Exhibit 99.1 | ||
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For more information contact: | |
Media Relations: Britt Zarling Vice President, Corporate Communications Fiserv, Inc. 678-375-1595 britt.zarling@fiserv.com | Investor Relations: Stephanie Gregor Vice President, Investor Relations Fiserv, Inc. 262-879-5969 stephanie.gregor@fiserv.com |
For Immediate Release |
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• | Adjusted revenue increased 6 percent in the second quarter to $1.29 billion and 5 percent in the first six months to $2.55 billion, compared to the prior year periods. |
• | Internal revenue growth in the quarter was 4 percent for the company, driven by 6 percent growth in the Payments segment and 1 percent growth in the Financial segment. |
• | Internal revenue growth was 4 percent in the first six months of 2016, led by 7 percent growth in the Payments segment and 1 percent growth in the Financial segment. |
• | Adjusted earnings per share increased 14 percent in the second quarter to $1.08 and increased 17 percent in the first six months of 2016 to $2.14 compared to the prior year periods. |
• | Adjusted operating margin increased 10 basis points to 31.9 percent in the quarter and increased 40 basis points to 31.9 percent in the first six months compared to the prior year periods. |
• | Free cash flow was $442 million in the first six months of 2016 compared to $439 million in the prior year period. Cash distributions of $140 million in the first half of 2016 from StoneRiver related to the sale of a business interest have been excluded from the company's free cash flow results. |
• | The company repurchased 2.8 million shares of common stock for $283 million in the second quarter and 6.2 million shares of common stock for $604 million in the first six months of 2016. As of June 30, 2016, the company had 11.2 million remaining shares authorized for repurchase. |
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Fiserv, Inc. | |||||||||||||||
Condensed Consolidated Statements of Income | |||||||||||||||
(In millions, except per share amounts, unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue | |||||||||||||||
Processing and services | $ | 1,159 | $ | 1,109 | $ | 2,281 | $ | 2,176 | |||||||
Product | 204 | 189 | 413 | 397 | |||||||||||
Total revenue | 1,363 | 1,298 | 2,694 | 2,573 | |||||||||||
Expenses | |||||||||||||||
Cost of processing and services | 547 | 542 | 1,100 | 1,084 | |||||||||||
Cost of product | 180 | 168 | 361 | 349 | |||||||||||
Selling, general and administrative | 274 | 262 | 532 | 500 | |||||||||||
Total expenses | 1,001 | 972 | 1,993 | 1,933 | |||||||||||
Operating income | 362 | 326 | 701 | 640 | |||||||||||
Interest expense | (40 | ) | (49 | ) | (80 | ) | (90 | ) | |||||||
Interest and investment (loss) income - net | — | — | (7 | ) | 1 | ||||||||||
Loss on early debt extinguishment | — | (85 | ) | — | (85 | ) | |||||||||
Income before income taxes and income from investment in unconsolidated affiliate | 322 | 192 | 614 | 466 | |||||||||||
Income tax provision | (110 | ) | (66 | ) | (259 | ) | (162 | ) | |||||||
Income from investment in unconsolidated affiliate | — | 1 | 146 | 1 | |||||||||||
Net income | $ | 212 | $ | 127 | $ | 501 | $ | 305 | |||||||
GAAP earnings per share - diluted | $ | 0.94 | $ | 0.53 | $ | 2.21 | $ | 1.26 | |||||||
Diluted shares used in computing earnings per share | 225.6 | 240.4 | 226.5 | 241.7 | |||||||||||
Earnings per share is calculated using actual, unrounded amounts. |
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Fiserv, Inc. | |||||||||||||||
Reconciliation of GAAP to | |||||||||||||||
Adjusted Net Income and Adjusted Earnings Per Share | |||||||||||||||
(In millions, except per share amounts, unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
GAAP net income | $ | 212 | $ | 127 | $ | 501 | $ | 305 | |||||||
Adjustments: | |||||||||||||||
Merger, integration and other costs 1 | 7 | 8 | 23 | 13 | |||||||||||
Severance costs | 4 | 6 | 8 | 9 | |||||||||||
Amortization of acquisition-related intangible assets | 40 | 50 | 80 | 99 | |||||||||||
Debt extinguishment and refinancing costs | — | 92 | — | 92 | |||||||||||
Tax impact of adjustments 2 | (18 | ) | (55 | ) | (39 | ) | (75 | ) | |||||||
StoneRiver and other investment activity 3 | — | — | (139 | ) | — | ||||||||||
Tax impact of StoneRiver and other investment activity 2 | — | — | 52 | — | |||||||||||
Adjusted net income | $ | 245 | $ | 228 | $ | 486 | $ | 443 | |||||||
GAAP earnings per share | $ | 0.94 | $ | 0.53 | $ | 2.21 | $ | 1.26 | |||||||
Adjustments - net of income taxes: | |||||||||||||||
Merger, integration and other costs 1 | 0.02 | 0.02 | 0.06 | 0.03 | |||||||||||
Severance costs | 0.01 | 0.02 | 0.02 | 0.02 | |||||||||||
