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Fiserv Reports Fourth Quarter and Full Year 2012 Results

  Fiserv Reports Fourth Quarter and Full Year 2012 Results

        Adjusted EPS increases 12 percent to $5.13 for the full year;
 Company expects 2013 adjusted internal revenue growth of 3 to 4 percent and
                   adjusted EPS growth of 15 to 18 percent

Business Wire

BROOKFIELD, Wis. -- February 5, 2013

Fiserv, Inc. (NASDAQ: FISV), a leading global provider of financial services
technology solutions, today reported financial results for the fourth quarter
and full year 2012.

GAAP revenue was $1.16 billion and adjusted revenue was $1.08 billion in the
fourth quarter, both consistent with the fourth quarter of 2011. For the full
year, GAAP revenue was $4.48 billion compared with $4.34 billion in 2011.
Adjusted revenue was $4.20 billion compared with $4.07 billion in 2011, an
increase of 3 percent.

GAAP earnings per share from continuing operations for the fourth quarter was
$1.18 compared with $1.07 in 2011. GAAP earnings per share from continuing
operations for the full year was $4.34 compared with $3.40, which included a
loss from early debt extinguishment of $0.37 per share, in 2011.

Adjusted earnings per share from continuing operations in the fourth quarter
increased 9 percent to $1.39 compared with $1.27 in the fourth quarter of
2011. Adjusted earnings per share from continuing operations for the year grew
12 percent to $5.13 compared with $4.58 in 2011.

“Our 2012 results were highlighted by our 27th consecutive year of
double-digit adjusted earnings per share growth and meaningful strategic
progress,” said Jeffery Yabuki, President and Chief Executive Officer of
Fiserv. “We capped off a strong sales year with exceptional performance in the
fourth quarter.”

Recent Developments

On January 14, 2013, the company acquired Open Solutions Inc., a leading
provider of collaborative, enterprise account processing technology for
financial institutions. This acquisition advances the company’s go-to-market
strategies including the addition of multiple high-quality technology
solutions and over 3,300 clients worldwide.

Fourth Quarter and Full Year 2012

  *Adjusted revenue grew 3 percent for the full year to $4.20 billion
    compared to 2011.
  *Adjusted internal revenue growth for the full year was 2 percent, with 2
    percent growth in each of the Payments and Financial segments. Adjusted
    internal revenue was flat in the quarter due primarily to a decrease in
    license revenue compared to 2011.
  *Adjusted operating margin was 30.7 percent in the quarter; an increase of
    70 basis points compared with the prior year period, and for the year was
    up 40 basis points to 29.6 percent compared to 2011.
  *Adjusted earnings per share in the quarter increased 9 percent to $1.39
    and increased 12 percent for the full year to $5.13, compared to the
    respective prior year periods.
  *Free cash flow grew 19% in the quarter to $271 million. Free cash flow for
    the year was $772 million compared with $746 million in 2011, an increase
    of 3%.
  *The company repurchased 9.2 million shares of common stock for $625
    million in 2012, which included 0.7 million shares in the fourth quarter.
    The company had approximately 5.6 million shares remaining under its
    existing share repurchase authorization at year-end.
  *The company extended its electronic bill payment and presentment
    relationship with Bank of America for a 10-year term. The bank will
    leverage the CheckFree^® RXP^® platform through its online and mobile
    channels.
  *The company presented its two billionth electronic bill since 2005 during
    the quarter.
  *The company received a $55 million cash dividend payment in the quarter
    from StoneRiver Group, L.P., a company in which Fiserv owns a 49%
    interest.
  *The company signed 134 Mobiliti^™ clients in the quarter and 552 mobile
    banking clients for the full year. As of December 31, 2012, Fiserv has
    nearly 1,400 mobile banking clients.
  *The company signed 113 electronic bill payment clients and 40 debit
    processing clients in the quarter, and 404 electronic bill payment clients
    and 165 debit clients for the full year.
  *The company signed 113 Popmoney^® clients in the quarter and 455 for the
    full year. As of December 31, 2012, the network includes more than 1,800
    financial institutions.
  *Fiserv generated a number of new and expanded client relationships in the
    quarter, including:

