FISERV INC. 10-K Summary (Fiscal Year Ended Dec 31, 2004)
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 2004. Fiserv, Inc. provides integrated data processing and information management systems to over 16,000 financial services providers, including banks, credit unions, insurance companies, and self-insured employers. The company operates primarily in the United States, with international operations constituting approximately 3% of total processing and services revenues in 2004. Operations are classified into three segments: Financial Institution Outsourcing, Systems and Services; Health Plan Management Services; and Investment Support Services.
Key Financial Metrics
The provided text incorporates detailed financial statements by reference to the 2004 Annual Report to Shareholders and does not contain specific numerical values for revenue, net income, cash flow, or debt levels within the body of this filing text. However, the following financial data points are explicitly stated:
- Product Development Expenses: Approximately 6% of processing and services revenues in 2004.
- Allowance for Doubtful Accounts (2004): Ending balance of $29,521,000, with $20,592,000 charged to expense and $19,357,000 in write-offs.
- Legal Reserve: A reserve of $15.5 million was recorded at December 31, 2004, regarding an SEC investigation into Fiserv Securities, Inc.
- Market Value of Equity: $7,253,558,705 as of June 30, 2004.
- Shares Outstanding: 193,264,003 shares as of January 31, 2005.
Material Changes and Acquisitions
Fiserv continued its strategy of strategic acquisitions in 2004, acquiring four businesses with combined annual revenues of more than $40 million and approximately 260 employees. Notable 2004 acquisitions included RegEd, Inc. (insurance/securities training), Pharmacy Fulfillment, Inc. (health plan management), Results International Systems, Inc. (insurance data processing), and CheckAGAIN, LLC (item processing).
A significant material change involves the proposed sale of the company's securities clearing businesses. On December 16, 2004, Fiserv entered into an agreement to sell these businesses to National Financial Services LLC for approximately $349 million in cash, plus a contingent payment of up to $15 million. These operations are reported as discontinued operations.
Guidance, Risks, and Management Commentary
Management Commentary: Management emphasizes a strategy of developing new products, improving cost effectiveness, and aggressive solicitation of new clients. The company notes that consolidation in the financial industry has not materially reduced the number of customers or accounts serviced.
Risks and Contingencies:
- SEC Investigation: Fiserv Securities, Inc. is under investigation by the SEC regarding mutual fund trading practices. A $15.5 million reserve has been established, though no settlement has been reached.
- Regulatory Compliance: The Health Plan Management segment is subject to extensive federal and state regulation, including HIPAA, regarding privacy and security of health information.
- Competition: The market is highly competitive with major players including The Bisys Group, Fidelity Information Services, Jack Henry and Associates, Metavante, and Open Solutions in the financial sector, and UnitedHealth Group, Cigna, and Aetna in the health sector.
- Forward-Looking Statements: The filing includes standard disclaimers that actual results may differ materially from anticipated results due to economic, competitive, and regulatory factors.
Investor Verification Checklist
- Verify the final settlement amount and tax deductibility of the $15.5 million SEC reserve.
- Confirm the closing date and final purchase price of the securities clearing business sale to National Financial Services LLC.
- Review the full 2004 Annual Report to Shareholders (incorporated by reference) for specific revenue, profit, and cash flow figures not detailed in this text.
- Monitor the integration of the four 2004 acquisitions and their contribution to revenue growth.
- Assess the impact of the CEO's announced retirement plan (Leslie M. Muma, retiring June 2006) on future strategic direction.