<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>d10k405.txt
<DESCRIPTION>FORM 10-K (FISCAL YEAR DECEMBER 31, 2001)
<TEXT>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2001
Commission file no. 0-14948
FISERV, INC.
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(Exact name of registrant as specified in its charter)
WISCONSIN 39-1506125
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
255 FISERV DRIVE, BROOKFIELD, WISCONSIN 53045
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (262) 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, $0.01 Par Value
-----------------------------
(Title of Class)
Preferred Stock Purchase Rights
-------------------------------
(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 [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant as of January 31, 2002: $8,087,000,000
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of January 31, 2002: 190,545,290
DOCUMENTS INCORPORATED BY REFERENCE:
2001 Annual Report to Shareholders - Parts II, IV
Proxy Statement for March 28, 2002, Annual Meeting of Shareholders - Part III
<PAGE>
Fiserv, Inc. and Subsidiaries
Form 10-K
December 31, 2001
PART I Page
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Item 1. Business 1
Item 2. Properties 8
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Executive Officers of the Registrant 9
PART II
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Item 5. Market for the Registrant's Common Equity and Related
Shareholder Matters 11
Item 6. Selected Financial Data 11
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 7a. Quantitative and Qualitative Disclosure about Market Risk 11
Item 8. Financial Statements and Supplementary Data 11
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 11
PART III
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Item 10. Directors and Executive Officers of the Registrant 12
Item 11. Executive Compensation 12
Item 12. Security Ownership of Certain Beneficial Owners and
Management 12
Item 13. Certain Relationships and Related Transactions 12
PART IV
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Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K 12
<PAGE>
================================================================================
PART I
================================================================================
Special Note Regarding Forward-Looking Statements
Certain matters discussed in this Annual Report on Form 10-K are
"forward-looking statements" intended to qualify for the safe harbors from
liability established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements can generally be identified as such because the
context of the statement will include words such as "believes," "anticipates" or
"expects," or words of similar import. Similarly, statements that describe
future plans, objectives or goals of Fiserv, Inc. ("Fiserv" or the "Company")
are also forward-looking statements. Such forward-looking statements are subject
to certain risks and uncertainties which could cause actual results to differ
materially from those currently anticipated. Factors that could affect results
include, among others, economic, competitive, governmental and technological
factors affecting the Company's operations, markets, services and related
products, prices and other factors discussed in the Company's prior filings with
the Securities and Exchange Commission. Shareholders, potential investors and
other readers are urged to consider these factors carefully in evaluating the
forward-looking statements and are cautioned not to place undue reliance on such
forward-looking statements.
Item 1. Business
Fiserv is a leading technology resource for information management
systems used by 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 provides information
management technology and related services to banks, broker-dealers, credit
unions, financial planners and investment advisers, insurance agents and
companies, leasing companies, mortgage lenders and savings institutions. The
Company 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 Argentina, Australia, Colombia, Indonesia, the Philippines,
Poland, Singapore and the United Kingdom.
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 that 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.
