Exhibit 99.1
| Press Release |
|
| For more information contact:
Media Relations: Britt Zarling Vice President, Corporate Communications Fiserv, Inc. 262-879-5945 britt.zarling@fiserv.com |
Investor Relations: Stephanie Gregor Vice President, Investor Relations Fiserv, Inc. 262-879-5969 stephanie.gregor@fiserv.com |
For Immediate Release
Fiserv Reports Third Quarter 2014 Results
Adjusted internal revenue growth of 5 percent for the quarter;
Adjusted EPS increase of 10 percent for the quarter;
Free cash flow increase of 13 percent year to date;
Full year 2014 outlook affirmed and adjusted EPS guidance increased
Brookfield, Wis., October 28, 2014 – Fiserv, Inc. (NASDAQ: FISV), a leading global provider of financial services technology solutions, today reported financial results for the third quarter of 2014.
GAAP revenue in the third quarter was $1.26 billion compared with $1.20 billion in the third quarter of 2013. Adjusted revenue was $1.19 billion in the third quarter compared with $1.14 billion in the third quarter of 2013, an increase of 4 percent. For the first nine months of 2014, GAAP revenue was $3.75 billion compared with $3.55 billion for the first nine months of 2013. Adjusted revenue was $3.52 billion in the first nine months of 2014 compared with $3.36 billion in the same period in 2013, an increase of 5 percent.
GAAP earnings per share from continuing operations in the third quarter was $0.95 compared with $0.61 in the third quarter of 2013. The third quarter 2014 GAAP earnings per share from continuing operations included a $0.21 per share gain on the sale of a subsidiary business at StoneRiver Group, L.P. (“StoneRiver”), a joint venture in which the company owns a 49% interest. GAAP earnings per share from continuing operations for the first nine months of 2014 was $2.25 compared with $1.61 for the first nine months of 2013.
Adjusted earnings per share from continuing operations in the quarter increased 10 percent to $0.86 compared with $0.78 in the third quarter of 2013. Adjusted earnings per share from continuing operations in the first nine months of 2014 increased 13 percent to $2.48 compared with $2.19 in the same period of 2013.
“The business performed very well in the quarter, delivering strong results including 8 percent adjusted internal revenue growth in the Payments segment, and record sales performance for the Company,” said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. “The strength of our business model combined with growth in high quality revenue, produced excellent adjusted operating margin expansion and free cash flow results.”
| Press Release |
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Third Quarter 2014
| • | Adjusted revenue increased 4 percent in the quarter to $1.19 billion and 5 percent year to date to $3.52 billion over the prior year periods. |
| • | Adjusted internal revenue growth in the quarter was 5 percent for the company, driven by 8 percent growth in the Payments segment and 1 percent growth in the Financial segment. |
| • | Adjusted internal revenue growth was 4 percent in the first nine months of 2014, led by 7 percent growth in the Payments segment and 2 percent growth in the Financial segment. |
| • | Adjusted earnings per share increased 10 percent in the quarter to $0.86 and increased 13 percent in the first nine months of 2014 to $2.48 compared to the prior year periods. |
| • | Adjusted operating margin increased 70 basis points in both the quarter and first nine months of 2014 to 31.2 percent and 30.5 percent, respectively, compared with the prior year periods. |
| • | Free cash flow increased 17 percent in the quarter and was up 13 percent year to date to $674 million compared with $598 million in the prior year period. |
| • | The company received $63 million in cash distributions in the quarter from StoneRiver, totaling $108 million year to date. These distributions have been excluded from the company’s free cash flow. |
| • | The company repurchased 4.2 million shares of common stock in the quarter for $270 million and 13.3 million shares for $789 million in the first nine months of 2014. As of September 30, 2014, the company had 5.2 million shares remaining authorized for repurchase. |
| • | Sales performance increased 27 percent in the quarter and 14 percent in the first nine months of 2014 compared with the prior year periods. |
| • | During the quarter, the company signed its 50th DNA™ account processing client since its acquisition of Open Solutions in January 2013. |
| • | The company signed 152 Mobiliti™ clients in the quarter and as of September 30 the company had over 2,000 mobile banking clients. |
| • | The company signed 85 Popmoney® clients to join the payment network in the quarter, which now includes over 2,300 financial institutions. |
| • | The company signed 77 electronic bill payment clients and 40 debit processing clients in the quarter. |
Outlook for 2014
Fiserv continues to expect 2014 adjusted revenue growth in a range of 4 to 5 percent and adjusted internal revenue growth of 4 to 4.5 percent. The company now expects 2014 adjusted earnings per share to be in a range of $3.34 to $3.38, which represents growth of 12 to 13 percent over $2.99 in 2013.
