FISERV INC. 2003 Annual Report (10-K) Summary
Business Context and Reporting Period
This filing covers the fiscal year ended December 31, 2003. Fiserv, Inc. is a leading provider of integrated data processing and information management systems to over 15,000 financial services providers, including banks, credit unions, broker-dealers, and insurance companies. The company operates primarily in the United States, with international operations constituting approximately 4% of total processing and services revenues in 2003. The business is organized into three primary segments: Financial Institution Outsourcing, Systems and Services; Health Plan Management Services; and Securities Processing and Trust Services.
Key Financial Metrics
The provided text incorporates the detailed financial statements by reference to the 2003 Annual Report to Shareholders and does not explicitly list consolidated revenue, net income, cash flow, or debt figures within the body of this 10-K text. However, the following specific data points are available:
- Acquisition Activity (2003): Fiserv acquired 12 businesses with combined annual revenues of more than $610 million and approximately 3,200 employees.
- Product Development Expenses: Represented approximately 7% of processing and services revenues in 2003.
- Allowance for Doubtful Accounts (2003): Ending balance of $25,884,000, with charges to expense of $5,089,000 and write-offs of $4,479,000.
- Market Capitalization: Aggregate market value of non-affiliate common equity was $6.6 billion as of June 30, 2003.
- Shares Outstanding: 194,605,104 shares as of January 31, 2004.
Material Changes and Strategic Developments
The most significant material change in 2003 was the aggressive acquisition strategy, adding 12 businesses compared to five in 2002 and 12 in 2001. Notable 2003 acquisitions included:
- Electronic Data Systems Corporation's Credit Union Industry Group business (July 2003).
- Chase Credit Systems, Inc. and Chase Credit Research, Inc. (July 2003).
- Unisure, Inc. and Insurance Management Solutions Group, Inc. (September 2003).
- Federal Home Loan Bank of Indianapolis IP services (October 2003).
Operationally, the company consolidated its care management services into a single operation named Avidyn Health effective in 2004. The company also noted that consolidation in the financial services industry has not materially reduced the number of customers or accounts serviced, but has increased the demand for specialized data processing and outsourcing.
Outlook, Risks, and Management Commentary
Management Commentary: Management emphasizes that the financial industry continues to undergo change with narrowing distinctions among banking, securities, and insurance firms. Fiserv's strategy focuses on developing new products, improving cost-effectiveness, soliciting new clients, and making strategic acquisitions to capitalize on outsourcing trends.
Risks and Contingencies:
- Regulatory Oversight: The company is subject to extensive regulation by the FDIC, SEC, NYSE, and state authorities. Regulatory reviews can result in higher costs, reduced operational flexibility, or fines.
- Competition: The market is highly competitive. Competitors include internal data processing departments, hardware vendors, and large financial institutions. In health plan management, competitors include major insurers like United Health Group and Aetna.
- Legal Proceedings: The company is involved in various lawsuits in the normal course of business but expects no material adverse effect on financial statements.
- Forward-Looking Statements: Actual results may differ materially from anticipated results due to economic, competitive, governmental, and technological factors.
Investor Verification Checklist
- Verify the specific consolidated revenue and net income figures in the 2003 Annual Report to Shareholders (Exhibit 13), as these are not explicitly detailed in the 10-K text provided.
- Review the Segment Information in Note 8 of the financial statements to understand the revenue contribution of the Financial Institution, Health Plan, and Securities segments.
- Confirm the integration status and financial impact of the 12 acquisitions made in 2003, particularly the EDS Credit Union and Chase Credit businesses.
- Assess the impact of regulatory inquiries regarding the mutual fund industry on the Securities Processing segment.
- Monitor the Allowance for Doubtful Accounts trend, which increased to $25.9 million in 2003, to gauge credit risk exposure.