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Fiserv, Inc.$131.20($.63)(.48%)

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 Fiserv Reports Second Quarter 2017 Results
   Tuesday, August 01, 2017 4:01:05 PM ET

Fiserv, Inc. (FISV ), a leading global provider of financial services technology solutions, today reported financial results for the second quarter of 2017.

Second Quarter 2017 GAAP Results

GAAP revenue for the company increased 2 percent in the second quarter compared to the prior year period to $1.39 billion, with 2 percent growth in both the Payments and Financial segments. For the first six months of 2017, GAAP revenue increased 3 percent versus the same period last year to $2.78 billion, with 4 percent growth in the Payments segment and 3 percent growth in the Financial segment. GAAP revenue in the second quarter of 2017 reflects the divestiture of the company’s Australian item processing business which closed in May.

GAAP earnings per share increased 9 percent to $1.02 in the second quarter and decreased 3 percent to $2.15 in the first six months of 2017, compared to the prior year periods. GAAP earnings per share included net investment gains of $0.08 per share and $0.39 per share in the first six months of 2017 and 2016, respectively, driven by the disposition of a business and a business interest at StoneRiver Group, L.P. ("StoneRiver"), a joint venture in which the company owns a 49% interest. GAAP earnings per share in the first six months of 2017 included a benefit related to the adoption of the new accounting standard for excess tax benefits from share-based compensation awards.

GAAP operating margin was 26.8 percent in the second quarter and 26.5 percent in the first six months of 2017, increasing 20 basis points and 50 basis points, respectively, compared to the prior year periods.

Net cash provided by operating activities was $691 million in the first six months of 2017 compared with $687 million in the prior year period. Net cash provided by operating activities included cash distributions from StoneRiver of $31 million and $140 million in the first six months of 2017 and 2016, respectively.

"We delivered solid financial results in the quarter consistent with our expectations," said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. "Our focus on client success continues to drive market momentum."

Second Quarter 2017 Non-GAAP Results and Additional Information

-- Adjusted revenue increased 2 percent in the second quarter to $1.32 billion and 4 percent in the first six months of 2017 to $2.64 billion, compared to the prior year periods.

-- Internal revenue growth for the company was 3 percent in the second quarter, with 3 percent growth in both the Payments segment and Financial segment.

-- Internal revenue growth for the company was 4 percent in the first six months of 2017, with 4 percent growth in the Payments segment and 3 percent growth in the Financial segment.

-- Adjusted earnings per share increased 10 percent in the second quarter to $1.19 and increased 14 percent in the first six months of 2017 to $2.43 compared to the prior year periods.

-- Adjusted operating margin increased 10 basis points to 32.0 percent in the second quarter and expanded 40 basis points to 32.3 percent in the first six months of 2017 compared to the prior year periods.

-- Free cash flow increased 26 percent to $555 million in the first six months of 2017 compared to the prior year period. A cash distribution from StoneRiver of $31 million related to the sale of a business has been excluded from the company’s free cash flow results for the first six months of 2017.

-- The company repurchased 2.5 million shares of common stock for $295 million in the second quarter and 5.9 million shares of common stock for $684 million in the first six months of 2017. As of June 30, 2017, the company had 14.6 million remaining shares authorized for repurchase.

-- In June 2017, the company made a recommended cash offer to acquire Monitise plc for approximately ?70 million ($89 million). The transaction is subject to certain conditions including Monitise shareholder approval (full details of the offer can be found on our website, Fiserv.com).

Outlook for 2017

Fiserv continues to expect 2017 internal revenue growth in a range of 4 to 5 percent and adjusted earnings per share in a range of $5.03 to $5.17, which represents growth of 14 to 17 percent over $4.43 in 2016.

"We remain on-track to achieve our full-year financial objectives which anticipate stronger results in the second half of the year," said Yabuki.