“Given our strong results to date and visibility for the full year, we have increased our adjusted earnings per share guidance and are on-track to achieve strong full year results,” said Yabuki.
Earnings Conference Call
The company will discuss its third quarter 2014 results on a conference call and webcast at 4 p.m. CT on Tuesday, October 28, 2014. To register for the event, go to www.fiserv.com and click on the Q3 Earnings webcast link. Supplemental materials will be available in the “Investor Relations” section of the website.
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About Fiserv
This year, Fiserv, Inc. (NASDAQ: FISV) celebrates 30 years of leadership in financial services technology. As one of FORTUNE® magazine’s World’s Most Admired Companies, Fiserv is helping clients worldwide achieve best-in-class results by driving innovation in payments, processing services, risk and compliance, customer and channel management, and business insights and optimization. For more information, visit www.fiserv.com.
Non-GAAP Financial Measures and Other Information
In this earnings release, we supplement our reporting of information determined in accordance with GAAP, such as revenue, operating income, operating margin, income from continuing operations, earnings per share and net cash provided by operating activities, with “adjusted revenue,” “adjusted internal revenue growth,” “adjusted operating income,” “adjusted operating margin,” “adjusted income from continuing operations,” “adjusted earnings per share” and “free cash flow.” Management believes that adjustments for certain non-cash or other items and the exclusion of certain pass-through revenue and expenses enhance our shareholders’ ability to evaluate our performance because such items do not reflect how we manage our operations. Therefore, we exclude these items from GAAP revenue, operating income, operating margin, income from continuing operations, earnings per share and net cash provided by operating activities to calculate these non-GAAP measures.
Examples of non-cash or other items may include, but are not limited to, non-cash deferred revenue adjustments arising from acquisitions, non-cash intangible asset amortization expense associated with acquisitions, non-cash impairment charges, gains or losses from unconsolidated affiliates, severance costs, merger costs and certain integration expenses related to acquisitions. We exclude these items to more clearly focus on the factors we believe are pertinent to the management of our operations, and we use this information to allocate resources to our various businesses.
Free cash flow and adjusted internal revenue growth are non-GAAP financial measures and are described on page 10. We believe free cash flow is useful to measure the funds generated in a given period that are available for strategic capital decisions. We believe adjusted internal revenue growth is useful because it presents revenue growth excluding the impact of postage reimbursements in our Output Solutions business, acquisitions and dispositions, and including deferred revenue purchase accounting adjustments. We believe this supplemental information enhances our shareholders’ ability to evaluate and understand our core business performance.
These non-GAAP measures should be considered in addition to, and not as a substitute for, revenue, operating income, operating margin, income from continuing operations, earnings per share and net cash provided by operating activities or any other amount determined in accordance with GAAP. These non-GAAP measures reflect management’s judgment of particular items and may not be comparable to similarly titled measures reported by other companies.
In the fourth quarter of 2013, the company completed a two-for-one stock split. Accordingly, all share data and per share amounts are presented on a split-adjusted basis.