1
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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 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 have 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
-------------------
<TABLE>
<CAPTION>
Formed Acquired Company Service
================================================================================================================
<S> <C> <C> <C>
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 Retirement plans
1962 Oct. 1985 First Retirement Marketing, Denver, CO Retirement plan marketing
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
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Formed Acquired Company Service
=====================================================================================================================
<S> <C> <C> <C>
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
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 and 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
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Formed Acquired Company Service
===========================================================================================================================
<S> <C> <C> <C>
1983 Jan. 1996 UniFi, Inc., Fort Lauderdale, FL Software and services
1982 Nov. 1996 Bankers Pension Services, Inc., Tustin, CA DP for retirement planning
1992 Apr. 1997 AdminaStar Communications, Indianapolis, IN Laser print/mailing services
1982 May 1997 Interactive Planning Systems, Atlanta, GA PC-based financial systems
1983 May 1997 BHC Financial, Inc., Philadelphia, PA Securities 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 services
1986 Oct. 1997 Emerald Publications, San Diego, CA Financial seminars and training
1968 Oct. 1997 Central Service Corp., Greensboro, NC Data and item processing
1993 Oct. 1997 Savoy Discount Brokerage, Seattle, WA Securities services
1990 Dec. 1997 Hanifen, Imhoff Holdings, Inc., Denver, CO Securities 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 and 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
1994 Jan. 1999 QuestPoint, Philadelphia, PA Item processing
1981 Feb. 1999 Eldridge & Associates, Lafayette, CA PC-based financial systems
1984 Feb. 1999 RF/Spectrum Decision Science Corporation, Oakland, CA Software and services
1978 Mar. 1999 FIPSCO, Inc., Des Plaines, IL Insurance marketing systems
1987 Apr. 1999 Progressive Data Solutions, Inc./Infinity Software Insurance software systems
Systems, Inc., Orlando, FL
1973 June 1999 JWGenesis Clearing Corporation, Boca Raton, FL Securities services
1987 June 1999 Alliance ADS, Redwood Shores, CA Imaging technology
1962 Aug. 1999 Envision Financial Technologies, Inc., Chicago, IL Data processing
1995 Oct. 1999 Pinehurst Analytics, Inc., Chapel Hill, NC PC-based financial systems
1982 Dec. 1999 Humanic Design Corporation, Mahwah, NJ (sold 2001) Software and services
1983 Jan. 2000 Patterson Press, Inc., Nashville, TN Card services
1982 May 2000 Resources Trust Company, Denver, CO DP for retirement planning
1986 Sept. 2000 National Flood Services, Inc., Kalispell, MT Insurance data processing
1982 Jan. 2001 Benefit Planners, Boerne, TX Insurance data processing
n/a Feb. 2001 Marshall & Ilsley IP services, IA, MN, MO Item processing
1972 Mar. 2001 Facilities and Services Corp., Agoura Hills, Novato, CA Insurance software systems
1991 Mar. 2001 Remarketing Services of America, Inc., Amherst, NY Automobile leasing services
1982 July 2001 EPSIIA Corporation, Austin, TX Data processing
1996 July 2001 Catapult Technology Limited, London, England Software and services
1985 Sept. 2001 FHLB of Pittsburgh IP services, Pittsburgh, PA Item processing
1959 Nov. 2001 NCR bank processing operations, Dayton, OH Data and item processing
1972 Nov. 2001 NCSI, Rockville, MD Insurance data processing
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Formed Acquired Company Service
===================================================================================================================
<S> <C> <C> <C>
1940 Nov. 2001 Integrated Loan Services, Rocky Hill, CT Loan services
1954 Nov. 2001 Trewit Inc., Minneapolis, MN Insurance data processing
n/a Nov. 2001 FACT 400 credit card solution, Bogota, Colombia Software and services
</TABLE>
Information Technology Services
-------------------------------
Fiserv is a technology company focused on helping financial services
providers meet the challenges and opportunities of today's dynamic financial
marketplace. The Company's core business is serving the needs of banking,
lending, insurance, financial planners and securities providers. With its wide
array of industry-specific products, Fiserv clients can satisfy their customers'
growing desire for anywhere, anytime financial services. The Company's
operations have been classified into three business segments: Financial
institution outsourcing, systems and services; Securities processing and trust
services; and All other and corporate. The Financial institution outsourcing,
systems and services business segment provides account and transaction
processing solutions and services to financial institutions and other financial
intermediaries. The Securities processing and trust services business segment
provides securities processing solutions and retirement plan administration
services to brokerage firms, investment advisors and financial institutions. The
All other and corporate business segment provides plastic card services and
document solutions, and includes general corporate expenses. The following
discussion covers the two major operating segments:
Financial Institution Outsourcing, Systems and Services. Account
processing is a core requirement of every financial institution. It's also vital
to the operations of brokerage firms and insurance companies. No matter how the
industry may consolidate and evolve, Fiserv expects that the need for account
processing will always remain. That's where Fiserv is positioned--as a leader in
financial information management.
Fiserv provides comprehensive solutions designed to meet the
information processing requirements of financial institutions, including account
and transaction processing services, item processing, loan servicing and lending
systems. The Company offers its clients service bureau and in-house processing
systems, e-commerce solutions and complementary products. In essence, Fiserv
provides all the technology a bank, credit union, mortgage lender, savings or
financing institution needs to run its operations--from deposit accounts to
loans to general ledger to check processing.
