|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|
|
|
Wisconsin
|
|
39-1506125
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I. R. S. Employer
Identification No.)
|
255 Fiserv Drive
|
Brookfield,
|
WI
|
53045
|
(Address of Principal Executive Offices and zip code)
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Common Stock, par value $0.01 per share
|
|
FISV
|
|
The NASDAQ Stock Market LLC
|
0.375% Senior Notes due 2023
|
|
FISV23
|
|
The NASDAQ Stock Market LLC
|
1.125% Senior Notes due 2027
|
|
FISV27
|
|
The NASDAQ Stock Market LLC
|
1.625% Senior Notes due 2030
|
|
FISV30
|
|
The NASDAQ Stock Market LLC
|
2.250% Senior Notes due 2025
|
|
FISV25
|
|
The NASDAQ Stock Market LLC
|
3.000% Senior Notes due 2031
|
|
FISV31
|
|
The NASDAQ Stock Market LLC
|
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
|
|
|
Emerging growth company
|
☐
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|
Page
|
|
||
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|
|
Item 1.
|
|
|
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
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||
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 6.
|
||
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Processing and services
|
$
|
2,608
|
|
|
$
|
1,223
|
|
|
$
|
5,229
|
|
|
$
|
3,668
|
|
Product
|
520
|
|
|
189
|
|
|
913
|
|
|
604
|
|
||||
Total revenue
|
3,128
|
|
|
1,412
|
|
|
6,142
|
|
|
4,272
|
|
||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of processing and services
|
1,204
|
|
|
568
|
|
|
2,445
|
|
|
1,696
|
|
||||
Cost of product
|
413
|
|
|
181
|
|
|
755
|
|
|
551
|
|
||||
Selling, general and administrative
|
1,137
|
|
|
305
|
|
|
1,821
|
|
|
930
|
|
||||
(Gain) loss on sale of businesses
|
—
|
|
|
2
|
|
|
(10
|
)
|
|
(227
|
)
|
||||
Total expenses
|
2,754
|
|
|
1,056
|
|
|
5,011
|
|
|
2,950
|
|
||||
Operating income
|
374
|
|
|
356
|
|
|
1,131
|
|
|
1,322
|
|
||||
Interest expense, net
|
(164
|
)
|
|
(45
|
)
|
|
(279
|
)
|
|
(134
|
)
|
||||
Debt financing activities
|
49
|
|
|
(8
|
)
|
|
(47
|
)
|
|
(8
|
)
|
||||
Other (expense) income
|
(3
|
)
|
|
1
|
|
|
—
|
|
|
3
|
|
||||
Income before income taxes and income from investments in unconsolidated affiliates
|
256
|
|
|
304
|
|
|
805
|
|
|
1,183
|
|
||||
Income tax provision
|
(53
|
)
|
|
(78
|
)
|
|
(144
|
)
|
|
(290
|
)
|
||||
Income from investments in unconsolidated affiliates
|
22
|
|
|
1
|
|
|
12
|
|
|
8
|
|
||||
Net income
|
225
|
|
|
227
|
|
|
673
|
|
|
901
|
|
||||
Less: Net income attributable to noncontrolling interests
|
27
|
|
|
—
|
|
|
27
|
|
|
—
|
|
||||
Net income attributable to Fiserv, Inc.
|
$
|
198
|
|
|
$
|
227
|
|
|
$
|
646
|
|
|
$
|
901
|
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Fiserv, Inc. per share – basic
|
$
|
0.34
|
|
|
$
|
0.56
|
|
|
$
|
1.42
|
|
|
$
|
2.21
|
|
Net income attributable to Fiserv, Inc. per share – diluted
|
$
|
0.33
|
|
|
$
|
0.55
|
|
|
$
|
1.39
|
|
|
$
|
2.16
|
|
|
|
|
|
|
|
|
|
||||||||
Shares used in computing net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
584.8
|
|
|
403.8
|
|
|
456.3
|
|
|
408.4
|
|
||||
Diluted
|
596.9
|
|
|
412.0
|
|
|
465.2
|
|
|
416.6
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
$
|
225
|
|
|
$
|
227
|
|
|
$
|
673
|
|
|
$
|
901
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
||||||||
Fair market value adjustment on cash flow hedges, net of income tax benefit of $1 million, $2 million, $46 million and $4 million
|
(4
|
)
|
|
(6
|
)
|
|
(134
|
)
|
|
(11
|
)
|
||||
Reclassification adjustment for net realized gains on cash flow hedges included in cost of processing and services, net of income tax benefit of $1 million
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||
Reclassification adjustment for net realized losses on cash flow hedges included in net interest expense, net of income tax provision of $1 million, $0, $2 million and $1 million
|
4
|
|
|
1
|
|
|
6
|
|
|
3
|
|
||||
Foreign currency translation
|
(186
|
)
|
|
(8
|
)
|
|
(184
|
)
|
|
(14
|
)
|
||||
Total other comprehensive loss
|
(186
|
)
|
|
(13
|
)
|
|
(312
|
)
|
|
(25
|
)
|
||||
Comprehensive income
|
$
|
39
|
|
|
$
|
214
|
|
|
$
|
361
|
|
|
$
|
876
|
|
Less: Comprehensive income attributable to noncontrolling interests
|
27
|
|
|
—
|
|
|
27
|
|
|
—
|
|
||||
Comprehensive income attributable to Fiserv, Inc.
|
$
|
12
|
|
|
$
|
214
|
|
|
$
|
334
|
|
|
$
|
876
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,028
|
|
|
$
|
415
|
|
Trade accounts receivable, net
|
2,653
|
|
|
1,049
|
|
||
Prepaid expenses and other current assets
|
1,330
|
|
|
274
|
|
||
Settlement assets
|
12,980
|
|
|
486
|
|
||
Total current assets
|
17,991
|
|
|
2,224
|
|
||
Property and equipment, net
|
1,639
|
|
|
398
|
|
||
Customer relationships, net
|
14,540
|
|
|
1,348
|
|
||
Other intangible assets, net
|
3,197
|
|
|
795
|
|
||
Goodwill
|
35,517
|
|
|
5,702
|
|
||
Contract costs, net
|
481
|
|
|
419
|
|
||
Investments in unconsolidated affiliates
|
2,618
|
|
|
65
|
|
||
Other long-term assets
|
1,881
|
|
|
311
|
|
||
Total assets
|
$
|
77,864
|
|
|
$
|
11,262
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
2,901
|
|
|
$
|
1,146
|
|
Short-term and current maturities of long-term debt
|
368
|
|
|
4
|
|
||
Contract liabilities
|
412
|
|
|
380
|
|
||
Settlement obligations
|
12,980
|
|
|
480
|
|
||
Total current liabilities
|
16,661
|
|
|
2,010
|
|
||
Long-term debt
|
22,123
|
|
|
5,955
|
|
||
Deferred income taxes
|
4,110
|
|
|
745
|
|
||
Long-term contract liabilities
|
129
|
|
|
89
|
|
||
Other long-term liabilities
|
989
|
|
|
170
|
|
||
Total liabilities
|
44,012
|
|
|
8,969
|
|
||
Commitments and contingencies (see Note 23)
|
|
|
|
||||
Redeemable noncontrolling interest
|
92
|
|
|
—
|
|
||
Fiserv, Inc. shareholders’ equity:
|
|
|
|
||||
Preferred stock, no par value: 25.0 million shares authorized; none issued
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value: 1,800.0 million shares authorized; 791.4 million shares issued
|
8
|
|
|
8
|
|
||
Additional paid-in capital
|
23,668
|
|
|
1,057
|
|
||
Accumulated other comprehensive loss
|
(379
|
)
|
|
(67
|
)
|
||
Retained earnings
|
12,281
|
|
|
11,635
|
|
||
Treasury stock, at cost, 110.6 million and 398.9 million shares
|
(2,909
|
)
|
|
(10,340
|
)
|
||
Total Fiserv, Inc. shareholders’ equity
|
32,669
|
|
|
2,293
|
|
||
Noncontrolling interests
|
1,091
|
|
|
—
|
|
||
Total equity
|
33,760
|
|
|
2,293
|
|
||
Total liabilities and equity
|
$
|
77,864
|
|
|
$
|
11,262
|
|
|
Nine Months Ended
September 30, |
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
673
|
|
|
$
|
901
|
|
Adjustments to reconcile net income to net cash provided by operating activities
from continuing operations:
|
|
|
|
||||
Depreciation and other amortization
|
386
|
|
|
278
|
|
||
Amortization of acquisition-related intangible assets
|
476
|
|
|
120
|
|
||
Amortization of financing costs, debt discounts and other
|
116
|
|
|
8
|
|
||
Net foreign currency gain on financing activities
|
(50
|
)
|
|
—
|
|
||
Share-based compensation
|
121
|
|
|
54
|
|
||
Deferred income taxes
|
26
|
|
|
105
|
|
||
Gain on sale of business
|
(10
|
)
|
|
(227
|
)
|
||
Income from investments in unconsolidated affiliates
|
(12
|
)
|
|
(8
|
)
|
||
Distributions from unconsolidated affiliates
|
6
|
|
|
1
|
|
||
Settlement of interest rate hedge contracts
|
(183
|
)
|
|
—
|
|
||
Other operating activities
|
(3
|
)
|
|
11
|
|
||
Changes in assets and liabilities, net of effects from acquisitions and dispositions:
|
|
|
|
||||
Trade accounts receivable
|
151
|
|
|
(29
|
)
|
||
Prepaid expenses and other assets
|
(41
|
)
|
|
(63
|
)
|
||
Contract costs
|
(141
|
)
|
|
(107
|
)
|
||
Accounts payable and other liabilities
|
117
|
|
|
48
|
|
||
Contract liabilities
|
(15
|
)
|
|
(111
|
)
|
||
Net cash provided by operating activities from continuing operations
|
1,617
|
|
|
981
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures, including capitalization of software costs
|
(431
|
)
|
|
(263
|
)
|
||
Proceeds from sale of businesses
|
39
|
|
|
419
|
|
||
Payments for acquisition of business, net of cash acquired
|
(16,004
|
)
|
|
—
|
|
||
Distributions from unconsolidated affiliates
|
85
|
|
|
—
|
|
||
Purchases of investments
|
(4
|
)
|
|
—
|
|
||
Other investing activities
|
6
|
|
|
(13
|
)
|
||
Net cash (used in) provided by investing activities from continuing operations
|
(16,309
|
)
|
|
143
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Debt proceeds
|
18,855
|
|
|
3,627
|
|
||
Debt repayments
|
(3,051
|
)
|
|
(3,256
|
)
|
||
Payments of debt financing, redemption and other costs
|
(247
|
)
|
|
—
|
|
||
Proceeds from issuance of treasury stock
|
116
|
|
|
60
|
|
||
Purchases of treasury stock, including employee shares withheld for tax obligations
|
(271
|
)
|
|
(1,254
|
)
|
||
Distributions paid to noncontrolling interest and redeemable noncontrolling interest
|
(46
|
)
|
|
—
|
|
||
Other financing activities
|
(5
|
)
|
|
4
|