Amortization of acquisition-related intangible assets | 0.11 | 0.13 | 0.23 | 0.26 | |||||||||||
Debt extinguishment and refinancing costs | — | 0.25 | — | 0.25 | |||||||||||
StoneRiver and other investment activity 3 | — | — | (0.39 | ) | — | ||||||||||
Adjusted earnings per share | $ | 1.08 | $ | 0.95 | $ | 2.14 | $ | 1.83 |
1 | Merger, integration and other costs include acquisition-related integration costs of $16 million in 2016, including a $10 million non-cash impairment charge during the first quarter associated with the decision to replace an existing software solution with software purchased in a business acquisition; incremental costs associated with the achievement of the company's operational effectiveness objectives, including expenses related to data center and real estate consolidation activities; and a non-cash expense in 2015 related to the modification of certain employee equity award agreements. |
2 | The tax impact of adjustments is calculated using a tax rate of 35 percent, which approximates the company's annual effective tax rate, exclusive of the actual tax impacts associated with StoneRiver transactions. |
3 | Represents the company's share of a net gain on the sale of a business interest at StoneRiver of $146 million, as well as a non-cash write-off of a $7 million investment, in the first quarter of 2016. |
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Fiserv, Inc. | |||||||||||||||
Financial Results by Segment | |||||||||||||||
(In millions, unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Total Company | |||||||||||||||
Revenue | $ | 1,363 | $ | 1,298 | $ | 2,694 | $ | 2,573 | |||||||
Output Solutions postage reimbursements | (71 | ) | (74 | ) | (149 | ) | (157 | ) | |||||||
Deferred revenue purchase accounting adjustments | 2 | 1 | 2 | 2 | |||||||||||
Adjusted revenue | $ | 1,294 | $ | 1,225 | $ | 2,547 | $ | 2,418 | |||||||
Operating income | $ | 362 | $ | 326 | $ | 701 | $ | 640 | |||||||
Merger, integration and other costs | 7 | 8 | 23 | 13 | |||||||||||
Severance costs | 4 | 6 | 8 | 9 | |||||||||||
Amortization of acquisition-related intangible assets | 40 | 50 | 80 | 99 | |||||||||||
Adjusted operating income | $ | 413 | $ | 390 | $ | 812 | $ | 761 | |||||||
Operating margin | 26.6 | % | 25.1 | % | 26.0 | % | 24.9 | % | |||||||
Adjusted operating margin | 31.9 | % | 31.8 | % | 31.9 | % | 31.5 | % | |||||||
Payments and Industry Products ("Payments") | |||||||||||||||
Revenue | $ | 763 | $ | 701 | $ | 1,512 | $ | 1,397 | |||||||
Output Solutions postage reimbursements | (71 | ) | (74 | ) | (149 | ) | (157 | ) | |||||||
Deferred revenue purchase accounting adjustments | 1 | — | 1 | — | |||||||||||
Adjusted revenue | $ | 693 | $ | 627 | $ | 1,364 | $ | 1,240 | |||||||
Operating income | $ | 237 | $ | 208 | $ | 462 | $ | 399 | |||||||
Merger, integration and other costs | 1 | — | 1 | — | |||||||||||
Adjusted operating income | $ | 238 | $ | 208 | $ | 463 | $ | 399 | |||||||
Operating margin | 31.1 | % | 29.7 | % | 30.5 | % | 28.6 | % | |||||||
Adjusted operating margin | 34.3 | % | 33.2 | % | 33.9 | % | 32.2 | % | |||||||
Financial Institution Services ("Financial") | |||||||||||||||
Revenue | $ | 612 | $ | 608 | $ | 1,211 | $ | 1,201 | |||||||
Deferred revenue purchase accounting adjustments | 1 | 1 | 1 | 2 | |||||||||||
Adjusted revenue | $ | 613 | $ | 609 | $ | 1,212 | $ | 1,203 | |||||||
Operating income | $ | 202 | $ | 209 | $ | 397 | $ | 413 | |||||||
Operating margin | 33.0 | % | 34.5 | % | 32.8 | % | 34.4 | % | |||||||
Adjusted operating margin | 33.0 | % | 34.5 | % | 32.8 | % | 34.4 | % | |||||||
Corporate and Other | |||||||||||||||
Revenue | $ | (12 | ) | $ | (11 | ) | $ | (29 | ) | $ | (25 | ) | |||
Operating loss | $ | (77 | ) | $ | (91 | ) | $ | (158 | ) | $ | (172 | ) | |||
Merger, integration and other costs | 6 | 8 | 22 | 13 | |||||||||||
Severance costs | 4 | 6 | 8 | 9 | |||||||||||
Amortization of acquisition-related intangible assets | 40 | 50 | 80 | 99 | |||||||||||
Adjusted operating loss | $ | (27 | ) | $ | (27 | ) | $ | (48 | ) | $ | (51 | ) | |||
See page 3 for disclosures related to the use of non-GAAP financial measures. | |||||||||||||||
Operating margin percentages are calculated using actual, unrounded amounts. |
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Fiserv, Inc. | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
(In millions, unaudited) | |||||||
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 501 | $ | 305 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and other amortization | 122 | 107 | |||||
Amortization of acquisition-related intangible assets | 80 | 99 | |||||
Share-based compensation | 39 | 36 | |||||
Excess tax benefits from share-based awards | (37 | ) | (29 | ) | |||
Deferred income taxes | 5 | (9 | ) | ||||
