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SECURITIES AND EXCHANGE COMMISSION
EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
For the fiscal year ended December 31, 1997
Commission file no. 0-14948
FISERV, INC.
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(Exact name of Registrant as specified in its charter)
WISCONSIN 39-1506125
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
255 FISERV DRIVE, BROOKFIELD, WISCONSIN 53045
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (414) 879-5000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
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(Title of Class)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.01 Par Value
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(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No
State the aggregate market value of the voting stock held by non-affiliates of
the registrant as of January 30, 1998: $2,788,108,403
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of January 30, 1998: 53,746,668
DOCUMENTS INCORPORATED BY REFERENCE: List the following documents if
incorporated by reference and the part of the Form 10-K into which the document
is incorporated: (1) Any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933.
1997 Annual Report to Shareholders - Parts II, IV
Proxy Statement for March 24, 1998 Meeting - Part III
Fiserv, Inc. and Subsidiaries
Form 10-K
December 31, 1997
PART I Page
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Item 1. Business 1
Item 2. Properties 9
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security Holders 10
PART II
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Item 5. Market for the Registrant's Common Equity and Related
Shareholder Matters 10
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 8. Financial Statements and Supplementary Data 10
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 10
PART III
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Item 10. Directors and Executive Officers of the Registrant 10
Item 11. Executive Compensation 10
Item 12. Security Ownership of Certain Beneficial Owners and
Management 10
Item 13. Certain Relationships and Related Transactions 10
PART IV
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Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K 11
PART I
Item 1. Business
Fiserv, Inc. is a leading, independent provider of financial data processing
systems and related information management services and products to the
financial industry. The Company was formed on July 31, 1984, through the
combination of two major regional data processing firms located in Milwaukee,
Wisconsin, and Tampa, Florida. These firms--First Data Processing of Milwaukee
and Sunshine State Systems of Tampa--began their operations in 1964 and 1971,
respectively, as the data processing operations of their parent financial
institutions. Historically, operations were expanded by developing a range of
services for these parent organizations as well as other financial institutions.
Since its organization in 1984, Fiserv has grown through the continuing
development of highly specialized services and product enhancements, the
addition of new clients and the acquisition of firms complementing the Fiserv
organization.
Headquartered in Brookfield, WI, Fiserv operates centers nationwide for full-
service financial data processing, software system development, item processing
and check imaging, technology support and related product businesses. In
addition, the Company has business support centers in Australia, Canada,
England, Indonesia, Poland and Singapore.
Based on market surveys of total clients served, Fiserv is the nation's
leading data processing provider for banks and savings institutions; the leading
data processing provider for credit unions (with the pending acquisition of CUSA
Technologies, Inc.); the leading item processing provider for banks and savings
institutions; the leading provider of clearing services to financial institution
affiliated brokers; the leading independent processor of IRAs; and the number
two data processing provider for mortgage banks.
Business Strategy
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The market for products and services offered by financial institutions
continues to undergo change. New alternative lending and investment products are
being introduced and implemented by the industry with great frequency; the
distinctions among financial services traditionally offered by savings and loan
associations, banks and credit unions continue to narrow; and financial
institutions diversify and consolidate on an ongoing basis in response to market
pressures, as well as under the auspices of the Federal Deposit Insurance
Corporation (FDIC) and the National Credit Union Administration (NCUA).
Although such market changes have led to consolidations which have reduced the
number of financial institutions in the United States, such consolidations have
not resulted in a material reduction of the number of customers or financial
accounts serviced by the financial industry as a whole. New organizations
entering the once limited financial services industry have opened new markets
for Fiserv services.
To stay competitive in this changing marketplace, financial institutions are
finding they must aggressively meet the growing needs of their customers for a
broad variety of new products and services that are typically transaction-
oriented and fee-based. The growing volume and types of transactions and
accounts have increased the data processing requirements of these
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institutions. As a consequence, Fiserv management believes that the financial
services industry is one of the largest users of data processing products and
services.
Moreover, Fiserv expects that the industry will continue to require
significant commitments of capital and human resources to the information
systems requirements, to require application of more specialized systems, and to
require development, maintenance and enhancement of applications software.
Fiserv believes that economies of scale in data processing operations are
essential to justify the required level of expenditures and commitment of human
resources.