|
||
Net cash provided by (used in) financing activities from continuing operations
|
15,351
|
|
|
(819
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
(4
|
)
|
|
—
|
|
||
Net change in cash, cash equivalents, and restricted cash from continuing operations
|
655
|
|
|
305
|
|
||
Net cash flows from discontinued operations
|
—
|
|
|
43
|
|
||
Cash, cash equivalents, and restricted cash beginning balance
|
415
|
|
|
325
|
|
||
Cash, cash equivalents, and restricted cash ending balance
|
$
|
1,070
|
|
|
$
|
673
|
|
Discontinued operations cash flow information:
|
|
|
|
||||
Net cash used in operating activities
|
$
|
—
|
|
|
$
|
(7
|
)
|
Net cash provided by investing activities
|
—
|
|
|
50
|
|
||
Net change in cash and cash equivalents from discontinued operations
|
$
|
—
|
|
|
$
|
43
|
|
(In millions)
|
Reportable Segments
|
||||||||||||||||||
Three Months Ended September 30, 2019
|
First Data
|
|
Payments
|
|
Financial
|
|
Corporate
and Other
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Major Business
|
|
|
|
|
|
|
|
|
|
||||||||||
Global Business Solutions
|
$
|
992
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
992
|
|
Global Financial Solutions
|
375
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
375
|
|
|||||
Network & Security Solutions
|
247
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
247
|
|
|||||
Total First Data
|
1,614
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,614
|
|
|||||
Digital Money Movement
|
—
|
|
|
376
|
|
|
—
|
|
|
—
|
|
|
376
|
|
|||||
Card and Related Services
|
—
|
|
|
470
|
|
|
—
|
|
|
—
|
|
|
470
|
|
|||||
Other
|
—
|
|
|
80
|
|
|
—
|
|
|
—
|
|
|
80
|
|
|||||
Total Payments
|
—
|
|
|
926
|
|
|
—
|
|
|
—
|
|
|
926
|
|
|||||
Account and Item Processing
|
—
|
|
|
—
|
|
|
533
|
|
|
—
|
|
|
533
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
63
|
|
|||||
Total Financial
|
—
|
|
|
—
|
|
|
596
|
|
|
—
|
|
|
596
|
|
|||||
Corporate and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(8
|
)
|
|||||
Total Revenue
|
$
|
1,614
|
|
|
$
|
926
|
|
|
$
|
596
|
|
|
$
|
(8
|
)
|
|
$
|
3,128
|
|
(In millions)
|
Reportable Segments
|
||||||||||||||
Three Months Ended September 30, 2018
|
Payments
|
|
Financial
|
|
Corporate
and Other
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Major Business
|
|
|
|
|
|
|
|
||||||||
Digital Money Movement
|
$
|
363
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
363
|
|
Card and Related Services
|
401
|
|
|
—
|
|
|
—
|
|
|
401
|
|
||||
Other
|
80
|
|
|
—
|
|
|
—
|
|
|
80
|
|
||||
Total Payments
|
844
|
|
|
—
|
|
|
—
|
|
|
844
|
|
||||
Account and Item Processing
|
—
|
|
|
516
|
|
|
—
|
|
|
516
|
|
||||
Other
|
—
|
|
|
58
|
|
|
—
|
|
|
58
|
|
||||
Total Financial
|
—
|
|
|
574
|
|
|
—
|
|
|
574
|
|
||||
Corporate and Other
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
||||
Total Revenue
|
$
|
844
|
|
|
$
|
574
|
|
|
$
|
(6
|
)
|
|
$
|
1,412
|
|
(In millions)
|
Reportable Segments
|
||||||||||||||||||
Nine Months Ended September 30, 2019
|
First Data
|
|
Payments
|
|
Financial
|
|
Corporate
and Other
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Major Business
|
|
|
|
|
|
|
|
|
|
||||||||||
Global Business Solutions
|
$
|
992
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
992
|
|
Global Financial Solutions
|
375
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
375
|
|
|||||
Network & Security Solutions
|
247
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
247
|
|
|||||
Total First Data
|
1,614
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,614
|
|
|||||
Digital Money Movement
|
—
|
|
|
1,105
|
|
|
—
|
|
|
—
|
|
|
1,105
|
|
|||||
Card and Related Services
|
—
|
|
|
1,408
|
|
|
—
|
|
|
—
|
|
|
1,408
|
|
|||||
Other
|
—
|
|
|
244
|
|
|
—
|
|
|
—
|
|
|
244
|
|
|||||
Total Payments
|
—
|
|
|
2,757
|
|
|
—
|
|
|
—
|
|
|
2,757
|
|
|||||
Account and Item Processing
|
—
|
|
|
—
|
|
|
1,592
|
|
|
—
|
|
|
1,592
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
206
|
|
|
—
|
|
|
206
|
|
|||||
Total Financial
|
—
|
|
|
—
|
|
|
1,798
|
|
|
—
|
|
|
1,798
|
|
|||||
Corporate and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
(27
|
)
|
|||||
Total Revenue
|
$
|
1,614
|
|
|
$
|
2,757
|
|
|
$
|
1,798
|
|
|
$
|
(27
|
)
|
|
$
|
6,142
|
|
(In millions)
|
Reportable Segments
|
||||||||||||||
Nine Months Ended September 30, 2018
|
Payments
|
|
Financial
|
|
Corporate
and Other
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Major Business
|
|
|
|
|
|
|
|
||||||||
Digital Money Movement
|
$
|
1,071
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,071
|
|
Card and Related Services
|
1,215
|
|
|
—
|
|
|
—
|
|
|
1,215
|
|
||||
Other
|
237
|
|
|
—
|
|
|
—
|
|
|
237
|
|
||||
Total Payments
|
2,523
|
|
|
—
|
|
|
—
|
|
|
2,523
|
|
||||
Account and Item Processing
|
—
|
|
|
1,552
|
|
|
—
|
|
|
1,552
|
|
||||
Lending Solutions
|
—
|
|
|
56
|
|
|
—
|
|
|
56
|
|
||||
Other
|
—
|
|
|
172
|
|
|
—
|
|
|
172
|
|
||||
Total Financial
|
—
|
|
|
1,780
|
|
|
—
|
|
|
1,780
|
|
||||
Corporate and Other
|
—
|
|
|
—
|
|
|
(31
|
)
|
|
(31
|
)
|
||||
Total Revenue
|
$
|
2,523
|
|
|
$
|
1,780
|
|
|
$
|
(31
|
)
|
|
$
|
4,272
|
|
(In millions)
|
September 30, 2019
|
|
December 31, 2018
|
||||
Contract assets
|
$
|
361
|
|
|
$
|
171
|
|
Contract liabilities
|
541
|
|
|
469
|
|
(In millions)
|
Remainder of:
|
|
|
|
|
|
|
|
|
||||||||||
September 30, 2019
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
||||||||||
Processing and services
|
$
|
618
|
|
|
$
|
2,211
|
|
|
$
|
1,787
|
|
|
$
|
1,332
|
|
|
$
|
2,478
|
|
Product
|
9
|
|
|
38
|
|
|
24
|
|
|
14
|
|
|
13
|
|
(1)
|
The fair value of the 286 million shares of the Company’s common stock issued as of the acquisition date was determined based on a per share price of $102.30, which was the closing price of the Company’s common stock on July 26, 2019, the last trading day before the acquisition closed the morning of July 29, 2019. This includes a nominal amount of cash paid in lieu of fractional shares.
|
(2)
|
Represents the portion of the fair value of the replacement awards related to services provided prior to the acquisition. The remaining portion of the fair value is associated with future service and will be recognized as expense over the future service period. See Note 7 for additional information.
|
(1)
|
In connection with the acquisition of First Data, the Company acquired two businesses which it intended to sell. Therefore, such businesses were classified as held for sale and were included within prepaid expenses and other current assets and accounts payable and accrued expenses in the above preliminary allocation of purchase price (see Note 5).
|
(2)
|
Includes foreign lines of credit, current portion of finance lease obligations and other financing obligations (see Note 14).
|
(3)
|
Includes the receivable securitized loan and the long-term portion of finance lease obligations (see Note 14).
|
•
|
Customer relationship intangible assets were valued using the MEEM method. The significant assumptions used include the estimated annual net cash flows (including appropriate revenue and profit attributable to the asset,
|
•
|
Technology and trade name intangible assets were valued using the RFR method. The significant assumptions used include the estimated annual net cash flows (including appropriate revenue attributable to the asset, applicable tax rate, royalty rate, and other factors such as technology related obsolescence rates), the discount rate, reflecting the risks inherent in the future cash flow stream, and the tax amortization benefit, among other factors.
|
•
|
The cost approach, which estimates value by determining the current cost of replacing an asset with another of equivalent economic utility, was used, as appropriate, for property and equipment. The cost to replace a given asset reflects the estimated reproduction or replacement cost for the property, less an allowance for loss in value due to depreciation.
|
•
|
The market approach, which estimates value by leveraging comparable land sale data/listings and qualitatively comparing them to the in-scope properties, was used to value the land.
|
•
|
An income approach was applied to derive fair value for both consolidated investments with a noncontrolling interest and equity method investments accounted for under the equity method of accounting. The significant assumptions used include the estimated annual cash flows, the discount rate, the long-term growth rate and operating margin, among other factors.
|
(In millions)
|
Gross Carrying Amount(1)
|
Weighted-Average Useful Life
|
||
Customer relationships
|
$
|
13,637
|
|
15 years
|
Acquired software and technology
|
1,914
|
|
7 years
|
|
Trade names
|
477
|
|
9 years
|
|
Total
|
$
|
16,028
|
|
14 years
|
(1)
|
In connection with the acquisition of First Data, the Company acquired two businesses which it intends to sell. As such, gross carrying amounts exclude amounts held for sale (see Note 5).