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Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated adjusted revenue growth, adjusted internal revenue growth, adjusted earnings per share, and adjusted earnings per share growth. Statements can generally be identified as forward-looking because they include words such as “believes,” “anticipates,” “expects,” “could,” “should” or words of similar meaning. Statements that describe the company’s future plans, objectives or goals are also forward-looking statements. Forward-looking statements are subject to assumptions, risks and uncertainties that may cause actual results to differ materially from those contemplated by such forward-looking statements. The factors that may affect the company’s results include, among others: the impact of market and economic conditions on the financial services industry; the capacity of the company’s technology to keep pace with a rapidly evolving marketplace; pricing and other actions by competitors; the effect of legislative and regulatory actions in the United States and internationally; the company’s ability to comply with government regulations; the impact of a security breach or operational failure on the company’s business; the company’s ability to successfully integrate acquisitions into its operations; the impact of the company’s strategic initiatives; and other factors included in the company’s filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2013 and in other documents that the company files with the SEC. You should consider these factors carefully in evaluating forward-looking statements and are cautioned not to place undue reliance on such statements. The company assumes no obligation to update any forward-looking statements, which speak only as of the date of this press release.
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| Fiserv, Inc. Condensed Consolidated Statements of Income (In millions, except per share amounts, unaudited)
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| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenue |
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| Processing and services |
$ | 1,063 | $ | 1,016 | $ | 3,141 | $ | 2,997 | ||||||||
| Product |
200 | 185 | 609 | 554 | ||||||||||||
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| Total revenue |
1,263 | 1,201 | 3,750 | 3,551 | ||||||||||||
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| Expenses |
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| Cost of processing and services |
537 | 520 | 1,610 | 1,565 | ||||||||||||
| Cost of product |
168 | 164 | 519 | 511 | ||||||||||||
| Selling, general and administrative |
243 | 237 | 728 | 711 | ||||||||||||
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| Total expenses |
948 | 921 | 2,857 | 2,787 | ||||||||||||
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| Operating income |
315 | 280 | 893 | 764 | ||||||||||||
| Interest expense - net |
(41 | ) | (41 | ) | (122 | ) | (123 | ) | ||||||||
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| Income from continuing operations before income taxes and income from investment in unconsolidated affiliate |
274 | 239 | 771 | 641 | ||||||||||||
| Income tax provision |
(120 | ) | (79 | ) | (287 | ) | (218 | ) | ||||||||
| Income from investment in unconsolidated affiliate |
85 | 1 | 89 | 7 | ||||||||||||
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| Income from continuing operations |
239 | 161 | 573 | 430 | ||||||||||||
| Loss from discontinued operations |
— | (2 | ) | — | (3 | ) | ||||||||||
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| Net income |
$ | 239 | $ | 159 | $ | 573 | $ | 427 | ||||||||
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| GAAP earnings (loss) per share - diluted: |
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| Continuing operations |
$ | 0.95 | $ | 0.61 | $ | 2.25 | $ | 1.61 | ||||||||
| Discontinued operations |
— | (0.01 | ) | — | (0.01 | ) | ||||||||||
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| Total |
$ | 0.95 | $ | 0.60 | $ | 2.25 | $ | 1.60 | ||||||||
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| Diluted shares used in computing earnings per share |
251.8 | 263.7 | 254.6 | 267.5 | ||||||||||||
|
Earnings per share is calculated using actual, unrounded amounts. |
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| Fiserv, Inc. | ||||||||||||||||
| Reconciliation of GAAP to Adjusted Income and | ||||||||||||||||