In response to these market dynamics, the means by which financial
institutions obtain data processing services has changed. Many smaller, local
and regional third-party data processors are leaving the business or
consolidating with larger providers. A number of large financial institutions
previously providing third-party processing services for other institutions have
withdrawn from the business to concentrate on their primary, core businesses.
Similarly, an increasing number of financial institutions that previously
developed their own software systems and maintained their own data processing
operations have outsourced their data processing requirements by licensing their
software from a third party or by contracting with third-party processors to
reduce costs and enhance their products and services. Outsourcing can involve
simply the licensing of software, thereby eliminating the costly technical
expertise within the financial institution, or the utilization of service
bureaus, facilities management or resource management capability. Fiserv
provides all of these options to the financial industry.
To capitalize on these industry trends and to become the premier provider of
data processing products and related services, Fiserv has implemented a strategy
of continuing to develop new products, improving the cost effectiveness of
services provided to clients, aggressively soliciting new clients and making
both opportunistic and strategic acquisitions.
Acquisition History
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Formed Acquired Business Service
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1964 July 1984 First Data Processing, Milwaukee, WI Data processing
1971 July 1984 Sunshine State Systems, Tampa, FL Data processing
1966 Nov. 1984 San Antonio, Inc., San Antonio, TX Data processing
1982 Oct. 1985 Sendero Corporation, Scottsdale, AZ Asset/liability management
1962 Oct. 1985 First Trust Corporation, Denver, CO DP for retirement planning
1962 Oct. 1985 First Retirement Marketing, Denver, CO Retirement planning services
1973 Jan. 1986 On-Line, Inc., Seattle, WA Data processing, forms
1966 May 1986 First City Financial Systems, Inc., Beaumont, TX Data processing
1962 Feb. 1987 Pamico, Inc., Milwaukee, WI Specialized forms
1975 Apr. 1987 Midwest Commerce Data Corp., Elkhart, IN Data processing
1969 Apr. 1987 Fidelity Financial Services, Inc., Spokane, WA Data processing
1965 Oct. 1987 Capbanc Computer Corporation, Baton Rouge, LA Data processing
1971 Feb. 1988 Minnesota On-Line Inc., Minneapolis, MN Data processing
1965 May 1988 Citizens Financial Corporation, Cleveland, OH Data processing
1980 May 1988 ZFC Electronic Data Services, Inc., Bowling Green, KY Data processing
1969 June 1988 GESCO Corporation, Fresno, CA Data processing
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1967 Nov. 1988 Valley Federal Data Services, Los Angeles, CA Data processing
1984 Dec. 1988 Northeast Savings Data Services, Hartford, CT Data processing
1982 May 1989 Triad Software Network, Ltd., Chicago, IL Data processing
1969 Aug. 1989 Northeast Datacom, Inc., New Haven, CT Data processing
1978 Feb. 1990 Financial Accounting Services Inc., Pittsburgh, PA Data processing
1974 June 1990 Accurate Data On Line, Inc., Titusville, FL Data processing
1982 June 1990 GTE EFT Services Money Network, Fresno, CA EFT networks
1968 July 1990 First Interstate Management, Milwaukee, WI Data processing
1982 Oct. 1990 GTE ATM Networks, Fresno, CA EFT networks
1867 Nov. 1990 Boston Safe Deposit & Trust Co. IP Services, MA Item processing
1968 Dec. 1990 First Bank, N.A. IP Services, Milwaukee, WI Item processing
1979 Apr. 1991 Citicorp Information Resources, Inc., Stamford, CT Data processing
1980 Apr. 1991 BMS Processing, Inc., Randolph, MA Item processing
1979 May 1991 FHLB of Dallas IP Services, Dallas, TX Item processing
1980 Nov. 1991 FHLB of Chicago IP Services, Chicago, IL Item processing
1977 Feb. 1992 Data Holdings, Inc., Indianapolis, IN Automated card services
1980 Feb. 1992 BMS On-Line Services, Inc. (assets), Randolph, MA Data processing
1982 Mar. 1992 First American Information Services, St. Paul, MN Data processing
1981 July 1992 Cadre, Inc., Avon, CT Disaster recovery
1992 July 1992 Performance Analysis, Inc., Cincinnati, OH Asset/liability management
1986 Oct. 1992 Chase Manhattan Bank, REALM Software, NY Asset/liability management
1984 Dec. 1992 Dakota Data Processing, Inc., Fargo, ND Data processing
1983 Dec. 1992 Banking Group Services, Inc., Somerville, MA Item processing
1968 Feb. 1993 Basis Information Technologies, Atlanta, GA Data processing, EFT
