equity | 33,028 | 34,595 | |||||
Total liabilities and equity | $ | 77,093 | $ | 77,539 | |||
News Release |
Internal Revenue Growth 1 | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||
2020 | 2019 | Growth | 2020 | 2019 | Growth | |||||||||||||||
Total Company | ||||||||||||||||||||
Adjusted revenue | $ | 3,220 | $ | 3,643 | $ | 6,698 | $ | 7,116 | ||||||||||||
Currency impact 2 | 48 | — | 93 | — | ||||||||||||||||
Acquisition adjustments | — | — | (6 | ) | — | |||||||||||||||
Divestiture adjustments | (116 | ) | (243 | ) | (263 | ) | (462 | ) | ||||||||||||
Internal revenue | $ | 3,152 | $ | 3,400 | (7)% | $ | 6,522 | $ | 6,654 | (2)% | ||||||||||
Acceptance | ||||||||||||||||||||
Adjusted revenue | $ | 1,167 | $ | 1,467 | $ | 2,502 | $ | 2,801 | ||||||||||||
Currency impact 2 | 35 | — | 69 | — | ||||||||||||||||
Acquisition adjustments | — | — | (6 | ) | — | |||||||||||||||
Divestiture adjustments | (101 | ) | (172 | ) | (217 | ) | (329 | ) | ||||||||||||
Internal revenue | $ | 1,101 | $ | 1,295 | (15)% | $ | 2,348 | $ | 2,472 | (5)% | ||||||||||
Fintech | ||||||||||||||||||||
Adjusted revenue | $ | 714 | $ | 731 | $ | 1,432 | $ | 1,456 | ||||||||||||
Currency impact 2 | 1 | — | 3 | — | ||||||||||||||||
Divestiture adjustments | — | (11 | ) | — | (20 | ) | ||||||||||||||
Internal revenue | $ | 715 | $ | 720 | (1)% | $ | 1,435 | $ | 1,436 | — | ||||||||||
Payments | ||||||||||||||||||||
Adjusted revenue | $ | 1,329 | $ | 1,392 | $ | 2,725 | $ | 2,757 | ||||||||||||
Currency impact 2 | 12 | — | 21 | — | ||||||||||||||||
Divestiture adjustments | (5 | ) | (11 | ) | (7 | ) | (15 | ) | ||||||||||||
Internal revenue | $ | 1,336 | $ | 1,381 | (3)% | $ | 2,739 | $ | 2,742 | — | ||||||||||
Corporate and Other | ||||||||||||||||||||
Adjusted revenue | $ | 10 | $ | 53 | $ | 39 | $ | 102 | ||||||||||||
Divestiture adjustments | (10 | ) | (49 | ) | (39 | ) | (98 | ) | ||||||||||||
Internal revenue | $ | — | $ | 4 | $ | — | $ | 4 |
1 | Internal revenue growth is measured as the change in adjusted revenue (see pages 10-12) 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 the revenue associated with Banc of America Merchant Services, which was dissolved effective July 1, 2020, transition services revenue within Corporate and Other, and, in the Payments segment, certain adjustments to conform prior period amounts to be consistent with the combined company's presentation. |
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 | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net cash provided by operating activities | $ | 1,031 | $ | 206 | $ | 1,919 | $ | 579 | ||||||||
First Data net cash provided by operating activities 1 | — | 713 | — | 1,328 | ||||||||||||
First Data payments for contract assets 2 | — | (20 | ) | — | (51 | ) | ||||||||||
Combined net cash provided by operating activities | 1,031 | 899 | 1,919 | 1,856 | ||||||||||||
Combined capital expenditures | (242 | ) | (310 | ) | (488 | ) | (543 | ) | ||||||||
Combined adjustments: | ||||||||||||||||
Distributions paid to noncontrolling interests and redeemable noncontrolling interests | (26 | ) | (81 | ) | (52 | ) | (133 | ) | ||||||||
Distributions from unconsolidated affiliates 3 | 30 | 7 | 66 | 7 | ||||||||||||
Severance, restructuring, merger and integration payments | 133 | 50 | 272 | 136 | ||||||||||||
Settlement of interest rate hedge contracts | — | 183 | — | 183 | ||||||||||||
Tax payments on adjustments and debt financing | (31 | ) | (16 | ) | (62 | ) | (36 | ) | ||||||||
Other | — | (4 | ) | — | (4 | ) | ||||||||||
Free cash flow | $ | 895 | $ | 728 | $ | 1,655 | $ | 1,466 | ||||||||
1 | Represents the financial results of First Data prior to the date of acquisition. For the three and six months ended June 30, 2019, this includes the results of First Data from April 1, 2019 through June 30, 2019 and from January 1, 2019 through June 30, 2019, respectively. |
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 $31 million and $78 million for the three and six months ended June 30, 2020, of which $1 million and $12 million are recorded within net cash provided by operating activities, respectively. Distributions from unconsolidated affiliates totaled $54 million and $106 million for the three and six months ended June 30, 2019, of which $47 million and $99 million are recorded within First Data net cash provided by operating activities, respectively. |
News Release |
Total Amortization 1 | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Acquisition-related intangible assets | $ | 546 | $ | 44 | $ | 1,099 | $ | 89 | ||||||||