Earnings Conference Call

The company will discuss its second quarter 2017 results on a conference call and webcast at 4 p.m. CT on Tuesday, August 1, 2017. To register for the event, go to Fiserv.com and click on the Q2 Earnings webcast link. Supplemental materials will be available in the "Investor Relations" section of the website.

About Fiserv

Fiserv, Inc. (FISV ) enables clients worldwide to create and deliver financial services experiences that are in step with the way people live and work today. For more than 30 years, Fiserv has been a trusted leader in financial services technology, helping clients achieve best-in-class results by driving quality and innovation in payments, processing services, risk and compliance, customer and channel management, and insights and optimization. Fiserv is a member of the FORTUNE(R) 500 and has been named among the FORTUNE World’s Most Admired Companies(R) for four consecutive years, ranking first in its category for innovation in 2016 and 2017. For more information, visit Fiserv.com.

Use of Non-GAAP Financial Measures

In this earnings release, the company supplements its reporting of information determined in accordance with GAAP, such as revenue, operating income, operating margin, net income, earnings per share and net cash provided by operating activities, with "adjusted revenue," "internal revenue growth," "adjusted operating income," "adjusted operating margin," "adjusted net income," "adjusted earnings per share" and "free cash flow." Management believes that adjustments for certain non-cash or other items and the exclusion of certain pass-through revenue and expenses enhance shareholders’ ability to evaluate the company’s performance as such measures provide additional insights into the factors and trends affecting its business. Therefore, the company excludes these items from GAAP revenue, operating income, operating margin, net income, earnings per share and net cash provided by operating activities to calculate these non-GAAP measures. The corresponding reconciliations of these non-GAAP financial measures to the most comparable GAAP measures are included in this earnings release, except for forward-looking measures where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and low visibility of the non-cash and other items described below that are excluded from the non-GAAP outlook measures. See page 12 for additional information regarding the company’s forward-looking non-GAAP financial measures.

Examples of non-cash or other items may include, but are not limited to, non-cash deferred revenue adjustments arising from acquisitions, non-cash intangible asset amortization expense associated with acquisitions, non-cash impairment charges, gains or losses from dispositions and unconsolidated affiliates, severance costs, merger and integration costs related to acquisitions, and certain costs associated with the achievement of the company’s operational effectiveness objectives. The company excludes these items to more clearly focus on the factors management believes are pertinent to its operations, and management uses this information to make operating decisions, including the allocation of resources to the company’s various businesses.

Internal revenue growth and free cash flow are non-GAAP financial measures and are described on page 11. Management believes internal revenue growth is useful because it presents revenue growth excluding the effects of acquisitions and dispositions and the impact of postage reimbursements in the company’s Output Solutions business, and including deferred revenue purchase accounting adjustments. Management believes free cash flow is useful to measure the funds generated in a given period that are available for debt service requirements and strategic capital decisions. Management believes this supplemental information enhances shareholders’ ability to evaluate and understand the company’s core business performance.

These non-GAAP measures may not be comparable to similarly titled measures reported by other companies and should be considered in addition to, and not as a substitute for, revenue, operating income, operating margin, net income, earnings per share and net cash provided by operating activities or any other amount determined in accordance with GAAP.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated internal revenue growth, adjusted earnings per share and adjusted earnings per share growth. Statements can generally be identified as forward-looking because they include words such as "believes," "anticipates," "expects," "could," "should" or words of similar meaning. Statements that describe the company’s future plans, objectives or goals are also forward-looking statements. Forward-looking statements are subject to assumptions, risks and uncertainties that may cause actual results to differ materially from those contemplated by such forward-looking statements. The factors that may affect the company’s results include, among others: pricing and other actions by competitors; the capacity of the company’s technology to keep pace with a rapidly evolving marketplace; the impact of market and economic conditions on the financial services industry; the impact of a security breach or operational failure on the company’s business; the effect of legislative and regulatory actions in the United States and internationally; the company’s ability to comply with government regulations; the company’s ability to successfully identify, complete and integrate acquisitions, and to realize the anticipated benefits associated with the same, including with respect to the acquisition of Monitise plc; the impact of the company’s strategic initiatives; and other factors included in the company’s filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2016 and in other documents that the company files with the SEC. You should consider these factors carefully in evaluating forward-looking statements and are cautioned not to place undue reliance on such statements. The company assumes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

