-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OEOKRhHWwFJ7oWSv/c9BqMaAvNf1L5Wt3V1V2emyitZHNnwZ9IEXSM4sdjofvBNF u0XkejK7aV8cCAZFC+uJPg== 0000950131-01-001283.txt : 20010228 0000950131-01-001283.hdr.sgml : 20010228 ACCESSION NUMBER: 0000950131-01-001283 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010227 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FISERV INC CENTRAL INDEX KEY: 0000798354 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 391506125 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-14948 FILM NUMBER: 1555175 BUSINESS ADDRESS: STREET 1: 255 FISERV DR STREET 2: PO BOX 979 CITY: BROOKFIELD STATE: WI ZIP: 53045 BUSINESS PHONE: 4148795000 MAIL ADDRESS: STREET 1: 255 FISERV DRIVE CITY: BROOKFIELD STATE: WI ZIP: 53045 10-K 1 0001.txt FORM 10-K (DATED DECEMBER 31, 2000) SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 COMMISSION FILE NO. 0-14948 FISERV, INC. ------------ (Exact name of registrant as specified in its charter) WISCONSIN 39-1506125 --------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 255 FISERV DRIVE, BROOKFIELD, WISCONSIN 53045 - --------------------------------------- ----- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (262) 879-5000 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE ---- (Title of Class) SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, $0.01 Par Value ----------------------------- (Title of Class) Preferred Stock Purchase Rights ------------------------------- (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_] State the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of January 31, 2001: $6,427,897,972 Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of January 31, 2001: 124,060,757 DOCUMENTS INCORPORATED BY REFERENCE: 2000 Annual Report to Shareholders - Parts II, IV Proxy Statement for March 29, 2001, Annual Meeting of Shareholders - Part III FISERV, INC. AND SUBSIDIARIES FORM 10-K December 31, 2000
PART I Page - ------ ---- Item 1. Business 1 Item 2. Properties 8 Item 3. Legal Proceedings 9 Item 4. Submission of Matters to a Vote of Security Holders 9 Executive Officers of the Registrant 9 PART II - -------- Item 5. Market for the Registrant's Common Equity and Related Shareholder Matters 10 Item 6. Selected Financial Data 10 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 7a. Quantitative and Qualitative Disclosure about Market Risk 10 Item 8. Financial Statements and Supplementary Data 10 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 10 PART III - -------- Item 10. Directors and Executive Officers of the Registrant 10 Item 11. Executive Compensation 10 Item 12. Security Ownership of Certain Beneficial Owners and Management 10 Item 13. Certain Relationships and Related Transactions 10 PART IV - ------- Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 11
================================================================================ PART I ================================================================================ Special Note Regarding Forward-Looking Statements Certain matters discussed in this Annual Report on Form 10-K are "forward- looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as "believes," "anticipates" or "expects," or words of similar import. Similarly, statements that describe future plans, objectives or goals of Fiserv, Inc. ("Fiserv" or the "Company") are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated. Factors that could affect results include, among others, economic, competitive, governmental and technological factors affecting the Company's operations, markets, services and related products, prices and other factors discussed in the Company's prior filings with the Securities and Exchange Commission. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Item 1. Business Fiserv is a leading technology resource for information management systems used by the financial industry. The Company was formed on July 31, 1984, through the combination of two major regional data processing firms located in Milwaukee, Wisconsin, and Tampa, Florida. These firms--First Data Processing of Milwaukee and Sunshine State Systems of Tampa--began their operations in 1964 and 1971, respectively, as the data processing operations of their parent financial institutions. Historically, operations were expanded by developing a range of services for these parent organizations as well as other financial institutions. Since its organization in 1984, Fiserv has grown through the continuing development of highly specialized services and product enhancements, the addition of new clients and the acquisition of firms complementing the Fiserv organization. Headquartered in Brookfield, Wisconsin, Fiserv provides information management technology and related services to banks, broker-dealers, credit unions, financial planners and investment advisers, insurance companies, leasing companies, mortgage lenders and savings institutions. The Company operates centers nationwide for full-service financial data processing, software system development, item processing and check imaging, technology support and related product businesses. In addition, the Company has business support centers in Australia, Colombia, Indonesia, the Philippines, Poland, Singapore and the United Kingdom. Business Strategy - ----------------- The market for products and services offered by financial institutions continues to undergo change. New alternative lending and investment products are being introduced and implemented by the financial industry with great frequency; the distinctions among financial services traditionally offered by banking and thrift organizations as well as by securities and insurance firms continue to narrow; and financial institutions diversify and consolidate on an ongoing basis in response to market pressures, as well as under the auspices of regulatory agencies. Although such market changes have led to consolidations that have reduced the number of financial institutions in the United States, such consolidations have not resulted in a material reduction of the number of customers or financial accounts serviced by the financial industry as a whole. New organizations entering the once limited financial services industry have opened new markets for Fiserv services. 1 To stay competitive in this changing marketplace, financial institutions are finding they must aggressively meet the growing needs of their customers for a broad variety of new products and services that are typically transaction- oriented and fee-based. The growing volume and types of transactions and accounts have increased the data processing requirements of these institutions. As a consequence, Fiserv management believes that the financial services industry is one of the largest users of data processing products and services. Moreover, Fiserv expects that the industry will continue to require significant commitments of capital and human resources to the information systems requirements, to require application of more specialized systems and to require development, maintenance and enhancement of applications software. Fiserv believes that economies of scale in data processing operations are essential to justify the required level of expenditures and commitment of human resources. In response to these market dynamics, the means by which financial institutions obtain data processing services have changed. Many smaller, local and regional third-party data processors are leaving the business or consolidating with larger providers. A number of large financial institutions previously providing third-party processing services for other institutions have withdrawn from the business to concentrate on their primary, core businesses. Similarly, an increasing number of financial institutions that previously developed their own software systems and maintained their own data processing operations have outsourced their data processing requirements by licensing their software from a third party or by contracting with third-party processors to reduce costs and enhance their products and services. Outsourcing can involve simply the licensing of software, thereby eliminating the costly technical expertise within the financial institution, or the utilization of service bureaus, facilities management or resource management capabilities. Fiserv provides all of these options to the financial industry. To capitalize on these industry trends and to become the premier provider of data processing products and related services, Fiserv has implemented a strategy of continuing to develop new products, improving the cost effectiveness of services provided to clients, aggressively soliciting new clients, and making both opportunistic and strategic acquisitions.
Acquisition History - ------------------- Formed Acquired Company Service ========================================================================================================= 1964 July 1984 First Data Processing, Milwaukee, WI Data processing 1971 July 1984 Sunshine State Systems, Tampa, FL Data processing 1966 Nov. 1984 San Antonio, Inc., San Antonio, TX Data processing 1982 Oct. 1985 Sendero Corporation, Scottsdale, AZ Asset/liability management 1962 Oct. 1985 First Trust Corporation, Denver, CO DP for retirement planning 1962 Oct. 1985 First Retirement Marketing, Denver, CO Retirement planning services 1973 Jan. 1986 On-Line, Inc., Seattle, WA Data processing, forms 1966 May 1986 First City Financial Systems, Inc., Beaumont, TX Data processing 1962 Feb. 1987 Pamico, Inc., Milwaukee, WI Specialized forms 1975 Apr. 1987 Midwest Commerce Data Corp., Elkhart, IN Data processing 1969 Apr. 1987 Fidelity Financial Services, Inc., Spokane, WA Data processing 1965 Oct. 1987 Capbanc Computer Corp., Baton Rouge, LA (sold 1991) Data processing 1971 Feb. 1988 Minnesota On-Line Inc., Minneapolis, MN Data processing 1965 May 1988 Citizens Financial Corporation, Cleveland, OH Data processing 1980 May 1988 ZFC Electronic Data Services, Inc., Bowling Green, KY Data processing 1969 June 1988 GESCO Corporation, Fresno, CA Data processing
2
Formed Acquired Company Service ============================================================================================== 1967 Nov. 1988 Valley Federal Data Services, Los Angeles, CA Data processing 1984 Dec. 1988 Northeast Savings Data Services, Hartford, CT Data processing 1982 May 1989 Triad Software Network, Ltd., Chicago, IL (sold 1996) Data processing 1969 Aug. 1989 Northeast Datacom, Inc., New Haven, CT Data processing 1978 Feb. 1990 Financial Accounting Services Inc., Pittsburgh, PA Data processing 1974 June 1990 Accurate Data On Line, Inc., Titusville, FL Data processing 1982 June 1990 GTE EFT Services Money Network, Fresno, CA EFT networks 1968 July 1990 First Interstate Management, Milwaukee, WI Data processing 1982 Oct. 1990 GTE ATM Networks, Fresno, CA EFT networks 1867 Nov. 1990 Boston Safe Deposit & Trust Co. IP Services, MA Item processing 1968 Dec. 1990 First Bank, N.A. IP Services, Milwaukee, WI Item processing 1979 Apr. 1991 Citicorp Information Resources, Inc., Stamford, CT Data processing 1980 Apr. 1991 BMS Processing, Inc., Randolph, MA Item processing 1979 May 1991 FHLB of Dallas IP Services, Dallas, TX Item processing 1980 Nov. 1991 FHLB of Chicago IP Services, Chicago, IL Item processing 1977 Feb. 1992 Data Holdings, Inc., Indianapolis, IN Automated card services 1980 Feb. 1992 BMS On-Line Services, Inc. (assets), Randolph, MA Data processing 1982 Mar. 1992 First American Information Services, St. Paul, MN Data processing 1981 July 1992 Cadre, Inc., Avon, CT (sold 1996) Disaster recovery 1992 July 1992 Performance Analysis, Inc., Cincinnati, OH Asset/liability management 1986 Oct. 1992 Chase Manhattan Bank, REALM Software, NY Asset/liability management 1984 Dec. 1992 Dakota Data Processing, Inc., Fargo, ND Data processing 1983 Dec. 1992 Banking Group Services, Inc., Somerville, MA Item processing 1968 Feb. 1993 Basis Information Technologies, Atlanta, GA Data processing, EFT 1986 Mar. 1993 IPC Service Corporation (assets), Denver, CO Item processing 1973 May 1993 EDS' FHLB Seattle (assets), Seattle, WA Item processing 1982 June 1993 Datatronix Financial Services, San Diego, CA Item processing 1966 July 1993 Data Line Service, Covina, CA Data processing 1978 Nov. 1993 Financial Processors, Inc., Miami, FL Data processing 1974 Nov. 1993 Financial Data Systems, Jacksonville, FL Item processing 1961 Nov. 1993 Financial Institutions Outsourcing, Pittsburgh, PA Data processing 1972 Nov. 1993 Data-Link Systems, South Bend, IN Mortgage banking services 1985 Apr. 1994 National Embossing Company, Inc., Houston, TX Automated card services 1962 May 1994 Boatmen's Information Systems of Iowa, Des Moines Data processing 1981 Aug. 1994 FHLB of Atlanta IP Services, Atlanta, GA Item processing 1989 Nov. 1994 CBIS Imaging Technology Banking Unit, Maitland, FL Imaging technology 1987 Dec. 1994 RECOM Associates, Inc., Tampa, FL (sold 1998) Network integration 1970 Jan. 1995 Integrated Business Systems, Glendale, CA Specialized forms 1977 Feb. 1995 BankLink, Inc., New York, NY Cash management 1976 May 1995 Information Technology, Inc., Lincoln, NE Software & services 1957 Aug. 1995 Lincoln Holdings, Inc., Denver, CO DP for retirement planning 1993 Sept. 1995 SRS, Inc., Austin, TX Data processing 1992 Sept. 1995 ALLTEL's Document Management Services, CA, NJ Item processing 1978 Nov. 1995 Financial Information Trust, Des Moines, IA Data processing
3
Formed Acquired Company Service =============================================================================================================== 1983 Jan. 1996 UniFi, Inc., Fort Lauderdale, FL Software & services 1982 Nov. 1996 Bankers Pension Services, Inc., Tustin, CA DP for retirement planning 1992 Apr. 1997 AdminaStar Communications, Indianapolis, IN Laser print/mailing services 1982 May 1997 Interactive Planning Systems, Atlanta, GA PC-based financial systems 1983 May 1997 BHC Financial, Inc., Philadelphia, PA Securities services 1968 Sept. 1997 FIS, Inc., Orlando, FL, and Baton Rouge, LA Data processing n/a Sept. 1997 Stephens Inc. clearing business, Little Rock, AR Securities services 1986 Oct. 1997 Emerald Publications, San Diego, CA Financial seminars & training 1968 Oct. 1997 Central Service Corp., Greensboro, NC Data & item processing 1993 Oct. 1997 Savoy Discount Brokerage, Seattle, WA Securities services 1990 Dec. 1997 Hanifen, Imhoff Holdings, Inc., Denver, CO Securities services 1980 Jan. 1998 Automated Financial Technology, Inc., Malvern, PA Data processing 1981 Feb. 1998 The LeMans Group, King of Prussia, PA Automobile leasing software n/a Feb. 1998 PSI Group, Seattle, WA Laser printing 1956 Apr. 1998 Network Data Processing Corporation, Cedar Rapids, IA Insurance data processing 1977 Apr. 1998 CUSA Technologies, Inc., Salt Lake City, UT Software & services 1982 May 1998 Specialty Insurance Service, Orange, CA Insurance data processing 1985 Aug. 1998 Deluxe Card Services, St. Paul, MN Automated card services 1981 Oct. 1998 FHLB of Topeka IP Services, Topeka, KS Item processing n/a Oct. 1998 FiCATS, Norristown, PA Item processing 1984 Oct. 1998 Life Instructors, Inc., New Providence, NJ Insurance/securities training 1994 Nov. 1998 ASI Financial, Inc., New Jersey and New York PC-based financial systems 1986 Dec. 1998 The FREEDOM Group, Inc., Cedar Rapids, IA Insurance data processing 1994 Jan. 1999 QuestPoint, Philadelphia, PA Item processing 1981 Feb. 1999 Eldridge & Associates, Lafayette, CA PC-based financial systems 1984 Feb. 1999 RF/Spectrum Decision Science Corporation, Oakland, CA Software & services 1978 Mar. 1999 FIPSCO, Inc., Des Plaines, IL Insurance marketing systems 1987 Apr. 1999 Progressive Data Solutions, Inc./Infinity Software Insurance software systems Systems, Inc., Orlando, FL 1973 June 1999 JWGenesis Clearing Corporation, Boca Raton, FL Securities services 1987 June 1999 Alliance ADS, Redwood Shores, CA Imaging technology 1962 Aug. 1999 Envision Financial Technologies, Inc., Chicago, IL Data processing 1995 Oct. 1999 Pinehurst Analytics, Inc., Chapel Hill, NC PC-based financial systems 1982 Dec. 1999 Humanic Design Corporation, Mahwah, NJ Software & services 1983 Jan. 2000 Patterson Press, Inc., Nashville, TN Card services 1982 May 2000 Resources Trust Company, Denver, CO DP for retirement planning 1986 Sept. 2000 National Flood Services, Inc., Kalispell, MT Insurance data processing