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In millions, except for per share data)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Total revenue
|
$
|
3,935
|
|
|
$
|
3,772
|
|
|
$
|
11,730
|
|
|
$
|
11,343
|
|
Net income
|
306
|
|
|
434
|
|
|
939
|
|
|
851
|
|
||||
Net income attributable to Fiserv, Inc.
|
284
|
|
|
405
|
|
|
847
|
|
|
766
|
|
||||
Net income per share attributable to Fiserv, Inc.:
|
|
|
|
|
|
|
|
||||||||
Basic
|
0.42
|
|
|
0.59
|
|
|
1.25
|
|
|
1.10
|
|
||||
Diluted
|
0.41
|
|
|
0.57
|
|
|
1.22
|
|
|
1.08
|
|
•
|
a net increase in amortization expense that would have been recognized due to acquired intangible assets;
|
•
|
an adjustment to interest expense to reflect (i) the additional borrowings of the Company in conjunction with the acquisition and (ii) the repayment of First Data’s historical debt in conjunction with the acquisition;
|
•
|
a reduction in expenses for the three and nine months ended September 30, 2019 and a corresponding increase in the nine months ended September 30, 2018 for acquisition-related transaction costs and other one-time costs directly attributable to the acquisition;
|
•
|
a reduction in operating revenues due to the elimination of deferred revenues assigned no value at the acquisition date;
|
•
|
an adjustment to stock compensation expense to reflect the cost of the replacement awards as if they had been issued on January 1, 2018; and
|
•
|
the related income tax effects of the adjustments noted above.
|
(In millions)
|
Gross Carrying Amount
|
Weighted-Average Useful Life
|
||
Customer relationships
|
$
|
370
|
|
15 years
|
Trade name
|
3
|
|
8 years
|
|
Total
|
$
|
373
|
|
15 years
|
(In millions)
|
September 30, 2019
|
||
Total current assets
|
$
|
4,103
|
|
Total long-term assets
|
1
|
|
|
Total assets
|
$
|
4,104
|
|
|
|
||
Total current liabilities
|
$
|
4,063
|
|
Total long-term liabilities
|
—
|
|
|
Total liabilities
|
$
|
4,063
|
|
(In millions)
|
Nine Months Ended September 30, 2019
|
||
Total revenues
|
$
|
189
|
|
Total expenses
|
106
|
|
|
Operating income
|
$
|
83
|
|
Net income
|
$
|
81
|
|
Income from investments in unconsolidated affiliates(1)
|
$
|
11
|
|
(1)
|
Amount reflects the Company’s share of investee’s net income or loss and the amortization basis difference between the estimated fair value and the underlying book value of equity method intangibles.
|
Expected life (in years)
|
2.5
|
|
Average risk-free interest rate
|
1.9
|
%
|
Expected volatility
|
27.4
|
%
|
Expected dividend yield
|
0
|
%
|
|
2019
|
|
2018
|
||
Expected life (in years)
|
6.4
|
|
|
6.3
|
|
Average risk-free interest rate
|
2.7
|
%
|
|
2.2
|
%
|
Expected volatility
|
28.5
|
%
|
|
28.3
|
%
|
Expected dividend yield
|
0
|
%
|
|
0
|
%
|
|
Shares (In thousands)
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value (In millions)
|
|||||
Stock options outstanding - December 31, 2018
|
12,052
|
|
|
$
|
33.96
|
|
|
|
|
|
||
Converted First Data stock options
|
7,591
|
|
|
62.54
|
|
|
|
|
|
|||
Granted
|
1,177
|
|
|
84.77
|
|
|
|
|
|
|||
Forfeited
|
(158
|
)
|
|
68.17
|
|
|
|
|
|
|||
Exercised
|
(3,265
|
)
|
|
35.94
|
|
|
|
|
|
|||
Stock options outstanding - September 30, 2019
|
17,397
|
|
|
$
|
49.19
|
|
|
5.03
|
|
$
|
1,079
|
|
Stock options exercisable - September 30, 2019
|
14,531
|
|
|
$
|
45.00
|
|
|
4.37
|
|
$
|
986
|
|
|
Restricted Stock Units
|
|
Performance Share Units
|
||||||||||
|
Shares (In thousands)
|
|
Weighted-Average Grant Date Fair Value
|
|
Shares (In thousands)
|
|
Weighted-Average Grant Date Fair Value
|
||||||
Units - December 31, 2018
|
1,821
|
|
|
$
|
53.22
|
|
|
524
|
|
|
$
|
57.60
|
|
Converted First Data units
|
6,025
|
|
|
102.30
|
|
|
1,333
|
|
|
101.96
|
|
||
Granted
|
533
|
|
|
91.35
|
|
|
1,107
|
|
|
96.72
|
|
||
Forfeited
|
(173
|
)
|
|
74.02
|
|
|
(238
|
)
|
|
50.96
|
|
||
Vested
|
(945
|
)
|
|
70.21
|
|
|
(405
|
)
|
|
90.03
|
|
||
Units - September 30, 2019
|
7,261
|
|
|
$
|
93.97
|
|
|
2,321
|
|
|
$
|
99.25
|
|
|
Restricted Stock Awards
|
|
Performance Share Awards
|
||||||||||
|
Shares (In thousands)
|
|
Weighted-Average Grant Date Fair Value
|
|
Shares (In thousands)
|
|
Weighted-Average Grant Date Fair Value
|
||||||
Awards - December 31, 2018
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Converted First Data awards
|
96
|
|
|
102.30
|
|
|
264
|
|
|
87.57
|
|
||
Granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
87.57
|
|
||
Vested
|
—
|
|
|
—
|
|
|
(248
|
)
|
|
87.57
|
|
||
Awards - September 30, 2019
|
96
|
|
|
$
|
102.30
|
|
|
—
|
|
|
$
|
—
|
|
(In millions)
|
2019
|
|
2018
|
||||
Total intrinsic value of stock options exercised
|
$
|
211
|
|
|
$
|
119
|
|
Fair value of restricted stock units vested
|
158
|
|
|
36
|
|
||
Income tax benefit from stock options exercised and restricted stock units vested
|
89
|
|
|
36
|
|
||
Cash received from stock options exercised
|
73
|
|
|
25
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(In millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Income tax provision
|
|
$
|
53
|
|
|
$
|
78
|
|
|
$
|
144
|
|
|
$
|
290
|
|
Effective income tax rate
|
|
20.7
|
%
|
|
25.7
|
%
|
|
17.9
|
%
|
|
24.5
|
%
|
(In millions)
|
September 30, 2019
|
|
December 31, 2018
|
||||
Noncurrent assets
|
$
|
51
|
|
|
$
|
20
|
|
Noncurrent liabilities
|
(4,110
|
)
|
|
(745
|
)
|
||
Total
|
$
|
(4,059
|
)
|
|
$
|
(725
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
(In millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Weighted-average common shares outstanding used for the calculation of net income attributable to Fiserv, Inc. per share – basic
|
584.8
|
|
|
403.8
|
|
|
456.3
|
|
|
408.4
|
|
Common stock equivalents
|
12.1
|
|
|
8.2
|
|
|
8.9
|
|
|
8.2
|
|
Weighted-average common shares outstanding used for the calculation of net income attributable to Fiserv, Inc. per share – diluted
|
596.9
|
|
|
412.0
|
|
|
465.2
|
|
|
416.6
|
|
•
|
Level 1 - Quoted prices (unadjusted) for identical assets or liabilities in active markets that are accessible as of the measurement date.
|
•
|
Level 2 - Inputs other than quoted prices within Level 1 that are observable either directly or indirectly, including but not limited to quoted prices in markets that are not active, quoted prices in active markets for similar assets or liabilities and observable inputs other than quoted prices such as interest rates or yield curves.
|
•
|
Level 3 - Unobservable inputs reflecting the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk.
|
(In millions)
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||
September 30, 2019
|
|
|
|||||||||
Customer relationships
|
$
|
16,220
|
|
|
$
|
1,680
|
|
|
$
|
14,540
|
|
Acquired software and technology
|
2,227
|
|
|
556
|
|
|
1,671
|
|
|||
Trade names
|
586
|
|
|
75
|
|
|
511
|
|
|||
Capitalized software development costs
|
950
|
|
|
355
|
|
|
595
|
|
|||
Purchased software
|
557
|
|
|
137
|
|
|
420
|
|
|||
Total
|
$
|
20,540
|
|
|
$
|
2,803
|
|
|
$
|
17,737
|
|
(In millions)
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||
December 31, 2018
|
|
|
|||||||||
Customer relationships
|
$
|
2,642
|
|
|
$
|
1,294
|
|
|
$
|
1,348
|
|
Acquired software and technology
|
591
|
|
|
490
|
|
|
101
|
|
|||
Trade names
|
120
|
|
|
71
|
|
|
49
|
|
|||
Capitalized software development costs
|
810
|
|
|
314
|
|
|
496
|
|
|||
Purchased software
|
261
|
|
|
112
|
|
|
149
|
|
|||
Total
|
$
|
4,424
|
|
|
$
|
2,281
|
|
|
$
|
2,143
|
|
|
Reportable Segments
|
||||||||||||||
(In millions)
|
First Data
|
|
Payments
|
|
Financial
|
|
Total
|
||||||||
Goodwill at December 31, 2018
|
$
|
—
|
|
|
$
|
3,996
|
|
|
$
|
1,706
|
|
|
$
|
5,702
|
|
Acquisitions and valuation adjustments (see Note 4)
|
29,955
|
|
|
(27
|
)
|
|
2
|
|
|
29,930
|
|
||||
Foreign currency translation
|
(114
|
)
|
|
(2
|
)
|
|
1
|
|
|
(115
|
)
|
||||
Goodwill at September 30, 2019
|
$
|
29,841
|
|
|
$
|
3,967
|
|
|
$
|
1,709
|
|
|
$
|
35,517
|
|
(In millions)
|
September 30, 2019
|
|
December 31, 2018
|
||||
Trade accounts payable
|
$
|
402
|
|
|
$
|
127
|
|
Client deposits
|
625
|
|
|
564
|
|
||
Accrued compensation and benefits
|
310
|
|
|
199
|
|
||
Other accrued expenses
|
1,564
|
|
|
256
|
|
||
Total
|
$
|
2,901
|
|
|
$
|
1,146
|
|
(In millions)
|
September 30, 2019
|
|
December 31, 2018
|
||||
Short-term debt and current maturities of long-term debt:
|
|
|
|
||||
Lines of credit
|
$
|
248
|
|
|
$
|
—
|
|
Finance lease and other financing obligations
|
120
|
|
|
4
|
|
||
Total short-term and current maturities of long-term debt
|
$
|
368
|
|
|
$
|
4
|
|
|
|
|
|
||||
Long-term debt:
|
|
|
|
||||
2.7% senior notes due 2020
|
$
|
850
|
|
|
$
|
850
|
|
4.75% senior notes due 2021
|
400
|
|
|
400
|
|
||
3.5% senior notes due 2022
|
700
|
|
|
700
|
|
||
3.8% senior notes due 2023
|
1,000
|
|
|
1,000
|
|
||
0.375% senior notes due 2023
|
547
|
|
|
—
|
|
||
2.75% senior notes due 2024
|
2,000
|
|
|
—
|
|
||
3.85% senior notes due 2025
|
900
|
|
|
900
|
|
||
2.25% senior notes due 2025
|
645
|
|
|
—
|
|
||
3.2% senior notes due 2026
|
2,000
|
|
|
—
|
|
||
1.125% senior notes due 2027
|
547
|
|
|
—
|
|
||
4.2% senior notes due 2028
|
1,000
|
|
|
1,000
|
|
||
3.5% senior notes due 2029
|
3,000
|
|
|
—
|
|
||
1.625% senior notes due 2030
|
547
|
|
|
—
|
|
||
3.0% senior notes due 2031
|
645
|
|
|
—
|
|
||
4.4% senior notes due 2049
|
2,000
|
|
|
—
|
|
||
Receivable securitized loan
|
500
|
|
|
—
|
|
||
Term loan facility
|
4,400
|
|
|
—
|
|
||
Unamortized discount and unamortized deferred financing costs
|
(167
|
)
|
|
(29
|
)
|
||
Revolving credit facility
|
406
|
|
|
1,129
|
|
||
Finance lease and other financing obligations
|
203
|
|
|
5
|
|
||
Total long-term debt
|
$
|
22,123
|
|
|
$
|
5,955
|
|
(In millions)
|
|
September 30, 2019
|
||
Assets
|
|
|
||
Operating lease assets (1)
|
|
$
|
675
|
|
Finance lease assets (2)
|
|
271
|
|
|
Total lease assets
|
|
$
|
946
|
|
|
|
|
||
Liabilities
|
|
|
||
Current
|
|
|
||
Operating lease liabilities (1)
|
|
$
|
138
|
|
Finance lease liabilities (2)
|
|
73
|
|
|
Noncurrent
|
|
|
||
Operating lease liabilities (1)
|
|
585
|
|
|
Finance lease liabilities (2)
|
|
158
|
|
|
Total lease liabilities
|
|
$
|
954
|
|
(1)
|
Operating lease assets are included within other long-term assets, and operating lease liabilities are included within accounts payable and accrued expenses (current portion) and other long-term liabilities (noncurrent portion) in the Company’s consolidated balance sheet.