Income from investment in unconsolidated affiliate | (146 | ) | (1 | ) | |||
Dividends from unconsolidated affiliate | 140 | — | |||||
Non-cash impairment charges | 17 | — | |||||
Loss on early debt extinguishment | — | 85 | |||||
Other operating activities | (2 | ) | 1 | ||||
Changes in assets and liabilities, net of effects from acquisitions: | |||||||
Trade accounts receivable | 3 | 53 | |||||
Prepaid expenses and other assets | (38 | ) | (40 | ) | |||
Accounts payable and other liabilities | 37 | 38 | |||||
Deferred revenue | (34 | ) | (45 | ) | |||
Net cash provided by operating activities | 687 | 600 | |||||
Cash flows from investing activities | |||||||
Capital expenditures, including capitalization of software costs | (145 | ) | (203 | ) | |||
Payments for acquisitions of businesses | (265 | ) | — | ||||
Other investing activities | 2 | — | |||||
Net cash used in investing activities | (408 | ) | (203 | ) | |||
Cash flows from financing activities | |||||||
Debt proceeds | 1,249 | 2,392 | |||||
Debt repayments, including redemption and other costs | (991 | ) | (2,055 | ) | |||
Proceeds from issuance of treasury stock | 47 | 47 | |||||
Purchases of treasury stock, including employee shares withheld for tax obligations | (633 | ) | (574 | ) | |||
Excess tax benefits from share-based awards | 37 | 29 | |||||
Net cash used in financing activities | (291 | ) | (161 | ) | |||
Net change in cash and cash equivalents | (12 | ) | 236 | ||||
Cash and cash equivalents, beginning balance | 275 | 294 | |||||
Cash and cash equivalents, ending balance | $ | 263 | $ | 530 |
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Fiserv, Inc. | |||||||
Condensed Consolidated Balance Sheets | |||||||
(In millions, unaudited) | |||||||
June 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 263 | $ | 275 | |||
Trade accounts receivable – net | 812 | 802 | |||||
Prepaid expenses and other current assets | 411 | 429 | |||||
Total current assets | 1,486 | 1,506 | |||||
Property and equipment – net | 394 | 396 | |||||
Intangible assets – net | 1,893 | 1,872 | |||||
Goodwill | 5,380 | 5,200 | |||||
Other long-term assets | 377 | 366 | |||||
Total assets | $ | 9,530 | $ | 9,340 | |||
Liabilities and Shareholders' Equity | |||||||
Accounts payable and accrued expenses | $ | 1,006 | $ | 1,024 | |||
Current maturities of long-term debt | 6 | 5 | |||||
Deferred revenue | 440 | 473 | |||||
Total current liabilities | 1,452 | 1,502 | |||||
Long-term debt | 4,548 | 4,288 | |||||
Deferred income taxes | 734 | 726 | |||||
Other long-term liabilities | 154 | 164 | |||||
Total liabilities | 6,888 | 6,680 | |||||
Shareholders' equity | 2,642 | 2,660 | |||||
Total liabilities and shareholders' equity | $ | 9,530 | $ | 9,340 |
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Internal Revenue Growth 1 | Three Months Ended June 30, 2016 | Six Months Ended June 30, 2016 | ||
Payments Segment | 6% | 7% | ||
Financial Segment | 1% | 1% | ||
Total Company | 4% | 4% |
1 | Internal revenue growth is measured as the increase in adjusted revenue (see page 7) for the current period excluding acquired revenue and revenue attributable to dispositions, divided by adjusted revenue from the prior year period excluding revenue attributable to dispositions. In the second quarter of 2016, acquired revenue was $26 million (all in the Payments segment), and revenue in the comparable prior year period attributable to dispositions was $3 million (all in the Financial segment). During the first six months of 2016, acquired revenue was $39 million (all in the Payments segment), and revenue in the comparable prior year period attributable to dispositions was $4 million (all in the Financial segment). |
Free Cash Flow | Six Months Ended June 30, | |||||||
2016 | 2015 | |||||||
Net cash provided by operating activities | $ | 687 | $ | 600 | ||||
Capital expenditures 1 | (145 | ) | (203 | ) | ||||
Other adjustments 1, 2 | (100 | ) | 42 | |||||
Free cash flow | $ | 442 | $ | 439 |
1 | 2015 includes $43 million of capital expenditures, primarily leasehold improvements and furniture and equipment related to the company's Atlanta facility consolidation, of which $24 million is offset by landlord reimbursements reported in net cash provided by operating activities, and $19 million of non-reimbursable building expenditures is included in "other adjustments." |
2 | Free cash flow excludes tax-effected severance, merger and integration payments; certain cash distributions from StoneRiver; and other items which management believes may not be indicative of the future free cash flow of the company. "Other adjustments" in 2016 removes cash distributions, net of related tax payments, from StoneRiver of $117 million. |
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