Information Technology Services - ------------------------------- Fiserv is a technology company focused on helping financial services providers meet the challenges and opportunities of today's dynamic financial marketplace. The Company's core business is serving the needs of banking, lending, insurance, financial planners and securities providers. With its wide array of industry-specific products, Fiserv clients can satisfy their customers' growing desire for anywhere, anytime financial services. The Company's operations have been classified into three business segments: Financial institution outsourcing, systems and services; Securities processing and trust services; and All other and corporate. The Financial institution outsourcing, systems and services 4 business segment provides account and transaction processing solutions and services to financial institutions and other financial intermediaries. The Securities processing and trust services business segment provides securities processing solutions and retirement plan administration services to brokerage firms, financial planners and financial institutions. The All other and corporate business segment provides plastic card services and document solutions, and includes general corporate expenses. The following discussion covers the two major operating segments: Financial Institution Outsourcing, Systems and Services. Account processing -------------------------------------------------------- is a core requirement of every financial institution. It's also vital to the operations of brokerage firms and insurance companies. No matter how the industry may consolidate and evolve, Fiserv expects that there will always remain the need for account processing. That's where Fiserv is positioned--as a leader in financial information management. Fiserv provides comprehensive solutions designed to meet the information processing requirements of financial institutions, including account and transaction processing services, item processing, loan servicing and lending systems. The Company offers its clients service bureau and in-house processing systems, e-commerce solutions and complementary products. In essence, Fiserv provides all the technology a bank, credit union, mortgage lender, savings or financing institution needs to run its operations--from deposit accounts to loans to general ledger to check processing. Fiserv products, services and software solutions are available through multiple delivery channels to financial institutions in the United States, and many of its systems have applications designed for the unique requirements of financial institutions operating outside of North America. Fiserv international teams develop, sell, install and support core banking and delivery channel integration solutions for a wide range of international banks and financial services companies located in over 60 countries. All Fiserv core systems can be complemented with a number of other products that allow clients to create a total servicing solution, depending on their requirements. These complementary products and back-office solutions include treasury and investment management, decision support and performance measurement solutions, electronic funds transfer services, imaging systems, human resource information systems, call center systems, loan origination and tracking, auto leasing software, data warehousing/data mining and credit services. The insurance industry, like banking, has requirements for basic administration services and information processing systems. Fiserv brings expertise in information management technology and related administration processing services to the insurance and banking industries. The products and solutions offered by the Company automate the full range of insurance services and support the growing convergence between banking and insurance. Fiserv insurance solutions include administration services and software for life, annuity, health insurance, property/casualty, flood and workers compensation; award-winning claims workstation software; comprehensive financial accounting systems; computer-based training for insurance and securities; and electronic sales platforms that can be delivered over the Internet. Securities Processing and Trust Services. The securities business is about ----------------------------------------- transactions and volume; advanced technology that makes executing and clearing trades faster, easier and more economical; and service excellence and customer satisfaction. Fiserv has accumulated the technology resources and industry knowledge required to meet the needs of brokerage firms and financial institutions that are expanding into this business. The Company provides comprehensive clearing, execution and brokerage services. With Fiserv, brokerage firms and financial institutions gain a technology resource with the volumes, management expertise, products and service necessary to help satisfy customer needs. The administration of self-directed retirement plans is also a highly specialized business that benefits, as do all financial services applications, from technology. Fiserv has built a trusted reputation in this field by applying its expertise to technology for administration of business and self-directed retirement plans and related services. As a leading provider of retirement plan administration and processing services to financial planners, Fiserv provides a full range of services including trustee services, proprietary software for registered investment advisors, financial seminars and related marketing materials. 5 Financial information concerning the Company's industry segments is included in Note 8 to the Consolidated Financial Statements contained in the Company's Annual Report to Shareholders included in this Annual Report on Form 10-K as Exhibit 13 and such information is incorporated herein by reference. Servicing the Market - -------------------- The market for Fiserv account and transaction processing services and products has specific needs and requirements, with strong emphasis placed by clients on software flexibility, product quality, reliability of service, comprehensiveness and integration of product lines, timely introduction of new products and features, cost effectiveness and demand for service excellence. Through its multiple product offerings, the Company successfully services these market needs for clients ranging in size from start-ups to some of the largest financial services providers worldwide. Fiserv believes that the position it holds as an independent, growth- oriented company dedicated to its business is an advantage to its clients. The Company differs from many of the account and transaction processing resources currently available since it isn't a regional or local cooperatively owned organization, nor a data processing subsidiary, an affiliate of a financial institution or a hardware vendor. Due to the economies of scale gained through its broad market presence, Fiserv offers clients a selection of information management and data processing solutions designed to meet the specific needs of the ever-changing financial industry. The Company believes this independence and primary focus on the financial industry helps its business development and related client service and product support teams remain responsive to the technology needs of its market, now and for the future. "The Client Comes First" is one of the Company's founding principles. It is a belief backed by a dedication to providing ongoing client service and support--no matter the client size. The Company believes its commitment of substantial resources to training and technical support helps retain Fiserv clients. Fiserv conducts the majority of its new and ongoing client training in its technology centers, where the Company maintains fully equipped demonstration and training facilities containing equipment used in the delivery of Fiserv services. Fiserv also provides local and on-site training services. Fiserv has been an international company since 1986, when its retail banking products were first launched throughout Europe, Asia and Latin America. Since then, the Company has grown an impressive infrastructure for supporting clients in international markets. Fiserv currently maintains international support staffs in Australia, Colombia, Indonesia, the Philippines, Poland, Singapore and the United Kingdom. Product Development - ------------------- In order to meet the changing technology needs of the clients served by Fiserv, the Company continually develops, maintains and enhances its systems. Resources applied to product development and maintenance are believed to be approximately 8% to 10% of Company revenues, about half of which is dedicated to software development. The Fiserv network of development and financial information technology centers applies the shared expertise of multiple Fiserv teams to design, develop and maintain specialized processing systems around the leading technology platforms. The applications of its account processing systems meet the preferences and diverse requirements of the various international, national, regional or local market-specific financial service environments of the Company's many clients. Though multiple Fiserv centers share the Company's variety of nationally developed and supported software, each center has specialized capabilities that enable it to offer system application features and functions unique to its client base. Where the client's requirements warrant, Fiserv purchases software programs from third parties that are interfaced with existing Fiserv systems. In developing its products, Fiserv stresses interaction with and responsiveness to the needs of its clients. 6 Fiserv provides a dedicated solution designed, developed, maintained and enhanced according to each client's goals for service quality, business development, asset/liability mix, local market positioning and other user- defined parameters. Fiserv regards its software as proprietary and utilizes a combination of trade secrecy laws, internal security practices and employee non-disclosure agreements for protection. The Company believes that legal protection of its software, while important, is less significant than the knowledge and experience of the Company's management and personnel and their ability to develop, enhance and market new products and services. The Company believes that it holds all proprietary rights necessary for the conduct of its business. Competition - ----------- The market for information technology products and services within the financial industry is highly competitive. The Company's principal competitors include internal data processing departments, data processing affiliates of large companies or large computer hardware manufacturers, independent computer service firms and processing centers owned and operated as user cooperatives. Certain competitors possess substantially greater financial, sales and marketing resources than the Company. Competition for in-house data processing and software departments is intensified by the efforts of computer hardware vendors who encourage the growth of internal data centers. Competitive factors for processing services include product quality, reliability of service, comprehensiveness and integration of product lines, timely introduction of new products and features, and price. The Company believes that it competes favorably in each of these categories. In addition, the Company believes that its position as an independent vendor, rather than as a cooperative, an affiliate of a larger corporation or a hardware vendor, is a competitive advantage. Government Regulation - --------------------- The Company's data processing subsidiaries are not themselves directly subject to federal or state regulations specifically applicable to financial institutions such as banks, thrifts and credit unions. As a provider of services to these entities, however, the data processing operations are observed from time to time by the Federal Deposit Insurance Corporation, the National Credit Union Association, the Office of Thrift Supervision, the Office of the Comptroller of the Currency and various state regulatory authorities. In addition, several of the Company's operations are reviewed annually by independent auditors to provide internal control evaluations for its clients' auditors and regulators. As trust companies under Colorado law, First Trust, Lincoln Trust and Resources Trust are subject to the regulations of the Colorado Division of Banking. First Trust, Lincoln Trust and Resources Trust historically have complied with such regulations and although no assurance can be given, the Company believes First Trust, Lincoln Trust and Resources Trust will continue to be able to comply with such regulations. Commencing in 1991, First Trust received approval of its application for Federal Deposit Insurance Corporation coverage of its customer deposits. The Company's securities businesses, Fiserv Securities, Inc. (formerly BHC Financial, Inc.) and affiliates and Fiserv Correspondent Services, Inc. (formerly Hanifen, Imhoff Clearing Corporation and JWGenesis Clearing Corporation), are subject to the broker-dealer rules of the Securities and Exchange Commission and the New York Stock Exchange, as well as the National Association of Securities Dealers and other stock exchanges of which they are members. Employees - --------- Fiserv employs approximately 14,000 specialists worldwide in its information management centers and related product and service companies. This service support network includes employees with backgrounds in computer science and the financial industry, often complemented by management 7 and other direct experience in banks, credit unions, mortgage firms, savings and other financial services business environments. Fiserv employees provide expertise in sales and marketing; account management and client services; computer operations, network control and technical support; programming, software development, modification and maintenance; conversions and client training; financial planning and related support services. In supporting international markets, Fiserv works closely with its clients to help ensure their continued success. Fiserv employees speak the same language as their clients, they