FISERV INC - 10-K Summary (Fiscal Year Ended Dec 31, 1998)
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 1998, for Fiserv, Inc., a leading independent provider of financial data processing systems and information management services. Headquartered in Brookfield, Wisconsin, the company serves banks, credit unions, thrifts, mortgage banks, securities brokers, and insurance companies. Fiserv operates 94 centers globally (78 in the U.S.) and employs approximately 12,500 specialists. The company's strategy focuses on economies of scale, product development, and strategic acquisitions to serve a consolidating financial services industry.
Key Financial Metrics
Revenue, Profit, Cash Flow, Margins, Debt, and Liquidity: The filing text incorporates the consolidated financial statements by reference to the 1998 Annual Report to Shareholders (Exhibit 13). Consequently, specific numerical values for total revenue, net income, operating cash flow, profit margins, total debt, and liquidity ratios are not present in the provided text.
Valuation and Qualifying Accounts: The only specific financial data provided in the text is found in Schedule II regarding the Allowance for Doubtful Accounts:
- 1998 Beginning Balance: $6,903,000
- Charged to Expense (1998): $4,762,000
- Write-offs (1998): $5,124,000
- 1998 Ending Balance: $6,541,000
Market Data (as of Jan 29, 1999):
- Aggregate Market Value (Non-affiliates): $4,015,748,072
- Shares Outstanding: 82,058,709
Material Changes and Operational Highlights
Acquisitions: Fiserv continued its aggressive acquisition strategy in 1998, adding 14 entities to its portfolio. Notable acquisitions included:
- Automated Financial Technology, Inc. (Data processing)
- The LeMans Group (Automobile leasing software)
- Network Data Processing Corporation (Insurance data processing)
- Deluxe Card Services (Automated card services)
- The FREEDOM Group, Inc. (Insurance data processing)
Divestitures: The company sold RECOM Associates, Inc. in 1998.
Capital Structure: A 3-for-2 stock split was announced and filed on March 24, 1998.
Facilities: The company owns facilities in six locations (Brookfield, Corvallis, Fresno, Lincoln, Marion, Miami, and South Bend) and leases the remainder of its 94 centers.
Guidance, Outlook, and Risks
Management Outlook: Management anticipates continued industry consolidation and a shift toward outsourcing data processing to reduce costs and enhance services. Fiserv expects the financial services industry to remain a major user of data processing products, requiring significant capital and human resource commitments. The company plans to continue developing new products, improving cost-effectiveness, and pursuing strategic acquisitions.
Risks and Contingencies:
- Competition: The market is highly competitive, with rivals including internal data departments of large institutions, hardware manufacturers, and user cooperatives. Some competitors possess greater financial resources.
- Regulation: While not directly regulated as financial institutions, Fiserv's operations are observed by federal and state regulators (FDIC, NCUA, OTS, OCC). Subsidiaries acting as trust companies or broker-dealers are subject to specific regulations.
- Legal Proceedings: The company is involved in various lawsuits in the normal course of business. Management believes these will not have a material adverse effect on financial statements.
- Technology Dependence: The business relies heavily on proprietary software and the expertise of its personnel. Protection relies on trade secrets and non-disclosure agreements rather than patents.
Investor Verification Checklist
- Verify the specific revenue, net income, and cash flow figures in the 1998 Annual Report to Shareholders (Exhibit 13), as these are not detailed in the 10-K text provided.
- Review the definitive proxy statement for details on executive compensation and security ownership (Items 10-13).
- Confirm the integration status and financial impact of the 14 acquisitions completed in 1998.
- Assess the impact of the 3-for-2 stock split on per-share metrics and market liquidity.
- Monitor the Allowance for Doubtful Accounts trend, noting the increase in charges to expense ($4.76M) relative to write-offs ($5.12M) in 1998.