1986 Mar. 1993 IPC Service Corporation (assets), Denver, CO Item processing
1973 May 1993 EDS' FHLB Seattle (assets), Seattle, WA Item processing
1982 June 1993 Datatronix Financial Services, San Diego, CA Item processing
1966 July 1993 Data Line Service, Covina, CA Data processing
1978 Nov. 1993 Financial Processors, Inc., Miami, FL Data processing
1974 Nov. 1993 Financial Data Systems, Jacksonville, FL Item processing
1961 Nov. 1993 Financial Institutions Outsourcing, Pittsburgh, PA Data processing
1972 Nov. 1993 Data-Link Systems, South Bend, IN Mortgage banking services
1985 Apr. 1994 National Embossing Company, Inc., Houston, TX Automated card services
1962 May 1994 Boatmen's Information Systems of Iowa, Des Moines Data processing
1981 Aug. 1994 FHLB of Atlanta IP Services, Atlanta, GA Item processing
1989 Nov. 1994 CBIS Imaging Technology Banking Unit, Maitland, FL Imaging technology
1987 Dec. 1994 RECOM Associates, Inc., Tampa, FL Network integration
1970 Jan. 1995 Integrated Business Systems, Glendale, CA Specialized forms
1977 Feb. 1995 BankLink, Inc., New York, NY Cash management
1976 May 1995 Information Technology, Inc., Lincoln, NE Software & services
1957 Aug. 1995 Lincoln Holdings, Inc., Denver, CO DP for retirement planning
1993 Sept. 1995 SRS, Inc., Austin, TX Data processing
1992 Sept. 1995 ALLTEL's Document Management Services, CA, NJ Item processing
1978 Nov. 1995 Financial Information Trust, Des Moines, IA Data processing
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1983 Jan. 1996 UniFi, Inc., Fort Lauderdale, FL Software & services
1982 Nov. 1996 Bankers Pension Services, Inc., Tustin, CA DP for retirement planning
1992 Apr. 1997 AdminaStar Communications, Indianapolis, IN Laser print/mailing services
1982 May 1997 Interactive Planning Systems, Atlanta, GA PC-based financial systems
1983 May 1997 BHC Financial, Inc., Philadelphia, PA Securities processing services
1968 Sept. 1997 FIS, Inc., Orlando, FL, and Baton Rouge, LA Data processing
n/a Sept. 1997 Stephens Inc. clearing business, Little Rock, AR Securities processing services
1986 Oct. 1997 Emerald Publications, San Diego, CA Financial seminars & training
1968 Oct. 1997 Central Service Corp., Greensboro, NC Data & item processing
1993 Oct. 1997 Savoy Discount Brokerage, Seattle, WA Securities processing services
1990 Dec. 1997 Hanifen, Imhoff Holdings, Inc., Denver, CO Clearing services
Technology Resources
Fiserv is a technology company focused on serving the financial data
processing and related information management needs of financial intermediaries
and service providers throughout the financial industry. No matter what a client
requires for automation, Fiserv offers a business-specific technology solution
to satisfy its needs. Fiserv products and services are designed to help clients
meet their ultimate goal of giving their customers the best possible service
quickly, accurately and completely.
As a technology partner, Fiserv offers multiple data processing solutions
and delivery options based on the client's requirements. These include service
bureau capabilities; in-house software systems; and strategic technology
alliances including facilities and resource management services. A host of
financial information technology products and services complement these delivery
methods: item processing and imaging technology services; backroom automation
software systems; electronic funds transfer services; plastic cards and other
related card management services; rate risk management and decision support
systems; complete data warehouse systems; self-directed retirement plan
processing; network installation and integration services; human resources
outsourcing; design and production of business forms and marketing literature;
delivery and support of leading third-party software and hardware products;
laser print/mailing services; securities processing, deep discount brokerage and
clearing services; and financial seminars and training products.
Through their relationship with Fiserv, clients gain the tools to enhance
and expand their customer service: advanced technology, dependable and
responsive support, product and system flexibility, and value for their money.
Resources for financial data processing. The goal of any financial
institution or service provider is to serve its customers by helping them move
money. No matter how it's conducted, account and transaction processing remains
the core business of Fiserv. Our role is to provide the technology that drives
these transactions quickly and efficiently.