also understand the differences in the style of doing business, as well as the financial products requirements and regulations unique to each client and its specific market. Fiserv employees are not represented by a union, and there have been no work stoppages, strikes or organizational attempts. The service nature of the Fiserv business makes its employees an important corporate asset, and while the market for qualified personnel is competitive, the Company does not experience significant difficulty with hiring or retaining its staff of top industry professionals. In assessing companies to acquire, the quality and stability of the prospective company's staff are emphasized. Management attributes its ability to attract and keep quality employees to, among other things, the Company's growth and dedication to state-of-the-art software development tools and hardware technologies. Item 2. Properties Fiserv currently operates full-service data centers, software system development centers and item processing and back-office support centers in 121 cities (113 in the United States): Birmingham, Alabama; Little Rock, Arkansas; Phoenix and Scottsdale, Arizona; Diamond Bar, Fresno, Lafayette, Moorpark, Oakland, Ontario, Orange, Redwood City, Sacramento, San Diego, San Leandro, Van Nuys and Walnut, California; Denver and Englewood, Colorado; Wallingford and Windsor, Connecticut; Boca Raton, Heathrow, Jacksonville, Lake Mary, Lake Wales, Maitland, Miami, Orlando, Plantation, Tampa and Titusville, Florida; Atlanta, Duluth, Macon, Marietta and Norcross, Georgia; Honolulu, Hawaii; Cedar Rapids and West Des Moines, Iowa; Arlington Heights, Chicago, Des Plaines, Marion and Rock Island, Illinois; Indianapolis and South Bend, Indiana; Topeka, Kansas; Bowling Green and Louisville, Kentucky; Baton Rouge and Kenner, Louisiana; Gaithersburg, Maryland; Braintree, Mansfield and Somerville, Massachusetts; Flint, Northville and Troy, Michigan; Eagan, Edina, Mendota Heights and Shoreview, Minnesota; Kansas City, Missouri; Kalispell, Montana; Lincoln and Omaha, Nebraska; Mahwah, New Providence and South Plainfield, New Jersey; Santa Fe, New Mexico; Fayetteville, Melville, New Hartford and New York, New York; Chapel Hill and Greensboro, North Carolina; Fargo, North Dakota; Cincinnati and Cleveland, Ohio; Oklahoma City, Oklahoma; Corvallis and Portland, Oregon; Bryn Mawr, Erie, King of Prussia, Malvern, Norristown, Philadelphia, Pittsburgh, Valley Forge and Williamsport, Pennsylvania; Newberry, South Carolina; Nashville, Tennessee; Addison, Austin, Beaumont, Dallas, Denton, Houston, San Antonio, Southlake and Stafford, Texas; Salt Lake City and Taylorsville, Utah; Williamsburg, Virginia; Bellevue, Kent and Seattle, Washington; and Brookfield, Milwaukee, New Berlin and Sheboygan, Wisconsin. International business centers are located in North Sydney, New South Wales, Australia; Bogota, Colombia; London and Uxbridge, Middlesex, England; Jakarta, Indonesia; Manila, Philippines; Warsaw, Poland; and Singapore, Singapore. The Company owns facilities in Brookfield, Corvallis, Greensboro, Kalispell, Lincoln, Marion, Moorpark, South Bend and Valley Forge; all other buildings in which centers are located are subject to leases expiring through 2002 and beyond. The Company owns or leases approximately 160 mainframe computers (Data General, Hewlett Packard, IBM, NCR, Tandem and Unisys). In addition, the Company maintains its own national data communication network consisting of communications processors and leased lines. 8 Fiserv believes its facilities and equipment are generally well maintained and are in good operating condition. The Company believes that the computer equipment it owns and its various facilities are adequate for its present and foreseeable business. Fiserv periodically upgrades its mainframe capability as needed. Fiserv contracts with multiple sites to provide processing backup in the event of a disaster and maintains duplicate tapes of data collected and software used in its business in locations away from the Company's facilities. Item 3. Legal Proceedings In the normal course of business, the Company and its subsidiaries are named as defendants in various lawsuits in which claims are asserted against the Company. In the opinion of management, the liabilities, if any, which may ultimately result from such lawsuits are not expected to have a material adverse effect on the financial statements of the Company. Item 4. Submission of Matters to a Vote of Security Holders During the fourth quarter of the fiscal year covered by this report, no matter was submitted to a vote of security holders of the Company. Executive Officers of the Registrant - ------------------------------------ The executive officers and other officers of the Company as of February 27, 2001, together with their ages, positions and business experience are described below:
Name Age Position Leslie M. Muma 56 President and Chief Executive Officer Donald F. Dillon 60 Chairman of the Board and Chairman of Information Technology, Inc. Kenneth R. Jensen 57 Senior Executive Vice President, Chief Financial Officer and Treasurer Howard F. Arner 60 President, Insurance Solutions Group Norman J. Balthasar 54 President and Chief Operating Officer, Financial Institution Group Robert H. Beriault 49 President and Chief Operating Officer, Securities Group Thomas A. Neill 51 President and Chief Operating Officer, Credit Union and Industry Products Group Gordon G. Rockafellow 64 President and Chief Operating Officer, Trust Services Group Dean C. Schmelzer 50 Executive Vice President - Marketing & Sales Charles W. Sprague 51 Executive Vice President, General Counsel, Chief Administrative Officer and Secretary
Mr. Muma has been a Director of the Company since it was established in 1984. He has served as President and Chief Operating Officer of the Company from 1984 to 1999, when he was named President and Chief Executive Officer. Mr. Dillon was named Chairman of the Board of Directors in July 2000. He served as Vice Chairman from 1995 to 2000. From 1976 to 1995, Mr. Dillon was co-founder and President of Information Technology, Inc. (ITI), a software and services organization that was acquired by the Company in 1995. Mr. Dillon also serves as Chairman of ITI. 9 Mr. Jensen has been Executive Vice President, Chief Financial Officer, Treasurer, Assistant Secretary and a Director of the Company since it was established in 1984. He was named Senior Executive Vice President in 1986. Mr. Arner has been Corporate Executive Vice President and President of the Fiserv Insurance Solutions Group since 1998. Mr. Arner was Chief Executive Officer of Network Data Processing from 1994 to 1998, when it was acquired by the Company. Mr. Balthasar was named President and Chief Operating Officer of the Fiserv Financial Institution Group in 2000. He served as Corporate Executive Vice President and President-Savings and Community Bank Group from 1996 to 1999, when he was named President and Chief Operating Officer of the Fiserv Financial Institution Outsourcing Group. Mr. Balthasar has been with Fiserv and its predecessor company since 1974. Mr. Beriault was named President and Chief Operating Officer of the Fiserv Securities Group in 1999. He served as Corporate Executive Vice President and President-Securities Processing Group from 1998 to 1999. Mr. Beriault was President of Lincoln Trust Company from 1986 to 1995, when it was acquired by the Company. Mr. Neill was named President and Chief Operating Officer of the Fiserv Credit Union and Industry Products Group in 2000. Mr. Neill served as President and Chief Executive Officer of Basis Information Technologies, Inc. prior to its acquisition by Fiserv in 1993. Mr. Rockafellow was named President and Chief Operating Officer of the Fiserv Trust Services Group in 1999. He has served as Corporate Executive Vice President and President-Trust Group since 1996. Mr. Rockafellow was the President and CEO of First Trust Company from 1982 to 1985, when it was acquired by the Company, and served in that capacity until 1999. Mr. Schmelzer was named Corporate Executive Vice President, Marketing & Sales for the Company in 1992. Prior to joining Fiserv, he was Director of Commercial Analysis for IBM. Mr. Sprague has been Corporate Executive Vice President, General Counsel and Secretary since 1994, and Chief Administrative Officer of the Company since 1999. He has been involved with the Company's corporate and legal concerns since it was formed in 1984. ================================================================================ PART II ================================================================================ Pursuant to Instruction G(2) for Form 10-K, the information required in Items 5 through 8 are incorporated by reference from the Company's Annual Report to Shareholders included in this Form 10-K Annual Report as Exhibit 13. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable. ================================================================================ PART III ================================================================================ Pursuant to Instruction G(3) for Form 10-K, the information required in Items 10 through 13 is incorporated by reference from the Company's definitive Proxy Statement, which is expected to be filed pursuant to Regulation 14A on or before February 27, 2001. 10 ================================================================================ PART IV ================================================================================ Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) (1) Financial Statements: The consolidated financial statements of the Company as of December 31, 2000 and 1999 and for each of the three years in the period ended December 31, 2000, together with the report thereon of Deloitte & Touche LLP, dated January 26, 2001, appear on pages 23 through 44 of the Company's Annual Report to Shareholders, Exhibit 13 to this Form 10-K Annual Report, and are incorporated herein by reference. (a) (2) Financial Statement Schedule: The following financial statement schedule of the Company and related documents are included in this Report on Form 10-K: Page ---- Independent Auditors' Report 13 Schedule II-Valuation and Qualifying Accounts 13 All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. (b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter ended December 31, 2000. (c) Exhibits: The exhibits listed in the accompanying exhibit index are filed as part of this Annual Report on Form 10-K. 11 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: February 27, 2001 FISERV, INC. By /s/ Leslie M. Muma ---------------------------------------- Leslie M. Muma President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following person on behalf of the registrant and in the capacities indicated on February 27, 2001. Signature Capacity /s/ Leslie M. Muma - ---------------------------------- Leslie M. Muma Director, President and Chief Executive Officer /s/ Donald F. Dillon - ---------------------------------- Donald F. Dillon Chairman of the Board, Chairman-Information Technology, Inc. /s/ Kenneth R. Jensen - ---------------------------------- Kenneth R. Jensen Director, Senior Executive Vice President, Chief Financial Officer, Treasurer /s/ George D. Dalton - ----------------------------------- George D. Dalton Director /s/ Daniel P. Kearney - ----------------------------------- Daniel P. Kearney Director /s/ Gerald J. Levy - ----------------------------------- Gerald J. Levy Director /s/ L. William Seidman - ----------------------------------- L. William Seidman Director /s/ Thekla R. Shackelford - ----------------------------------- Thekla R. Shackelford Director 12 INDEPENDENT AUDITORS' REPORT Shareholders and Directors of Fiserv, Inc.: We have audited the consolidated financial statements of Fiserv, Inc. and subsidiaries as of December 31, 2000 and 1999, and for each of the three years in the period ended December 31, 2000, and have issued our report thereon dated January 26, 2001; such consolidated financial statements and report are included in your 2000 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of Fiserv, Inc., listed in Item 14. This consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ Deloitte & Touche LLP - -------------------------------------------- DELOITTE & TOUCHE LLP Milwaukee, Wisconsin January 26, 2001 SCHEDULE II Valuation and Qualifying Accounts Allowance for Doubtful Accounts
Year Ended Beginning Charged December 31, Balance to Expense Write-offs Balance - ----------- ----------- --------------- --------------- ------------- 2000 $11,606,000 $6,803,000 ($2,408,000) $16,001,000 1999 8,041,000 7,028,000 (3,463,000) 11,606,000 1998 6,903,000 6,262,000 (5,124,000) 8,041,000
13 EXHIBIT INDEX Exhibit Number Exhibit Description - ------ ------------------- 3.1 Restated Articles of Incorporation, as amended (filed as Exhibit 3.1 to the Company's Annual Report on Form 10-K dated February 28, 2000 and incorporated herein by reference (File No. 0-14948)). 3.2 By-laws, as amended (filed as Exhibit 3.2 to the Company's Current Report on Form 8-K dated March 25, 1999 and incorporated herein by reference (File No. 0-14948.)) 4.1 Credit Agreements dated as of May 17, 1999, by and among Fiserv, Inc., the Lenders Party Hereto, and The Bank of New York, as Administrative Agent. (Not being filed herewith, but will be provided to the Commission upon its request, pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K.) 4.2 Note Purchase Agreement dated as of March 15, 1991, as amended, among Fiserv, Inc., Aid Association for Lutherans, Northwestern National Life Insurance Company, Northern Life Insurance Company and The North Atlantic Life Insurance Company of America. (Not being filed herewith, but will be provided to the Commission upon its request, pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K.) 4.3 Note Purchase Agreement dated as of May 17, 1995, as amended, among Fiserv, Inc., Teachers Insurance and Annuity Association of America, Massachusetts Mutual Life Insurance Company, Aid Association for Lutherans, Northern Life Insurance Company and Northwestern National Life Insurance Company. (Not being filed herewith, but will be provided to the Commission upon its request, pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K.) 4.4 Shareholder Rights Agreement (filed as Exhibit 4 to the Company's Current Report on Form 8-K dated February 24, 1998, and incorporated herein by reference (File No. 0-14948.)) 4.5 First Amendment to the Shareholder Rights Agreement (filed as Exhibit 4.3 to the Company's Form S-8 dated April 7, 2000, and incorporated herein by reference (File No. 333-34310.)) 4.6 Second Amendment to the Shareholder Rights Agreement. 10.1 Fiserv, Inc. Stock Option Plan, as amended (filed as Exhibit 4.1 to the Company's Form S-8 Registration Statement dated April 7, 2000, and incorporated herein by reference (File No. 333-34310.)) 10.2 Fiserv, Inc. Executive Incentive Compensation Plan (filed as Exhibit A to the Company's Proxy Statement for the 2001 Annual Meeting of Shareholders.) 13 2000 Annual Report to Shareholders (to the extent incorporated by reference herein). 21 List of Subsidiaries of the Registrant. 23 Independent Auditors' Consent. 