       *American Electric Power Company, Inc., one of the largest power
         generators and distributors in the U.S. serving more than five
         million customers in 11 states, extended its relationship with Fiserv
         for a full suite of comprehensive billing and payment options,
         including CheckFreePay^® for walk-in bill payments, Biller Direct^™
         HV for bill presentment and online payments, BillMatrix^® On Demand
         Payments for phone and web payments and eBill Distribution to enable
         the delivery of the company’s bills to financial institution
         websites.
       *Broadway Bank, headquartered in San Antonio, Texas with $2.8 billion
         in assets, extended and expanded its relationship with Fiserv. The
         bank will continue to leverage the Signature^® account processing
         platform and selected an integrated technology suite of Fiserv
         solutions for payments, processing services, risk and compliance,
         business intelligence and customer and channel management.
       *California Credit Union, one of the largest credit unions in Southern
         California with $1.1 billion in assets, agreed to leverage payment
         solutions from Fiserv with CheckFree ^ RXP and Popmoney for bill
         payment and person-to-person payments.The credit union is also a
         member of the ACCEL/Exchange^® Network from Fiserv.
       *Cape Bank, a $1 billion institution headquartered in Cape May Court
         House, N.J., selected the Premier^® account processing platform. The
         bank will integrate a full suite of Fiserv solutions, including
         Mobiliti, CheckFree RXP, CheckFree Small Business, the ACCEL/Exchange
         Network, Debit Processing, Teller Source Capture^™, Merchant Source
         Capture^™, the Fiserv Clearing Network and AccountCreate^SM.
       *First American International Bank, a New York State chartered
         commercial bank with $526 million in assets, selected the Premier
         account processing platform from Fiserv. The bank will also leverage
         CheckFree ^ RXP, the ACCEL/Exchange Network and Debit Processing for
         payments, the Common Origination Platform^™ for lending, Branch
         Source Capture^™ and the Fiserv Clearing Network for item processing
         and Prologue^™ for financial performance management.
       *Founders Federal Credit Union, headquartered in Lancaster, S.C. with
         $1.6 billion in assets, expanded its account processing and payments
         relationship with Fiserv to enhance its digital channels capabilities
         with Corillian Online^®, Mobiliti, AllData^® PFM and Mobile Source
         Capture^™.
       *Humana Inc., a leading health care company headquartered in
         Louisville, Ky., selected Fiserv to produce its secure health savings
         account and member identification cards for the company’s commercial
         and dental customers.
       *Katahdin Trust Company, a commercial bank in Houlton, Maine with $576
         million in assets, selected the Premier account processing platform,
         and will integrate Mobiliti, CheckFree RXP, CheckFree Small Business,
         Popmoney, Source Capture Solutions^®, the ACCEL/Exchange Network,
         Business Online^™, Retail Online^™, WireXchange, and AccountCreate
         for customer and channel management, Consumer and Commercial Debit
         for processing services, and AML Manager and Fraud Risk Manager^™ for
         risk and compliance.
       *Mutual of Omaha Bank, headquartered in Omaha, Neb. with $5.8 billion
         in assets, renewed its relationship with Fiserv for the Signature
         account processing platform and accompanying solutions, including
         Corillian Online for online banking, CheckFree RXP for bill payment,
         Nautilus^® for enterprise content management, and WireXchange for
         wire transfer as well as card production services. The bank also
         added PEP+^® for ACH processing, XRoads^™ for data management and
         Aperio^™ for customer and channel management.
       *SunTrust Banks, Inc., one of the nation’s largest banking
         organizations with $173.4 billion in assets and headquartered in
         Atlanta, implemented Popmoney, offering its online banking customers
         person-to-person payment options.The bank also uses Mobiliti,
         CheckFree RXP, TransferNow^® for inter-bank transfers and FundNow^®
         for new account funding.
       *Union Bank, N.A., a subsidiary of UnionBanCal Corporation, a
         financial holding company with $97 billion in assets, and a member of
         the Mitsubishi UFJ Financial Group, selected CheckFree RXP from
         Fiserv to enable electronic bill delivery and payment through its
         online and mobile banking channels. The bank also leverages
         TransferNow and Banklink^® Cash Management to support its online
         channel, as well as treasury management, financial crime risk
         management and cash forecasting solutions from Fiserv.
       *United Community Banks, Inc., the third largest bank holding company
         in Georgia with $6.7 billion in assets, expanded its relationship
         with Fiserv. Centered on the Premier account processing platform, the
         bank will implement the ACCEL/Exchange Network and Debit Processing
         and continue to use CheckFree RXP, Popmoney, Retail Online, Business
         Online, Merchant Source Capture, Director^™ and several other Fiserv
         solutions.