|
(2)
|
Finance lease assets are included within property and equipment, net and finance lease liabilities are included within short-term and current maturities of long-term debt (current portion) and long-term debt (noncurrent portion) in the Company’s consolidated balance sheets.
|
(In millions)
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||
Operating lease cost (1)
|
|
$
|
64
|
|
|
$
|
141
|
|
Finance lease cost (2)
|
|
|
|
|
||||
Amortization of right-of-use assets
|
|
16
|
|
|
18
|
|
||
Interest on lease liabilities
|
|
3
|
|
|
3
|
|
||
Total lease cost
|
|
$
|
83
|
|
|
$
|
162
|
|
(1)
|
Operating lease expense is included within cost of processing and services, cost of product and selling, general and administrative expense, dependent upon the nature and use of the ROU asset, in the Company’s consolidated statements of income. Operating lease cost includes approximately $14 million and $42 million of variable lease costs for the three and nine months ended September 30, 2019, respectively.
|
(2)
|
Finance lease expense is recorded as depreciation and amortization expense within cost of processing and services, cost of product and selling, general and administrative expense, dependent upon the nature and use of the ROU asset, and interest expense, net in the Company’s consolidated statements of income.
|
(In millions)
|
|
Nine Months Ended September 30, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
||
Operating cash flows from operating leases
|
|
$
|
94
|
|
Operating cash flows from finance leases
|
|
3
|
|
|
Financing cash flows from finance leases
|
|
17
|
|
|
|
|
|
||
Right-of-use assets obtained in exchange for lease liabilities
|
|
|
||
Operating leases
|
|
$
|
459
|
|
Finance leases
|
|
288
|
|
|
|
September 30, 2019
|
|
Weighted-average remaining lease term
|
|
|
|
Operating leases
|
|
6 years
|
|
Finance leases
|
|
3 years
|
|
Weighted-average discount rate
|
|
|
|
Operating leases
|
|
3.0
|
%
|
Finance leases
|
|
3.5
|
%
|
(1)
|
Operating lease payments include $55 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $6 million of legally binding minimum lease payments for leases signed but not yet commenced. Operating leases that have been signed but not yet commenced are for real estate and equipment and will commence in 2019 and 2020 with lease terms of one to 10 years.
|
(In millions)
|
|
||
Year ending December 31,
|
|
||
2019
|
$
|
94
|
|
2020
|
75
|
|
|
2021
|
62
|
|
|
2022
|
51
|
|
|
2023
|
40
|
|
|
Thereafter
|
108
|
|
|
Total
|
$
|
430
|
|
(In millions)
|
Three and Nine Months Ended September 30, 2019
|
||
Sales-type and direct financing leases
|
|
||
Selling profit (1)
|
$
|
8
|
|
Interest income (1)
|
15
|
|
|
Operating lease income (2)
|
14
|
|
(1)
|
Selling profit includes $21 million recorded within product revenue with a corresponding charge of $13 million recorded in cost of product in the consolidated statements of income for the three and nine months ended September 30, 2019. Interest income is included within product revenue in the consolidated statements of income.
|
(2)
|
Operating lease income includes an immaterial amount of variable lease income and is included within product revenue in the Company’s consolidated statements of income for the three and nine months ended September 30, 2019.
|
(In millions)
|
September 30, 2019
|
||
Minimum lease payments
|
$
|
374
|
|
Residual values
|
37
|
|
|
Less: Unearned interest income
|
(160
|
)
|
|
Net investment in leases (1)
|
$
|
251
|
|
(1)
|
Net investments in leased assets are included within prepaid expenses and other current assets (current portion) and other long-term assets (noncurrent portion) in the consolidated balance sheet.
|
(In millions)
|
|
||
Year ending December 31,
|
Sales-Type Leases
|
||
2019
|
$
|
45
|
|
2020
|
149
|
|
|
2021
|
107
|
|
|
2022
|
56
|
|
|
2023
|
16
|
|
|
Thereafter
|
1
|
|
|
Total minimum lease payments
|
$
|
374
|
|
|
Fiserv, Inc. Shareholders’ Equity
|
|
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||
Three Months Ended
September 30, 2019 |
Number of Shares
|
|
Amount
|
||||||||||||||||||||||||
(In millions)
|
Common Shares
|
Treasury Shares
|
|
Common Stock
|
Additional
Paid-In
Capital
|
Accumulated
Other
Comprehensive
Loss
|
Retained
Earnings
|
Treasury Stock
|
Noncontrolling Interests
|
Total Equity
|
|||||||||||||||||
Balance at June 30, 2019
|
791
|
|
399
|
|
|
$
|
8
|
|
$
|
1,056
|
|
$
|
(193
|
)
|
$
|
12,083
|
|
$
|
(10,408
|
)
|
$
|
—
|
|
$
|
2,546
|
|
|
Shares issued to acquire First Data (see Note 4)
|
|
(286
|
)
|
|
|
22,582
|
|
|
|
7,478
|
|
1,119
|
|
31,179
|
|
||||||||||||
Distributions paid to noncontrolling interests
|
|
|
|
|
|
|
|
|
(51
|
)
|
(51
|
)
|
|||||||||||||||
Net income (1)
|
|
|
|
|
|
|
198
|
|
|
23
|
|
221
|
|
||||||||||||||
Other comprehensive loss
|
|
|
|
|
|
(186
|
)
|
|
|
|
(186
|
)
|
|||||||||||||||
Share-based compensation
|
|
|
|
|
87
|
|
|
|
|
|
87
|
|
|||||||||||||||
Shares issued under stock plans
|
|
(2
|
)
|
|
|
(57
|
)
|
|
|
57
|
|
|
—
|
|
|||||||||||||
Purchases of treasury stock
|
|
—
|
|
|
|
|
|
|
(36
|
)
|
|
(36
|
)
|
||||||||||||||
Balance at September 30, 2019
|
791
|
|
111
|
|
|
$
|
8
|
|
$
|
23,668
|
|
$
|
(379
|
)
|
$
|
12,281
|
|
$
|
(2,909
|
)
|
$
|
1,091
|
|
$
|
33,760
|
|
(1)
|
The total net income presented in shareholders’ equity for the three months ended September 30, 2019 is different than the amounts presented in the unaudited consolidated statement of income due to the net income attributable to the redeemable noncontrolling interest of $4 million not included in equity.
|
|
Fiserv, Inc. Shareholders’ Equity
|
|||||||||||||||||||||||
Three Months Ended
September 30, 2018 |
Number of Shares
|
|
Amount
|
|||||||||||||||||||||
(In millions)
|
Common Shares
|
Treasury Shares
|
|
Common Stock
|
Additional
Paid-In
Capital
|
Accumulated
Other
Comprehensive
Loss
|
Retained
Earnings
|
Treasury Stock
|
Total Equity
|
|||||||||||||||
Balance at June 30, 2018
|
791
|
|
385
|
|
|
$
|
8
|
|
$
|
1,023
|
|
$
|
(66
|
)
|
$
|
11,122
|
|
$
|
(9,237
|
)
|
$
|
2,850
|
|
|
Net income
|
|
|
|
|
|
|
227
|
|
|
227
|
|
|||||||||||||
Other comprehensive loss
|
|
|
|
|
|
(13
|
)
|
|
|
(13
|
)
|
|||||||||||||
Share-based compensation
|
|
|
|
|
18
|
|
|
|
|
18
|
|
|||||||||||||
Shares issued under stock plans
|
|
(1
|
)
|
|
|
4
|
|
|
|
12
|
|
16
|
|
|||||||||||
Purchases of treasury stock
|
|
6
|
|
|
|
|
|
|
(437
|
)
|
(437
|
)
|
||||||||||||
Balance at September 30, 2018
|
791
|
|
390
|
|
|
$
|
8
|
|
$
|
1,045
|
|
$
|
(79
|
)
|
$
|
11,349
|
|
$
|
(9,662
|
)
|
$
|
2,661
|
|
|
Fiserv, Inc. Shareholders’ Equity
|
|
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Nine Months Ended
September 30, 2019 |
Number of Shares
|
|
Amount
|
||||||||||||||||||||||||
(In millions)
|
Common Shares
|
Treasury Shares
|
|
Common Stock
|
Additional
Paid-In
Capital
|
Accumulated
Other
Comprehensive
Loss
|
Retained
Earnings
|
Treasury Stock
|
Noncontrolling Interests
|
Total Equity
|
|||||||||||||||||
Balance at December 31, 2018
|
791
|
|
399
|
|
|
$
|
8
|
|
$
|
1,057
|
|
$
|
(67
|
)
|
$
|
11,635
|
|
$
|
(10,340
|
)
|
$
|
—
|
|
$
|
2,293
|
|
|
Shares issued to acquire First Data (see Note 4)
|
|
(286
|
)
|
|
|
22,582
|
|
|
|
7,478
|
|
1,119
|
|
31,179
|
|
||||||||||||
Distributions paid to noncontrolling interests
|
|
|
|
|
|
|
|
|
(51
|
)
|
(51
|
)
|
|||||||||||||||
Net income (1)
|
|
|
|
|
|
|
646
|
|
|
23
|
|
669
|
|
||||||||||||||
Other comprehensive loss
|
|
|
|
|
|
(312
|
)
|
|
|
|
(312
|
)
|
|||||||||||||||
Share-based compensation
|
|
|
|
|
121
|
|
|
|
|
|
121
|
|
|||||||||||||||
Shares issued under stock plans
|
|
(4
|
)
|
|
|
(92
|
)
|
|
|
109
|
|
|
17
|
|
|||||||||||||
Purchases of treasury stock
|
|
2
|
|
|
|
|
|
|
(156
|
)
|
|
(156
|
)
|
||||||||||||||
Balance at September 30, 2019
|
791
|
|
111
|
|
|
$
|
8
|
|
$
|
23,668
|
|
$
|
(379
|
)
|
$
|
12,281
|
|
$
|
(2,909
|
)
|
$
|
1,091
|
|
$
|
33,760
|
|
(1)
|
The total net income presented in shareholders’ equity for the nine months ended September 30, 2019 is different than the amounts presented in the unaudited consolidated statement of income due to the net income attributable to the redeemable noncontrolling interest of $4 million not included in equity.
