FISERV INC - 10-K Filing Summary
Business Context and Reporting Period
Company: Fiserv, Inc.
Filing Type: Form 10-K (Annual Report)
Period Ended: December 31, 2005
Business Overview: Fiserv provides integrated information management systems and services to the financial and health benefits industries. The company serves over 17,000 clients globally, including banks, credit unions, insurance companies, and self-insured employers. Operations are divided into three segments: Financial Institution Outsourcing, Systems and Services; Health Plan Management Services; and Investment Support Services. International operations constituted approximately 4% of total revenues in 2005.
Key Financial Metrics
Note: Specific consolidated revenue, net income, cash flow, and debt figures are incorporated by reference to the 2005 Annual Report to Shareholders (Exhibit 13) and are not explicitly detailed in the provided text.
- Product Development Expenses: Approximately 7% of total revenues in 2005.
- Market Capitalization: $7.82 billion (as of June 30, 2005).
- Shares Outstanding: 178,929,400 (as of February 28, 2006).
- Stock Repurchases (Q4 2005): 4,385,045 shares purchased at an average price of $44.26 per share.
- Allowance for Doubtful Accounts (2005): Ending balance of $33,545,000.
- Discontinued Operations Proceeds: Sold securities clearing businesses for $344.9 million in cash (March 2005).
Material Changes and Acquisitions
Acquisitions in 2005: Fiserv acquired 8 businesses with combined annual revenues exceeding $100 million and approximately 520 employees. Notable acquisitions included Del Mar Datatrac, Emergis eLending, Interactive Technologies, Administrative Services Group, J.W. Hutton, BillMatrix, VerticalPoint, and Xcipio.
Discontinued Operations: Completed the sale of its securities clearing businesses to Fidelity Global Brokerage Group, Inc. for $344.9 million. The company retained liability for an SEC investigation regarding a former subsidiary, which was settled in April 2005 for $15.0 million (fully accrued in 2004).
Leadership Changes: Jeffery W. Yabuki became President and CEO on December 1, 2005. CFO Kenneth R. Jensen announced plans to retire in approximately nine months from November 2005.
Outlook, Risks, and Contingencies
Strategic Outlook: The company continues to pursue growth through product development, cost-effectiveness improvements, and strategic acquisitions. In early 2006, Fiserv acquired CareGain and P2P Link to expand health plan management offerings.
Key Risks:
- Acquisition Risks: Potential for increased debt, unforeseen liabilities, and integration difficulties.
- Competition: Highly competitive markets in financial outsourcing and health plan administration with competitors possessing substantial resources.
- Contract Renewals: Risk of losing clients or revenue if contracts are not renewed on favorable terms.
- Operational Failure: Potential for service interruptions due to software defects, security breaches, or facility failures.
- Regulatory Compliance: Extensive oversight under HIPAA for health services and various banking regulations for financial services.
Contingencies: The company is investigating an indemnification notice regarding documentation related to former introducing broker dealers, with the ultimate outcome currently undetermined.
Investor Verification Checklist
- Verify the specific consolidated revenue and net income figures in the 2005 Annual Report to Shareholders (Exhibit 13), as they are not listed in the 10-K text provided.
- Review the status of the indemnification notice regarding Fiserv Securities, Inc. (FSI) and potential financial impact.
- Assess the integration progress of the 8 businesses acquired in 2005 and the 2006 acquisitions (CareGain, P2P Link).
- Monitor the transition of leadership following the appointment of Jeffery W. Yabuki as CEO and the upcoming retirement of CFO Kenneth R. Jensen.
- Confirm the remaining capacity of the stock repurchase program (3,051,285 shares authorized as of Dec 31, 2005, plus a new 10 million share authorization in Feb 2006).