Capitalized software | 40 | 39 | 78 | 77 | ||||||||||||
Purchased software | 78 | 13 | 134 | 25 | ||||||||||||
Financing costs, debt discounts and other | 11 | 42 | 23 | 105 | ||||||||||||
Sales commissions | 22 | 21 | 44 | 41 | ||||||||||||
Deferred conversion costs | 7 | 5 | 14 | 10 | ||||||||||||
Total amortization | $ | 704 | $ | 164 | $ | 1,392 | $ | 347 | ||||||||
First Data acquisition-related intangible assets | $ | — | $ | 100 | $ | — | $ | 200 | ||||||||
First Data capitalized software | — | 27 | — | 52 | ||||||||||||
First Data purchased software | — | 32 | — | 61 | ||||||||||||
First Data financing costs, debt discounts and other | — | 4 | — | 7 | ||||||||||||
First Data sales commissions | — | — | — | — | ||||||||||||
First Data deferred conversion costs | — | 9 | — | 18 | ||||||||||||
Total First Data amortization 2 | $ | — | $ | 172 | $ | — | $ | 338 | ||||||||
Combined acquisition-related intangible assets | $ | 546 | $ | 144 | $ | 1,099 | $ | 289 | ||||||||
Combined capitalized software | 40 | 66 | 78 | 129 | ||||||||||||
Combined purchased software | 78 | 45 | 134 | 86 | ||||||||||||
Combined financing costs, debt discounts and other | 11 | 46 | 23 | 112 | ||||||||||||
Combined sales commissions | 22 | 21 | 44 | 41 | ||||||||||||
Combined deferred conversion costs | 7 | 14 | 14 | 28 | ||||||||||||
Total combined amortization | $ | 704 | $ | 336 | $ | 1,392 | $ | 685 |
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 three and six months ended June 30, 2019, this includes the results of First Data from April 1, 2019 through June 30, 2019 and from January 1, 2019 through June 30, 2019, respectively. |
News Release |
News Release |
2019 GAAP net income | $ | 893 | |
2019 GAAP net income attributable to First Data 1 | 303 | ||
2019 combined net income attributable to Fiserv | 1,196 | ||
Combined adjustments: | |||
Merger and integration costs 2 | 467 | ||
Severance and restructuring costs 3 | 150 | ||
Amortization of acquisition-related intangible assets 4 | 1,222 | ||
Debt financing activities 5 | 287 | ||
Non wholly-owned entity activities 6 | (53 | ) | |
Tax impact of adjustments 7 | (480 | ) | |
Gain on sale of businesses 8 | (12 | ) | |
Tax impact of gain on sale of businesses 7 | 3 | ||
Discrete tax items 9 | (5 | ) | |
2019 adjusted net income | 2,775 | ||
Impact of divestitures 8 | (46 | ) | |
Taxes on Impact of divestitures 7 | 10 | ||
2019 adjusted net income, as adjusted for divestitures | $ | 2,739 | |
Weighted average common shares outstanding - diluted | 522.6 | ||
Issuance of shares for combination | 167.0 | ||
Dilutive impact of exchanged equity awards | 4.5 | ||
Combined weighted average common shares outstanding - diluted 10 | 694.1 | ||
2019 GAAP earnings per share 10 | $ | 1.71 | |
Combined earnings per share 10 | $ | 1.72 | |
Combined adjustments - net of income taxes: | |||
Merger and integration costs 2 | 0.52 | ||
Severance and restructuring costs 3 | 0.17 | ||
Amortization of acquisition-related intangible assets 4 | 1.36 | ||
Debt financing activities 5 | 0.32 | ||
Non wholly-owned entity activities 6 | (0.06 | ) | |
Gain on sale of businesses 8 | (0.01 | ) | |
Discrete tax items 9 | (0.01 | ) | |
2019 adjusted earnings per share | 4.00 | ||
Impact of divestitures 8 | (0.05 | ) | |
2019 adjusted earnings per share, as adjusted for divestitures | $ | 3.95 | |
2020 adjusted earnings per share outlook | ≥ $4.33 | ||
2020 adjusted earnings per share growth outlook | ≥ 10% | ||
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. |
2 | Represents acquisition and related integration costs incurred as a result of the company's various acquisitions. Merger and integration costs include $408 million, 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 $199 million and incremental share-based compensation including the fair value of assumed stock awards was $108 million. |
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 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. Debt financing activities 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. |
6 | 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. |
7 | 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 on sale of businesses. |
8 | Represents the earnings attributable to divested businesses and the gain on the associated divestiture transactions, including two businesses acquired as part of the First Data acquisition that were sold in October 2019 and the sale of a 60% interest in the Investment Services business in February 2020. |
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. |
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