|
|
Fiserv, Inc. Shareholders’ Equity
|
|||||||||||||||||||||||
Nine Months Ended
September 30, 2018 |
Number of Shares
|
|
Amount
|
|||||||||||||||||||||
(In millions)
|
Common Shares
|
Treasury Shares
|
|
Common Stock
|
Additional
Paid-In
Capital
|
Accumulated
Other
Comprehensive
Loss
|
Retained
Earnings
|
Treasury Stock
|
Total Equity
|
|||||||||||||||
Balance at December 31, 2017
|
791
|
|
376
|
|
|
$
|
8
|
|
$
|
1,031
|
|
$
|
(54
|
)
|
$
|
10,240
|
|
$
|
(8,494
|
)
|
$
|
2,731
|
|
|
Net income
|
|
|
|
|
|
|
901
|
|
|
901
|
|
|||||||||||||
Other comprehensive loss
|
|
|
|
|
|
(25
|
)
|
|
|
(25
|
)
|
|||||||||||||
Share-based compensation
|
|
|
|
|
54
|
|
|
|
|
54
|
|
|||||||||||||
Shares issued under stock plans
|
|
(3
|
)
|
|
|
(40
|
)
|
|
|
58
|
|
18
|
|
|||||||||||
Purchases of treasury stock
|
|
17
|
|
|
|
|
|
|
(1,226
|
)
|
(1,226
|
)
|
||||||||||||
Cumulative-effect adjustment of ASU 2014-09 adoption
|
|
|
|
|
|
|
208
|
|
|
208
|
|
|||||||||||||
Cumulative-effect adjustment of ASU 2017-12 adoption
|
|
|
|
|
|
3
|
|
(3
|
)
|
|
—
|
|
||||||||||||
Cumulative-effect adjustment of ASU 2018-02 adoption
|
|
|
|
|
|
(3
|
)
|
3
|
|
|
—
|
|
||||||||||||
Balance at September 30, 2018
|
791
|
|
390
|
|
|
$
|
8
|
|
$
|
1,045
|
|
$
|
(79
|
)
|
$
|
11,349
|
|
$
|
(9,662
|
)
|
$
|
2,661
|
|
|
Three Months Ended September 30, 2019
|
||||||||||||||
(In millions)
|
Cash Flow
Hedges |
|
Foreign
Currency Translation |
|
Other
|
|
Total
|
||||||||
Balance at June 30, 2019
|
$
|
(144
|
)
|
|
$
|
(47
|
)
|
|
$
|
(2
|
)
|
|
$
|
(193
|
)
|
Other comprehensive loss before reclassifications
|
(4
|
)
|
|
(186
|
)
|
|
—
|
|
|
(190
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Net current-period other comprehensive loss
|
—
|
|
|
(186
|
)
|
|
—
|
|
|
(186
|
)
|
||||
Balance at September 30, 2019
|
$
|
(144
|
)
|
|
$
|
(233
|
)
|
|
$
|
(2
|
)
|
|
$
|
(379
|
)
|
|
Three Months Ended September 30, 2018
|
||||||||||||||
(In millions)
|
Cash Flow
Hedges |
|
Foreign
Currency Translation |
|
Other
|
|
Total
|
||||||||
Balance at June 30, 2018
|
$
|
(20
|
)
|
|
$
|
(44
|
)
|
|
$
|
(2
|
)
|
|
$
|
(66
|
)
|
Other comprehensive loss before reclassifications
|
(6
|
)
|
|
(8
|
)
|
|
—
|
|
|
(14
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Net current-period other comprehensive loss
|
(5
|
)
|
|
(8
|
)
|
|
—
|
|
|
(13
|
)
|
||||
Balance at September 30, 2018
|
$
|
(25
|
)
|
|
$
|
(52
|
)
|
|
$
|
(2
|
)
|
|
$
|
(79
|
)
|
|
Nine Months Ended September 30, 2019
|
||||||||||||||
(In millions)
|
Cash Flow
Hedges
|
|
Foreign
Currency
Translation
|
|
Other
|
|
Total
|
||||||||
Balance at December 31, 2018
|
$
|
(16
|
)
|
|
$
|
(49
|
)
|
|
$
|
(2
|
)
|
|
$
|
(67
|
)
|
Other comprehensive loss before reclassifications
|
(134
|
)
|
|
(184
|
)
|
|
—
|
|
|
(318
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
||||
Net current-period other comprehensive loss
|
(128
|
)
|
|
(184
|
)
|
|
—
|
|
|
(312
|
)
|
||||
Balance at September 30, 2019
|
$
|
(144
|
)
|
|
$
|
(233
|
)
|
|
$
|
(2
|
)
|
|
$
|
(379
|
)
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||
(In millions)
|
Cash Flow
Hedges
|
|
Foreign
Currency
Translation
|
|
Other
|
|
Total
|
||||||||
Balance at December 31, 2017
|
$
|
(14
|
)
|
|
$
|
(38
|
)
|
|
$
|
(2
|
)
|
|
$
|
(54
|
)
|
Net current-period other comprehensive loss
|
(11
|
)
|
|
(14
|
)
|
|
—
|
|
|
(25
|
)
|
||||
Cumulative-effect adjustment of ASU 2017-12 adoption from retained earnings
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Cumulative-effect adjustment of ASU 2018-02 adoption to retained earnings
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||
Balance at September 30, 2018
|
$
|
(25
|
)
|
|
$
|
(52
|
)
|
|
$
|
(2
|
)
|
|
$
|
(79
|
)
|
|
Nine Months Ended
September 30, |
||||||
(In millions)
|
2019
|
|
2018
|
||||
Interest paid
|
$
|
149
|
|
|
$
|
98
|
|
Income taxes paid
|
155
|
|
|
203
|
|
||
Treasury stock purchases settled after the balance sheet date
|
10
|
|
|
20
|
|
(In millions)
|
First Data
|
|
Payments
|
|
Financial
|
|
Corporate
and Other
|
|
Total
|
||||||||||
Three Months Ended September 30, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Processing and services revenue
|
$
|
1,279
|
|
|
$
|
754
|
|
|
$
|
562
|
|
|
$
|
13
|
|
|
$
|
2,608
|
|
Product revenue
|
335
|
|
|
172
|
|
|
34
|
|
|
(21
|
)
|
|
520
|
|
|||||
Total revenue
|
$
|
1,614
|
|
|
$
|
926
|
|
|
$
|
596
|
|
|
$
|
(8
|
)
|
|
$
|
3,128
|
|
Operating income
|
$
|
396
|
|
|
$
|
309
|
|
|
$
|
196
|
|
|
$
|
(527
|
)
|
|
$
|
374
|
|
Three Months Ended September 30, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Processing and services revenue
|
$
|
—
|
|
|
$
|
674
|
|
|
$
|
535
|
|
|
$
|
14
|
|
|
$
|
1,223
|
|
Product revenue
|
—
|
|
|
170
|
|
|
39
|
|
|
(20
|
)
|
|
189
|
|
|||||
Total revenue
|
$
|
—
|
|
|
$
|
844
|
|
|
$
|
574
|
|
|
$
|
(6
|
)
|
|
$
|
1,412
|
|
Operating income
|
$
|
—
|
|
|
$
|
267
|
|
|
$
|
187
|
|
|
$
|
(98
|
)
|
|
$
|
356
|
|
Nine Months Ended September 30, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Processing and services revenue
|
$
|
1,279
|
|
|
$
|
2,224
|
|
|
$
|
1,686
|
|
|
$
|
40
|
|
|
$
|
5,229
|
|
Product revenue
|
335
|
|
|
533
|
|
|
112
|
|
|
(67
|
)
|
|
913
|
|
|||||
Total revenue
|
$
|
1,614
|
|
|
$
|
2,757
|
|
|
$
|
1,798
|
|
|
$
|
(27
|
)
|
|
$
|
6,142
|
|
Operating income
|
$
|
396
|
|
|
$
|
899
|
|
|
$
|
598
|
|
|
$
|
(762
|
)
|
|
$
|
1,131
|
|
Nine Months Ended September 30, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Processing and services revenue
|
$
|
—
|
|
|
$
|
1,992
|
|
|
$
|
1,646
|
|
|
$
|
30
|
|
|
$
|
3,668
|
|
Product revenue
|
—
|
|
|
531
|
|
|
134
|
|
|
(61
|
)
|
|
604
|
|
|||||
Total revenue
|
$
|
—
|
|
|
$
|
2,523
|
|
|
$
|
1,780
|
|
|
$
|
(31
|
)
|
|
$
|
4,272
|
|
Operating income
|
$
|
—
|
|
|
$
|
807
|
|
|
$
|
590
|
|
|
$
|
(75
|
)
|
|
$
|
1,322
|
|
(In millions)
|
July 29, 2019
|
||
U.K. plan
|
|
||
Plan benefit obligations
|
$
|
(674
|
)
|
Fair value of plan assets
|
850
|
|
|
Net pension assets (1)
|
$
|
176
|
|
U.S. and other plans
|
|
||
Plan benefit obligations
|
$
|
(217
|
)
|
Fair value of plan assets
|
161
|
|
|
Net pension liabilities (2)
|
$
|
(56
|
)
|
Funded status of the plans
|
$
|
120
|
|
(1)
|
Pension assets are included in other long-term assets in the consolidated balance sheet
|
(2)
|
Pension liabilities are included in other long-term liabilities in the consolidated balance sheet
|
|
Projected Benefit Obligation
|
|
Net Periodic Benefit Expense
|
||
Discount rate
|
2.35
|
%
|
|
2.74
|
%
|
Expected long-term return on plan assets
|
n/a
|
|
|
2.79
|
%
|
(In millions)
|
|
|
||
Year ended December 31,
|
|
|
||
2019
|
|
$
|
28
|
|
2020
|
|
30
|
|
|
2021
|
|
32
|
|
|
2022
|
|
34
|
|
|
2023
|
|
36
|
|
|
Thereafter
|
|
194
|
|
|
Total
|
|
$
|
354
|
|
(In millions)
|
Three and Nine Months Ended September 30, 2019
|
||
Service costs
|
$
|
1
|
|
Interest costs
|
3
|
|
|
Expected return on plan assets
|
(5
|
)
|
|
Net periodic benefit expense
|
$
|
(1
|
)
|
(In millions)
|
|
||
Balance as of December 31, 2018
|
$
|
—
|
|
Acquired
|
88
|
|
|
Share of income
|
4
|
|
|
Balance as of September 30, 2019
|
$
|
92
|
|
•
|
Overview. This section contains background information on our company and the services and products that we provide, acquisitions and dispositions, our enterprise priorities, and the trends affecting our industry in order to provide context for management’s discussion and analysis of our financial condition and results of operations.
