Exhibit 99.1 | ||
Press Release |
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 |
Press Release |
• | Adjusted revenue increased 5 percent both in the fourth quarter and for the full year to $1.35 billion and $5.21 billion, respectively, compared to the prior year periods. |
• | Internal revenue growth for the company both in the fourth quarter and for the full year was 4 percent, driven by 6 percent growth in the Payments segment and 2 percent growth in the Financial segment in each period. |
• | Adjusted earnings per share increased 16 percent in the fourth quarter to $1.16 and 14 percent for the full year to $4.43 compared to the prior year periods. |
• | Adjusted operating margin expanded 140 basis points to 32.1 percent in the fourth quarter and 50 basis points to 32.2 percent for the full year compared to the prior year periods. |
• | Free cash flow increased 8 percent to $1.08 billion for the full year compared to the prior year. Cash distributions from StoneRiver of $151 million in 2016 related to the sale of a business interest have been excluded from the company's free cash flow results. |
• | Sales performance increased 22 percent in the fourth quarter and 21 percent for the full year compared to the prior year periods. |
• | The company repurchased 11.9 million shares of common stock for $1.20 billion in 2016, which included 2.6 million shares of common stock for $265 million in the fourth quarter. The company announced a new 15 million share repurchase authorization in the quarter and had 20.5 million remaining shares authorized for repurchase as of December 31, 2016. |
• | In January 2017, the company completed its acquisition of Online Banking Solutions, Inc., gaining additional cash management and digital business banking capabilities, which complement and enrich the company's existing solutions. |
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Fiserv, Inc. | |||||||||||||||
Condensed Consolidated Statements of Income | |||||||||||||||
(In millions, except per share amounts, unaudited) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue | |||||||||||||||
Processing and services | $ | 1,184 | $ | 1,110 | $ | 4,625 | $ | 4,411 | |||||||
Product | 247 | 258 | 880 | 843 | |||||||||||
Total revenue | 1,431 | 1,368 | 5,505 | 5,254 | |||||||||||
Expenses | |||||||||||||||
Cost of processing and services | 561 | 553 | 2,212 | 2,178 | |||||||||||
Cost of product | 200 | 210 | 747 | 731 | |||||||||||
Selling, general and administrative | 295 | 276 | 1,101 | 1,034 | |||||||||||
Total expenses | 1,056 | 1,039 | 4,060 | 3,943 | |||||||||||
Operating income | 375 | 329 | 1,445 | 1,311 | |||||||||||
Interest expense | (42 | ) | (39 | ) | (163 | ) | (170 | ) | |||||||
Interest and investment (loss) income - net | — | — | (7 | ) | 1 | ||||||||||
Loss on early debt extinguishment | — | — | — | (85 | ) | ||||||||||
Income before income taxes and income from investment in unconsolidated affiliate | 333 | 290 | 1,275 | 1,057 | |||||||||||
Income tax provision | (119 | ) | (98 | ) | (492 | ) | (377 | ) | |||||||
Income (loss) from investment in unconsolidated affiliate | 1 | (3 | ) | 147 | 32 | ||||||||||
Net income | $ | 215 | $ | 189 | $ | 930 | $ | 712 | |||||||
GAAP earnings per share - diluted | $ | 0.98 | $ | 0.81 | $ | 4.15 | $ | 2.99 | |||||||
Diluted shares used in computing earnings per share | 219.9 | 231.6 | 223.9 | 238.0 | |||||||||||
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 December 31, | Year Ended December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
GAAP net income | $ | 215 | $ | 189 | $ | 930 | $ | 712 | |||||||
Adjustments: | |||||||||||||||
Merger, integration and other costs 1 | 17 | 9 | 58 | 37 | |||||||||||
Severance costs | 4 | 11 | 15 | 24 | |||||||||||
Amortization of acquisition-related intangible assets | 39 | 45 | 158 | 194 | |||||||||||
Debt extinguishment and refinancing costs | — | — | — | 92 | |||||||||||
Tax impact of adjustments 2 | (21 | ) | (23 | ) | (81 | ) | (122 | ) | |||||||
StoneRiver and other investment activity 3 | — | 3 | (139 | ) | (29 | ) | |||||||||
Tax impact of StoneRiver and other investment activity 2 | — | (1 | ) | 52 | 13 | ||||||||||
Adjusted net income | $ | 254 | $ | 233 | $ | 993 | $ | 921 | |||||||