Fiserv products, services and software solutions are available through
multiple delivery channels to financial institutions in the United States, and
many of its systems have applications designed for the unique requirements of
financial institutions operating outside of North America. Fiserv international
teams develop, sell, install and support core banking and delivery channel
integration solutions for a wide range of international banks and financial
services companies located in over 65 countries.
All Fiserv core systems can be complemented with a number of other
products that allow clients to create a total servicing solution, depending on
their requirements. These complementary products and back-office solutions
include treasury and investment management, decision support and performance
measurement solutions, electronic funds transfer services, imaging systems, call
center systems, loan origination and tracking, auto leasing software, data
warehousing/data mining and credit services.
The insurance industry, like banking, has requirements for basic
administration services and information processing systems. Fiserv brings
expertise in information management technology and related administration
processing services to the insurance and banking industries. The products and
solutions offered by the Company automate the full range of insurance services.
Fiserv insurance solutions include administration services and software
for life, annuity, health insurance, property & casualty, flood and workers
compensation; award-winning claims workstation software; comprehensive financial
accounting systems; computer-based training for insurance and securities;
administrative services for employee benefit programs; and electronic sales
platforms that can be delivered over the Internet.
5
<PAGE>
Securities Processing and Trust Services. The securities business is
about transactions and volume; advanced technology that makes executing and
clearing trades faster, easier and more economical; and service excellence and
customer satisfaction. Fiserv has accumulated the technology resources and
industry knowledge required to meet the needs of brokerage firms and financial
institutions that are expanding into this business.
The Company provides comprehensive clearing, execution and brokerage
services. With Fiserv, brokerage firms and financial institutions gain a
technology resource with the volumes, management expertise, products and service
necessary to help satisfy customer needs.
The administration of self-directed retirement plans is also a highly
specialized business that benefits, as do all financial services applications,
from technology. Fiserv has built a trusted reputation in this field by applying
its expertise to technology for administration of business and self-directed
retirement plans and related services.
The Fiserv Trust Services Group is a leading provider of retirement
plan products and back-office services to financial advisors.
Financial information concerning the Company's industry segments is
included in Note 8 to the Consolidated Financial Statements contained in the
Company's Annual Report to Shareholders included in this Annual Report on Form
10-K as Exhibit 13 and such information is incorporated herein by reference.
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 lines, timely introduction of new
products and features, cost effectiveness and demand for service excellence.
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
financial services providers in the world.
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
information management and 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 is a belief backed by a dedication to providing ongoing client service and
support--no matter the client size.
The Company believes its commitment of substantial resources to
training and technical support helps retain Fiserv clients. 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.
Fiserv has been an international company since 1986, when its retail
banking products were first launched throughout Europe, Asia and Latin America.
Since then, the Company has grown an impressive infrastructure for supporting
clients in international markets. Fiserv currently maintains international
support staffs in Argentina, Australia, Colombia, Indonesia, the Philippines,
Poland, Singapore and the United Kingdom.
6
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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.
The Fiserv 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 multiple Fiserv centers share the Company's variety of
nationally developed and supported software, each center has specialized
capabilities that enable it to offer system application features and functions
unique to its client base. Where the client's requirements warrant, Fiserv
purchases software programs from third parties that 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 solution that is 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.
Fiserv regards its software as proprietary and utilizes a combination
of trade secrecy laws, 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.
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 lines,
timely introduction of new products and features, and price. The Company
believes that it competes favorably in each of these categories. In addition,
the Company believes that its position as an independent vendor, rather than as
a cooperative, an affiliate of a larger corporation or a hardware vendor, is a
competitive advantage.
Government Regulation
---------------------
The Company's data processing subsidiaries are not themselves directly
subject to federal or state regulations specifically applicable to financial
institutions such as banks, thrifts and credit unions. As a provider of services
to these entities, however, the data processing operations are observed from
time to time by the Federal Deposit Insurance Corporation, the National Credit
Union Association, the Office of Thrift Supervision, the Office of the
Comptroller of the Currency and various state regulatory authorities. In
addition, several of the Company's operations are reviewed annually by
independent auditors to provide internal control evaluations for its clients'
auditors and regulators.