 
                                                                                                                                                                                 Fiserv, Inc.
                                                                                                                                                                  Condensed Consolidated Statements of Income
                                                                                                                                                              (In millions, except per share amounts, unaudited)
                                                                                                                                                                                 
                                                                                                                                                    Three Months Ended                                                                                                                                          Six Months Ended
                                                                                                                                                         June 30,                                                                                                                                                   June 30,
                                                                                                                   2017                                                                           2016                                                                        2017                                                                        2016
                                                                                                   -------------------------------------                                          -------------------------------------                                          -------------------------------                                          -------------------------------------
Revenue
Processing and services                                                                                  $   1,186                                                                      $   1,159                                                                  $ 2,364                                                                      $   2,281
Product                                                                                                        200                                                         204                                                   416                                                         413  
                                                                                                   ------------------------------------                                           ------------------------------------                                           ------------------------------                                           ------------------------------------
Total revenue                                                                                                1,386                                                       1,363                                                 2,780                                                       2,694  
                                                                                                   ------------------------------------                                           ------------------------------------                                           ------------------------------                                           ------------------------------------
                                                                                                                                                                                                                                                                                                                                           
Expenses
Cost of processing and services                                                                                573                                                                            547                                                                    1,143                                                                          1,100
Cost of product                                                                                                175                                                                            180                                                                      357                                                                            361
Selling, general and administrative                                                                            276                                                                            274                                                                      553                                                                            532
Gain on sale of business                                                                                       (10 )                                                               --                                                   (10 )                                                               --  
                                                                                                   ------------------------------------                                           ------------------------------------                                           ------------------------------                                           ------------------------------------
Total expenses                                                                                               1,014                                                       1,001                                                 2,043                                                       1,993  
                                                                                                   ------------------------------------                                           ------------------------------------                                           ------------------------------                                           ------------------------------------
                                                                                                                                                                                                                                                                                                                                           
Operating income                                                                                               372                                                                            362                                                                      737                                                                            701
Interest expense                                                                                               (44 )                                                                          (40 )                                                                    (86 )                                                                          (80 )
Interest and investment income (loss) - net                                                                      2                                              --                                                     2                                                          (7 )
                                                                                                   ------------------------------------                                           ------------------------------------                                           ------------------------------                                           ------------------------------------
                                                                                                                                                                                                                                                                                                                                           
Income before income taxes and income from investment in                                                       330                                                                            322                                                                      653                                                                            614
unconsolidated affiliate
Income tax provision                                                                                          (109 )                                                                         (110 )                                                                   (211 )                                                                         (259 )
Income from investment in unconsolidated affiliate                                                  --                                              --                                                    26                                                         146  
                                                                                                   ------------------------------------                                           ------------------------------------                                           ------------------------------                                           ------------------------------------
                                                                                                                                                                                                                                                                                                                                           
Net income                                                                                               $     221                                                   $     212                                               $   468                                                   $     501  
                                                                                                   ======= ======= ====================                                           ======= ======= ====================                                           === ===== ====================                                           ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                           
GAAP earnings per share - diluted                                                                        $    1.02                                                                      $    0.94                                                                  $  2.15                                                                      $    2.21
                                                                                                                                                                                                                                                                                                                                           
Diluted shares used in computing earnings per share                                                          216.3                                                                          225.6                                                                    217.8                                                                          226.5
                                                                                                                                                                                                                                                                                                                                           
Earnings per share is calculated using actual, unrounded amounts.
 