|
•
|
Changes in critical accounting policies and estimates. This section contains a discussion of changes since our Annual Report on Form 10-K for the year ended December 31, 2018 in the accounting policies that we believe are important to our financial condition and results of operations and that require judgment and estimates on the part of management in their application.
|
•
|
Results of operations. This section contains an analysis of our results of operations presented in the accompanying unaudited consolidated statements of income by comparing the results for the three and nine months ended September 30, 2019 to the comparable periods in 2018.
|
•
|
Liquidity and capital resources. This section provides an analysis of our cash flows and a discussion of our outstanding debt as of September 30, 2019.
|
|
Three Months Ended September 30,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
Percentage of
Revenue (1)
|
|
Increase (Decrease)
|
|||||||||||||
(In millions)
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Processing and services
|
$
|
2,608
|
|
|
$
|
1,223
|
|
|
83.4
|
%
|
|
86.6
|
%
|
|
$
|
1,385
|
|
|
113
|
%
|
Product
|
520
|
|
|
189
|
|
|
16.6
|
%
|
|
13.4
|
%
|
|
331
|
|
|
175
|
%
|
|||
Total revenue
|
3,128
|
|
|
1,412
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
1,716
|
|
|
122
|
%
|
|||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of processing and services
|
1,204
|
|
|
568
|
|
|
46.2
|
%
|
|
46.4
|
%
|
|
636
|
|
|
112
|
%
|
|||
Cost of product
|
413
|
|
|
181
|
|
|
79.4
|
%
|
|
95.8
|
%
|
|
232
|
|
|
128
|
%
|
|||
Sub-total
|
1,617
|
|
|
749
|
|
|
51.7
|
%
|
|
53.0
|
%
|
|
868
|
|
|
116
|
%
|
|||
Selling, general and administrative
|
1,137
|
|
|
305
|
|
|
36.3
|
%
|
|
21.6
|
%
|
|
832
|
|
|
273
|
%
|
|||
Loss on sale of business
|
—
|
|
|
2
|
|
|
—
|
%
|
|
0.1
|
%
|
|
(2
|
)
|
|
n/m
|
|
|||
Total expenses
|
2,754
|
|
|
1,056
|
|
|
88.0
|
%
|
|
74.8
|
%
|
|
1,698
|
|
|
161
|
%
|
|||
Operating income
|
374
|
|
|
356
|
|
|
12.0
|
%
|
|
25.2
|
%
|
|
18
|
|
|
5
|
%
|
|||
Interest expense, net
|
(164
|
)
|
|
(45
|
)
|
|
(5.2
|
)%
|
|
(3.2
|
)%
|
|
119
|
|
|
264
|
%
|
|||
Debt financing activities
|
49
|
|
|
(8
|
)
|
|
1.6
|
%
|
|
(0.6
|
)%
|
|
(57
|
)
|
|
(713
|
)%
|
|||
Other (expense) income
|
(3
|
)
|
|
1
|
|
|
(0.1
|
)%
|
|
0.1
|
%
|
|
(4
|
)
|
|
(400
|
)%
|
|||
Income before income taxes and income from investments in unconsolidated affiliates
|
256
|
|
|
304
|
|
|
8.2
|
%
|
|
21.5
|
%
|
|
(48
|
)
|
|
(16
|
)%
|
|||
Income tax provision
|
(53
|
)
|
|
(78
|
)
|
|
(1.7
|
)%
|
|
(5.5
|
)%
|
|
(25
|
)
|
|
(32
|
)%
|
|||
Income from investments in unconsolidated affiliates
|
22
|
|
|
1
|
|
|
0.7
|
%
|
|
0.1
|
%
|
|
21
|
|
|
n/m
|
|
|||
Less: Net income attributable to noncontrolling interests
|
27
|
|
|
—
|
|
|
0.9
|
%
|
|
—
|
|
|
27
|
|
|
n/m
|
|
|||
Net income attributable to Fiserv, Inc.
|
$
|
198
|
|
|
$
|
227
|
|
|
6.3
|
%
|
|
16.1
|
%
|
|
$
|
(29
|
)
|
|
(13
|
)%
|
(1)
|
Percentage of revenue is calculated as the relevant revenue, expense, income or loss amount divided by total revenue, except for cost of processing and services and cost of product amounts which are divided by the related component of revenue.
|
|
Nine Months Ended September 30,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
Percentage of
Revenue (1)
|
|
Increase (Decrease)
|
|||||||||||||
(In millions)
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Processing and services
|
$
|
5,229
|
|
|
$
|
3,668
|
|
|
85.1
|
%
|
|
85.9
|
%
|
|
$
|
1,561
|
|
|
43
|
%
|
Product
|
913
|
|
|
604
|
|
|
14.9
|
%
|
|
14.1
|
%
|
|
309
|
|
|
51
|
%
|
|||
Total revenue
|
6,142
|
|
|
4,272
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
1,870
|
|
|
44
|
%
|
|||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of processing and services
|
2,445
|
|
|
1,696
|
|
|
46.8
|
%
|
|
46.2
|
%
|
|
749
|
|
|
44
|
%
|
|||
Cost of product
|
755
|
|
|
551
|
|
|
82.7
|
%
|
|
91.2
|
%
|
|
204
|
|
|
37
|
%
|
|||
Sub-total
|
3,200
|
|
|
2,247
|
|
|
52.1
|
%
|
|
52.6
|
%
|
|
953
|
|
|
42
|
%
|
|||
Selling, general and administrative
|
1,821
|
|
|
930
|
|
|
29.6
|
%
|
|
21.8
|
%
|
|
891
|
|
|
96
|
%
|
|||
Gain on sale of businesses
|
(10
|
)
|
|
(227
|
)
|
|
(0.2
|
)%
|
|
(5.3
|
)%
|
|
(217
|
)
|
|
(96
|
)%
|
|||
Total expenses
|
5,011
|
|
|
2,950
|
|
|
81.6
|
%
|
|
69.0
|
%
|
|
2,061
|
|
|
70
|
%
|
|||
Operating income
|
1,131
|
|
|
1,322
|
|
|
18.4
|
%
|
|
31.0
|
%
|
|
(191
|
)
|
|
(14
|
)%
|
|||
Interest expense, net
|
(279
|
)
|
|
(134
|
)
|
|
(4.5
|
)%
|
|
(3.1
|
)%
|
|
145
|
|
|
108
|
%
|
|||
Debt financing activities
|
(47
|
)
|
|
(8
|
)
|
|
(0.8
|
)%
|
|
(0.2
|
)%
|
|
39
|
|
|
488
|
%
|
|||
Other (expense) income
|
—
|
|
|
3
|
|
|
—
|
%
|
|
0.1
|
%
|
|
(3
|
)
|
|
n/m
|
|
|||
Income before income taxes and income from investments in unconsolidated affiliates
|
805
|
|
|
1,183
|
|
|
13.1
|
%
|
|
27.7
|
%
|
|
(378
|
)
|
|
(32
|
)%
|
|||
Income tax provision
|
(144
|
)
|
|
(290
|
)
|
|
(2.3
|
)%
|
|
(6.8
|
)%
|
|
(146
|
)
|
|
(50
|
)%
|
|||
Income from investments in unconsolidated affiliates
|
12
|
|
|
8
|
|
|
0.2
|
%
|
|
0.2
|
%
|
|
4
|
|
|
50
|
%
|
|||
Less: Net income attributable to noncontrolling interests
|
27
|
|
|
—
|
|
|
0.4
|
%
|
|
—
|
|
|
27
|
|
|
n/m
|
|
|||
Net income attributable to Fiserv, Inc.
|
$
|
646
|
|
|
$
|
901
|
|
|
10.5
|
%
|
|
21.1
|
%
|
|
$
|
(255
|
)
|
|
(28
|
)%
|
(1)
|
Percentage of revenue is calculated as the relevant revenue, expense, income or loss amount divided by total revenue, except for cost of processing and services and cost of product amounts which are divided by the related component of revenue.