Fiserv provides comprehensive data center service bureau or in-house
processing solutions for multiple types and sizes of financial institutions and
service providers worldwide. Maintained on multiple hardware platforms, these
solutions provide clients a choice of on-line systems compatible with their
existing equipment and preferred operating environment. Through ongoing R&D
efforts among Fiserv centers worldwide, clients benefit from enhancements to
existing products and development of innovative new services--all designed to
help keep each client competitive and growing within its own market.
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In-house software systems give clients a service delivery method that
enables them to set-up an internal operation for designing and implementing new
products, services or reporting systems. Specific to this solution is the option
of migrating between in-house or on-line delivery services of Fiserv without new
software conversion.
Technology alliances offer clients the option of on-site data processing
management by Fiserv personnel through a Facilities Management agreement; or
management of their systems at a Fiserv data center with Resource Management
services. Both solutions are designed to meet the unique requirements of the
client by partnering to minimize operating costs, while allowing each client to
direct their specific software applications.
Fiserv offers a complete line of lending software, products and related
services. Providing the only true client/server Windows(TM) solution for loan
origination and secondary marketing, these specialized services are available to
help clients effectively speed loan processing. Fiserv also provides the
nation's premier private-label/revolving credit processing service.
Resources for operations support. To provide quality customer service, a
financial institution or service provider must offer the latest products and
technological advancements, while maintaining top efficiency in all areas of its
business. Fiserv technology encompasses the entire range of operations support
services and products, helping clients make the best use of their available
resources, both internal and external.
Fiserv has the largest item processing (IP) client base in the financial
industry and extensive experience in managing item processing workflows, imaging
solutions and other back-office processes performed in financial data centers.
With full-service item processing and imaging technology centers located
throughout North America, the Fiserv network is well-positioned for large
volumes, as well as offering specialized item processing and imaging
alternatives to meet the specific needs of our clients. In a field where
efficiencies are gained through volume, Fiserv leverages its resources and
technological expertise for the benefit of IP services clients, providing a
comprehensive range of specialized services.
For imaging solutions, Fiserv provides high-quality, technologically
advanced imaging software and integration services that offer efficiencies and
new sources of revenue for clients of all sizes. These solutions are focused on
enhanced business-to-customer communications and integrated information access.
With considerable expertise in this increasingly popular technology, Fiserv
offers a full range of image integration products and services.
Fiserv provides PC-based productivity tools to deliver the software,
service and support necessary to meet the backroom automation and customer
service call center challenges facing the financial services industry. These
systems are designed to streamline backroom operations by reducing time,
keystrokes and labor.
Comprehensive marketing communications solutions available through Fiserv
include communications needs analysis, concept development and design, project
management and print production for annual reports, web sites, company
literature and other business communications. Also available are specialized
solutions for business forms design, production and distribution.
Resources for electronic banking. Technology is perhaps no more influential
than in the field of electronic banking. To stay competitive, financial
institutions and service providers can turn to Fiserv for the resources
necessary to provide the latest electronic services.
As a market leader in providing electronic funds transfer (EFT) services,
Fiserv offers transaction authorization, comprehensive Automated Teller
Machine/Point of Sale (ATM/POS) and debit card processing, and card management,
laser printing and mailing services. These solutions combine product flexibility
and innovative technology with access to major EFT
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services networks, offering clients diversity in selecting the products and
services that will best meet their customers' needs. Fiserv serves the plastic
card, laser printing and mailing fulfillment requirements of major financial
institutions, health care, telecommunications businesses and other leading card
issuers nationwide.
For cash management services, Fiserv offers a portfolio of software
products that provide solutions for individual needs. With a full range of
support services including electronic banking information reporting and
transaction initiation services, Fiserv meets the demands of diverse market
segments. From small businesses to Fortune 1000 corporations, these services are
designed to afford maximum flexibility in the exchange of data, integration with
other business management or investment systems, and the customization of
specialized cash management offerings.
Resources for information management. Managing financial information is a
major task faced by all organizations, and it becomes even more daunting as
technology continually streamlines the techniques available to gather and
analyze this wealth of data. As a result, the development of decision-oriented
performance measurement systems is critical to the ability of an organization to
effectively compete in today's environment.