                                                                                                                                                                                   Fiserv, Inc.
                                                                                                                                                                             Reconciliation of GAAP to
                                                                                                                                                                Adjusted Net Income and Adjusted Earnings Per Share
                                                                                                                                                                (In millions, except per share amounts, unaudited)
                                                                                                                                                                                         
                                                                                                                                                         Three Months Ended                                                                                                                                         Six Months Ended
                                                                                                                                                              June 30,                                                                                                                                                  June 30,
                                                                                                                        2017                                     2016                                                                        2017                                 2016
                                                                                                        -------------------------------------                                          -------------------------------------                                          ------------------------------                                          -------------------------------------
                                                                                                                                                                                                                                                                                                                                               
GAAP net income                                                                                               $     221                                                                      $     212                                                                  $  468                                                                      $     501
Adjustments:
   Merger, integration and other costs (1)                                                                           15                                                                              7                                                                      29                                                                             23
   Severance costs                                                                                                    7                                                                              4                                                                      19                                                                              8
   Amortization of acquisition-related intangible assets                                                             40                                                                             40                                                                      78                                                                             80
   Tax impact of adjustments (2)                                                                                    (21 )                                                                          (18 )                                                                   (42 )                                                                          (39 )
   StoneRiver and other investment activity (3)                                                          --                                                                 --                                                                     (26 )                                                                         (139 )
   Tax impact of StoneRiver and other investment activity (2)                                            --                                                                 --                                                                       9                                                                             52
   Gain on sale of business (4)                                                                                     (10 )                                                               --                                                                     (10 )                                                               --
   Tax impact of gain on sale of business (2)                                                                         5                                              --                                                    5                                              --  
                                                                                                        ------------------------------------                                           ------------------------------------                                           -----------------------------                                           ------------------------------------
Adjusted net income                                                                                           $     257                                                   $     245                                               $  530                                                   $     486  
                                                                                                        ======= ======= ====================                                           ======= ======= ====================                                           === ==== ====================                                           ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                               
GAAP earnings per share                                                                                       $    1.02                                                                      $    0.94                                                                  $ 2.15                                                                      $    2.21
Adjustments - net of income taxes:
   Merger, integration and other costs(1)                                                                          0.04                                                                           0.02                                                                    0.08                                                                           0.06
   Severance costs                                                                                                 0.02                                                                           0.01                                                                    0.06                                                                           0.02
   Amortization of acquisition-related intangible assets                                                           0.12                                                                           0.11                                                                    0.24                                                                           0.23
   StoneRiver and other investment activity (3)                                                          --                                                                 --                                                                   (0.08 )                                                                        (0.39 )
   Gain on sale of business (4)                                                                                   (0.02 )                                                               --                                                (0.02 )                                                               --  
                                                                                                        ------------------------------------                                           ------------------------------------                                           -----------------------------                                           ------------------------------------
Adjusted earnings per share                                                                                   $    1.19                                                   $    1.08                                               $ 2.43                                                   $    2.14  
                                                                                                        ======= ======= ====================                                           ======= ======= ====================                                           === ==== ====================                                           ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                                               
(1) Merger, integration and other costs include
acquisition and related integration costs of $13 million in 2017
and $16 million in 2016, and certain costs associated with the
achievement of the company’s operational effectiveness objectives
of $16 million in 2017 and $7 million in 2016, including expenses
related to data center consolidation activities.
                                                                                                                                                                                                                                                                                                                                                               
(2) The tax impact of adjustments is calculated using tax
rates of 33 percent and 35 percent in 2017 and 2016, respectively,
which approximates the company’s annual effective tax rate for the
respective years, exclusive of the actual tax impacts associated
with StoneRiver transactions and the gain on sale of business.
 
(3) Represents the company’s share of net gains on the
disposition of a business and a business interest at StoneRiver,
as well as a non-cash write-off of a $7 million investment in 2016.
 