GAAP earnings per share | $ | 0.98 | $ | 0.81 | $ | 4.15 | $ | 2.99 | |||||||
Adjustments - net of income taxes: | |||||||||||||||
Merger, integration and other costs 1 | 0.05 | 0.02 | 0.17 | 0.10 | |||||||||||
Severance costs | 0.01 | 0.03 | 0.04 | 0.06 | |||||||||||
Amortization of acquisition-related intangible assets | 0.12 | 0.13 | 0.46 | 0.53 | |||||||||||
Debt extinguishment and refinancing costs | — | — | — | 0.25 | |||||||||||
StoneRiver and other investment activity 3 | — | 0.01 | (0.39 | ) | (0.07 | ) | |||||||||
Adjusted earnings per share | $ | 1.16 | $ | 1.00 | $ | 4.43 | $ | 3.87 |
1 | Merger, integration and other costs include acquisition and related integration costs of $36 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; certain 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 net (gains) losses on the sales of a business interest and a subsidiary business at StoneRiver, 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 December 31, | Year Ended December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Total Company | |||||||||||||||
Revenue | $ | 1,431 | $ | 1,368 | $ | 5,505 | $ | 5,254 | |||||||
Output Solutions postage reimbursements | (79 | ) | (85 | ) | (300 | ) | (313 | ) | |||||||
Deferred revenue purchase accounting adjustments | 2 | 1 | 6 | 4 | |||||||||||
Adjusted revenue | $ | 1,354 | $ | 1,284 | $ | 5,211 | $ | 4,945 | |||||||
Operating income | $ | 375 | $ | 329 | $ | 1,445 | $ | 1,311 | |||||||
Merger, integration and other costs | 17 | 9 | 58 | 37 | |||||||||||
Severance costs | 4 | 11 | 15 | 24 | |||||||||||
Amortization of acquisition-related intangible assets | 39 | 45 | 158 | 194 | |||||||||||
Adjusted operating income | $ | 435 | $ | 394 | $ | 1,676 | $ | 1,566 | |||||||
Operating margin | 26.1 | % | 24.0 | % | 26.2 | % | 24.9 | % | |||||||
Adjusted operating margin | 32.1 | % | 30.7 | % | 32.2 | % | 31.7 | % | |||||||
Payments and Industry Products ("Payments") | |||||||||||||||
Revenue | $ | 806 | $ | 751 | $ | 3,090 | $ | 2,862 | |||||||
Output Solutions postage reimbursements | (79 | ) | (85 | ) | (300 | ) | (313 | ) | |||||||
Deferred revenue purchase accounting adjustments | 1 | — | 3 | — | |||||||||||
Adjusted revenue | $ | 728 | $ | 666 | $ | 2,793 | $ | 2,549 | |||||||
Operating income | $ | 240 | $ | 224 | $ | 943 | $ | 840 | |||||||
Merger, integration and other costs | 1 | — | 3 | — | |||||||||||
Adjusted operating income | $ | 241 | $ | 224 | $ | 946 | $ | 840 | |||||||
Operating margin | 29.8 | % | 29.8 | % | 30.5 | % | 29.3 | % | |||||||
Adjusted operating margin | 33.1 | % | 33.6 | % | 33.8 | % | 33.0 | % | |||||||
Financial Institution Services ("Financial") | |||||||||||||||
Revenue | $ | 643 | $ | 630 | $ | 2,477 | $ | 2,443 | |||||||
Deferred revenue purchase accounting adjustments | 1 | 1 | 3 | 4 | |||||||||||
Adjusted revenue | $ | 644 | $ | 631 | $ | 2,480 | $ | 2,447 | |||||||
Operating income | $ | 217 | $ | 195 | $ | 823 | $ | 826 | |||||||
Operating margin | 33.7 | % | 31.0 | % | 33.2 | % | 33.8 | % | |||||||
Adjusted operating margin | 33.7 | % | 31.0 | % | 33.2 | % | 33.8 | % | |||||||
Corporate and Other | |||||||||||||||
Revenue | $ | (18 | ) | $ | (13 | ) | $ | (62 | ) | $ | (51 | ) | |||
Operating loss | $ | (82 | ) | $ | (90 | ) | $ | (321 | ) | $ | (355 | ) | |||
Merger, integration and other costs | 16 | 9 | 55 | 37 | |||||||||||
Severance costs | 4 | 11 | 15 | 24 | |||||||||||
Amortization of acquisition-related intangible assets | 39 | 45 | 158 | 194 | |||||||||||
Adjusted operating loss | $ | (23 | ) | $ | (25 | ) | $ | (93 | ) | $ | (100 | ) | |||
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) | |||||||
Year Ended December 31, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 930 | $ | 712 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and other amortization | 253 | 223 | |||||
Amortization of acquisition-related intangible assets | 158 | 194 | |||||
Share-based compensation | 68 | 65 | |||||
Excess tax benefits from share-based awards | (51 | ) | (38 | ) | |||
Deferred income taxes | 21 | 20 | |||||
Income from investment in unconsolidated affiliate | (147 | ) | (32 | ) | |||
Dividends from unconsolidated affiliate | 151 | 36 | |||||
Non-cash impairment charges | 17 | 6 | |||||
Loss on early debt extinguishment | — | 85 | |||||