| Earnings Per Share from Continuing Operations | ||||||||||||||||
| (In millions, except per share amounts, unaudited)
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| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| GAAP income from continuing operations |
$ | 239 | $ | 161 | $ | 573 | $ | 430 | ||||||||
| Adjustments: |
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| Merger and integration costs 1 |
2 | 14 | 11 | 70 | ||||||||||||
| Severance costs |
3 | — | 15 | 12 | ||||||||||||
| Amortization of acquisition-related intangible assets |
50 | 53 | 153 | 156 | ||||||||||||
| Tax impact of adjustments 2 |
(19 | ) | (23 | ) | (63 | ) | (83 | ) | ||||||||
| StoneRiver transactions 3 |
(85 | ) | — | (87 | ) | 2 | ||||||||||
| Tax impact of StoneRiver transactions 3 |
32 | — | 36 | — | ||||||||||||
| Tax benefit 4 |
(6 | ) | — | (6 | ) | — | ||||||||||
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| Adjusted income from continuing operations |
$ | 216 | $ | 205 | $ | 632 | $ | 587 | ||||||||
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| GAAP earnings per share from continuing operations |
$ | 0.95 | $ | 0.61 | $ | 2.25 | $ | 1.61 | ||||||||
| Adjustments - net of income taxes: |
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| Merger and integration costs 1 |
0.01 | 0.03 | 0.03 | 0.17 | ||||||||||||
| Severance costs |
0.01 | — | 0.04 | 0.03 | ||||||||||||
| Amortization of acquisition-related intangible assets |
0.13 | 0.13 | 0.39 | 0.38 | ||||||||||||
| StoneRiver transactions 3 |
(0.21 | ) | — | (0.20 | ) | 0.01 | ||||||||||
| Tax benefit 4 |
(0.03 | ) | — | (0.02 | ) | — | ||||||||||
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| Adjusted earnings per share |
$ | 0.86 | $ | 0.78 | $ | 2.48 | $ | 2.19 | ||||||||
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| 1 | Merger and integration costs are attributable to the Open Solutions acquisition and include integration costs and deferred revenue purchase accounting adjustments. |
| 2 | The tax impact is calculated using a tax rate of 35 percent, which approximates the company’s annual effective tax rate for 2014 and 2013 exclusive of the tax benefit adjustment and the tax impacts from StoneRiver capital transactions. |
| 3 | Represents the company’s share of (gains) losses associated with capital transactions at StoneRiver, including sales of subsidiary businesses and related expenses during the first nine months of 2014 and a non-cash write-off of deferred financing costs associated with a recapitalization in the second quarter of 2013. |
| 4 | The tax benefit represents certain discrete income tax benefits that have been excluded from adjusted earnings per share in the period. |
See page 3 for disclosures related to the use of non-GAAP financial measures. Earnings per share is calculated using actual, unrounded amounts.
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| Fiserv, Inc. | ||||||||||||||||
| Financial Results by Segment | ||||||||||||||||
| (In millions, unaudited)
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| Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Total Company |
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| Revenue |
$ | 1,263 | $ | 1,201 | $ | 3,750 | $ | 3,551 | ||||||||
| Output Solutions postage reimbursements |
(77 | ) | (69 | ) | (238 | ) | (207 | ) | ||||||||
| Open Solutions deferred revenue adjustment |
1 | 5 | 3 | 17 | ||||||||||||
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| Adjusted revenue |
$ | 1,187 | $ | 1,137 | $ | 3,515 | $ | 3,361 | ||||||||
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| Operating income |
$ | 315 | $ | 280 | $ | 893 | $ | 764 | ||||||||
| Merger and integration costs |
2 | 14 | 11 | 70 | ||||||||||||
| Severance costs |
3 | — | 15 | 12 | ||||||||||||
| Amortization of acquisition-related intangible assets |
50 | 53 | 153 | 156 | ||||||||||||
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| Adjusted operating income |
$ | 370 | $ | 347 | $ | 1,072 | $ | 1,002 | ||||||||
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| Operating margin |
24.9 | % | 23.3 | % | 23.8 | % | 21.5 | % | ||||||||
| Adjusted operating margin |
31.2 | % | 30.5 | % | 30.5 | % | 29.8 | % | ||||||||
| Payments and Industry Products (“Payments”) |
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| Revenue |
$ | 686 | $ | 631 | $ | 2,028 | $ | 1,874 | ||||||||
| Output Solutions postage reimbursements |
(77 | ) | (69 | ) | (238 | ) | (207 | ) | ||||||||