Outlook for 2013

Fiserv expects total adjusted revenue growth for 2013 to be in excess of 10
percent and adjusted internal revenue growth to be in  a range of 3 to 4
percent. The company also expects adjusted earnings per share to be in a range
of $5.88 to $6.07, which represents growth of 15 to 18 percent over $5.13 in
2012.

”The continued strength in our recurring revenue businesses, along with the
acquisition of Open Solutions, has us well positioned to accelerate revenue
growth while delivering strong earnings and cash flow in 2013,” said Yabuki.

Earnings Conference Call

The company will discuss its fourth quarter and full year 2012 results on a
conference call and webcast at 4 p.m. CT on Tuesday, February 5, 2013. To
register for the event, go to www.fiserv.com and click on the Q4 Earnings
webcast link. Supplemental materials will be available in the “Investor
Relations” section of the website.

About Fiserv

Fiserv, Inc. (NASDAQ: FISV) is a leading global technology provider serving
the financial services industry, driving innovation in payments, processing
services, risk and compliance, customer and channel management, and business
insights and optimization. For more information, visit www.fiserv.com.

Use of Non-GAAP Financial Measures

We supplement our reporting of revenue, operating income, income from
continuing operations and earnings per share information determined in
accordance with GAAP by using “adjusted revenue,” “adjusted internal revenue
growth,” “adjusted operating income,” “adjusted income from continuing
operations,” “adjusted earnings per share,” “adjusted operating margin,” and
“free cash flow” in this earnings release. Management believes that
adjustments for certain non-cash or other items and the exclusion of certain
pass-through revenue and expenses enhance our shareholders’ ability to
evaluate our performance because such items do not reflect how we manage our
operations. Therefore, we exclude these items from GAAP revenue, operating
income, operating margin, income from continuing operations and earnings per
share to calculate these non-GAAP measures. In addition, the company’s prior
year free cash flow has been restated to conform to the current year
presentation.

Examples of non-cash or other items may include, but are not limited to,
non-cash intangible asset amortization expense associated with acquisitions,
severance costs, merger costs, certain integration expenses related to
acquisitions, certain costs associated with the achievement of the company’s
operational effectiveness objectives and certain discrete tax benefits. We
exclude these items to more clearly focus on the factors we believe are
pertinent to the management of our operations, and we use this information to
allocate resources to our various businesses.

Free cash flow and adjusted internal revenue growth are non-GAAP financial
measures and are described on page 12. We believe free cash flow is useful to
measure the funds generated in a given period that are available for strategic
capital decisions. We believe adjusted internal revenue growth is useful
because it presents revenue growth excluding all acquired revenue and postage
reimbursements in our Output Solutions business. We believe this supplemental
information enhances our shareholders’ ability to evaluate and understand our
core business performance.

These non-GAAP measures should be considered in addition to, and not as a
substitute for, revenue, operating income, operating margin, income from
continuing operations and earnings per share or any other amount determined in
accordance with GAAP. These non-GAAP measures reflect management’s judgment of
particular items and may not be comparable to similarly titled measures
reported by other companies.