(4) Represents the gain on the sale of the company’s
Australian item processing business.
 
 
See page 3 for disclosures related to the use of non-GAAP
financial measures.
Earnings per share is calculated using actual, unrounded amounts.
 
 
                                                                                                                                                                                   Fiserv, Inc.
                                                                                                                                                                           Financial Results by Segment
                                                                                                                                                                             (In millions, unaudited)
                                                                                                                                                                                    
                                                                                                                                                 Three Months Ended                                                                                                                                             Six Months Ended
                                                                                                                                                      June 30,                                                                                                                                                      June 30,
                                                                                                                2017                                                                           2016                                                                           2017                                                                           2016
                                                                                                -------------------------------------                                          -------------------------------------                                          -------------------------------------                                          -------------------------------------
Total Company
Revenue                                                                                               $   1,386                                                                      $   1,363                                                                      $   2,780                                                                      $   2,694
Output Solutions postage reimbursements                                                                     (64 )                                                                          (71 )                                                                         (139 )                                                                         (149 )
Deferred revenue purchase accounting adjustments                                                              1                                                           2                                                           2                                                           2  
                                                                                                ------------------------------------                                           ------------------------------------                                           ------------------------------------                                           ------------------------------------
Adjusted revenue                                                                                      $   1,323                                                   $   1,294                                                   $   2,643                                                   $   2,547  
                                                                                                ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                              
Operating income                                                                                      $     372                                                                      $     362                                                                      $     737                                                                      $     701
Merger, integration and other costs                                                                          15                                                                              7                                                                             29                                                                             23
Severance costs                                                                                               7                                                                              4                                                                             19                                                                              8
Amortization of acquisition-related intangible assets                                                        40                                                                             40                                                                             78                                                                             80
Gain on sale of business                                                                                    (10 )                                                               --                                                         (10 )                                                               --  
                                                                                                ------------------------------------                                           ------------------------------------                                           ------------------------------------                                           ------------------------------------
Adjusted operating income                                                                             $     424                                                   $     413                                                   $     853                                                   $     812  
                                                                                                ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================
Operating margin                                                                                           26.8                    %                                                      26.6                    %                                                      26.5                    %                                                      26.0                    %
Adjusted operating margin                                                                                  32.0                    %                                                      31.9                    %                                                      32.3                    %                                                      31.9                    %
                                                                                                                                                                                                                                                                                                                                              
Payments and Industry Products ("Payments")
Revenue                                                                                               $     779                                                                      $     763                                                                      $   1,573                                                                      $   1,512
Output Solutions postage reimbursements                                                                     (64 )                                                                          (71 )                                                                         (139 )                                                                         (149 )
Deferred revenue purchase accounting adjustments                                                              1                                                           1                                                           2                                                           1  
                                                                                                ------------------------------------                                           ------------------------------------                                           ------------------------------------                                           ------------------------------------
Adjusted revenue                                                                                      $     716                                                   $     693                                                   $   1,436                                                   $   1,364  
                                                                                                ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                              
Operating income                                                                                      $     238                                                                      $     237                                                                      $     497                                                                      $     462
Merger, integration and other costs                                                                           1                                                           1                                                           2                                                           1  
                                                                                                ------------------------------------                                           ------------------------------------                                           ------------------------------------                                           ------------------------------------
Adjusted operating income                                                                             $     239                                                   $     238                                                   $     499                                                   $     463  
                                                                                                ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================
Operating margin                                                                                           30.5                    %                                                      31.1                    %                                                      31.6                    %                                                      30.5                    %
Adjusted operating margin                                                                                  33.3                    %                                                      34.3                    %                                                      34.7                    %                                                      33.9                    %
                                                                                                                                                                                                                                                                                                                                              