14 EX-4.6 2 0002.txt SECOND AMND TO SHAREHOLDER RIGHTS AGREE EXHIBIT 4.6 SECOND AMENDMENT TO THE SHAREHOLDER RIGHTS AGREEMENT THIS AMENDMENT (this "Amendment") is made and entered into as of the 1/st/ --------- day of September, 2000 by and between Fiserv, Inc., a Wisconsin corporation (the "Company"), and EquiServe Limited Partnership, a division of First Chicago Trust ------- Company of New York (the "Rights Agent"). ------------ W I T N E S S E T H: -------------------- WHEREAS, the Company and the Rights Agent are parties to that Shareholders Rights Agreement dated as of February 23, 1998 and amended as of December 1, 1999 (the "Agreement"); --------- WHEREAS, pursuant to the provisions of Section 5.9 of the Agreement the Company may amend any term, provision or condition of the Agreement prior to the "Distribution Date" (as such term is defined in the Agreement); WHEREAS, the Board of Directors of the Company has determined that it is in the best interests of the Company and its shareholders to provide the Board of Directors of the Company with the authority granted to "Disinterested Directors" by the Agreement and to delete all references to "Disinterested Directors"; WHEREAS, pursuant to the provisions of Section 5.9 of the Agreement, an appropriate officer of the Company has delivered a Certificate of Amendment (attached as Exhibit A hereto), to the Rights Agent stating that the terms of this Amendment are in compliance with the terms of Section 5.9 of the Agreement; and WHEREAS, pursuant to the provisions of Section 5.9, the Rights Agent is required to execute this Amendment upon receipt of the Certificate of Amendment. NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows. A G R E E M E N T: ----------------- 1. Amendments to the Agreement. --------------------------- a. Section 1.1(h) of the Agreement is hereby deleted in its entirety and replaced with the following: "(h) [Reserved]." b. Section 1.1(l) of the Agreement is hereby deleted in its entirety and replaced with the following: "(l) "Permitted Offer" shall mean any tender or exchange offer for --------------- all of the outstanding shares of Common Stock of the Company at a price and on terms determined, prior to the purchase of shares under such tender or exchange offer, by at least a majority of the members of the Board who are not officers of the Company to be appropriate (taking into account all factors which such Board members deem relevant, including, without limitation, prices reasonably obtainable if the Company or its assets were sold on an orderly basis designed to realize maximum value) and otherwise in the best interests of the Company and its shareholders (other than the Person or any Affiliate or Associate thereof on whose behalf or for whose benefit such tender or exchange offer is being made)." c. Section 1.1(s) of the Agreement is hereby deleted in its entirety and replaced with the following: "(s) "Share Acquisition Date" shall mean the first date on which ---------------------- there shall be, as determined by a majority of members of the Board in their sole discretion, a public announcement (which shall include, without limitation, any press release or publicly available filing with the Securities and Exchange Commission or any other federal or state governmental authority or agency) by the Company or any Person that such Person has become an Acquiring Person." d. Section 3.1 of the Agreement is hereby deleted in its entirety and replaced with the following: "3.1 Flip-In. ------- (a) For purposes of this Article III, the "Product" shall be defined ------- as the product of the then current Exercise Price and the number of one one- hundredths of a Preferred Share for which such Right was exercisable prior to such occurrence. (b) Subject to Section 3.2, promptly upon the occurrence of an event described in (i), (ii) or (iii) below (where each event shall be referred to herein as a "Flip-In Event") proper provision shall be made so that the ------------- registered holder of each Right, except as otherwise provided in Section 2.5(c), shall thereafter have the right to receive, upon exercise thereof and payment of the Product, in accordance with this Agreement, in lieu of Preferred Shares, the number of shares of Common Stock determined dividing the Product by 50% of the Fair Market Value of one share of Common Stock on the date of such occurrence: (i) The occurrence of a Share Acquisition Date; (ii) The commencement by any Person (other than an Exempt Person) of, or the first public announcement of the intention of any Person (other than an Exempt Person) to commence, a tender or exchange offer if, upon the consummation thereof, such Person would be the Beneficial Owner of 15% or more of the shares of Common Stock of the Company then outstanding; provided, however, that if any such tender or exchange offer is 2 cancelled, terminated or otherwise withdrawn prior to the Distribution Date without the purchase of any Common Stock pursuant thereto, such offer shall be deemed never to have been commenced or publicly announced; or (iii) At least a majority of the members of the Board who are not officers of the Company shall declare that any Person is an "Adverse ------- Person." A Person may be declared as an Adverse Person if it is determined ------ by at least a majority of the members of the Board who are not officers of the Company after reasonable inquiry and investigation (including such consultation, if any, with such Person as such members of the Board shall deem appropriate) that a Person, either alone or with its Affiliates and Associates, has become the Beneficial Owner of 10% or more of the outstanding shares of Common Stock of the Company and that: (A) such Beneficial Ownership by such Person is intended to cause, is reasonably likely to cause or will cause the Company to repurchase the shares of Common Stock Beneficially Owned by such Person (and/or its Affiliates and Associates) or the Company to take other action or enter into one or a series of related transactions which would provide such Person (and/or its Affiliates and Associates) with short-term financial gain under circumstances which would not be, in the judgment of such members of the Board, in the best long- term interests of the Company and its shareholders, or (B) such Beneficial Ownership is having or reasonably likely to have a material adverse effect (including, but not limited to, impairment of the Company's relationships with customers or its ability to maintain its competitive position) on the business or prospects of the Company (provided, however, that such members of the Board may determine not to declare a Person to be an Adverse Person if, prior to the time that such Person acquired 10% or more of the then outstanding shares of Common Stock of the Company, such Person provides a written statement of its purposes and intentions in connection with its proposed acquisition of such shares of Common Stock, together with any other information reasonably requested of such Person by such members of the Board, and such members of the Board, based on such written statement and information and such further inquiry and investigation as such members of the Board shall deem necessary or appropriate, notify such Person in writing that such Person will not then be declared to be an Adverse Person. The members of the Board may expressly condition in any manner their determination not to declare a Person to be an Adverse Person in such respects as they deem appropriate, including, 3 without limitation, such Person's not acquiring more than a specified amount or percentage of the Company's then outstanding capital stock or other securities and/or such Person's not taking actions inconsistent with the purposes and intentions disclosed in its written statement provided to the Board. (c) No delay or failure by at least a majority of the members of the Board who are not officers of the Company to declare any Person to be an Adverse Person shall in any way waive or otherwise affect the power of such members of the Board thereafter to declare such Person to be an Adverse Person. In the event that at least a majority of such members of the Board should at any time determine, after reasonable inquiry and investigation, including such consultation, if any, with such Person as such members of the Board shall deem necessary or appropriate, that such Person has not met or complied with any condition specified by such members of the Board, such members of the Board may at any time thereafter declare such Person to be an Adverse Person. (d) In the event that there shall not be sufficient authorized and unissued or treasury shares of Common Stock to permit the exercise in full of the Rights in accordance with Section 3.1(b), the Company shall take all necessary action to authorize and reserve for issuance such number of additional shares of Common Stock as may from time to time be required to be issued upon the exercise in full of all outstanding Rights and, if necessary, shall use its best efforts to obtain shareholder approval thereof. Notwithstanding the preceding sentence, if at least a majority of the members of the Board shall determine that such action is necessary or appropriate and is not contrary to the best interests of the holders of the Rights or if a sufficient number of shares of Common Stock cannot be issued for such purpose in accordance with the provisions hereof, the Board may cause the Company, in lieu of issuing shares of Common Stock to distribute, upon the exercise of each Right, cash, debt securities, shares of preferred stock of the Company, other property or any combination thereof, having an aggregate Fair Market Value equal to the Fair Market Value of the number of shares of Common Stock which otherwise would have been issuable. Any such decision by a majority of the Board must be made and publicly announced within 45 days after the occurrence of any Flip-In Event." e. Section 5.1(a) of the Agreement is hereby deleted in its entirety and replaced with the following: "(a) The Board may, at its option, at any time prior to the earliest of the (i) Distribution Date, and (ii) the Final Expiration Date (where such date at which Rights are redeemed pursuant to this Section shall be referred to herein as the "Redemption Date"), redeem all, but not less than all, of the then --------------- outstanding Rights at a redemption price of $.01 per Right, as may be adjusted as provided in Section 5.1(f) (the "Redemption Price")." ---------------- f. Section 5.1(c) of the Agreement is hereby deleted in its entirety and replaced with the following: "(c) In considering whether to redeem the Rights, the Board may consider the best long and short term interests of the Company and its shareholders, including, without limitation, the effects of the redemption of the Rights upon employees, creditors, suppliers and customers of the Company or of its Subsidiaries and upon the communities in which offices or other 4 establishments of the Company and such Subsidiaries are located and all other pertinent factors. The redemption of the Rights by the Board may be made effective at such time, on such basis and with such conditions as the Board, in its sole discretion, may establish." g. Section 5.9 of the Agreement is hereby deleted in its entirety and replaced with the following: "5.9 Supplements and Amendments. Prior to the Distribution Date, but -------------------------- subject to the last sentence of this Section, the Company and the Rights Agent, if so directed in writing by the Company may supplement or amend any term, provision or condition of this Agreement, without the approval of the registered holders of the stock certificates representing the Common Stock and the Rights. From and after the Distribution Date, but subject to the last sentence of this Section, the Company and the Rights Agent, if so directed in writing by the Company may supplement or amend this Agreement, without the approval of the registered holders of the Rights (however represented), in order to: (i) cure any ambiguity; (ii) correct or supplement any term, provision or condition of this Agreement which may be defective or inconsistent with any other term, provision or condition hereof; (iii) shorten or lengthen any time period specified herein; or (iv) change or supplement one or more of the terms, provisions or conditions hereof, other than as described in (iii) above, in any manner which the Company may deem necessary or desirable and which shall not materially adversely affect, as determined by the Board, the interests of the holders (other than a Restricted Person or the transferees thereof specified in Section 2.5(c)) of the Rights (however represented); provided, however, that this Agreement may not be supplemented or amended pursuant to clause (iii) of this sentence (A) to lengthen any time period unless such lengthening is for the purpose of protecting, enhancing or clarifying the rights of, and/or the benefits to, the holders (other than a Restricted Person or the transferees thereof specified in Section 2.5(c)) of the Rights, or (B) to lengthen any time period relating to when the Rights may be redeemed if at such time the Rights are not then redeemable. Upon the delivery of a certificate from an appropriate officer of the Company stating that the proposed supplement or amendment is in compliance with the terms of this Section, the Rights Agent shall execute such supplement or amendment; provided, however, that the Rights Agent shall not be required to execute any supplement or amendment which affects any of the Rights Agent's rights, powers, obligations, duties or immunities under this Agreement without its consent. On and after the Distribution Date, no supplement or amendment shall be made which changes the Exercise Price, the number of one one- hundredths of a Preferred Share for which a Right is exercisable, the Redemption Price or the Final Expiration Date. Prior to the Distribution Date, the interests of the holders of the Rights shall be deemed coincident with the interests of the holders of the Common Stock of the Company." h. Section 5.11 of the Agreement is hereby deleted in its entirety and replaced with the following: "5.11 Certain Determinations and Actions by the Board. For all purposes of ----------------------------------------------- this Agreement, any calculation of the number of shares of Common Stock outstanding at any particular time, including the determination of the percentage of such outstanding shares of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d- 3(d)(1)(i), as in effect on the date hereof, under the Exchange Act. The Board shall have the exclusive power and authority to interpret this Agreement and to exercise all rights and powers specifically granted 5 to the Board or to the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to make all determinations deemed necessary or advisable for such administration, including, without limitation, a determination to redeem or not to redeem the Rights, to exchange or not to exchange the Rights, to declare a Person to be an Adverse Person or to supplement or amend this Agreement. All such calculations, determinations, interpretations and exercises (including, for purposes of clause (ii) below, all omissions with respect to the foregoing) which are done or made by the Board in good faith shall (i) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other Persons and (ii) not subject any director to any liability to the holders of the Rights or to any other Person. i. Section 5.13 of the Agreement is hereby deleted in its entirety and replaced with the following: "5.13 Severability. If any term, provision or condition of this Agreement ------------ shall be held by a court of competent jurisdiction or other lawful authority to be invalid, void or unenforceable, the remaining terms, provisions, and conditions of this Agreement shall remain in full force and effect and in no way shall be affected, impaired or invalidated; provided, however, that if any such term, provision or condition is held by such court or authority to be invalid, void or unenforceable and the Board shall determine in good faith that severing the same from this Agreement would adversely affect the purposes or effect of this Agreement, the right of redemption set forth herein shall be reinstated and shall not expire until the Close of Business on the tenth day following the date of such determination by the Board." 