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 adjusted revenue, adjusted internal revenue, 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: the
impact on the company’s business of the current state of the economy,
including the risk of reduction in revenue resulting from decreased spending
on the products and services that the company offers; legislative and
regulatory actions in the United States and internationally, including the
impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and
related regulations; the company’s ability to successfully integrate
acquisitions, including Open Solutions Inc., into its operations; changes in
client demand for the company’s products or services; pricing or other actions
by competitors; the impact of the company’s strategic initiatives; the
company’s ability to comply with government regulations, including privacy
regulations; 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, 2011
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              Year Ended
                   December 31,                    December 31,
                    2012          2011          2012          2011  
Revenue
Processing and     $ 950           $ 915           $ 3,709         $ 3,543
services
Product             206           246           773           794   
Total revenue       1,156         1,161         4,482         4,337 
                                                                             
Expenses
Cost of
processing and       493             498             1,969           1,941
services
Cost of product      164             165             628             601
Selling, general
and                 210           217           829           799   
administrative
Total expenses      867           880           3,426         3,341 
                                                                             
Operating income     289             281             1,056           996
Interest expense     (38   )         (44   )         (167  )         (182  )
- net
Loss on early
debt                -             -             -             (85   )
extinguishment
                                                                             
Income from
continuing
operations
before income
taxes
and income from
investment in        251             237             889             729
unconsolidated
affiliate
Income tax           (94   )         (88   )         (303  )         (256  )
provision
Income from
investment in       2             4             11            18    
unconsolidated
affiliate
Income from
continuing           159             153             597             491
operations
Income (loss)
from                20            (10   )        14            (19   )
discontinued
operations
                                                                             
Net income         $ 179          $ 143          $ 611          $ 472   
                                                                             
GAAP earnings
(loss) per share
- diluted:
Continuing         $ 1.18          $ 1.07          $ 4.34          $ 3.40
operations
Discontinued        0.14          (0.07 )        0.10          (0.13 )
operations
Total              $ 1.32         $ 1.01         $ 4.44         $ 3.28  
                                                                             
Diluted shares
used in
computing            135.1           142.3           137.5           144.2
earnings (loss)
per share
                                                                             
                                                                             

Fiserv, Inc.
Reconciliation of GAAP to Adjusted Income and
Earnings Per Share from Continuing Operations
(In millions, except per share amounts, unaudited)
                                                         
                      Three Months Ended            Year Ended
                      December 31,                  December 31,
                       2012         2011         2012          2011  
                                                                              
GAAP income from
continuing            $ 159          $ 153          $ 597           $ 491
operations
Adjustments:
Merger and              4              2              13              17
integration costs
Severance costs         -              -              12              18
Amortization of
acquisition-related     41             42             163             157
intangible assets
Debt extinguishment
and refinancing         -              -              4               85
costs ^1
Tax impact of           (16  )         (16  )         (69   )         (101  )
adjustments ^2
Tax benefit ^3          -              -              (14   )         (3    )
Gain on sale of
business by            -            -            -             (3    )
unconsolidated
affiliate
Adjusted income
from continuing       $ 188         $ 181         $ 706          $ 661   
operations
                                                                              
GAAP earnings per
share - continuing    $ 1.18         $ 1.07         $ 4.34          $ 3.40
operations
Adjustments - net
of income taxes:
Merger and              0.02           0.01           0.06            0.07
integration costs
Severance costs         -              -              0.06            0.08
Amortization of
acquisition-related     0.19           0.19           0.76            0.69
intangible assets
Debt extinguishment
and refinancing         -              -              0.02            0.37
costs ^1
Tax benefit ^3          -              -              (0.10 )         (0.02 )
Gain on sale of
business by            -            -            -             (0.02 )
unconsolidated
affiliate
Adjusted earnings     $ 1.39        $ 1.27        $ 5.13         $ 4.58  
per share
                                                                              