Financial Institution Services ("Financial")
Revenue                                                                                               $     623                                                                      $     612                                                                      $   1,243                                                                      $   1,211
Deferred revenue purchase accounting adjustments                                                 --                                                           1                                              --                                                           1  
                                                                                                ------------------------------------                                           ------------------------------------                                           ------------------------------------                                           ------------------------------------
Adjusted revenue                                                                                      $     623                                                   $     613                                                   $   1,243                                                   $   1,212  
                                                                                                ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                              
Operating income                                                                                      $     214                                                   $     202                                                   $     410                                                   $     397  
                                                                                                ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================
Operating margin                                                                                           34.3                    %                                                      33.0                    %                                                      33.0                    %                                                      32.8                    %
Adjusted operating margin                                                                                  34.3                    %                                                      33.0                    %                                                      33.0                    %                                                      32.8                    %
                                                                                                                                                                                                                                                                                                                                              
Corporate and Other
Revenue                                                                                               $     (16 )                                                                    $     (12 )                                                                    $     (36 )                                                                    $     (29 )
                                                                                                ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                              
Operating loss                                                                                        $     (80 )                                                                    $     (77 )                                                                    $    (170 )                                                                    $    (158 )
Merger, integration and other costs                                                                          14                                                                              6                                                                             27                                                                             22
Severance costs                                                                                               7                                                                              4                                                                             19                                                                              8
Amortization of acquisition-related intangible assets                                                        40                                                                             40                                                                             78                                                                             80
Gain on sale of business                                                                                    (10 )                                                               --                                                         (10 )                                                               --  
                                                                                                ------------------------------------                                           ------------------------------------                                           ------------------------------------                                           ------------------------------------
Adjusted operating loss                                                                               $     (29 )                                                                    $     (27 )                                                                    $     (56 )                                                                    $     (48 )
                                                                                                ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                              
See page 3 for disclosures related to the use of non-GAAP financial
measures.
Operating margin percentages are calculated using actual, unrounded
amounts.
 
                                                                                                             Fiserv, Inc.
                                                                                            Condensed Consolidated Statements of Cash Flows
                                                                                                       (In millions, unaudited)
                                                                                                                              Six Months Ended
                                                                                                                                                                        June 30,
                                                                                                                                  2017                                     2016
                                                                                                                  -------------------------------------                                          -------------------------------------
Cash flows from operating activities
Net income                                                                                                              $     468                                                                      $     501
Adjustments to reconcile net income to net cash provided by
operating activities:
   Depreciation and other amortization                                                                                        137                                                                            122
   Amortization of acquisition-related intangible assets                                                                       78                                                                             80
   Share-based compensation                                                                                                    33                                                                             39
   Excess tax benefits from share-based awards                                                                     --                                                                            (37 )
   Deferred income taxes                                                                                           --                                                                              5
   Income from investment in unconsolidated affiliate                                                                         (26 )                                                                         (146 )
   Dividends from unconsolidated affiliate                                                                                     31                                                                            140
   Non-cash impairment charges                                                                                                 10                                                                             17
   Gain on sale of business                                                                                                   (10 )                                                               --
   Other operating activities                                                                                                  (1 )                                                                           (2 )
   Changes in assets and liabilities, net of effects from acquisitions:
      Trade accounts receivable                                                                                                59                                                                              3
      Prepaid expenses and other assets                                                                                       (21 )                                                                          (38 )
      Accounts payable and other liabilities                                                                                  (47 )                                                                           37
      Deferred revenue                                                                                                        (20 )                                                                          (34 )
                                                                                                                  ------------------------------------                                           ------------------------------------
Net cash provided by operating activities                                                                                     691                                                         687  
                                                                                                                  ------------------------------------                                           ------------------------------------
                                                                                                                                                                                                  
Cash flows from investing activities
Capital expenditures, including capitalization of software costs                                                             (136 )                                                                         (145 )
Payments for acquisitions of businesses, net of cash acquired                                                                 (78 )                                                                         (265 )
Proceeds from sale of business                                                                                                 19                                                                 --
Other investing activities                                                                                                      1                                                           2  
                                                                                                                  ------------------------------------                                           ------------------------------------
Net cash used in investing activities                                                                                        (194 )                                                                         (408 )
                                                                                                                  ------------------------------------                                           ------------------------------------
                                                                                                                                                                                                  
