Back to GetFilings.com
SECURITIES AND 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, 1998
Commission file no. 0-14948
FISERV, INC.
------------
(Exact name of Registrant as specified in its charter)
WISCONSIN 39-1506125
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
255 FISERV DRIVE, BROOKFIELD, WISCONSIN 53045
- --------------------------------------- -----
(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
----
(Title of Class)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.01 Par Value
----------------------------
(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 29, 1999: $4,015,748,072
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of January 29, 1999: 82,058,709
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.
1998 Annual Report to Shareholders - Parts II, IV
Proxy Statement for March 25, 1999, Meeting - Part III
Fiserv, Inc. and Subsidiaries
Form 10-K
December 31, 1998
PART I Page
- ------ ----
Item 1. Business 1
Item 2. Properties 7
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote of Security Holders 9
PART II
- -------
Item 5. Market for the Registrant's Common Equity and Related
Shareholder Matters 9
Item 6. Selected Financial Data 9
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 8. Financial Statements and Supplementary Data 9
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 9
PART III
- --------
Item 10. Directors and Executive Officers of the Registrant 9
Item 11. Executive Compensation 9
Item 12. Security Ownership of Certain Beneficial Owners and Management 9
Item 13. Certain Relationships and Related Transactions 9
PART IV
- -------
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K 9
===============================================================================
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, Wisconsin, 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, Philippines, Poland and Singapore.
Business Strategy
- -----------------
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 financial industry with great
frequency; the distinctions among financial services traditionally offered by
banking and thrift organizations as well as by securities and insurance firms
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
regulatory agencies.
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 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
1
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 capabilities. 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
- -------------------
Formed Acquired Company Service
===========================================================================================================
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 Corp., Baton Rouge, LA (sold 1991) 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
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 (sold 1996) Data processing
2
Formed Acquired Company Service
=========================================================================================================
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 (sold 1996) 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 (sold 1998) 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
1983 Jan. 1996 UniFi, Inc., Fort Lauderdale, FL Software & services
1982 Nov. 1996 Bankers Pension Services, Inc., Tustin, CA DP for retirement planning
3
Formed Acquired Company Service
=============================================================================================================
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 Securities processing services
1980 Jan. 1998 Automated Financial Technology, Inc., Malvern, PA Data processing
1981 Feb. 1998 The LeMans Group, King of Prussia, PA Automobile leasing software
n/a Feb. 1998 PSI Group, Seattle, WA Laser printing
1956 Apr. 1998 Network Data Processing Corporation, Cedar Rapids, IA Insurance data processing
1977 Apr. 1998 CUSA Technologies, Inc., Salt Lake City, UT Software & services
1982 May 1998 Specialty Insurance Service, Orange, CA Insurance data processing
1985 Aug. 1998 Deluxe Card Services, St. Paul, MN Automated card services
1981 Oct. 1998 FHLB of Topeka IP Services, Topeka, KS Item processing
n/a Oct. 1998 FiCATS, Norristown, PA Item processing
1984 Oct. 1998 Life Instructors, Inc., New Providence, NJ Insurance/securities training
1994 Nov. 1998 ASI Financial, Inc., New Jersey and New York PC-based financial systems
1986 Dec. 1998 The FREEDOM Group, Inc., Cedar Rapids, IA Insurance data processing
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.
Account & Transaction Processing. The key point of contact between money
and technology lies within the financial transaction. Since the Company's
formation nearly 15 years ago, Fiserv has focused its technology on providing
account and transaction processing services for the financial industry. This
dedication hasn't changed. Processing financial transactions continues to be the
main business of Fiserv, with banks, credit unions, thrifts and mortgage banks
comprising its largest category of clients.
Fiserv account and transaction processing solutions run as service bureau,
resource management (operating a client's systems at a Fiserv data center),
facilities management (onsite management of a client's operations by Fiserv
personnel) or through licensed software for in-house systems. Comprehensive
automation systems from Fiserv are designed for banks, credit unions, thrifts,
mortgage banks, securities brokers, financial planners / investment advisers,
insurance companies and leasing organizations. Fiserv provides a complete line
of account and transaction processing systems and related information management
products and services.
Fiserv offers a comprehensive portfolio of securities processing and trust
services, providing integrated brokerage processing and outsourcing services to
securities brokerage affiliates of banks, mutual fund companies, insurance
companies and independent broker-dealers.
4
Fiserv also provides comprehensive retirement plan and custodial account
processing services designed to help individuals and businesses focus on saving
for the future.
Electronic Commerce Transactions. Fiserv is a leading provider of the
technology solutions that support electronic commerce. The Company offers the
more traditional services, including electronic funds transfer, transaction
authorization, Automated Teller Machine (ATM) and debit card processing. Fiserv
also provides automated voice response systems, remote banking services and
comprehensive Internet solutions.
Item / Back Office Processing. Fiserv currently has regional item
processing centers in more than 60 cities throughout North America. As a
leading provider of specialized check processing services to financial
institutions, Fiserv has refined the outsourcing relationship to create the most
beneficial partnership possible. This allows the Company's clients to maintain
the high quality service and investment in technology that their customers
expect, while maximizing their own efficiency through the expertise and
resources of Fiserv.
Operations Support. Operations support encompasses a number of different
systems and services that are either made possible through or enhanced by
technology. Fiserv provides financial institutions with advanced call center
systems; financial investment and trading services; card-issuance and business
communications solutions; industry-specific forms and related printed products;
high-quality, technologically advanced imaging software and integration
services; mortgage origination and tracking; financial seminar programs and
related marketing and training systems; Internet-based online training programs
for insurance and securities; and advanced terminal and platform systems.