Fiserv offers a comprehensive suite of PC-based financial decision-support
and planning products worldwide. These products are designed to meet the needs
of the financial function in financial institutions for profitability
measurement, planning and financial accounting tools, as well as asset/liability
management simulation models, profitability measurement, quarterly analysis of
interest rate risk, and educational and consulting services. The Fiserv data
warehouse solution provides an institution's decision makers and analysts with a
single source for current, accurate and consistent information on profitability,
customers and their marketplace.
Resources for business solutions. The Fiserv technology portfolio includes
a broad array of complementary products and services designed to help each
client enhance its total service capabilities.
Through subsidiary companies, Fiserv provides specialized account
processing, administration and trusteeship of self-directed individual and
business retirement plans. These companies specifically assist financial
representatives and other financial service intermediaries in managing and
reporting information through proprietary data base technology. Other related
products available include financial seminars and training programs.
Fiserv also provides a full range of traditional securities processing and
support services, professional and correspondent clearing services and deep
discount brokerage services for banks, insurance companies, brokerage firms,
money managers and mutual fund companies.
Office automation and communication network integration services are
designed to meet specialized information technology needs. Services include
conversions to new hardware and software, design and installation of office
automation (LAN/WAN) and networking systems, and on-site education.
Fiserv provides data processing information management systems for
organizations that are seeking an outsourcing solution for all or part of their
human resource and related operations. This solution is designed for and
primarily aimed at the financial industry. It is also well suited for any large
national or international organization that desires to enhance and streamline
its personnel management tasks.
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Servicing the Market
The market for Fiserv data processing services and products has specific
needs and requirements, with strong emphasis placed by clients on software
flexibility, product quality, reliability of service, comprehensiveness and
integration of product line, timely introduction of new products and features,
and cost value. Through its multiple product offerings, the Company successfully
services these market needs for clients ranging in size from start-ups to some
of the largest institutions worldwide.
Fiserv believes that the position it holds as an independent, growth-
oriented company dedicated to its business is an advantage to its clients. The
Company differs from many of the data processing resources currently available
since it isn't a regional or local cooperatively owned organization, nor a data
processing subsidiary, an affiliate of a financial institution or a hardware
vendor. Due to the economies of scale gained through its broad market presence,
Fiserv offers clients a selection of data processing solutions designed to meet
the specific needs of the ever-changing financial industry.
The Company believes this independence and primary focus on the financial
industry helps its business development and related Client Service and Product
Support teams remain responsive to the technology needs of its market, now and
for the future.
"The Client Comes First" is one of the Company's founding principles. It's
a belief backed by a dedication to providing ongoing client service and support
- --no matter the client size.
The Company's commitment of substantial resources to training and technical
support helps keep Fiserv clients first. Fiserv conducts the majority of its new
and ongoing client training in its technology centers, where the Company
maintains fully equipped demonstration and training facilities containing
equipment used in the delivery of Fiserv services. Fiserv also provides local
and on-site training services.
Product Development
In order to meet the changing technology needs of the clients served by
Fiserv, the Company continually develops, maintains and enhances its systems.
Resources applied to product development and maintenance are believed to be
approximately 8% to 10% of Company revenues, about half of which is dedicated to
software development.
Unique to Fiserv, its network of development and financial information
technology centers applies the shared expertise of multiple Fiserv teams to
design, develop and maintain specialized processing systems around the leading
technology platforms. The applications of its account processing systems meet
the preferences and diverse requirements of the various international, national,
regional or local market-specific financial service environments of the
Company's many clients.
Though all Fiserv centers rely on the Company's nationally developed and
supported software, each center has specialized capabilities that enable them to
offer system application features and functions unique to their client base.
Where the client's requirements warrant, Fiserv purchases software programs from
third parties which are interfaced with existing Fiserv systems. In developing
its products, Fiserv stresses responsiveness to the needs of its clients through
close client contact.
Fiserv provides a dedicated system designed, developed, maintained and
enhanced according to each client's goals for service quality, business
development, asset/liability mix, local-market positioning and other user-
defined parameters.
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Competition
The market for information technology products and services within the
financial industry is highly competitive. The Company's principal competitors
include internal data processing departments, data processing affiliates of
large companies or large computer hardware manufacturers, independent computer
service firms and processing centers owned and operated as user cooperatives.