^1 The 2012 adjustment represents a charge of $4 million of interest expense
associated with hedge ineffectiveness of interest rate swap agreements        
settled in September 2012 in conjunction with the company’s bond offering.
The 2011 adjustment represents costs associated with the early retirement of  
debt.                                                                         
                                                                              
^2 The tax impact for all periods presented is calculated using a tax rate of
approximately 36 percent, which approximates the company’s normalized annual  
effective tax rate.
                                                                              
^3 The tax benefit in 2012 represents certain discrete income tax benefits
related to prior years recognized for GAAP purposes in the second quarter     
that have been excluded from adjusted earnings per share.                     
                                                                              
See page 5 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              Year Ended
                      December 31,                    December 31,
                       2012          2011          2012          2011  
Total Company
Revenue               $ 1,156         $ 1,161         $ 4,482         $ 4,337
Output Solutions
postage                (72   )        (77   )        (286  )        (266  )
reimbursements
Adjusted revenue      $ 1,084        $ 1,084        $ 4,196        $ 4,071 
Operating income      $ 289           $ 281           $ 1,056         $ 996
Merger and              4               2               13              17
integration costs
Severance costs         -               -               12              18
Amortization of
acquisition-related    41            42            163           157   
intangible assets
Adjusted operating    $ 334          $ 325          $ 1,244        $ 1,188 
income
Operating margin        25.0  %         24.3  %         23.6  %         23.0  %
Adjusted operating      30.7  %         30.0  %         29.6  %         29.2  %
margin
                                                                                
Payments and
Industry Products
(“Payments”)
Revenue               $ 644           $ 635           $ 2,489         $ 2,381
Output Solutions
postage                (72   )        (77   )        (286  )        (266  )
reimbursements
Adjusted revenue      $ 572          $ 558          $ 2,203        $ 2,115 
Operating income      $ 179          $ 174          $ 668          $ 656   
Operating margin        27.7  %         27.4  %         26.8  %         27.5  %
Adjusted operating      31.2  %         31.2  %         30.3  %         31.0  %
margin
                                                                                
Financial
Institution
Services
(“Financial”)
Revenue               $ 524          $ 540          $ 2,040        $ 2,004 
Operating income      $ 173          $ 178          $ 652          $ 613   
Operating margin        33.1  %         33.1  %         32.0  %         30.6  %
                                                                                
Corporate and Other
Revenue               $ (12   )       $ (14   )       $ (47   )       $ (48   )
Operating loss        $ (63   )       $ (71   )       $ (264  )       $ (273  )
Merger and              4               2               13              17
integration costs
Severance costs         -               -               12              18
Amortization of
acquisition-related    41            42            163           157   
intangible assets
Adjusted operating    $ (18   )       $ (27   )       $ (76   )       $ (81   )
loss
                                                                                
See page 5 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)
                                                           
                                                 Year Ended
                                                 December 31,
                                                  2012           2011   
Cash flows from operating activities
Net income                                       $ 611            $ 472
Adjustment for discontinued operations             (14    )         19
Adjustments to reconcile net income to net
cash
provided by operating activities:
  Depreciation and other amortization              191              192
  Amortization of acquisition-related              163              157
  intangible assets
  Share-based compensation                         44               39
  Deferred income taxes                            5                29
  Settlement of interest rate hedge contracts      (88    )         (6     )
  Dividends from unconsolidated affiliate          23               12
  Loss on early debt extinguishment                -                85
  Other non-cash items                             (22    )         (26    )
  Changes in assets and liabilities, net of
  effects from acquisitions:
             Trade accounts receivable             (12    )         (83    )
             Prepaid expenses and other assets     (85    )         (25    )
             Accounts payable and other            -                78
             liabilities
             Deferred revenue                     19             10     
Net cash provided by operating activities         835            953    
                                                                             