As trust companies under Colorado law, First Trust, Lincoln Trust,
Resources Trust and Trust Industrial Bank are subject to the regulations of the
Colorado Division of Banking. First Trust, Lincoln
7
<PAGE>
Trust, Resources Trust and Trust Industrial Bank historically have complied with
such regulations and although no assurance can be given, the Company believes
First Trust, Lincoln Trust, Resources Trust and Trust Industrial Bank 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 securities business, Fiserv Securities, Inc. (formerly
BHC Financial, Inc., Hanifen, Imhoff Clearing Corporation and JWGenesis Clearing
Corporation), is 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 it is a
member.
Employees
---------
Fiserv employs approximately 18,200 specialists 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.
In supporting international markets, Fiserv works closely with its
clients to help ensure their continued success. Fiserv employees speak the same
language as their clients, they also understand the differences in the style of
doing business, as well as the financial products requirements and regulations
unique to each client and its specific market.
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 164
cities (153 in the United States): Birmingham, Alabama; Phoenix and Scottsdale,
Arizona; Agoura Hills, Diamond Bar, Foster City, Fresno, Marina del Rey,
Moorpark, Novato, Oakland, Ontario, Orange, Redwood Shores, Sacramento, San
Diego, San Leandro, Torrance, Van Nuys and Walnut, California; Denver,
Englewood, Greenwood Village and Pueblo, Colorado; East Hartford, Fairfield,
Glastonbury, North Haven, Rocky Hill, Wallingford and Windsor, Connecticut;
Deerfield Beach, Jacksonville, Lake Mary, Lake Wales, Maitland, Melbourne,
Miami, Miami Lakes, Orlando, Plantation, Tampa and Titusville, Florida; Atlanta,
Duluth, Macon, Marietta and Norcross, Georgia; Honolulu, Hawaii; Cedar Rapids
and West Des Moines, Iowa; Arlington Heights, Chicago, Des Plaines, Marion,
Naperville, Mt. Prospect, Rock Island, Rockford and Schaumburg, Illinois;
Indianapolis and South Bend, Indiana; Topeka, Kansas; Bowling Green and
Louisville, Kentucky; Kenner and Shreveport, Louisiana; Bangor and Scarborough,
Maine; Columbia, Gaithersburg, and Rockville, Maryland; Auburn, Braintree,
Charlestown, Framingham, Mansfield, Quincy and Somerville, Massachusetts; Flint,
Northville and Troy, Michigan; Brooklyn Center, Eagan, Edina, Mendota Heights,
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Minnetonka, Shoreview and Wayzata, Minnesota; Kansas City and St. Louis,
Missouri; Kalispell, Montana; Lincoln and Omaha, Nebraska; New Providence,
Secaucus and South Plainfield, New Jersey; Santa Fe, New Mexico; Amherst,
Fayetteville, New Hartford, New York, Utica and White Plains, New York; Chapel
Hill and Greensboro, North Carolina; Fargo, North Dakota; Cleveland, Dayton,
Milford, Westerville and Youngstown, Ohio; Duncan and Oklahoma City, Oklahoma;
Corvallis and Portland, Oregon; Bryn Mawr, Conshohoken, Erie, Malvern,
Norristown, King of Prussia, Philadelphia, Pittsburgh, Valley Forge and
Williamsport, Pennsylvania; Newberry, South Carolina; Brentwood and Nashville,
Tennessee; Addison, Arlington, Austin, Boerne, Beaumont, Dallas, Houston,
Irving, San Antonio, South Lake and Stafford, Texas; Salt Lake City and
Taylorsville, Utah; Norfolk and Williamsburg, Virginia; Bellevue, Kent, Lynnwood
and Seattle, Washington; Brookfield, Milwaukee, New Berlin, Sheboygan and
Waukesha, Wisconsin. International business centers are located in Buenos Aires,
Argentina; North Sydney, New South Wales, Australia; Bogota, Colombia; London,
Slough (Berkshire) and Uxbridge (Middlesex), England; Jakarta, Indonesia;
Manila, Philippines; Warsaw, Poland; and Singapore, Singapore.