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| Adjusted revenue |
$ | 609 | $ | 562 | $ | 1,790 | $ | 1,667 | ||||||||
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| Operating income |
$ | 201 | $ | 173 | $ | 566 | $ | 518 | ||||||||
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| Operating margin |
29.2 | % | 27.4 | % | 27.9 | % | 27.6 | % | ||||||||
| Adjusted operating margin |
32.9 | % | 30.8 | % | 31.6 | % | 31.1 | % | ||||||||
| Financial Institution Services (“Financial”) |
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| Revenue |
$ | 588 | $ | 580 | $ | 1,758 | $ | 1,713 | ||||||||
| Open Solutions deferred revenue adjustment |
1 | 5 | 3 | 17 | ||||||||||||
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| Adjusted revenue |
$ | 589 | $ | 585 | $ | 1,761 | $ | 1,730 | ||||||||
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| Operating income |
$ | 193 | $ | 194 | $ | 581 | $ | 541 | ||||||||
| Merger and integration costs |
— | 3 | — | 12 | ||||||||||||
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| Adjusted operating income |
$ | 193 | $ | 197 | $ | 581 | $ | 553 | ||||||||
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| Operating margin |
32.8 | % | 33.3 | % | 33.0 | % | 31.6 | % | ||||||||
| Adjusted operating margin |
32.8 | % | 33.7 | % | 33.0 | % | 32.0 | % | ||||||||
| Corporate and Other |
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| Revenue |
$ | (11 | ) | $ | (10 | ) | $ | (36 | ) | $ | (36 | ) | ||||
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| Operating loss |
$ | (79 | ) | $ | (87 | ) | $ | (254 | ) | $ | (295 | ) | ||||
| Merger and integration costs |
2 | 11 | 11 | 58 | ||||||||||||
| Severance costs |
3 | — | 15 | 12 | ||||||||||||
| Amortization of acquisition-related intangible assets |
50 | 53 | 153 | 156 | ||||||||||||
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| Adjusted operating loss |
$ | (24 | ) | $ | (23 | ) | $ | (75 | ) | $ | (69 | ) | ||||
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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)
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| Nine Months Ended September 30, |
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| 2014 | 2013 | |||||||
| Cash flows from operating activities |
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| Net income |
$ | 573 | $ | 427 | ||||
| Adjustment for discontinued operations |
— | 3 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Depreciation and other amortization |
147 | 145 | ||||||
| Amortization of acquisition-related intangible assets |
153 | 156 | ||||||
| Share-based compensation |
37 | 37 | ||||||
| Deferred income taxes |
(11 | ) | (11 | ) | ||||
| Income from investment in unconsolidated affiliate |
(89 | ) | (7 | ) | ||||
| Dividends from unconsolidated affiliate |
108 | 6 | ||||||
| Non-cash impairment charge |
— | 30 | ||||||
| Other non-cash items |
(15 | ) | (9 | ) | ||||
| Changes in assets and liabilities, net of effects from acquisitions: |
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| Trade accounts receivable |
8 | (7 | ) | |||||
| Prepaid expenses and other assets |
(37 | ) | (51 | ) | ||||
| Accounts payable and other liabilities |
147 | (12 | ) | |||||
| Deferred revenue |
(61 | ) | (26 | ) | ||||
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| Net cash provided by operating activities |
960 | 681 | ||||||
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| Cash flows from investing activities |
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| Capital expenditures, including capitalization of software costs |
(225 | ) | (171 | ) | ||||
| Payments for acquisitions of businesses, net of cash acquired |
— | (30 | ) | |||||
| Dividends from unconsolidated affiliate |
— | 116 | ||||||
| Net proceeds from investments |
7 | 2 | ||||||
| Other investing activities |
(1 | ) | (1 | ) | ||||
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| Net cash used in investing activities |
(219 | ) | (84 | ) | ||||
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| Cash flows from financing activities |
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| Debt proceeds |
544 | 1,319 | ||||||
| Debt repayments |
(544 | ) | (1,574 | ) | ||||
| Issuance of treasury stock |
39 | 37 | ||||||
| Purchases of treasury stock |
(785 | ) | (455 | ) | ||||
| Other financing activities |
15 | 12 | ||||||
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| Net cash used in financing activities |