Certain competitors possess substantially greater financial, sales and marketing
resources than the Company. Competition for in-house data processing and
software departments is intensified by the efforts of computer hardware vendors
who encourage the growth of internal data centers.
Competitive factors for processing services include product quality,
reliability of service, comprehensiveness and integration of product line,
timely introduction of new products and features, and price. The Company
believes that it competes favorably in each of these categories. In addition,
the Company believes that its position as an independent vendor, rather than as
a cooperative, an affiliate of a larger corporation or a hardware vendor, is a
competitive advantage.
Government Regulation
The Company's data processing subsidiaries are not themselves directly
subject to federal or state regulations specifically applicable to financial
institutions such as banks, thrifts and credit unions. As a provider of services
to these entities, however, the data processing operations are observed from
time to time by the Federal Deposit Insurance Corporation, the National Credit
Union Association, the Office of Thrift Supervision, the Office of the
Comptroller of the Currency and various state regulatory authorities. These
regulators make certain recommendations to the Company regarding various aspects
of its data processing operations. Such recommendations are generally
implemented by the Company. In addition, the Company's operations are reviewed
annually by an independent auditor to provide required internal control
evaluations for its clients' auditors and regulators.
As trust companies under Colorado law, First Trust and Lincoln Trust are
subject to the regulations of the Colorado Division of Banking. First Trust and
Lincoln Trust historically have complied with such regulations and although no
assurance can be given, the Company believes First Trust and Lincoln Trust will
continue to be able to comply with such regulations. Commencing in 1991, First
Trust received approval of its application for Federal Deposit Insurance
Corporation coverage of its customer deposits.
The Company's clearing businesses, BHC Securities and affiliates and Fiserv
Correspondent Services (formerly Hanifen, Imhoff Clearing Corp.), are subject to
the broker/dealer rules of the Securities and Exchange Commission and the New
York Stock Exchange, as well as the National Association of Securities Dealers
and other stock exchanges of which they are members.
Employees
Fiserv employs 10,090 specialists throughout the United States and
worldwide in its information management centers and related product and service
companies. This service support network includes employees with backgrounds in
computer science and the financial industry, often complemented by management
and other direct experience in banks, credit unions, mortgage firms, savings and
other financial services business environments.
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Fiserv employees provide expertise in sales and marketing; account
management and client services; computer operations, network control and
technical support; programming, software development, modification and
maintenance; conversions and client training; financial planning; and related
support services.
Fiserv employees are not represented by a union, and there have been no
work stoppages, strikes or organizational attempts. The service nature of the
Fiserv business makes its employees an important corporate asset, and while the
market for qualified personnel is competitive, the Company does not experience
significant difficulty with hiring or retaining its staff of top industry
professionals. In assessing companies to acquire, the quality and stability of
the prospective company's staff are emphasized.
Management attributes its ability to attract and keep quality employees to,
among other things, the Company's growth and dedication to state-of-the-art
software development tools and hardware technologies.
Item 2. Properties
Fiserv currently operates full-service data centers, software system
development centers and item processing and back-office support centers in 86
cities (69 in the United States): Birmingham, AL; Little Rock, AR; Phoenix and
Scottsdale, AZ; Covina, Fresno, Fullerton, Irvine, Los Angeles, Sacramento, San
Diego, San Leandro, Van Nuys and Walnut, CA; Denver, CO; New Haven and Stamford,
CT; Ft. Lauderdale, Jacksonville, Maitland, Miami, Orlando, Tampa and
Titusville, FL; Atlanta, Macon and Norcross, GA; Honolulu, HI; Des Moines, IA;
Arlington Heights, Chicago and Marion, IL; Indianapolis and South Bend, IN;
Bowling Green, KY; Baton Rouge and New Orleans, LA; Boston, Braintree,
Somerville and West Springfield, MA; Flint and Troy, MI; Minneapolis, MN;
Greensboro, NC; Fargo, ND; Lincoln, NE; Piscataway, NJ; Brooklyn, Lake Success,
Melville, New York, Syracuse and Utica, NY; Cleveland, OH; Oklahoma City, OK;
Corvallis and Portland, OR; Philadelphia and Pittsburgh, PA; Newberry, SC;
Amarillo (FM), Beaumont, Dallas, Houston and San Antonio, TX; Seattle, WA;
Brookfield and Milwaukee, WI. International business centers are located in
Sydney, Australia; Burlington, Calgary, Edmonton, Halifax, London, Montreal,
Regina, St. Catherines, Toronto, Vancouver, Victoria and Winnipeg, Canada;
London, England; Jakarta, Indonesia; Warsaw, Poland; and Singapore.