2. Remaining Provisions Effective. Except as amended hereby, the ------------------------------ provisions of the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed by their officers duly authorized so to do on the dates indicated. FISERV, INC. By: /s/ Leslie M. Muma ------------------------------------------- Its: President and Chief Executive Officer ---------------------------------------- EQUISERV LIMITED PARTNERSHIP By: /s/ John H. Ruocco ------------------------------------------ Its: Account Manager ------------------------------------------ 6 EX-13 3 0003.txt 2000 ANNUAL REPORT EXHIBIT 13 2000 ANNUAL REPORT FISERV, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data) Years ended December 31, 2000 1999 1998 ------------------------------------------- REVENUES $1,653,606 $1,407,545 $1,233,670 ------------------------------------------- COST OF REVENUES: Salaries, commissions and payroll related costs 792,799 677,226 573,187 Data processing expenses, rentals and telecommunication costs 115,029 111,163 119,205 Other operating expenses 316,638 272,616 259,126 Depreciation and amortization of property and equipment 70,147 63,713 60,697 Amortization of intangible assets 42,812 22,600 15,754 Amortization (capitalization) of internally generated computer software-net 1,875 7,142 (3,938) ------------------------------------------- TOTAL COST OF REVENUES 1,339,300 1,154,460 1,024,031 ------------------------------------------- OPERATING INCOME 314,306 253,085 209,639 Interest expense - net (22,089) (19,410) (15,955) Realized gain from sale of investment 7,818 - - ------------------------------------------- INCOME BEFORE INCOME TAXES 300,035 233,675 193,684 Income tax provision 123,014 95,807 79,410 ------------------------------------------- NET INCOME $ 177,021 $ 137,868 $ 114,274 =========================================== NET INCOME PER SHARE: Basic $ 1.44 $ 1.12 $ 0.93 =========================================== Diluted $ 1.40 $ 1.09 $ 0.90 =========================================== SHARES USED IN COMPUTING NET INCOME PER SHARE: Basic 123,192 123,143 122,873 =========================================== Diluted 126,536 126,679 127,154 ===========================================
See notes to consolidated financial statements. CONSOLIDATED BALANCE SHEETS (Dollars in thousands) December 31, 2000 1999 ---------- ---------- ASSETS Cash and cash equivalents $ 98,856 $ 80,554 Accounts receivable-net 265,640 235,350 Securities processing receivables 2,193,291 2,196,068 Prepaid expenses and other assets 91,077 89,378 Trust account investments 1,514,643 1,298,120 Other investments 282,256 335,573 Property and equipment-net 205,555 195,333 Internally generated computer software-net 88,263 90,138 Intangible assets-net 846,739 787,196 ---------- ---------- TOTAL $5,586,320 $5,307,710 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 80,633 $ 66,400 Securities processing payables 1,977,323 1,764,382 Short-term borrowings 19,725 234,350 Accrued expenses 182,090 176,443 Accrued income taxes 22,207 12,736 Deferred revenues 156,668 131,476 Trust account deposits 1,525,652 1,298,120 Deferred income taxes 34,992 59,963 Long-term debt 334,958 472,824 ---------- ---------- TOTAL LIABILITIES 4,334,248 4,216,694 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Common stock issued, 125,387,700 shares 1,254 1,254 Additional paid-in capital 455,444 458,550 Accumulated other comprehensive income 78,869 125,026 Accumulated earnings 753,531 576,510 Treasury stock, at cost, 1,581,900 and 2,804,400 shares, respectively (37,026) (70,324) ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 1,252,072 1,091,016 ---------- ---------- TOTAL $5,586,320 $5,307,710 ========== ========== See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands) Years ended December 31, 2000 1999 1998 --------------------- ----------------------- --------------------- SHARES ISSUED-300,000 AUTHORIZED: Balance at beginning of year 125,388 83,253 53,925 Shares issued under stock plans-net - 394 495 Shares issued for acquired companies - - 1,132 Three-for-two stock split - 41,741 27,701 ---------- ---------- -------- Balance at end of year 125,388 125,388 83,253 ========== ========== ======== COMMON STOCK-PAR VALUE $0.01 PER SHARE: Balance at beginning of year $ 1,254 $ 833 $ 539 Shares issued under stock plans-net - 4 5 Shares issued for acquired companies - - 11 Three-for-two stock split - 417 278 ---------- ---------- -------- Balance at end of year 1,254 1,254 833 ---------- ---------- -------- ADDITIONAL PAID-IN CAPITAL: Balance at beginning of year 458,550 448,877 427,785 Shares issued under stock plans-net of income tax benefit (3,106) 10,090 13,036 Shares issued for acquired companies - - 8,334 Three-for-two stock split - (417) (278) ---------- ---------- -------- Balance at end of year 455,444 458,550 448,877 ---------- ---------- -------- ACCUMULATED OTHER COMPREHENSIVE INCOME: Balance at beginning of year 125,026 39,875 16,563 Unrealized (losses) gains on investments - net of tax (39,765) $(39,765) 85,496 $85,496 23,492 $23,492 Reclassification adjustment for realized gains included in net income (5,082) (5,082) - - - - Foreign currency translation adjustment (1,310) (1,310) (345) (345) (180) (180) ---------- ---------- -------- Balance at end of year 78,869 125,026 39,875 ---------- ---------- -------- ACCUMULATED EARNINGS: Balance at beginning of year 576,510 438,642 324,368 Net income 177,021 177,021 137,868 137,868 114,274 114,274 ---------- -------- ---------- -------- -------- -------- Balance at end of year 753,531 576,510 438,642 ---------- ---------- -------- TREASURY STOCK, AT COST: Balance at beginning of year (70,324) (42,430) - Purchase of treasury stock (9,884) (28,713) (42,430) Shares issued under stock plans-net 43,182 819 - ---------- ---------- -------- Balance at end of year (37,026) (70,324) (42,430) ---------- ---------- -------- TOTAL COMPREHENSIVE INCOME $130,864 $223,019 $137,586 ======== ======== ======== TOTAL SHAREHOLDERS' EQUITY $1,252,072 $1,091,016 $885,797 ========== ========== ========
See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) Years ended December 31, 2000 1999 1998 --------- ---------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 177,021 $ 137,868 $ 114,274 Adjustments to reconcile net income to net cash provided by operating activities: Realized gain from sale of investment (7,818) - - Deferred income taxes 4,813 14,183 2,463 Depreciation and amortization of property and equipment 70,147 63,713 60,697 Amortization of intangible assets 42,812 22,600 15,754 Amortization of internally generated computer software 35,883 33,194 26,641 ------------------------------------------------ 322,858 271,558 219,829 Changes in assets and liabilities, net of effects from acquisitions of businesses: Accounts receivable (21,153) 18,853 (22,860) Prepaid expenses and other assets (179) (3,299) 9,618 Accounts payable and accrued expenses 9,706 14,394 32,422 Deferred revenues 24,844 17,210 21,197 Accrued income taxes 32,674 (1) 13,109 Securities processing receivables and payables - net 215,718 (140,878) 7,080 ------------------------------------------------ Net cash provided by operating activities 584,468 177,837 280,395 ------------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (72,979) (69,697) (77,542) Capitalization of internally generated computer software (34,008) (26,052) (30,579) Payment for acquisitions of businesses, net of cash acquired (88,764) (210,587) (217,792) Investments 136,726 (209,011) (30,779) ------------------------------------------------ Net cash used in investing activities (59,025) (515,347) (356,692) ------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from (repayments of) short-term borrowings-net (214,625) 119,226 (56,625) Proceeds from borrowings on long-term debt 5,004 103,523 143,245 Repayment of long-term debt (143,899) (52,790) (6,785) Issuance of common stock 20,576 5,913 5,041 Purchases of treasury stock (9,884) (28,713) (42,430) Trust account deposits (164,313) 199,347 16,032 ------------------------------------------------ Net cash (used in) provided by financing activities (507,141) 346,506 58,478 ------------------------------------------------ Change in cash and cash equivalents 18,302 8,996 (17,819) Beginning balance 80,554 71,558 89,377 ------------------------------------------------ Ending balance $ 98,856 $ 80,554 $ 71,558 ================================================
See notes to consolidated financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2000, 1999 and 1998 1. Summary of Significant Accounting Policies PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Fiserv, Inc. and all majority owned subsidiaries (the "Company"). All significant intercompany transactions and balances have been eliminated in consolidation. Certain amounts reported in 1999 have been reclassified to conform to the 2000 presentation. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash and investments with original maturities of 90 days or less. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. FAIR VALUES The carrying amounts of cash and cash equivalents, accounts receivable and payable, securities processing receivables and payables, accrued expenses, trust account deposits, short- and long-term borrowings, and derivative instruments approximated fair value as of December 31, 2000 and 1999. DERIVATIVE INSTRUMENTS Interest rate hedge transactions are utilized to manage interest rate exposure. The interest differential on interest rate swap contracts used to hedge underlying debt obligations is reflected as an adjustment to interest expense over the life of the contracts. SECURITIES PROCESSING RECEIVABLES AND PAYABLES The Company's securities processing subsidiaries had receivables from and payables to brokers or dealers and clearing organizations related to the following at December 31: (In thousands) 2000 1999 -------------------------------- RECEIVABLES: Securities failed to deliver $ 17,974 $ 41,554 Securities borrowed 1,101,261 829,573 Receivables from customers 1,036,114 1,283,326 Other 37,942 41,615 -------------------------------- TOTAL $2,193,291 $2,196,068 ================================ PAYABLES: Securities failed to receive $ 19,558 $ 45,255 Securities loaned 1,405,107 1,076,235 Payables to customers 462,485 523,275 Other 90,173 119,617 -------------------------------- TOTAL $1,977,323 $1,764,382 ================================ Securities borrowed and loaned represent deposits made to or received from other broker-dealers. Receivables from and payables to customers represent amounts due on cash and margin transactions. SHORT-TERM BORROWINGS The Company's securities processing subsidiaries had short-term bank loans payable of $19,725,000 and $234,350,000 as of December 31, 2000 and 1999, respectively, which bear interest at the respective banks' call rate (6.0% as of December 31, 2000) and were collateralized by customers' margin account securities. INVESTMENTS The Company's trust administration subsidiaries accept money market deposits from trust customers and invest the funds in securities. Such amounts due trust depositors represent the primary source of funds for the Company's investment securities and amounted to $1,525,652,000 and $1,298,120,000 as of December 31, 2000 and 1999, respectively. Trust account investments in government agency and certain fixed income obligations have an average duration of approximately two years and six months at December 31, 2000. These investments are held to maturity and carried at amortized cost as the Company has the ability and intent to hold these investments to maturity. Available for sale equity investments are carried at market, based upon quoted market prices. Unrealized gains or losses on available for sale equity investments are accumulated in shareholders' equity as other comprehensive income, net of related deferred income taxes. Related gross unrealized gains were $134,270,000 and $212,476,000 as of December 31, 2000 and 1999, respectively. Realized gains or losses are computed based on specific identification of the equity investments sold. The following tables summarize the Company's investments in securities:
2000 1999 ------------------------ ------------------------ (In thousands) Carrying Fair Carrying Fair 2000 Value Value Value Value ------------------------ ------------------------ U.S. Government and government agency obligations $ 737,291 $ 741,699 $ 625,374 $ 616,823 Other fixed income obligations 760,824 766,278 562,560 550,931 ------------------------ ------------------------ Total held to maturity investments 1,498,115 1,507,977 1,187,934 1,167,754 Available for sale equity investments 137,100 137,100 215,352 215,352 Money market mutual funds 142,467 142,467 202,503 202,503 ------------------------ ------------------------ TOTAL $1,777,682 $1,787,544 $1,605,789 $1,585,609 ======================== ======================== These investments are included in the following captions on the balance sheets as of December 31: 2000 1999 ---------- ---------- Trust account investments $1,514,643 $1,298,120 Other investments 263,039 307,669 ---------- ---------- TOTAL $1,777,682 $1,605,789 ========== ==========
PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation and amortization are computed primarily using the straight-line method over the estimated useful lives of the assets, ranging from three to 40 years. Property and equipment consist of the following at December 31:
(In thousands) 2000 1999 ------------------------------- Data processing equipment $ 232,597 $ 227,292 Purchased software 98,033 81,239 Buildings and leasehold improvements 89,799 84,763 Furniture and equipment 111,615 99,637 ------------------------------- 532,044 492,931 Less accumulated depreciation and amortization 326,489 297,598 ------------------------------- TOTAL $ 205,555 $ 195,333 ===============================