Cash flows from financing activities
Debt proceeds                                                                                                               1,173                                                                          1,249
Debt repayments                                                                                                            (1,005 )                                                                         (991 )
Proceeds from issuance of treasury stock                                                                                       47                                                                             47
Purchases of treasury stock, including employee shares withheld                                                              (713 )                                                                         (633 )
for tax obligations
Excess tax benefits from share-based awards                                                                        --                                                          37  
                                                                                                                  ------------------------------------                                           ------------------------------------
Net cash used in financing activities                                                                                        (498 )                                                                         (291 )
                                                                                                                  ------------------------------------                                           ------------------------------------
                                                                                                                                                                                                  
Net change in cash and cash equivalents                                                                                        (1 )                                                                          (12 )
Cash and cash equivalents, beginning balance                                                                                  300                                                         275  
                                                                                                                  ------------------------------------                                           ------------------------------------
Cash and cash equivalents, ending balance                                                                               $     299                                                   $     263  
                                                                                                                  ======= ======= ====================                                           ======= ======= ====================
 
                                                                                     Fiserv, Inc.
                                                                         Condensed Consolidated Balance Sheets
                                                                               (In millions, unaudited)
                                                                                   
                                                                                                  June 30,                                                           December 31,
                                                                                                    2017                                                                 2016
                                                                                       ----------------------------                                             --------------------
Assets
Cash and cash equivalents                                                                $   299                                                                         $        300
Trade accounts receivable - net                                                 845                                                                                  902
Prepaid expenses and other current assets                                                    488                                                               526
                                                                                       ------------------------------                                           ----------------------
Total current assets                                                                       1,632                                                                                1,728
                                                                                                                                                                 
Property and equipment - net                                                    396                                                                                  405
Intangible assets - net                                                       1,807                                                                                1,833
Goodwill                                                                                   5,435                                                                                5,373
Other long-term assets                                                                       415                                                               404
                                                                                       ------------------------------                                           ----------------------
Total assets                                                                             $ 9,685                                                      $      9,743
                                                                                       === ===== ====================                                           ========== ==========
                                                                                                                                                                 
Liabilities and Shareholders’ Equity
Accounts payable and accrued expenses                                                    $ 1,148                                                                         $      1,242
Current maturities of long-term debt                                                          95                                                                                   95
Deferred revenue                                                                             464                                                               483
                                                                                       ------------------------------                                           ----------------------
Total current liabilities                                                                  1,707                                                                                1,820
                                                                                                                                                                 
Long-term debt                                                                             4,646                                                                                4,467
Deferred income taxes                                                                        773                                                                                  762
Other long-term liabilities                                                                  168                                                               153
                                                                                       ------------------------------                                           ----------------------
Total liabilities                                                                          7,294                                                                                7,202
Shareholders’ equity                                                                       2,391                                                             2,541
                                                                                       ------------------------------                                           ----------------------
Total liabilities and shareholders’ equity                                               $ 9,685                                                      $      9,743
                                                                                       === ===== ====================                                           ========== ==========
                                                                    
                                                                                  Fiserv, Inc.
                                                                      Selected Non-GAAP Financial Measures
                                                                           ($ in millions, unaudited)
                                
--------------------------- -------------------- -------------------- -------------------------------- -------------------- -------------------- ------------------------------
Internal Revenue Growth (1)                                           Three Months Ended June 30, 2017                                           Six Months Ended June 30, 2017
---------------------------                                           --------------------------------                                           ------------------------------
Payments Segment                                                                     3%                                                                        4%
Financial Segment                                                                    3%                                                                        3%
                                                                      --------------------------------                                           ------------------------------
Total Company                                                                        3%                                                                        4%
                                                                      ================================                                           ==============================
                                                                                                                                                  