The Company owns facilities in Brookfield, Corvallis, Covina, Fresno,
Hartford, Lincoln, Marion, Miami, South Bend and Titusville; all other buildings
in which centers are located are subject to leases expiring through 1998 and
beyond. The Company owns or leases 136 mainframe computers (Data General,
Hewlett Packard, IBM, NCR, Tandem and Unisys). In addition, the Company
maintains its own national data communication network consisting of
communications processors and leased lines.
Fiserv believes its facilities and equipment are generally well maintained
and are in good operating condition. The Company believes that the computer
equipment it owns and its various facilities are adequate for its present and
foreseeable business. Fiserv periodically upgrades its mainframe capability as
needed. Fiserv contracts with multiple sites to provide processing backup in the
event of a disaster and maintains duplicate tapes of data collected and software
used in its business in locations away from the Company's facilities.
Fiserv regards its software as proprietary and utilizes a combination of
trade secrecy law, internal security practices and employee non-disclosure
agreements for protection. The Company has not patented or registered the
copyrights on its software. The Company believes
9
that legal protection of its software, while important, is less significant than
the knowledge and experience of the Company's management and personnel and their
ability to develope, enhance and market new products and services. The Company
believes that it holds all proprietary rights necessary for the conduct of its
business.
Item 3. Legal Proceedings
In the normal course of business, the Company and its subsidiaries are
named as defendants in various lawsuits in which claims are asserted against the
Company. In the opinion of management, the liabilities, if any, which may
ultimately result from such lawsuits are not expected to have a material adverse
effect on the financial statements of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of the fiscal year covered by this report, no
matter was submitted to a vote of security holders of the Company.
PART II
Pursuant to Instruction G(2) for Form 10-K, the information required in
Items 5 through 8 is incorporated by reference from the Company's annual report
to shareholders included in this Form 10-K Annual Report as Exhibit 13.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Pursuant to Instruction G(3) for Form 10-K, the information required in
Items 10 through 13 is incorporated by reference from the Company's definitive
proxy statement which is expected to be filed pursuant to Regulation 14A on or
before February 20, 1998, and included in the Form 10-K Annual Report as Exhibit
28.
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PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements:
The consolidated financial statements of the companies as of December 31,
1997 and 1996 and for each of the three years in the period ending December 31,
1997, together with the report thereon of Deloitte & Touche LLP, dated January
30, 1998, appear on pages 23 through 40 of the Company's annual report to
shareholders, Exhibit 13 to this Form 10-K Annual Report, and are incorporated
herein by reference. Deloitte & Touche LLP relied upon the report of other
auditors (Exhibit 99) for 1996 and 1995 as to BHC Financial, Inc. and
subsidiaries (BHC), due to the acquisition of BHC by the Company in 1997
accounted for on a pooling of interests basis.
(a)(2) Financial Statement Schedule:
The following financial statement schedule of the Company and related
documents are included in this Report on Form 10-K:
Page
----
[S] [C]
Independent Auditors' Report 14
Schedule II--Valuation and Qualifying Accounts 14
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
(b) Reports on Form 8-K:
During 1997, the Company filed five reports on Form 8-K, three dated
March 3, June 13 and June 25, 1997, relating to the acquisition of BHC Financial
Inc., one dated October 22, 1997, relating to the acquisition of Hanifen, Imhoff
Holdings, Inc., in which financial statements and other financial information
previously presented in its 1996 Annual Report to Shareholders were restated to
include, on a pooling of interests basis, the financial position and results of
operations of BHC Financial, acquired in May 1997, and one dated December 22,
1997, announcing a stock buyback program.
(c) Exhibits:
2.1 Stock Purchase Agreement, dated as of April 6, 1995, by and between Fiserv,
Inc. and Information Technology, Inc. (filed as Exhibit 2.1 to the
Company's Registration Statement on Form S-3, File No. 33-58709, and
incorporated herein by reference).
3.1 Articles of Incorporation, as amended (filed as Exhibit 3.1 to the
Company's Registration Statement on Form S-4, File No. 333-23349, and
incorporated herein by reference).