INTERNALLY GENERATED COMPUTER SOFTWARE The Company capitalizes certain costs incurred to develop new software or enhance existing software which is marketed externally or utilized by the Company to process customer transactions. Costs are capitalized commencing when the technological feasibility of the software has been established. Amortization of capitalized costs is computed on a straight-line basis over the expected useful life of the product, generally three to five years. Routine maintenance of software products, design costs and development costs incurred prior to establishment of a product's technological feasibility are expensed as incurred. In addition, Year 2000 costs were expensed as incurred. INTANGIBLE ASSETS Intangible assets relating to acquisitions consist of the following at December 31: (In thousands) 2000 1999 ----------------------------- Goodwill $832,134 $793,908 Other 162,823 111,663 ----------------------------- 994,957 905,571 Less accumulated amortization 148,218 118,375 ----------------------------- TOTAL $846,739 $787,196 ============================= The excess of the purchase price over the estimated fair value of tangible and identifiable intangible assets acquired is recorded as goodwill and is generally amortized over 40 years using the straight-line method. Other intangible assets consist primarily of computer software, contract rights, customer bases and trademarks applicable to acquired businesses. These assets are generally amortized using the straight-line method over their estimated useful lives, ranging from three to 35 years. IMPAIRMENT OF LONG-LIVED ASSETS The Company periodically assesses the likelihood of recovering the cost of long-lived assets based on current and projected operating results and cash flows of the related business operations using undiscounted cash flow analyses. These factors, along with management's plans with respect to the operations, are considered in assessing the recoverability of property, equipment and intangible assets. Measurement of any impairment loss is based on discounted operating cash flows. During 2000, the Company recorded a charge of $11,000,000 for impairment of goodwill associated with the consolidation of certain ancillary product lines in the Company's software businesses. INCOME TAXES The consolidated financial statements are prepared on the accrual method of accounting. Deferred income taxes are provided for temporary differences between the Company's income for accounting and tax purposes. REVENUE RECOGNITION Revenues from the sale of data processing services are recognized as the related services are provided. Revenues from securities processing and trust services include net investment income of $124,338,000, $88,458,000 and $77,457,000, net of direct credits to customer accounts of $94,133,000, $63,519,000 and $50,180,000 in 2000, 1999 and 1998, respectively. Revenues from the sales of software are recognized in accordance with the AICPA's Statement of Position No. 97-2, "Software Revenue Recognition" and other authoritative literature. Maintenance fee revenue is recognized ratably over the term of the related support period, generally 12 months. Consulting revenue is recognized as the related services are provided. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 summarizes certain of the staff's views in applying accounting principles generally accepted in the United States of America to revenue recognition in financial statements. The Company adopted SAB 101 in the fourth quarter of 2000. Adoption of this standard did not have a material impact on the Company's financial statements. NET INCOME PER SHARE Basic net income per share is computed using the weighted average number of common shares outstanding during the periods. Diluted net income per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the periods. Common equivalent shares consist of stock options and are computed using the treasury stock method. SUPPLEMENTAL CASH FLOW INFORMATION (In thousands) 2000 1999 1998 ------------------------------ Interest paid $29,346 $26,075 $21,111 Income taxes paid 87,633 81,499 66,066 Liabilities assumed in acquisitions of businesses 401,129 246,120 39,816 ACCOUNTING STANDARDS TO BE ADOPTED In 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133, as amended, is required to be adopted on January 1, 2001. The Company evaluated the impact of this statement and has concluded that the adoption of this statement will not have a material impact on the consolidated financial statements. 2. Acquisitions During 2000, 1999 and 1998 the Company completed the following acquisitions:
Month Company Acquired Service Consideration - ------------------------------------------------------------------------------------------------------- 2000: Patterson Press, Inc. Jan Card services Cash for stock Resources Trust Company May Data processing for retirement Cash for assets planning National Flood Services, Inc. Sep Insurance data processing Cash for stock 1999: QuestPoint Jan Item processing Cash for assets Eldridge & Associates Feb PC-based financial systems Cash for assets RF/Spectrum Decision Science Corp. Feb Software and services Cash for stock FIPSCO, Inc. Mar Insurance marketing systems Cash for stock Progressive Data Solutions, Inc./ Apr Insurance software systems Cash for stock Infinity Software Systems, Inc. JWGenesis Clearing Corporation Jun Securities services Cash for stock Alliance ADS Jun Imaging technology Cash for assets Envision Financial Technologies, Inc. Aug Data processing software and Cash for stock services Pinehurst Analytics, Inc. Oct PC-based financial systems Cash for assets Humanic Design Corporation Dec Software and services Cash for stock 1998: Automated Financial Technology, Inc. Jan Data processing Stock for stock PSI Group (laser printing and Feb Laser printing Cash for assets custom packing operations) The LeMans Group Feb Automobile leasing software Cash for stock Network Data Processing Corporation Apr Insurance data processing Stock for stock CUSA Technologies, Inc. Apr Software and services Stock for stock Specialty Insurance Service May Insurance data processing Cash for stock Deluxe Card Services, a division of Aug Automated card services Cash for assets Deluxe Corporation Federal Home Loan Bank of Topeka Oct Item processing Cash for assets (item processing contracts) Life Instructors, Inc. Oct Insurance and securities training Cash for stock FiCATS Oct Item processing Cash for assets ASI Financial Services, Inc. Nov PC-based financial systems Cash for stock The FREEDOM Group, Inc. Dec Insurance data processing Cash for stock
Generally, the acquisitions were accounted for as purchases and, accordingly, the operations of the acquired companies were included in the consolidated financial statements since their respective dates of acquisition as set forth above. Net cash paid in connection with these acquisitions was $88,764,000, $210,587,000, and $217,792,000 in 2000, 1999 and 1998, respectively, subject to certain adjustments. The Company does not anticipate any significant adjustments to the purchase price allocations. Pro forma information for acquisitions accounted for as purchases is not presented as the impact was not material. 3. Long-term debt The Company has available a $500,000,000 unsecured line of credit and commercial paper facility with a group of banks, of which $229,000,000 was in use at December 31, 2000, at an average rate of 7.0%. The credit facilities, which expire in May 2004, are comprised of a $250,000,000 five-year revolving credit facility and a $250,000,000 364-day revolving credit facility which is renewable annually through 2004. The loan agreements covering the Company's long-term borrowings contain certain restrictive covenants with which the Company was in compliance at December 31, 2000. As of December 31, 2000, the Company had interest rate swap agreements to fix the interest rates on certain floating rate debt at an average rate approximating 6.75% (based on current bank fees and spreads) for a principal amount of $200,000,000 until 2005. Long-term debt consisted of the following at December 31: (In thousands) 2000 1999 ------------------------ 9.75% senior notes payable, due 2001 $ 2,500 $ 5,000 8.00% senior notes payable, due 2001-2005 64,286 77,143 Bank notes and commercial paper, at short-term rates 268,172 390,681 ------------------------ TOTAL $334,958 $472,824 ======================== Annual principal payments required under the terms of the long-term agreements were as follows at December 31, 2000: (In thousands) Year 2001 $ 37,959 2002 14,714 2003 14,714 2004 253,857 2005 13,714 -------- TOTAL $334,958 ======== Interest expense with respect to long-term debt amounted to $28,823,000, $25,111,000 and $21,330,000 in 2000, 1999 and 1998, respectively. 4. Income taxes A reconciliation of recorded income tax expense with income tax computed at the statutory federal tax rates for the three years ended December 31, 2000, is as follows: (In thousands) 2000 1999 1998 -------------------------------- Statutory federal tax rate 35% 35% 35% Tax computed at statutory rate $105,012 $81,786 $67,789 State income taxes-net of federal effect 11,156 9,375 7,601 Non-deductible amortization 3,887 3,161 2,737 Other 2,959 1,485 1,283 -------------------------------- TOTAL $123,014 $95,807 $79,410 ================================ The provision for income taxes consisted of the following: (In thousands) 2000 1999 1998 -------------------------------- Current: Federal $101,906 $69,250 $64,992 State 16,295 12,374 11,955 -------------------------------- 118,201 81,624 76,947 -------------------------------- Deferred: Federal 4,425 11,833 2,364 State 388 2,350 99 -------------------------------- 4,813 14,183 2,463 -------------------------------- TOTAL $123,014 $95,807 $79,410 ================================ Significant components of the Company's net deferred tax (liability) asset consisted of the following at December 31: (In thousands) 2000 1999 ------------------------ Purchased incomplete software technology $43,051 $47,663 Accrued expenses not currently deductible 27,380 25,407 Deferred revenues 15,494 13,693 Internally generated capitalized software (35,306) (30,858) Excess of tax over book depreciation and amortization (20,480) (19,438) Unrealized gains on investments (53,722) (87,162) Other (11,409) (9,268) ------------------------ TOTAL $(34,992) $(59,963) ======================== Tax benefits associated with the exercise of non-qualified employee stock options were credited directly to additional paid-in capital and amounted to $19,500,000, $5,000,000 and $8,000,000 in 2000, 1999 and 1998, respectively. 5. Employee Benefit Plans STOCK OPTION PLAN The Company's Stock Option Plan (the "Plan") provides for the granting to its employees and directors of either incentive or non-qualified options to purchase shares of the Company's common stock for a price not less than 100% of the fair value of the shares at the date of grant. In general, 20% of the shares awarded under the Plan may be purchased annually and expire 10 years from the date of the award. Changes in stock options outstanding are as follows: Number of Weighted Average Shares Price Range Exercise Price ---------------------------------------------- Outstanding, December 31, 1997 7,113,821 $ 2.76 - $21.78 $10.38 Granted 2,677,205 21.83 - 31.59 24.15 Forfeited (147,030) 4.51 - 24.00 19.48 Exercised (1,187,123) 2.76 - 24.00 8.43 ---------------------------------------------- Outstanding, December 31, 1998 8,456,873 2.76 - 31.59 14.57 Granted 1,535,269 28.81 - 39.50 30.94 Forfeited (350,093) 16.00 - 34.29 27.42 Exercised (579,098) 3.25 - 33.02 12.48 ---------------------------------------------- Outstanding, December 31, 1999 9,062,951 2.76 - 39.50 16.89 Granted 1,194,654 32.00 - 59.88 32.22 Forfeited (416,824) 13.98 - 34.29 28.77 Exercised (1,535,744) 3.25 - 34.29 13.27 ---------------------------------------------- Outstanding, December 31, 2000 8,305,037 $ 2.76 - $59.88 $19.14 ============================================== The following summarizes information about the Company's stock options outstanding and exercisable at December 31, 2000:
Options Outstanding Options Outstanding and Exercisable ---------------------------------------------------------- ------------------------------------- Weighted Weighted Average Weighted Range of Number of Average Remaining Number of Average Exercise Prices Shares Exercise Price Contractual Life Shares Exercise Price - ----------------------------------------------------------------------------------------------------------------- $2.76-$10.00 2,574,473 $8.14 2.7 2,574,473 $8.14 10.01-22.00 2,147,016 16.34 6.0 1,547,273 15.46 22.01-59.88 3,583,548 28.73 8.0 1,353,854 27.10 - ----------------------------------------------------------------------------------------------------------------- $2.76-$59.88 8,305,037 $19.14 5.9 5,475,600 $14.90 =================================================================================================================
At December 31, 2000, options to purchase 7,889,925 shares were available for grant under the Plan. The Company has accounted for its stock-based compensation plans in accordance with the provisions of Accounting Principles Board Opinion 25. Accordingly, the Company did not record any compensation expense in the accompanying consolidated financial statements for its stock-based compensation plans. Had compensation expense been recognized consistent with SFAS No.123, "Accounting for Stock-Based Compensation," the Company's net income and net income per share - diluted would have been changed to the pro forma amounts indicated below: (In thousands, except per share data) 2000 1999 1998 -------- -------- -------- Net income: As reported $177,021 $137,868 $114,274 Pro forma 167,321 131,868 110,574 Net income per share-diluted: As reported $1.40 $1.09 $0.90 Pro forma 1.32 1.04 0.87 The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes pricing model with the following assumptions for grants in 2000: 1) expected dividend yield of 0%, 2) risk-free interest rate of 5.0%, 3) expected volatility of 48.6% and 4) expected option life of five years. The weighted-average estimated fair value of stock options granted during 2000 was $16.08 per share. EMPLOYEE STOCK PURCHASE PLAN Effective January 1, 2000, the Company adopted an employee stock purchase plan under which eligible employees may purchase a limited number of shares of common stock each quarter through payroll deductions, at a purchase price equal to 85% of the closing price of the Company's common stock on the last business day of each calendar quarter. As of January 1, 2001, there were 576,669 shares available for grant under this plan. EMPLOYEE SAVINGS PLAN The Company and its subsidiaries have contributory savings plans covering substantially all employees, under which eligible participants may elect to contribute a specified percentage of their salaries, subject to certain limitations. The Company makes matching contributions, subject to certain limitations, and makes discretionary contributions based upon the attainment of certain profit goals. Company contributions vest ratably at 20% for each year of service. Contributions charged to operations under these plans approximated $30,400,000, $24,000,000 and $16,900,000 in 2000, 1999 and 1998, respectively. 