|
|
Three Months Ended September 30,
|
|||||||||||||||||||||||
(In millions)
|
First Data
|
|
Payments
|
|
Financial
|
|
Corporate
and Other
|
|
Total
|
|||||||||||||||
Total revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2019
|
$
|
1,614
|
|
|
|
$
|
926
|
|
|
|
$
|
596
|
|
|
|
$
|
(8
|
)
|
|
|
$
|
3,128
|
|
|
2018
|
—
|
|
|
|
844
|
|
|
|
574
|
|
|
|
(6
|
)
|
|
|
1,412
|
|
|
|||||
Revenue growth
|
$
|
1,614
|
|
|
|
$
|
82
|
|
|
|
$
|
22
|
|
|
|
$
|
(2
|
)
|
|
|
$
|
1,716
|
|
|
Revenue growth percentage
|
n/m
|
|
|
|
10
|
%
|
|
|
4
|
%
|
|
|
|
|
|
122
|
%
|
|
||||||
Operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2019
|
$
|
396
|
|
|
|
$
|
309
|
|
|
|
$
|
196
|
|
|
|
$
|
(527
|
)
|
|
|
$
|
374
|
|
|
2018
|
—
|
|
|
|
267
|
|
|
|
187
|
|
|
|
(98
|
)
|
|
|
356
|
|
|
|||||
Operating income growth
|
$
|
396
|
|
|
|
$
|
42
|
|
|
|
$
|
9
|
|
|
|
$
|
(429
|
)
|
|
|
$
|
18
|
|
|
Operating income growth percentage
|
n/m
|
|
|
|
16
|
%
|
|
|
5
|
%
|
|
|
|
|
|
5
|
%
|
|
||||||
Operating margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2019
|
24.6
|
%
|
|
|
33.3
|
%
|
|
|
32.9
|
%
|
|
|
|
|
|
12.0
|
%
|
|
||||||
2018
|
—
|
|
|
|
31.5
|
%
|
|
|
32.7
|
%
|
|
|
|
|
|
25.2
|
%
|
|
||||||
Operating margin growth (1)
|
n/m
|
|
|
|
180
|
|
bps
|
|
20
|
|
bps
|
|
|
|
|
(1,320
|
)
|
bps
|
|
Nine Months Ended September 30,
|
|||||||||||||||||||||||
(In millions)
|
First Data
|
|
Payments
|
|
Financial
|
|
Corporate
and Other
|
|
Total
|
|||||||||||||||
Total revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2019
|
$
|
1,614
|
|
|
|
$
|
2,757
|
|
|
|
$
|
1,798
|
|
|
|
$
|
(27
|
)
|
|
|
$
|
6,142
|
|
|
2018
|
—
|
|
|
|
2,523
|
|
|
|
1,780
|
|
|
|
(31
|
)
|
|
|
4,272
|
|
|
|||||
Revenue growth
|
$
|
1,614
|
|
|
|
$
|
234
|
|
|
|
$
|
18
|
|
|
|
$
|
4
|
|
|
|
$
|
1,870
|
|
|
Revenue growth percentage
|
n/m
|
|
|
|
9
|
%
|
|
|
1
|
%
|
|
|
|
|
|
44
|
%
|
|
||||||
Operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2019
|
$
|
396
|
|
|
|
$
|
899
|
|
|
|
$
|
598
|
|
|
|
$
|
(762
|
)
|
|
|
$
|
1,131
|
|
|
2018
|
—
|
|
|
|
807
|
|
|
|
590
|
|
|
|
(75
|
)
|
|
|
1,322
|
|
|
|||||
Operating income growth
|
$
|
396
|
|
|
|
$
|
92
|
|
|
|
$
|
8
|
|
|
|
$
|
(687
|
)
|
|
|
$
|
(191
|
)
|
|
Operating income growth percentage
|
n/m
|
|
|
|
11
|
%
|
|
|
1
|
%
|
|
|
|
|
|
(14
|
)%
|
|
||||||
Operating margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2019
|
24.6
|
%
|
|
|
32.6
|
%
|
|
|
33.3
|
%
|
|
|
|
|
|
18.4
|
%
|
|
||||||
2018
|
—
|
|
|
|
32.0
|
%
|
|
|
33.2
|
%
|
|
|
|
|
|
31.0
|
%
|
|
||||||
Operating margin growth (1)
|
n/m
|
|
|
|
60
|
|
bps
|
|
10
|
|
bps
|
|
|
|
|
(1,260
|
)
|
bps
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the basis point growth or decline in operating margin.
|
|
Nine Months Ended
September 30, |
|
Increase (Decrease)
|
|||||||||||
(In millions)
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Net income
|
$
|
673
|
|
|
$
|
901
|
|
|
$
|
(228
|
)
|
|
|
|
Depreciation and amortization
|
978
|
|
|
406
|
|
|
572
|
|
|
|
||||
Net foreign currency gain on financing activities
|
(50
|
)
|
|
—
|
|
|
(50
|
)
|
|
|
||||
Share-based compensation
|
121
|
|
|
54
|
|
|
67
|
|
|
|
||||
Deferred income taxes
|
26
|
|
|
105
|
|
|
(79
|
)
|
|
|
||||
Gain on sale of business
|
(10
|
)
|
|
(227
|
)
|
|
217
|
|
|
|
||||
Income from investments in unconsolidated affiliates
|
(12
|
)
|
|
(8
|
)
|
|
(4
|
)
|
|
|
||||
Distributions from unconsolidated affiliates
|
6
|
|
|
1
|
|
|
5
|
|
|
|
||||
Settlement of interest rate hedge contracts
|
(183
|
)
|
|
—
|
|
|
(183
|
)
|
|
|
||||
Net changes in working capital and other
|
68
|
|
|
(251
|
)
|
|
319
|
|
|
|
||||
Operating cash flow
|
$
|
1,617
|
|
|
$
|
981
|
|
|
$
|
636
|
|
|
65
|
%
|
Capital expenditures
|
$
|
431
|
|
|
$
|
263
|
|
|
$
|
168
|
|
|
64
|
%
|
(In millions)
|
September 30, 2019
|
|
December 31, 2018
|
||||
Short-term debt and current maturities of long-term debt:
|
|
|
|
||||
Lines of credit
|
$
|
248
|
|
|
$
|
—
|
|
Finance lease and other financing obligations
|
120
|
|
|
4
|
|
||
Total short-term and current maturities of long-term debt
|
$
|
368
|
|
|
$
|
4
|
|
|
|
|
|
||||
Long-term debt:
|
|
|
|
||||
2.7% senior notes due 2020
|
$
|
850
|
|
|
$
|
850
|
|
4.75% senior notes due 2021
|
400
|
|
|
400
|
|
||
3.5% senior notes due 2022
|
700
|
|
|
700
|
|
||
3.8% senior notes due 2023
|
1,000
|
|
|
1,000
|
|
||
0.375% senior notes due 2023
|
547
|
|
|
—
|
|
||
2.75% senior notes due 2024
|
2,000
|
|
|
—
|
|
||
3.85% senior notes due 2025
|
900
|
|
|
900
|
|
||
2.25% senior notes due 2025
|
645
|
|
|
—
|
|
||
3.2% senior notes due 2026
|
2,000
|
|
|
—
|
|
||
1.125% senior notes due 2027
|
547
|
|
|
—
|
|
||
4.2% senior notes due 2028
|
1,000
|
|
|
1,000
|
|
||
3.5% senior notes due 2029
|
3,000
|
|
|
—
|
|
||
1.625% senior notes due 2030
|
547
|
|
|
—
|
|
||
3.0% senior notes due 2031
|
645
|
|
|
—
|
|
||
4.4% senior notes due 2049
|
2,000
|
|
|
—
|
|
||
Receivable securitized loan
|
500
|
|
|
—
|
|
||
Term loan facility
|
4,400
|
|
|
—
|
|
||
Unamortized discount and unamortized deferred financing costs
|
(167
|
)
|
|
(29
|
)
|
||
Revolving credit facility
|
406
|
|
|
1,129
|
|
||
Finance lease and other financing obligations
|
203
|
|
|
5
|
|
||
Total long-term debt
|
$
|
22,123
|
|
|
$
|
5,955
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
(In millions)
|
Domestic
|
|
International
|
|
Total
|
|
Domestic
|
|
International
|
|
Total
|
||||||||||||
Available
|
$
|
419
|
|
|
$
|
282
|
|
|
$
|
701
|
|
|
$
|
356
|
|
|
$
|
59
|
|
|
$
|
415
|
|
Unavailable
|
145
|
|
(1)
|
182
|
|
(2)
|
327
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
564
|
|
|
$
|
464
|
|
|
$
|
1,028
|
|
|
$
|
356
|
|
|
$
|
59
|
|
|
$
|
415
|
|
(1)
|
Represents cash held by certain domestic entities that are not available to fund operations outside of these entities unless the Board of Directors for said entities declares a dividend. In addition, one of these entities is subject to regulatory capital requirements that must be satisfied before a dividend may be declared.
|
(2)
|
Distributions of these funds are subject to certain of our joint ventures’ Board of Directors authorization.
|
(In millions)
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
Purchase obligations (1)
|
$
|
1,101
|
|
|
$
|
380
|
|
|
$
|
488
|
|
|
$
|
113
|
|
|
$
|
120
|
|
Income tax obligations
|
145
|
|
|
36
|
|
|
59
|
|
|
25
|
|
|
25
|
|
|||||
Total
|
$
|
1,246
|
|
|
$
|
416
|
|
|
$
|
547
|
|
|
$
|
138
|
|
|
$
|
145
|
|
(1)
|
Purchase obligations are reported on a pre-tax basis.
|
•
|
managing geographically separated organizations, systems and facilities;
|
•
|
integrating personnel with diverse business backgrounds and organizational cultures;
|
•
|
complying with non-U.S. regulatory requirements;
|
•
|
fluctuations in currency exchange rates;
|
•
|
enforcement of intellectual property rights in some non-U.S. countries;
|
•
|
difficulty entering new non-U.S. markets due to, among other things, consumer acceptance and business knowledge of these new markets; and
|
•
|
general economic and political conditions.
|
•
|
Declining economies, foreign currency fluctuations, and the pace of economic recovery can change consumer spending behaviors, such as cross-border travel patterns, on which a significant portion of our revenues are dependent.
|
•
|
Low levels of consumer and business confidence typically associated with recessionary environments and those markets experiencing relatively high inflation and/or unemployment, may cause decreased spending by cardholders.
|
•
|
Budgetary concerns in the United States and other countries around the world could affect the United States and other specific sovereign credit ratings, impact consumer confidence and spending, and increase the risks of operating in those countries.
|
•
|
Emerging market economies tend to be more volatile than the more established markets we serve in the United States and Europe, and adverse economic trends, including high rates of inflation, may be more pronounced in such emerging markets.
|
•
|
Financial institutions may restrict credit lines to cardholders or limit the issuance of new cards to mitigate cardholder defaults.
|
•
|
Uncertainty and volatility in the performance of our clients’ businesses may make estimates of our revenues, rebates, incentives, and realization of prepaid assets less predictable.
|
•
|
Our clients may decrease spending for value-added services.
|
•
|
Government intervention, including the effect of laws, regulations, and /or government investments in our clients, may have potential negative effects on our business and our relationships with our clients or otherwise alter their strategic direction away from our products.
|
•
|
the inability to successfully combine the business of First Data in a manner that permits us to achieve, on a timely basis, or at all, the enhanced revenue opportunities and cost savings and other benefits anticipated to result from the merger;
|
•
|
complexities associated with managing the combined businesses, including difficulty addressing possible differences in corporate cultures and management philosophies and the challenge of integrating complex systems, technology, networks and other assets of each of the companies in a seamless manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies; and
|
•
|
potential unknown liabilities and unforeseen increased expenses or delays associated with the merger.
|
Period
|
Total Number of
Shares Purchased
|
|
Average Price
Paid per Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (1)
|
|
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans or
Programs (1)
|
|||||
July 1-31, 2019
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
24,320,000
|
|
August 1-31, 2019
|
—
|
|
|
—
|
|
|
—
|
|
|
24,320,000
|
|
|
September 1-30, 2019
|
341,000
|
|
|
104.17
|
|
|
341,000
|
|
|
23,979,000
|
|
|
Total
|
341,000
|
|
|
|
|
341,000
|
|
|
|
(1)
|
On each of November 16, 2016 and August 8, 2018, our board of directors authorized the purchase of up to 30.0 million shares of our common stock. These authorizations do not expire. The Company repurchased 0.3 million and 2.0 million shares of common stock in the three and nine months ended September 30, 2019 for $35 million and $156 million, respectively. The Company had 24.0 million remaining shares authorized for repurchase as of September 30, 2019.
|
Period
|
Total Number of
Shares Purchased
|
|
Average Price
Paid per Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
|
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans or
Programs
|
|||||
July 1-31, 2019
|
82,284
|
|
(1)
|
$
|
104.64
|
|
|
—
|
|
|
—
|
|
August 1-31, 2019
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
September 1-30, 2019
|
121,232
|
|
(1)
|
106.68
|
|
|
—
|
|
|
—
|
|
|
Total
|
203,516
|
|
|
|
|
—
|
|
|
|
(1)
|
Shares surrendered to us to satisfy tax withholding obligations in connection with the vesting of restricted stock awards issued to employees.