The Company owns facilities in Brookfield, Columbia, Corvallis,
Glastonbury, Greensboro, Kalispell, Lincoln, Marion, Moorpark, South Bend and
Valley Forge; all other buildings in which centers are located are subject to
leases expiring through 2003 and beyond. The Company owns or leases
approximately 170 mainframe computers (Compaq Alpha, Data General, Hewlett
Packard, IBM, NCR, SUN, 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
back-up 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.
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 consolidated financial statements of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of the fiscal year covered by this report, no
matter was submitted to a vote of security holders of the Company.
Executive Officers of the Registrant
------------------------------------
The executive officers and other officers of the Company as of February
26, 2002, together with their ages, positions and business experience are
described below:
Name Age Position
Leslie M. Muma 57 President and Chief Executive Officer
Donald F. Dillon 61 Chairman of the Board and Chairman of
Information Technology, Inc.
Kenneth R. Jensen 58 Senior Executive Vice President, Chief
Financial Officer and Treasurer
9
<PAGE>
Norman J. Balthasar 55 President and Chief Operating Officer,
Financial Institution Group
Robert H. Beriault 50 President and Chief Operating Officer,
Securities Group
Michael D. Gantt 50 President and Chief Operating Officer,
Insurance Solutions Group
Thomas A. Neill 52 President and Chief Operating Officer,
Credit Union and Industry Products Group
Gordon G. Rockafellow 65 President and Chief Operating Officer,
Trust Services Group
Dean C. Schmelzer 51 Executive Vice President - Marketing &
Sales
Charles W. Sprague 52 Executive Vice President, General
Counsel, Chief Administrative Officer
and Secretary
Mr. Muma has been a Director of the Company since it was established in
1984. He has served as President and Chief Operating Officer of the Company from
1984 to 1999, when he was named President and Chief Executive Officer.
Mr. Dillon was named Chairman of the Board of Directors in July 2000.
He served as Vice Chairman from 1995 to 2000. From 1976 to 1995, Mr. Dillon was
co-founder and President of Information Technology, Inc. ("ITI"), a software and
services organization that was acquired by the Company in 1995. Mr. Dillon also
serves as Chairman of ITI.
Mr. Jensen has been Executive Vice President, Chief Financial Officer,
Treasurer, Assistant Secretary and a Director of the Company since it was
established in 1984. He was named Senior Executive Vice President in 1986.
Mr. Balthasar was named President and Chief Operating Officer of the
Fiserv Financial Institution Group in 2000. He served as Corporate Executive
Vice President and President-Savings and Community Bank Group from 1996 to 1999,
when he was named President and Chief Operating Officer of the Fiserv Financial
Institution Outsourcing Group. Mr. Balthasar has been with Fiserv and its
predecessor company since 1974.
Mr. Beriault was named President and Chief Operating Officer of the
Fiserv Securities Group in 1999. He served as Corporate Executive Vice President
and President-Securities Processing Group from 1998 to 1999. From 1986 to 1998,
Mr. Beriault was President of Lincoln Trust Company, which was acquired by the
Company in 1995.
Mr. Gantt was named President and Chief Operating Officer of the Fiserv
Insurance Solutions Group in 2001. He joined Fiserv in 2000 and served as
Executive Vice President and Chief Operating Officer of the Group. Prior to
joining Fiserv, he was Senior Vice President and Group Manager for PMSC's
(Policy Management Systems Corporation) Claims and Risk Management Group.
Mr. Neill was named President and Chief Operating Officer of the Fiserv
Credit Union and Industry Products Group in 2000. He served as President of the
Products & Services Division and Group President of the Industry Products and
Services Group from 1993 to 2000.
Mr. Rockafellow was named President and Chief Operating Officer of the
Fiserv Trust Services Group in 1999. He has served as Corporate Executive Vice
President and President-Trust Group since 1998. Mr. Rockafellow was the
President and CEO of First Trust Corporation from 1982 to 1985, when it was
acquired by the Company, and served in that capacity until 1999.
Mr. Schmelzer was named Corporate Executive Vice President, Marketing &
Sales for the Company in 1992. Prior to joining Fiserv, he was Director of
Commercial Analysis for IBM.