6. Shareholders' Equity SHAREHOLDER RIGHTS PLAN The Company has a shareholder rights plan. Under this plan, the shareholders of record as of March 9, 1998, were granted a dividend of one preferred stock purchase right for each outstanding share of Company common stock. The stock purchase rights are not exercisable until certain events occur. STOCK BUYBACK PLAN During 1999, the Company's Board of Directors authorized the repurchase of up to 3,250,000 shares of the Company's common stock. Shares purchased under the authorization will be made through open market transactions that may occur from time to time as market conditions warrant. Shares acquired will be held for issuance in connection with acquisitions and employee stock option and purchase plans. As of December 31, 2000, approximately 1,850,000 shares remained available under the repurchase authorization. 7. Leases, other commitments and contingencies LEASES Future minimum rental payments on various operating leases for office facilities and equipment were due as follows as of December 31, 2000: (In thousands) Year 2001 $ 69,300 2002 59,400 2003 48,500 2004 38,000 2005 26,800 Thereafter 32,200 -------- TOTAL $274,200 -------- Rent expense applicable to all operating leases was approximately $83,100,000, $78,600,000 and $72,200,000 in 2000, 1999 and 1998, respectively. OTHER COMMITMENTS AND CONTINGENCIES The Company's trust administration subsidiaries had fiduciary responsibility for the administration of approximately $32 billion in trust funds as of December 31, 2000. With the exception of the trust account investments discussed in Note 1, such amounts are not included in the accompanying consolidated balance sheets. The Company's securities processing subsidiaries are subject to the Uniform Net Capital Rule of the Securities and Exchange Commission. At December 31, 2000, the aggregate net capital of such subsidiaries was $198,947,000, exceeding the net capital requirement by $176,251,000. In the normal course of business, the Company and its subsidiaries are named as defendants in various lawsuits in which claims are asserted against the Company. In the opinion of management, the liabilities, if any, which may ultimately result from such lawsuits are not expected to have a material adverse effect on the consolidated financial statements of the Company. 8. Business segment information The Company is a leading independent provider of data processing systems and related information management services and products to financial institutions and other financial intermediaries. The Company has three business segments: Financial institution outsourcing, systems and services; Securities processing and trust services; and All other and corporate. The Financial institution outsourcing, systems and services segment provides account and transaction processing solutions and services to financial institutions and other financial intermediaries. The Securities processing and trust services segment provides securities processing solutions and retirement plan administration services to brokerage firms, financial planners and financial institutions. The All other and corporate segment provides plastic card services and document solutions, and includes general corporate expenses. Summarized financial information by business segment for each of the three years ended December 31, 2000, is as follows:
(In thousands) 2000 1999 1998 -------------------------------------------------- Revenues: Financial institution outsourcing, systems and services $1,243,509 $1,066,514 $ 951,010 Securities processing and trust services 341,155 276,215 234,699 All other and corporate 68,942 64,816 47,961 -------------------------------------------------- Total $1,653,606 $1,407,545 $1,233,670 -------------------------------------------------- Operating income: Financial institution outsourcing, systems and services $ 218,935 $ 175,194 $ 148,774 Securities processing and trust services 97,125 80,125 70,074 All other and corporate (1,754) (2,234) (9,209) -------------------------------------------------- Total $ 314,306 $ 253,085 $ 209,639 -------------------------------------------------- Identifiable assets: Financial institution outsourcing, systems and services $1,185,819 $1,169,666 $1,018,541 Securities processing and trust services 4,160,939 3,832,868 2,783,818 All other and corporate 239,562 305,176 155,979 -------------------------------------------------- Total $5,586,320 $5,307,710 $3,958,338 -------------------------------------------------- Depreciation expense: Financial institution outsourcing, systems and services $ 52,191 $ 48,407 $ 46,880 Securities processing and trust services 11,395 9,510 8,631 All other and corporate 6,561 5,796 5,186 -------------------------------------------------- Total $ 70,147 $ 63,713 $ 60,697 -------------------------------------------------- Amortization of intangible assets: Financial institution outsourcing, systems and services $ 32,847 $ 18,843 $ 12,577 Securities processing and trust services 9,104 3,040 2,651 All other and corporate 861 717 526 -------------------------------------------------- Total $ 42,812 $ 22,600 $ 15,754 -------------------------------------------------- Capital expenditures: Financial institution outsourcing, systems and services $ 54,750 $ 52,724 $ 60,075 Securities processing and trust services 12,836 12,119 11,255 All other and corporate 5,393 4,854 6,212 -------------------------------------------------- Total $ 72,979 $ 69,697 $ 77,542 --------------------------------------------------
The revenues of each segment are principally domestic, and no single customer accounted for 10% or more of consolidated revenues during the years ended December 31, 2000, 1999 and 1998. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, the relative percentage which certain items in the Company's consolidated statements of income bear to revenues and the percentage change in those items from period to period.
Percentage of Revenues Period to Period Percentage Years Ended December 31, Increase (Decrease) 2000 vs. 1999 vs. 2000 1999 1998 1999 1998 --------------------------------- ---------------------------- Revenues 100.0% 100.0% 100.0% 17% 14% --------------------------------- Cost of revenues: Salaries, commissions and payroll related costs 48.0 48.1 46.4 17 18 Data processing expenses, rentals and telecommunication costs 7.0 7.9 9.7 3 (7) Other operating expenses 19.1 19.4 21.0 16 5 Depreciation and amortization of property and equipment 4.2 4.5 4.9 10 5 Amortization of intangible assets 2.6 1.6 1.3 89 43 Amortization (capitalization) of internally generated computer software-net 0.1 0.5 (0.3) --------------------------------- Total cost of revenues 81.0 82.0 83.0 16 13 --------------------------------- Operating income 19.0% 18.0% 17.0% 24% 21% ================================= Income before income taxes 18.1% 16.6% 15.7% 28% 21% ================================= Net income 10.7% 9.8% 9.3% 28% 21% =================================
Revenues increased $246,061,000 in 2000 and $173,875,000 in 1999. Revenue growth in 2000 and 1999 was derived from sales to new clients, cross-sales to existing clients, growth in the transaction volume experienced by existing clients, price increases and revenues from acquired businesses. Revenues from acquired businesses approximated 40% and 45% of total revenue growth in 2000 and 1999, respectively. Cost of revenues increased $184,840,000 in 2000 and $130,429,000 in 1999. The make up of cost of revenues has been affected in all years by business acquisitions, changes in the mix of the Company's business and operational efficiencies. Amortization of intangible assets increased $20,212,000 in 2000 and $6,846,000 in 1999. The increase in 2000 over 1999 was due to amortization associated with acquisitions and a goodwill impairment charge. Amortization of internally generated computer software is stated net of capitalization and decreased $5,267,000 in 2000 and increased $11,080,000 in 1999. The increase in 1999 was due to reduced capitalization resulting from Year 2000 activities and accelerated amortization of certain ancillary software products. Operating income increased $61,221,000 in 2000 and $43,446,000 in 1999. The Company's operating margins increased by 1% in 2000 and 1999 over prior periods primarily due to continued revenue growth, operational efficiencies and increased operating leverage of existing operations. The effective income tax rate was 41% in all three years, and the effective income tax rate for 2001 is expected to be 40%. Net income per share - diluted in 2000 was $1.36, before recognizing a $0.04 per share realized gain from sale of investment, compared to $1.09 in 1999. The Company's growth has been accomplished, to a significant degree, through the acquisition of businesses which are complementary to its operations. Management believes that a number of acquisition candidates are available which would further enhance its competitive position and plans to pursue them vigorously. Management is engaged in an ongoing program to reduce expenses related to acquisitions by eliminating operating redundancies. The Company's approach has been to move slowly in achieving this goal in order to minimize the amount of disruption experienced by its clients and the potential loss of clients due to this program. SEGMENT INFORMATION The following table sets forth revenue and operating income by business segment for the years ended December 31:
(In thousands) 2000 1999 1998 ----------- ---------- ---------- Revenues: Financial institution outsourcing, systems and services $1,243,509 $1,066,514 $ 951,010 Securities processing and trust services 341,155 276,215 234,699 All other and corporate 68,942 64,816 47,961 ---------- ---------- ---------- Total $1,653,606 $1,407,545 $1,233,670 ---------- ---------- ---------- Operating income: Financial institution outsourcing, systems and services $ 218,935 $ 175,194 $ 148,774 Securities processing and trust services 97,125 80,125 70,074 All other and corporate (1,754) (2,234) (9,209) ---------- ---------- ---------- Total $ 314,306 $ 253,085 $ 209,639 ---------- ---------- ----------
Revenues in the Financial institution outsourcing, systems and services business segment increased $176,995,000 in 2000 and $115,504,000 in 1999. Revenue growth in 2000 and 1999 was derived from sales to new clients, cross-sales to existing clients, growth in the transaction volume experienced by existing clients, price increases and revenues from acquired businesses. Operating income in the Financial institution outsourcing, systems and services business segment increased $43,741,000 and $26,420,000 in 2000 and 1999, respectively. Operating income and margin increases in 2000 and 1999 over prior periods were primarily due to continued revenue growth, operational efficiencies, increased operating leverage of existing operations and the impact of certain acquisitions. Revenues in the Securities processing and trust services business segment increased $64,940,000 in 2000 and $41,516,000 in 1999. Revenue growth in 2000 and 1999 was derived primarily from increased transaction volumes from existing clients, sales to new clients and revenues from acquired businesses. Operating income in the Securities processing and trust services business segment increased $17,000,000 and $10,051,000 in 2000 and 1999, respectively. Operating margins in 2000 and 1999 decreased slightly when compared to prior years primarily due to changes in the mix of revenues in this business segment. Revenues in the All other and corporate business segment increased $4,126,000 in 2000 and $16,855,000 in 1999. Operating income in this business segment increased $480,000 and $6,975,000 in 2000 and 1999, respectively. The increase in operating income in 1999 over 1998 was due to an acquisition and increased profitability in the Company's plastic card operations. LIQUIDITY AND CAPITAL RESOURCES The following table summarizes the Company's primary sources (uses) of funds during the years ended December 31:
(In thousands) 2000 1999 1998 ---------- ---------- ---------- Cash provided by operating activities before changes in securities processing receivables and payables-net $ 368,750 $ 318,715 $ 273,315 Securities processing receivables and payables-net 215,718 (140,878) 7,080 ---------- ---------- ---------- Cash provided by operating activities 584,468 177,837 280,395 Increase (decrease) in net borrowings (353,520) 169,959 79,835 ---------- ---------- ---------- TOTAL $ 230,948 $ 347,796 $ 360,230 ---------- ---------- ----------
The Company has used a significant portion of its cash flow from operations for acquisitions and capital expenditures with any remainder used to reduce long- term debt. The Company believes that its cash flow from operations together with other available sources of funds will be adequate to meet its funding requirements. In the event that the Company makes significant future acquisitions, however, it may raise funds through additional borrowings or issuances of securities. MARKET RISK FACTORS Market risk refers to the risk that a change in the level of one or more market prices, interest rates, indices, correlations or other market factors, such as liquidity, will result in losses for a certain financial instrument or group of financial instruments. The Company is exposed primarily to interest rate risk on investments and borrowings. The Company actively monitors these risks through a variety of control procedures involving senior management. The Company's trust administration subsidiaries accept money market account deposits from trust customers and invest those funds in marketable securities. Substantially all of the investments are rated within the highest investment grade categories for securities. The Company's trust administration subsidiaries utilize simulation models for measuring and monitoring interest rate risk and market value of portfolio equities. A formal Asset Liability Committee of the Company meets quarterly to review interest rate risks, capital ratios, liquidity levels, portfolio diversification, credit risk ratings and adherence to investment policies and guidelines. The Company manages its debt structure and interest rate risk through the use of fixed- and floating-rate debt and through the use of derivatives. The Company uses interest rate swaps to hedge its exposure to interest rate changes, and to lower its financing costs. Generally, under these swaps, the Company agrees with a counterparty to exchange the difference between fixed-rate and floating-rate interest amounts based on an agreed principal amount. As of December 31, 2000, the carrying amount of interest rate swap agreements approximated fair value. Based on the controls in place, management believes the risk associated with these instruments at December 31, 2000, will not have a material effect on the Company's consolidated financial position or results of operations. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Except for the historical information contained herein, the matters discussed in this Annual Report are forward-looking statements which involve risks and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting the Company's operations, markets, services and related products, prices and other factors discussed in the Company's prior filings with the Securities and Exchange Commission. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate. Therefore, there can be no assurance that the forward-looking statements included in this Annual Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. Selected Financial Data The following data, which has been affected by acquisitions, should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Annual Report.