Other operating activities | (2 | ) | (1 | ) | |||
Changes in assets and liabilities, net of effects from acquisitions: | |||||||
Trade accounts receivable | (88 | ) | (2 | ) | |||
Prepaid expenses and other assets | (68 | ) | (66 | ) | |||
Accounts payable and other liabilities | 178 | 148 | |||||
Deferred revenue | 11 | (4 | ) | ||||
Net cash provided by operating activities | 1,431 | 1,346 | |||||
Cash flows from investing activities | |||||||
Capital expenditures, including capitalization of software costs | (290 | ) | (359 | ) | |||
Payments for acquisitions of businesses | (265 | ) | — | ||||
Other investing activities | 1 | (1 | ) | ||||
Net cash used in investing activities | (554 | ) | (360 | ) | |||
Cash flows from financing activities | |||||||
Debt proceeds | 2,126 | 3,121 | |||||
Debt repayments, including redemption and other costs | (1,863 | ) | (2,707 | ) | |||
Proceeds from issuance of treasury stock | 79 | 71 | |||||
Purchases of treasury stock, including employee shares withheld for tax obligations | (1,245 | ) | (1,522 | ) | |||
Excess tax benefits from share-based awards | 51 | 38 | |||||
Other financing activities | — | (6 | ) | ||||
Net cash used in financing activities | (852 | ) | (1,005 | ) | |||
Net change in cash and cash equivalents | 25 | (19 | ) | ||||
Cash and cash equivalents, beginning balance | 275 | 294 | |||||
Cash and cash equivalents, ending balance | $ | 300 | $ | 275 |
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Fiserv, Inc. | |||||||
Condensed Consolidated Balance Sheets | |||||||
(In millions, unaudited) | |||||||
December 31, | |||||||
2016 | 2015 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 300 | $ | 275 | |||
Trade accounts receivable – net | 902 | 802 | |||||
Prepaid expenses and other current assets | 526 | 429 | |||||
Total current assets | 1,728 | 1,506 | |||||
Property and equipment – net | 405 | 396 | |||||
Intangible assets – net | 1,833 | 1,872 | |||||
Goodwill | 5,373 | 5,200 | |||||
Other long-term assets | 404 | 366 | |||||
Total assets | $ | 9,743 | $ | 9,340 | |||
Liabilities and Shareholders' Equity | |||||||
Accounts payable and accrued expenses | $ | 1,242 | $ | 1,024 | |||
Current maturities of long-term debt | 95 | 5 | |||||
Deferred revenue | 483 | 473 | |||||
Total current liabilities | 1,820 | 1,502 | |||||
Long-term debt | 4,467 | 4,288 | |||||
Deferred income taxes | 762 | 726 | |||||
Other long-term liabilities | 153 | 164 | |||||
Total liabilities | 7,202 | 6,680 | |||||
Shareholders' equity | 2,541 | 2,660 | |||||
Total liabilities and shareholders' equity | $ | 9,743 | $ | 9,340 |
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Internal Revenue Growth 1 | Three Months Ended December 31, 2016 | Year Ended December 31, 2016 | ||
Payments Segment | 6% | 6% | ||
Financial Segment | 2% | 2% | ||
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 fourth quarter of 2016, acquired revenue was $25 million (all in the Payments segment), and revenue in the comparable prior year period attributable to dispositions was $2 million (all in the Financial segment). Full year 2016 acquired revenue was $89 million (all in the Payments segment), and revenue in the comparable prior year period attributable to dispositions was $8 million (all in the Financial segment). |
Free Cash Flow | Year Ended December 31, | |||||||
2016 | 2015 | |||||||
Net cash provided by operating activities | $ | 1,431 | $ | 1,346 | ||||
Capital expenditures 1 | (290 | ) | (359 | ) | ||||
Other adjustments 1, 2 | (57 | ) | 19 | |||||
Free cash flow | $ | 1,084 | $ | 1,006 |
1 | 2015 includes $70 million of capital expenditures, primarily leasehold improvements and furniture and equipment related to the company's Atlanta facility consolidation, of which $25 million is offset by landlord reimbursements reported in net cash provided by operating activities, and $45 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; cash tax benefits on early debt extinguishment; and other items which management believes may not be indicative of the future free cash flow of the company. "Other adjustments" removes cash distributions, net of related tax payments, from StoneRiver of $99 million and $20 million in 2016 and 2015, respectively. |
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