Cash flows from investing activities
Capital expenditures, including capitalization     (195   )         (192   )
of software costs
Payments for acquisitions of businesses, net       -                (511   )
of cash acquired
Dividends from unconsolidated affiliate            32               42
Net proceeds from sale (purchases) of              28               (4     )
investments
Other investing activities                        (3     )        -      
Net cash used in investing activities             (138   )        (665   )
                                                                             
Cash flows from financing activities
Proceeds from long-term debt                       1,469            1,189
Repayments of long-term debt, including            (1,642 )         (1,226 )
premium and costs
Issuance of treasury stock                         96               73
Purchases of treasury stock                        (634   )         (533   )
Other financing activities                        5              (1     )
Net cash used in financing activities             (706   )        (498   )
                                                                             
Change in cash and cash equivalents                (9     )         (210   )
Net cash flows from discontinued operations        30               (16    )
Beginning balance                                 337            563    
Ending balance                                   $ 358           $ 337    
                                                                             
                                                                             

Fiserv, Inc.
Condensed Consolidated Balance Sheets
(In millions, unaudited)
                                                      
                                             December 31,
                                              2012         2011
Assets
Cash and cash equivalents                    $ 358         $ 337
Trade accounts receivable – net                663           666
Deferred income taxes                          42            44
Prepaid expenses and other current assets     349          309
Total current assets                           1,412         1,356
                                                                   
Property and equipment – net                   249           258
Intangible assets – net                        1,760         1,881
Goodwill                                       4,719         4,720
Other long-term assets                        357          333
Total assets                                 $ 8,497       $ 8,548
                                                                   
Liabilities and Shareholders’ Equity
Accounts payable and accrued expenses        $ 724         $ 836
Current maturities of long-term debt           2             179
Deferred revenue                              379          369
Total current liabilities                      1,105         1,384
                                                                   
Long-term debt                                 3,228         3,216
Deferred income taxes                          638           617
Other long-term liabilities                   109          73
Total liabilities                              5,080         5,290
Shareholders’ equity                          3,417        3,258
Total liabilities and shareholders’ equity   $ 8,497       $ 8,548
                                                                   
                                                                   

Fiserv, Inc.
Selected Non-GAAP Financial Measures
(In millions, unaudited)
                                                    
Adjusted Internal Revenue         Three Months Ended       Year Ended
Growth ^1                         December 31, 2012        December 31, 2012
Payments Segment                  3         %              2        %
Financial Segment                 (3        %)             2        %
Total Company                     0         %              2        %
                                                                             


^1 Adjusted internal revenue growth is measured as the increase in adjusted
revenue (see page 9), excluding acquired revenue for the current period,
divided by adjusted revenue from the prior year period. Acquired revenue was
$2 million (all in the Financial segment) for the fourth quarter of 2012 and
$43 million ($40 million in the Payments segment and $3 million in the
Financial segment) for the full year.

                                               Year Ended
Free Cash Flow ^2                                 December 31,
                                                   2012      2011 
Net cash provided by operating activities         $ 835          $ 953
Settlement of interest rate hedge contracts         88             6
Capital expenditures                                (195 )         (192 )
Other adjustments                                  44           (21  )
Free cash flow                                    $ 772         $ 746  
                                                                          



^2 Free cash flow is calculated as net cash provided by operating activities
less capital expenditures and excludes the net change in settlement assets and
obligations; tax-effected severance, merger and integration payments; and
other items which management believes may not be indicative of the future free
cash flow of the company. Free cash flow does not include $70 million received
in the fourth quarter of 2012, comprised of the portion of a cash dividend
received from an unconsolidated affiliate that is included in “net cash from
investing activities” and an insurance recovery included in discontinued
operations.

See page 5 for disclosures related to the use of non-GAAP financial measures.

FISV-E

Contact:

Investor Relations:
Fiserv, Inc.
Eric Nelson, 262-879-5350
Vice President, Investor Relations
eric.nelson@fiserv.com
or
Media Relations:
Fiserv, Inc.
Judy DeRango Wicks, 678-375-1595
Vice President, Communications
judy.wicks@fiserv.com