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Exhibit
Number
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Exhibit Description
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3.1
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4.1
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4.2
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4.3
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10.1
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10.2
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|
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10.3
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|
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|
|
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2007 Stock Incentive Plan for Key Employees of First Data Corporation and its Affiliates Forms of Award Agreements
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|
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10.4
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10.5
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|
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|
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10.6
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|
|
|
|
|
|
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First Data Corporation 2015 Omnibus Incentive Plan Forms of Award Agreements
|
|
|
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10.7
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|
|
|
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10.8
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|
|
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10.9
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|
|
|
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10.10
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|
|
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10.11
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31.1
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|
|
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31.2
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|
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32.1
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101.INS*
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Inline XBRL Instance Document - The XBRL Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
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101.SCH*
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Inline XBRL Taxonomy Extension Schema Document
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101.CAL*
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF*
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
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101.LAB*
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|
Inline XBRL Taxonomy Extension Label Linkbase Document
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101.PRE*
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|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
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|
104
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|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
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*
|
Filed with this quarterly report on Form 10-Q are the following documents formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Statements of Income for the three and nine months ended September 30, 2019 and 2018, (ii) the Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2019 and 2018, (iii) the Consolidated Balance Sheets at September 30, 2019 and December 31, 2018, (iv) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018, and (v) Notes to Consolidated Financial Statements.
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FISERV, INC.
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||
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Date:
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November 7, 2019
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By:
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/s/ Robert W. Hau
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Robert W. Hau
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Chief Financial Officer and Treasurer
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Date:
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November 7, 2019
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By:
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/s/ Kenneth F. Best
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Kenneth F. Best
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Chief Accounting Officer
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NEW OMAHA HOLDINGS CORPORATION
|
By:
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Its:
|
OPTIONEE:
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Name:
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Address
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ACCEPTED BY:
|
|
Signature
|
|
Date
|
Participant:
|
[Insert Participant Name]
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Date of Grant:
|
[Insert Date of Grant]
|
Number of Time Options:
|
[Insert No. of Time Options Granted], subject to adjustment as set forth in the Plan (the “Time Options”).
|
Number of Performance Options:
|
[Insert No. of Performance Options Granted], subject to adjustment as set forth in the Plan (the “Performance Options”).
|
Exercise Price:
|
[Insert Exercise Price per Share], subject to adjustment as set forth in the Plan.
|
Option Period Expiration Date:
|
[Insert Expiration Date]
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Type of Option:
|
Nonqualified Stock Option
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Vesting Schedule:
|
Provided that the Participant has not undergone a Termination at the time of each applicable vesting date, twenty-five percent (25%) of the Time Options (rounded down to the nearest whole share underlying such Option) shall vest and become exercisable on each of December 31, 2017, December 31, 2018, December 31, 2019 and December 31, 2020 (each such date, a “Time-Vesting Vesting Date”). In the event of a Termination prior to a Time-Vesting Vesting Date, unvested Time Options shall be forfeited to the Company by the Participant for no consideration as of the date of such Termination; provided, however that, in the event of a Termination due to death or Disability, by the Participant for Good Reason or by the Service Recipient without Cause, in each case, prior to the date on which the Time Options are fully vested, the unvested Time Options that would have vested on the next Time-Vesting Vesting Date shall vest pro-rata and become exercisable as of such date of Termination as determined by multiplying the number of Time Options that would have vested on such next Time-Vesting Vesting Date by a fraction, the numerator of which corresponds to the number of completed months of employment since the Time-Vesting Vesting Date immediately preceding the date of the Participant’s Termination and the denominator of which is 12 (the “Time Pro Rata Fraction”). For the avoidance of doubt, the numerator of the Time Pro Rata Fraction shall in all cases be a whole number.
Provided that the Participant has not undergone a Termination at the time of the applicable vesting event, one hundred percent (100%) of the Performance Options shall vest and become exercisable on the date immediately following the date on which the closing trading price of a share of Common Stock on the NYSE or other such primary exchange on which the Common Stock is listed and traded has equaled or exceeded $[ ] for ten (10) consecutive trading days (such date, the “Performance-Vesting Vesting Date”). In the event of a Termination prior to the Performance-Vesting Vesting Date, unvested Performance Options shall be forfeited to the Company by the Participant for no consideration as of the date of such Termination.
Notwithstanding the foregoing, in the event of a Change in Control that occurs prior to the Participant’s Termination:
(1) the Time Options, to the extent not then vested or previously forfeited or cancelled, shall become fully vested; and
(2) the Performance Options, to the extent not then vested or previously forfeited or cancelled, shall become fully vested if the consideration received by holders of Common Stock in cash or marketable securities (which shall be valued on the date of such Change in Control) in such Change in Control transaction equals or exceeds [●]. To the extent the Performance Options do not vest as a result of a Change in Control, such unvested Performance Options shall be forfeited to the Company by the Participant for no consideration as of the date of such Change in Control.
|
FIRST DATA CORPORATION
|
PARTICIPANT
|
|
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By:
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Title:
|
|
[Signature Page to Option Award]
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Vesting Schedule:
|
Provided that the Participant has not undergone a Termination at the time of each applicable vesting date, twenty-five percent (25%) of the shares of Time-Vesting Restricted Stock (rounded down to the nearest whole share) shall vest on each of December 31, 2017, December 31, 2018, December 31, 2019 and December 31, 2020 (each such date, a “Time-Vesting Vesting Date”) and the Restricted Period shall expire with respect to a corresponding number of shares of Time-Vesting Restricted Stock.
In the event of a Termination prior to a Time-Vesting Vesting Date, unvested Time-Vesting Restricted Stock shall be forfeited to the Company by the Participant for no consideration as of the date of such Termination; provided, however that, in the event of a Termination due to death or Disability, by the Participant for Good Reason or by the Service Recipient without Cause, in each case, prior to the date on which the Time-Vesting Restricted Stock is fully vested, the unvested Time-Vesting Restricted Stock that would have vested on the next Time-Vesting Vesting Date shall vest pro-rata as of such date of Termination as determined by multiplying the number of shares of Time-Vesting Restricted Stock that would have vested on such next Time-Vesting Vesting Date by a fraction, the numerator of which corresponds to the number of completed months of employment since the Time-Vesting Vesting Date immediately preceding the date of the Participant’s Termination and the denominator of which is 12 (the “Time Pro Rata Fraction”) and the Restricted Period shall expire with respect to a corresponding number of shares of Time-Vesting Restricted Stock. For the avoidance of doubt, the numerator of the Time Pro Rata Fraction shall in all cases be a whole number.
Provided that the Participant has not undergone a Termination at the time of the applicable vesting event, one hundred percent (100%) of the shares of Performance-Vesting Restricted Stock shall vest on the date immediately following the date on which the closing trading price of a share of Common Stock on the NYSE or other such primary exchange on which the Common Stock is listed and traded has equaled or exceeded $[ ] for ten (10) consecutive trading days (such date, the “Performance-Vesting Vesting Date”) and the Restricted Period shall expire with respect to such shares of Performance-Vesting Restricted Stock. In the event of a Termination prior to the Performance-Vesting Vesting Date, unvested Performance-Vesting Restricted Stock shall be forfeited to the Company by the Participant for no consideration as of the date of such Termination.
Notwithstanding the foregoing, in the event of a Change in Control that occurs prior to the Participant’s Termination:
(1) the Time-Vesting Restricted Stock, to the extent not then vested or previously forfeited or cancelled, shall become fully vested and the Restricted Period shall expire with respect to such shares of Time-Vesting Restricted Stock; and
(2) the Performance-Vesting Restricted Stock, to the extent not then vested or previously forfeited or cancelled, shall become fully vested if the consideration received by holders of Common Stock in cash or marketable securities (which shall be valued on the date of such Change in Control) in such Change in Control transaction equals or exceeds [●] and the Restricted Period shall expire with respect to such shares of Performance-Vesting Restricted Stock. To the extent the Performance-Vesting Restricted Stock does not vest as a result of a Change in Control, such unvested Performance-Vesting Restricted Stock shall be forfeited to the Company by the Participant for no consideration as of the date of such Change in Control.
|
FIRST DATA CORPORATION
|
PARTICIPANT
|
|
|
|
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By:
|
|
Title:
|
|
|
|
|
|
|
|
ACCEPTED BY:
|
|
|
|
|
|
Signature
|
|
|
|
|
|
Date
|
|
ACCEPTED BY:
|
|
|
Signature
|
|
|
Date
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Fiserv, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
|
|
Date:
|
November 7, 2019
|
|
By:
|
|
/s/ Jeffery W. Yabuki
|
|
|
|
|
|
Jeffery W. Yabuki
|
|
|
|
|
|
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Fiserv, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
|
|
Date:
|
November 7, 2019
|
|
By:
|
|
/s/ Robert W. Hau
|
|
|
|
|
|
Robert W. Hau
|
|
|
|
|
|
Chief Financial Officer and Treasurer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
By:
|
|
/s/ Jeffery W. Yabuki
|
|
|
Jeffery W. Yabuki
|
|
|
Chairman and Chief Executive Officer
|
|
|
November 7, 2019
|
|
|
|
By:
|
|
/s/ Robert W. Hau
|
|
|
Robert W. Hau
|
|
|
Chief Financial Officer and Treasurer
|
|
|
November 7, 2019
|