(In thousands, except per share data) Years ended December 31, 2000 1999 1998 1997 1996 --------------------------------------------------------------------------------- Revenues $1,653,606 $1,407,545 $1,233,670 $ 974,432 $ 879,449 Income before income taxes 300,035 233,675 193,684 153,899 134,462 Income tax provision 123,014 95,807 79,410 63,099 54,754 Net income 177,021 137,868 114,274 90,800 79,708 Net income per share: Basic $ 1.44 $ 1.12 $ 0.93 $ 0.78 $ 0.69 ---------------------------------------------------------------------------------- Diluted $ 1.40 $ 1.09 $ 0.90 $ 0.75 $ 0.68 ---------------------------------------------------------------------------------- As originally reported-diluted $ 1.36 $ 1.09 $ 0.90 $ 0.75 $ 0.59 ---------------------------------------------------------------------------------- Total assets $5,586,320 $5,307,710 $3,958,338 $3,636,491 $2,698,979 Long-term debt 334,958 472,824 389,622 252,031 272,864 Shareholders' equity 1,252,072 1,091,016 885,797 769,255 605,898
Note: The above information has been restated to recognize (1) three-for-two stock splits effective in April 1999 and May 1998 and (2) the acquisition of BHC Financial, Inc. ("BHC") in 1997, accounted for as a pooling of interests. The net income per share as originally reported-diluted is before the realized gain from sale of investment in 2000 and the restatement in 1996 due to the BHC pooling of interests. QUARTERLY FINANCIAL INFORMATION (Unaudited)
(In thousands, except per share data) Quarters ----------------------------------------------- 2000 First Second Third Fourth Total ------------------------------------------------------------- Revenues $396,402 $ 416,434 $ 406,189 $434,581 $1,653,606 Cost of revenues 317,448 337,046 327,966 356,840 1,339,300 ------------------------------------------------------------- Operating income 78,954 79,388 78,223 77,741 314,306 Interest expense - net (5,806) (6,000) (5,295) (4,988) (22,089) Realized gain from sale of investment - 2,928 2,907 1,983 7,818 ------------------------------------------------------------- Income before income taxes 73,148 76,316 75,835 74,736 300,035 Income tax provision 29,991 31,289 31,093 30,641 123,014 ------------------------------------------------------------- Net income $ 43,157 $ 45,027 $ 44,742 $ 44,095 $ 177,021 ------------------------------------------------------------- Net income per share: Basic $ 0.35 $ 0.37 $ 0.36 $ 0.36 $ 1.44 ============================================================= Diluted $ 0.34 $ 0.36 $ 0.35 $ 0.35 $ 1.40 ============================================================= Diluted (before realized gain from sale of investment) $ 0.34 $ 0.34 $ 0.34 $ 0.34 $ 1.36 ============================================================= 1999 Revenues $337,129 $ 343,252 $ 352,663 $374,501 $1,407,545 Cost of revenues 276,506 280,738 288,094 309,122 1,154,460 ------------------------------------------------------------- Operating income 60,623 62,514 64,569 65,379 253,085 Interest expense - net (3,985) (4,315) (4,913) (6,197) (19,410) ------------------------------------------------------------- Income before income taxes 56,638 58,199 59,656 59,182 233,675 Income tax provision 23,222 23,861 24,459 24,265 95,807 ------------------------------------------------------------- Net income $ 33,416 $ 34,338 $ 35,197 $ 34,917 $ 137,868 ------------------------------------------------------------- Net income per share: Basic $ 0.27 $ 0.28 $ 0.29 $ 0.28 $ 1.12 ============================================================= Diluted $ 0.26 $ 0.27 $ 0.28 $ 0.28 $ 1.09 =============================================================
Market Price Information The following information relates to the closing price of the Company's $0.01 par value common stock, which is traded on the NASDAQ Stock Market under the symbol FISV. Information has been adjusted (to the nearest 1/32) to recognize the three-for-two stock split effective April 1999.
2000 1999 - ----------------------------------------------------------------------------------------------------- Quarter Ended High Low High Low - ----------------------------------------------------------------------------------------------------- March 31 38 1/2 24 5/16 37 19/32 30 June 30 50 3/8 33 11/16 40 31 5/16 September 30 64 1/8 42 11/16 34 1/8 27 1/4 December 31 62 5/8 43 7/16 39 3/16 24 3/4
At December 31, 2000, the Company's common stock was held by 2,859 shareholders of record. It is estimated that an additional 38,000 shareholders own the Company's stock through nominee or street name accounts with brokers. The closing sale price for the Company's stock on January 23, 2001, was $52.19 per share. The Company's present policy is to retain earnings to support future business opportunities, rather than to pay dividends. MANAGEMENT'S STATEMENT OF RESPONSIBILITY The management of Fiserv, Inc. assumes responsibility for the integrity and objectivity of the information appearing in the 2000 Annual Report. This information was prepared in conformity with accounting principles generally accepted in the United States of America and necessarily reflects the best estimates and judgment of management. To provide reasonable assurance that transactions authorized by management are recorded and reported properly and that assets are safeguarded, the Company maintains a system of internal controls. The concept of reasonable assurance implies that the cost of such a system is weighed against the benefits to be derived therefrom. The control environment is complemented by the Company's internal audit function, which evaluates the adequacy of the controls, policies and procedures in place, as well as adherence to them, and recommends improvements for implementation when applicable. In addition, Deloitte & Touche LLP, certified public accountants, audits the financial statements of the Company in accordance with auditing standards generally accepted in the United States of America. Their audit includes a review of the internal control system, and improvements are made to the system based upon their recommendations. The Audit Committee ensures that management and the independent auditors are properly discharging their financial reporting responsibilities. In performing this function, the Committee meets with management and the independent auditors throughout the year. Additional access to the Committee is provided to Deloitte & Touche LLP on an unrestricted basis, allowing discussion of audit results and opinions on the adequacy of internal accounting controls and the quality of financial reporting. /s/ Leslie M. Muma LESLIE M. MUMA President and Chief Executive Officer INDEPENDENT AUDITORS' REPORT SHAREHOLDERS AND DIRECTORS OF FISERV, INC. We have audited the accompanying consolidated balance sheets of Fiserv, Inc. and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Fiserv, Inc. and subsidiaries at December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP Deloitte & Touche LLP Milwaukee, Wisconsin January 26, 2001 EX-21 4 0004.txt SUBSIDIARIES OF THE REGISTRANT EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT State (Country) of Name under which Subsidiary does Business Incorporation The Affinity Group, Inc. Colorado Agio Insurance Agency, Inc. Montana Aspen Investment Alliance, Inc. Colorado BHC Investments, Inc. Delaware BHC Trading Corporation Delaware BHCM Insurance Agency, Inc. Delaware Data-Link Systems, LLC Wisconsin F.T. Agency, Inc. Ohio FCS Funding, Inc. Colorado First Trust Corporation Colorado Fiserv (ASPAC) Pte. Ltd. Singapore Fiserv (Europe) Ltd. England Fiserv Australia Pty. Limited Australia Fiserv BP, Inc. Wisconsin Fiserv BPI, Inc. Texas FIserv CIR, Inc. Delaware Fiserv Clearing, Inc. Delaware Fiserv Correspondent Services, Inc. Colorado FIserv Federal Systems, Inc. Delaware FIserv Fresno, Inc. California Fiserv Insurance Agency of Alabama, Inc. Alabama Fiserv Investor Services, Inc. Delaware Fiserv International (Barbados) Limited Barbados Fiserv LeMans, Inc. Pennsylvania Fiserv Mercosur, Inc. Delaware Fiserv Polska Sp. z o.o Poland Fiserv Securities, Inc. Delaware Fiserv Solutions of Canada Inc. Ontario Fiserv Solutions, Inc. Wisconsin The Freedom Group, Inc. Iowa Humanic Design Corporation New Jersey Information Technology, Inc. Nebraska Investment Consulting Group, Inc. Colorado ITI of Nebraska, Inc. Nebraska Life Instructors, Inc. New Jersey Lincoln Trust Company Colorado National Flood Services, Inc. Montana Patterson Press, Inc. Tennessee Precision Direct, Inc. Washington PT Fiserv Indonesia Indonesia Specialty Insurance Software California Specialty Software Service, Inc. California State (Country) of Name under which Subsidiary does Business Incorporation Tower Agency, Inc. Ohio TradeStar Investments, Inc. Delaware Trust Industrial Bank Colorado USERS Incorporated Maryland WUB2 Management Company Colorado WUB3 Capital Management, Inc. Colorado XP Systems Corporation Minnesota EX-23 5 0005.txt INDEPENDENT AUDITORS' CONSENT EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement Nos. 333-64353, 333-04417, 333-28121, 333-34310, 333-34396 and 333-89957 on Form S-8; Registration Statement Nos. 333-44935 and 333-47199 on Form S-4; and Registration Statement Nos. 333-55909, 333-49615, 333-45841, 333-00913, 333-23581 and 333-31465 on Form S-3 of Fiserv, Inc. of our reports dated January 26, 2001, appearing in and incorporated by reference in this Annual Report on Form 10-K of Fiserv, Inc. for the year ended December 31, 2000. /s/ Deloitte & Touche LLP - ----------------------------- DELOITTE & TOUCHE LLP Milwaukee, Wisconsin February 27, 2001 -----END PRIVACY-ENHANCED MESSAGE-----