Management Information Systems. Fiserv provides a number of systems
specifically designed to gather, analyze and disseminate information throughout
an organization, including: cash and investment management services;
enterprisewide data warehouse and data mining solutions; PC-based tools for
strategic balance sheet management, profitability measurement, and financial
accounting management and planning; and outsourcing for human resources and
related personnel management tasks.
Servicing the Market
- --------------------
The market for Fiserv account and transaction 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 effectiveness. 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 account and transaction 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
5
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 interaction with and responsiveness to the needs
of its clients.
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.
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.
6
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. 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 approximately 12,500 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.
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 94
cities (78 in the United States):
7
Birmingham, Alabama; Little Rock, Arkansas; Phoenix and Scottsdale, Arizona;
Covina, Fresno, Fullerton, Irvine, Orange, Sacramento, San Diego, San Leandro,
Van Nuys and Walnut, California; Denver and Englewood, Colorado; New Haven,
Connecticut; Jacksonville, Maitland, Miami, Orlando, Plantation, Tampa and
Titusville, Florida; Atlanta, Macon and Norcross, Georgia; Cedar Rapids and Des
Moines, Iowa; Arlington Heights, Chicago and Marion, Illinois; Indianapolis and
South Bend, Indiana; Topeka, Kansas; Bowling Green, Kentucky; Baton Rouge and
New Orleans, Louisiana; Braintree, Mansfield, Somerville and West Springfield,
Massachusetts; Flint and Troy, Michigan; Mendota Heights and St. Paul,
Minnesota; Lincoln and Omaha, Nebraska; New Providence and Piscataway, New
Jersey; Brooklyn, Lake Success, Melville, New York, Syracuse and Utica, New
York; Greensboro, North Carolina; Fargo, North Dakota; Cleveland, Ohio; Oklahoma
City, Oklahoma; Corvallis and Portland, Oregon; Malvern, King of Prussia,
Philadelphia, Pittsburgh, Valley Forge and Williamsport, Pennsylvania; Newberry,
South Carolina; Amarillo (FM), Beaumont, Dallas, Houston and San Antonio, Texas;
Salt Lake City, Utah; Seattle, Washington; and Brookfield and Milwaukee,
Wisconsin. International business centers are located in Sydney, Australia;
Calgary, Edmonton, Halifax, London, Montreal, Regina, Toronto, Vancouver,
Victoria and Winnipeg, Canada; London, England; Jakarta, Indonesia; Manila,
Philippines; Warsaw, Poland; and Singapore.
The Company owns facilities in Brookfield, Corvallis, Fresno, Lincoln,
Marion, Miami and South Bend; all other buildings in which centers are located
are subject to leases expiring through 1999 and beyond. The Company owns or
leases 140 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 believes 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 develop, 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.
8
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 23, 1999.
===============================================================================
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,
1998 and 1997 and for each of the three years in the period ending December 31,
1998, together with the report thereon of Deloitte & Touche LLP, dated January
29, 1999, appear on pages 23 through 42 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
9
auditors (Exhibit 99.1) for 1996 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
----
Independent Auditors' Report 13
Schedule II--Valuation and Qualifying Accounts 13
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 1998, the Company filed four reports on Form 8-K, as follows:
1. 1997 year-end earnings release filed on January 20, 1998.
2. Shareholders' Rights Plan filed on February 24, 1998.
3. 3-for-2 stock split announcement filed on March 24, 1998.
4. Exchange ratio applicable to CUSA Technologies, Inc. merger filed
on May 8, 1998.
(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, as amended (filed as Exhibit 3.2 to the Company's Registration
Statement on Form S-4, File No. 333-47199, and incorporated herein by
reference).
3.3 Shareholder Rights Plan (filed as Exhibit 4 to the Company's Current Report
on Form 8-K dated February 24, 1998 and incorporated herein by reference).
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,
10
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 1998 Annual Report to Shareholders.
21. List of Subsidiaries of the Registrant.
23. Consent of Independent Auditors.
27. Financial Data Schedule.
99.1 Report of Independent Accountants.
11
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 23, 1999
FISERV, INC.
/s/ George D. Dalton
By ________________________________
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 23, 1999.
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,
Chairman - Information
Technology, Inc.
/s/ Kenneth R. Jensen
_______________________________________
Kenneth R. Jensen Senior Executive Vice President,
Chief Financial Officer,
Treasurer, Director
/s/ Thomas P. Gerrity
_______________________________________
Thomas P. Gerrity 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
12
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, 1998 and 1997, and for each of the three years
in the period ended December 31, 1998, and have issued our report thereon dated
January 29, 1999. Such consolidated financial statements and report are included
in your 1998 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
for the year ended December 31, 1996, is based solely on the report of other
auditors. Our audits also included the consolidated financial statement schedule
of Fiserv, Inc., listed in Item 14. This consolidated 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.
/s/ DELOITTE & TOUCHE LLP
- --------------------------
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
January 29, 1999
SCHEDULE II
Valuation and Qualifying Accounts
Allowance for Doubtful Accounts
Year Ended Beginning Charged
December 31, Balance to Expense Write-offs Balance
------------ ---------- ---------- ----------- -------
1998 $6,903,000 $4,762,000 ($5,124,000) $6,541,000
1997 3,796,000 3,483,000 (376,000) 6,903,000
1996 5,026,000 (630,000) (600,000) 3,796,000
13