Mr. Sprague has been Corporate Executive Vice President, General
Counsel and Secretary since 1994, and Chief Administrative Officer of the
Company since 1999. He has been involved with the Company's corporate and legal
concerns since it was formed in 1984.
10
<PAGE>
================================================================================
PART II
================================================================================
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters
The information required by this item under Item 201 of Regulation S-K
is incorporated by reference to the information pertaining thereto set forth
under the caption "Quarterly Financial Information" in the Company's 2001 Annual
Report to Shareholders (the "Annual Report").
In connection with the Company's acquisition of Trewit Inc. on November
30, 2001, the Company issued 2,721,615 shares of its common stock to the
shareholders of Trewit. In connection with the Company's acquisition of Benefit
Planners, Ltd., L.L.P. on January 2, 2001, the Company issued 330,155 shares of
its common stock, as adjusted to reflect a three-for-two stock split effective
in August 2001, to the shareholders of Benefit Planners. For each of these
transactions, the Company relied on the exemption from registration under
Section 4(2) of the Securities Act of 1933, based upon the number and
sophistication of recipients of the shares, their positions and the aggregate
value of the transactions. No underwriter was involved in any of these
transactions.
Item 6. Selected Financial Information
The information required by this item is incorporated by reference to
the information set forth under the caption "Selected Financial Data" in the
Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation
The information required by this item is incorporated by reference to
the information set forth under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Annual Report.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The information required by this item is incorporated by reference to
the information set forth under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Market Risk Factors"
in the Annual Report.
Item 8. Financial Statements and Supplementary Data
The information required by this item is incorporated by reference to
the information set forth under the captions "Consolidated Statements of
Income," "Consolidated Balance Sheets," "Consolidated Statements of
Shareholders' Equity," "Consolidated Statements of Cash Flows," "Notes to
Consolidated Financial Statements," "Quarterly Financial Information" and
"Independent Auditors' Report" in the Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
11
<PAGE>
================================================================================
PART III
================================================================================
Item 10. Directors and Executive Officers
The information required by this item with respect to directors is
incorporated by reference to the information set forth under the captions
"Matter 1. Election of Directors" and "Information with Respect to Continuing
Directors" in the definitive proxy statement for the Company's 2002 annual
meeting of shareholders (the "Proxy Statement"). The information required by
this item with respect to executive officers appears at the end of Part I of
this Form 10-K. The information required by this item with respect to compliance
with Section 16(a) of the Securities Exchange Act of 1934 by directors and
officers is incorporated by reference to the information set forth under the
caption "Section 16(a) Beneficial Ownership Reporting Compliance" in the Proxy
Statement.
Item 11. Executive Compensation
The information required by this item is incorporated herein by
reference to the information set forth under the captions "Compensation of
Directors," "Compensation of Executive Officers," "Agreements with Executive
Officers" and "Stock Price Performance Graph" in the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this item is incorporated herein by
reference to the information set forth under the caption "Security Ownership of
Certain Beneficial Owners and Management" in the Proxy Statement.
Item 13. Certain Relationships and Related Transactions
Not applicable.
================================================================================
PART IV
================================================================================
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1) Financial Statements:
The consolidated financial statements of the Company as of December 31,
2001 and 2000 and for each of the three years in the period ended December 31,
2001, together with the report thereon of Deloitte & Touche LLP, dated January
25, 2002, appear on pages 23 through 44 of the Company's Annual Report to
Shareholders and Exhibit 13 to this Form 10-K Annual Report, and are
incorporated herein by reference.
12
<PAGE>
(a) (2) Financial Statement Schedule:
The following financial statement schedule of the Company and related
independent auditors' report are included in this Report on Form 10-K:
Page
----
Independent Auditors' Report 15
Schedule II-Valuation and Qualifying Accounts 15
All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements or notes
thereto.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended December 31,
2001.
(c) Exhibits:
The exhibits listed in the accompanying exhibit index are filed as part
of this Annual Report on Form 10-K.
13
<PAGE>
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 26, 2002
FISERV, INC.
By /s/ Leslie M. Muma
-------------------------------------
Leslie M. Muma
President and Chief Executive Officer
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 26, 2002.