(731 | ) | (661 | ) | ||||
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| Change in cash and cash equivalents |
10 | (64 | ) | |||||
| Net cash flows (to) from discontinued operations |
(1 | ) | 27 | |||||
| Beginning balance |
400 | 358 | ||||||
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| Ending balance |
$ | 409 | $ | 321 | ||||
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8
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| Fiserv, Inc. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (In millions, unaudited)
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| September 30, | December 31, | |||||||
| 2014 | 2013 | |||||||
| Assets |
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| Cash and cash equivalents |
$ | 409 | $ | 400 | ||||
| Trade accounts receivable – net |
748 | 751 | ||||||
| Deferred income taxes |
41 | 55 | ||||||
| Prepaid expenses and other current assets |
381 | 366 | ||||||
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| Total current assets |
1,579 | 1,572 | ||||||
| Property and equipment – net |
304 | 266 | ||||||
| Intangible assets – net |
2,042 | 2,142 | ||||||
| Goodwill |
5,212 | 5,216 | ||||||
| Other long-term assets |
301 | 317 | ||||||
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| Total assets |
$ | 9,438 | $ | 9,513 | ||||
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| Liabilities and Shareholders’ Equity |
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| Accounts payable and accrued expenses |
$ | 886 | $ | 756 | ||||
| Current maturities of long-term debt |
92 | 92 | ||||||
| Deferred revenue |
419 | 484 | ||||||
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| Total current liabilities |
1,397 | 1,332 | ||||||
| Long-term debt |
3,756 | 3,756 | ||||||
| Deferred income taxes |
693 | 713 | ||||||
| Other long-term liabilities |
130 | 127 | ||||||
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| Total liabilities |
5,976 | 5,928 | ||||||
| Shareholders’ equity |
3,462 | 3,585 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 9,438 | $ | 9,513 | ||||
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Fiserv, Inc.
Selected Non-GAAP Financial Measures
($ in millions, unaudited)
| Adjusted Internal Revenue Growth 1 |
Three Months Ended September 30, 2014 |
Nine Months Ended September 30, 2014 | ||
| Payments Segment |
8% | 7% | ||
| Financial Segment |
1% | 2% | ||
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| Total Company |
5% | 4% | ||
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| 1 | Adjusted internal revenue growth is measured as the increase in adjusted revenue (see page 7), excluding the net impact of acquisitions and dispositions (“acquired revenue”), for the current period divided by adjusted revenue from the prior year period. Acquired revenue for the third quarter of 2014 was ($2) million, due to a disposition in the Financial segment. Acquired revenue was $4 million for the first nine months of 2014 ($2 million in each of the Payments and Financial segments). |
| Free Cash Flow 2 |
Nine Months Ended September 30, |
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| 2014 |
2013 |
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| Net cash provided by operating activities |
$ | 960 | $ | 681 | ||||
| Capital expenditures |
(225 | ) | (171 | ) | ||||
| Other adjustments 3 |
(61 | ) | 88 | |||||
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| Free cash flow |
$ | 674 | $ | 598 | ||||
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| 2 | Free cash flow is calculated as net cash provided by operating activities less capital expenditures and excludes the net change in settlement assets and obligations; tax-effected severance, merger and integration payments; certain transaction expenses attributed to the Open Solutions acquisition; certain cash distributions from StoneRiver; and other items which management believes may not be indicative of the future free cash flow of the company. |
| 3 | “Other adjustments” in 2014 removes $73 million of cash distributions from StoneRiver less related tax payments, and in 2013, adds back $52 million of cash payments for transaction expenses, transaction-related assumed liabilities, and merger and integration costs attributed to the acquisition of Open Solutions. |
See page 3 for disclosures related to the use of non-GAAP financial measures.
FISV-E
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