FISERV INC. 10-K Summary (Fiscal Year Ended December 31, 1997)
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 1997. Fiserv, Inc. is a leading independent provider of financial data processing systems, information management services, and related products to the financial industry. Headquartered in Brookfield, Wisconsin, the company serves banks, savings institutions, credit unions, and mortgage banks. The company operates 86 centers globally, including 69 in the United States, and employs approximately 10,090 specialists.
Key Financial Metrics
The provided text incorporates the consolidated financial statements by reference to the 1997 Annual Report to Shareholders (Exhibit 13) and does not contain the 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:
- Market Value: The aggregate market value of voting stock held by non-affiliates as of January 30, 1998, was $2,788,108,403.
- Shares Outstanding: 53,746,668 shares of Common Stock as of January 30, 1998.
- Allowance for Doubtful Accounts: The balance increased from $3,796,000 at the beginning of 1997 to $6,903,000 at year-end, with $3,483,000 charged to expense during the year.
- Product Development Spend: Resources applied to product development and maintenance are estimated at 8% to 10% of Company revenues.
Material Changes and Acquisitions
Fiserv continued its strategy of growth through acquisitions in 1997. Significant transactions included:
- BHC Financial, Inc.: Acquired in May 1997. This acquisition was accounted for using the pooling of interests method, requiring the restatement of 1996 financial information to include BHC's results.
- Hanifen, Imhoff Holdings, Inc.: Acquired in December 1997, adding clearing services.
- Other 1997 Acquisitions: Included FIS, Inc. (data processing), Stephens Inc. clearing business, Emerald Publications, Central Service Corp., Savoy Discount Brokerage, AdminaStar Communications, Interactive Planning Systems, and others.
- Stock Buyback: The company announced a stock buyback program on December 22, 1997.
Outlook, Risks, and Management Commentary
Management Strategy: Fiserv aims to capitalize on industry consolidation and the trend of financial institutions outsourcing data processing to reduce costs. The company emphasizes economies of scale, product flexibility, and the "Client Comes First" principle.
Competitive Landscape: The market is highly competitive, with rivals including internal data departments of large institutions, hardware manufacturers, and user cooperatives. Fiserv competes on product quality, reliability, and its status as an independent vendor.
Risks and Contingencies:
- Legal Proceedings: The company is involved in various lawsuits in the normal course of business. Management believes potential liabilities will not have a material adverse effect on financial statements.
- Regulation: While not directly regulated as financial institutions, Fiserv's operations are observed by regulators such as the FDIC and NCUA. Subsidiaries involved in clearing and trust services are subject to SEC and state banking regulations.
- Technology Dependence: The company relies heavily on proprietary software protected by trade secrets rather than patents, and on the retention of skilled personnel.
Investor Verification Checklist
- Verify the specific Revenue, Net Income, and Cash Flow figures in the 1997 Annual Report to Shareholders (Exhibit 13), as they are not listed in this 10-K text.
- Review the restated 1996 financial data to understand the full impact of the BHC Financial, Inc. pooling of interests accounting.
- Confirm the details of the stock buyback program announced in December 1997, including authorization limits and execution status.
- Assess the integration progress of the numerous 1997 acquisitions (e.g., BHC, Hanifen, FIS) and their contribution to year-end results.
- Monitor the Allowance for Doubtful Accounts, which saw a significant increase in charges ($3.48M) and ending balance ($6.9M) in 1997.