3.2 By-laws (filed as Exhibit 3.2 to the Company's Registration Statement on
Form S-4, File No. 33-62870, and incorporated herein by reference).
11
4.1 Credit Agreement dated as of May 17, 1995, as amended, by and among Fiserv,
Inc., the Lenders Party Hereto, First Bank National Association, as Co-
Agent and The Bank of New York, as Agent. (Not being filed herewith, but
will be provided to the Commission upon its request, pursuant to Item
601(b) (4) (iii) (A) of Regulation S-K.)
4.2 Note Purchase Agreement dated as of March 15, 1991, as amended, among
Fiserv, Inc., Aid Association for Lutherans, Northwestern National Life
Insurance Company, Northern Life Insurance Company and The North Atlantic
Life Insurance Company of America. (Not being filed herewith, but will be
provided to the Commission upon its request, pursuant to Item 601(b) (4)
(iii) (A) of Regulation S-K.)
4.3 Note Purchase Agreement dated as of April 30, 1990, as amended, among
Fiserv, Inc. and Teachers Insurance and Annuity Association of America.
(Not being filed herewith, but will be provided to the Commission upon its
request, pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K.)
4.4 Note Purchase Agreement dated as of May 17, 1995, as amended, among Fiserv,
Inc., Teachers Insurance and Annuity Association of America, Massachusetts
Mutual Life Insurance Company, Aid Association for Lutherans, Northern Life
Insurance Company and Northwestern National Life Insurance Company. (Not
being filed herewith, but will be provided to the Commission upon its
request, pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K.)
11. Computation of Shares Used in Computing Diluted Earnings per Share.
13. The 1997 Annual Report to Shareholders.
21. List of Subsidiaries of the Registrant.
23. Consent of Independent Auditors.
28. The Company's definitive proxy statement for the 1998 annual meeting of
shareholders to be held on March 24, 1998, to be filed pursuant to
Regulation 14A under the Securities and Exchange Act of 1934.
99. Report of Independent Accountants.
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: February 20, 1998
FISERV, INC.
By /S/ George D. Dalton
---------------------------
George D. Dalton
(Chairman of the Board)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following person on behalf of the registrant
and in the capacities indicated on February 20, 1998.
Signature Capacity
/S/ George D. Dalton
- ---------------------------
George D. Dalton Chairman of the Board,
Chief Executive Officer
/S/ Leslie M. Muma
- ---------------------------
Leslie M. Muma Vice Chairman of the Board,
President, Chief Operating Officer
/S/ Donald F. Dillon
- ---------------------------
Donald F. Dillon Vice Chairman of the Board,
President - Information Technology, Inc.
/S/ Kenneth R. Jensen
- ---------------------------
Kenneth R. Jensen Senior Executive Vice President,
Chief Financial Officer, Treasurer, Director
/S/ Gerald J. Levy
- ---------------------------
Gerald J. Levy Director
/S/ L. William Seidman
- ---------------------------
L. William Seidman Director
/S/ Thekla R. Shackelford
- ---------------------------
Thekla R. Shackelford Director
/S/ Roland D. Sullivan
- ---------------------------
Roland D. Sullivan Director
13
INDEPENDENT AUDITORS' REPORT
Shareholders and Directors of Fiserv, Inc.:
We have audited the consolidated financial statements of Fiserv, Inc. and
subsidiaries as of December 31, 1997 and 1996, and for each of the three years
in the period ended December 31, 1997, and have issued our report thereon dated
January 30, 1998; such financial statements and report are included in your 1997
Annual Report to Shareholders and are incorporated herein by reference. Our
report on the consolidated financial statements indicates that our opinion as to
the amounts included for BHC Financial, Inc. and subsidiaries as of December 31,
1996 and for the two years ended December 31, 1996 and 1995 is based solely on
the report of other auditors. Our audits also included the financial statement
schedule of Fiserv, Inc., listed in Item 14. This financial statement schedule
is the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such consolidated
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
January 30, 1998
SCHEDULE II
Valuation and Qualifying Accounts
Allowance for Doubtful Accounts
Year Ended Beginning Charged
December 31, Balance to Expense Write-offs Balance
------------- ----------- ------------ ---------- ----------
1997 $3,796,000 $3,483,000 ($376,000) $6,903,000
1996 5,026,000 (630,000) (600,000) 3,796,000
1995 4,187,000 1,164,000 (325,000) 5,026,000
14