<TABLE>
<CAPTION>
Signature Capacity
<S> <C>
/s/ Leslie M. Muma
---------------------------------------
Leslie M. Muma Director, President and Chief Executive Officer
/s/ Donald F. Dillon
---------------------------------------
Donald F. Dillon Chairman of the Board,
Chairman-Information Technology, Inc.
/s/ Kenneth R. Jensen
--------------------------------------
Kenneth R. Jensen Director, Senior Executive Vice President,
Chief Financial Officer, Treasurer
/s/ Daniel P. Kearney
---------------------------------------
Daniel P. Kearney Director
/s/ Gerald J. Levy
---------------------------------------
Gerald J. Levy Director
/s/ Glenn M. Renwick
---------------------------------------
Glenn M. Renwick Director
/s/ L. William Seidman
---------------------------------------
L. William Seidman Director
/s/ Thekla R. Shackelford
---------------------------------------
Thekla R. Shackelford Director
</TABLE>
14
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of Fiserv, Inc.:
We have audited the consolidated financial statements of Fiserv, Inc. and
subsidiaries as of December 31, 2001 and 2000, and for each of the three years
in the period ended December 31, 2001, and have issued our report thereon dated
January 25, 2002; such consolidated financial statements and report are included
in your 2001 Annual Report to Shareholders and are incorporated herein by
reference. 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 consolidated 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 25, 2002
SCHEDULE II
Valuation and Qualifying Accounts
Allowance for Doubtful Accounts
<TABLE>
<CAPTION>
Year Ended Beginning Charged
December 31, Balance to Expense Write-offs Balance
------------ ------- ---------- ---------- -------
<S> <C> <C> <C> <C>
2001 $16,001,000 $1,101,000 ($2,399,000) $14,703,000
2000 11,606,000 6,803,000 (2,408,000) 16,001,000
1999 8,041,000 7,028,000 (3,463,000) 11,606,000
</TABLE>
15
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Description
------ -------------------
3.1 Restated Articles of Incorporation, as amended (filed as Exhibit 3.1 to
the Company's Annual Report on Form 10-K dated February 28, 2000, and
incorporated herein by reference (File No. 0-14948)).
3.2 By-laws, as amended (filed as Exhibit 3.2 to the Company's Annual Report
on Form 10-K dated February 28, 2000, and incorporated herein by
reference (File No. 0-14948)).
4.1 Shareholder Rights Agreement (filed as Exhibit 4 to the Company's
Current Report on Form 8-K dated February 23, 1998, and incorporated
herein by reference (File No. 0-14948)).
4.2 First Amendment to the Shareholder Rights Agreement (filed as Exhibit
4.3 to the Company's Form S-8 dated April 7, 2000, and incorporated
herein by reference (File No. 333-34310)).
4.3 Second Amendment to the Shareholder Rights Agreement (filed as Exhibit
4.6 to the Company's Form 10-K dated February 27, 2001, and incorporated
herein by reference (File No. 0-14948)).
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the Company agrees to
furnish to the Securities and Exchange Commission, upon request, any
instrument defining the rights of holders of long-term debt that is not
filed as an exhibit to this Form 10-K.
10.1 Fiserv, Inc. Stock Option Plan, as amended (filed as Exhibit 4.1 to the
Company's Form S-8 Registration Statement dated April 7, 2000, and
incorporated herein by reference (File No. 333-34310)).
10.2 Fiserv, Inc. Executive Incentive Compensation Plan (filed as Exhibit A
to the Company's Proxy Statement for the 2001 Annual Meeting of
Shareholders).
10.3 Form of Key Executive Employment and Severance Agreement, between
Fiserv, Inc. and each of Donald F. Dillon, Leslie M. Muma and Kenneth R.
Jensen.
10.4 Form of Key Executive Employment and Severance Agreement, between
Fiserv, Inc. and each of Norman J. Balthasar, Robert H. Beriault,
Michael D. Gantt, Thomas A. Neill, Gordon G. Rockafellow, Dean C.
Schmelzer and Charles W. Sprague.
13 2001 Annual Report to Shareholders (to the extent incorporated by
reference herein).
21 List of Subsidiaries of the Registrant.
23 Independent Auditors' Consent.
16
</TEXT>
</DOCUMENT>