(1) Internal revenue growth is measured as the increase
in adjusted revenue (see page 8) for the current period excluding
acquired revenue and revenue attributable to dispositions, divided
by adjusted revenue from the prior year period excluding revenue
attributable to dispositions. In the second quarter of 2017,
acquired revenue was $2 million (all in the Financial segment),
and revenue in the comparable prior year period attributable to
dispositions was $8 million (all in the Financial segment). During
the first six months of 2017, acquired revenue was $18 million
($14 million in the Payments segment and $4 million in the
Financial segment), and revenue in the comparable prior year
period attributable to dispositions was $12 million (all in the
Financial segment).
                                                                                                                                                  
                                                  
--------------------------------------------- ----------------------------- ----------------------------- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Free Cash Flow                                                                                                                                                             Six Months Ended
                                                                                                                                                                                                                     June 30,
                                                                                                          2017                                                         2016
---------------------------------------------                               ----------------------------------------------------------------                                                            --------------
Net cash provided by operating activities                                                                                             $ 691                                                                     $ 687
Capital expenditures                                                                                                                   (136 )                                                                    (145 )
Adjustments:
   Severance, merger and integration payments                                                                                            42                                                                        20
   StoneRiver cash distributions                                                                                                        (31 )                                                                    (140 )
   Other                                                                                                                                 (3 )                                                                       4
   Tax payments on adjustments                                                                                                           (8 )                                                                      16  
                                                                                                          ---------------------------------------------------------------                                    ---------------------------------------------------------------------------------------------------------------------------
      Free cash flow                                                                                                                  $ 555                                                  $ 442  
                                                                                                          ============================= === =============================                                    ==== === ==================================================================================================================
                                                                                                                                                                                                                       
              See page 3 for disclosures related to the use of
non-GAAP financial measures.
                                                                                                                                                                                                                       

Fiserv, Inc. Forward-Looking Non-GAAP Financial Measures

Internal Revenue Growth - The company’s internal revenue growth outlook for 2017 excludes the effects of acquisitions and dispositions and the impact of postage reimbursements in its Output Solutions business, and includes deferred revenue purchase accounting adjustments. These adjustments are subject to variability and are anticipated to impact 2017 revenue growth by less than 1 percent.

Adjusted Earnings Per Share - The company’s adjusted earnings per share outlook for 2017 excludes certain non-cash or other items to enhance shareholders’ ability to evaluate the company’s performance as such measures provide additional insights into the factors and trends affecting its business. Non-cash or other items may be significant and include, but are not limited to, non-cash deferred revenue adjustments arising from acquisitions, non-cash intangible asset amortization expense associated with acquisitions, non-cash impairment charges, gains or losses from dispositions and unconsolidated affiliates, severance costs, merger and integration costs related to acquisitions, and certain costs associated with the achievement of the company’s operational effectiveness objectives. The company estimates that the annual amortization expense for 2017 with respect to acquired intangible assets recorded at June 30, 2017 will approximate $150 million. Other adjustments to earnings per share that have been incurred to date are presented on page 7. Estimates of these other adjustments on a forward-looking basis are not available due to the variability, complexity and low visibility of these items.

See page 3 for disclosures related to the use of non-GAAP financial measures.

FISV-E

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170801006514r1&sid=cmtx6&distro=nx&

View source version on businesswire.com: http://www.businesswire.com/news/home/20170801006514/en/

SOURCE: Fiserv, Inc.

Media Relations: 
Britt Zarling 
Vice President, Corporate Communications 
Fiserv, Inc. 
678-375-1595 
britt.zarling@fiserv.com 
or 
Investor Relations: 
Paul Seamon 
Vice President, Investor Relations 
Fiserv, Inc. 
262-879-5727 
paul.seamon@fiserv.com


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