Fiserv Annual Report 2004

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2004 ANNUAL REPORT

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Corporate Headquarters
255 Fiserv Drive
Brookfield, Wisconsin 53045
P.O. Box 979
Brookfield, Wisconsin 53008-0979
United States

Phone:
262-879-5000
Toll Free: 800-872-7882
262-879-5013
Fax:
general_info@fiserv.com
www.fiserv.com

Fiserv is a registered trademark of
Fiserv, Inc. All product and brand
names mentioned are property of
their respective companies.

Strong Connection »

CONTENTS »
Financial Highlights
Fiserv at a Glance
To Our Shareholders
Strong Connection
Organic Revenue Growth
Service Excellence
Integration Initiative
Fiserv Health
Financial Report
Board of Directors
Executive and

Management Leadership

Corporate Information

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10
12
14
16
46

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49

ABOUT THE COVER »
The strong connection Fiserv has to its clients revolves
around our people. Our core values of The Client Comes
First and People Make the Difference are the foundation of
our commitment to service excellence. Representing the
nearly 22,000 Fiserv employees who provide exceptional
client service every day for every client are, from left, Tony
Catalfano, President and Chief Operating Officer of Fiserv
EFT; Mark Sievewright, Corporate Senior Vice President,
Market Development; and Teri Carstensen, President IP
Operations, Western Region.

Corporate Information »
CORPORATE HEADQUARTERS »
Fiserv, Inc.
255 Fiserv Drive
Brookfield, WI 53045
(262) 879-5000

WEB SITE »
http://www.fiserv.com

INVESTOR RELATIONS »
(800) 425-FISV

SHAREHOLDER INFORMATION »
Copies of the company’s 10-K and 10-Q reports as filed with the Securities
and Exchange Commission are available on request from the company.

Visit our Web site, www.fiserv.com, for updated news releases, stock performance,
financial reports, conference call Webcasts, SEC filings, corporate governance and
other investor information.

ANNUAL SHAREHOLDERS’ MEETING »
The 2005 Annual Meeting of Shareholders of Fiserv, Inc. will be held on
Wednesday, April 6, 2005 at 10 a.m. Central Time at the Fiserv Corporate
Headquarters, 255 Fiserv Drive, Brookfield, Wisconsin.

STOCK LISTING AND SYMBOL »
Nasdaq National Market System
Symbol: FISV

TRANSFER AGENT »
EquiServe Trust Company, N.A.
P.O. Box 43069
Providence, Rhode Island 02940-3069
(800) 446-2617
www.equiserve.com

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS »
Deloitte & Touche LLP
Milwaukee, Wisconsin

69451_fiserv annual 2/14/05 5:21 PM Page 1

Financial Highlights »

(Dollars in millions except per share amounts and stock price data.)

2004

2003

% Change

Processing and services revenues

Net income

Diluted earnings per share

Cash flow from operations

Year-end market price per share

$3,350.6

$ 377.6

1.91

$ 698.4

$ 40.19

$2,592.1

$ 315.0

1.61

$ 595.7

$ 39.54

PROCESSING &
SERVICES REVENUES »
(In millions)

NET
INCOME »
(In millions)

EARNINGS
PER SHARE–DILUTED* »
(In dollars)

CASH FLOW
FROM OPERATIONS »
(In millions)

$3,500

$3,351

$400

$378

$2.00

$1.91

$800

3,000

2,500

2,000

1,500

1,000

500

350

300

250

200

150

100

1.50

1.00

0.50

$698

700

600

500

400

300

200

100

00 01 02 03 04

* Figures adjusted to recognize a 3-for-2 stock split in 2001.

69451_fiserv annual 2/14/05 5:21 PM Page 2

Fiserv at a Glance » A strong connection through
information management technology, systems and services

FINANCIAL INSTITUTION
SERVICES »
Six of the Fiserv Business

Bank Servicing

Outsourced (service bureau) core processing systems,

EFT processing, credit processing services and value-added

Groups specialize in

solutions for banks and thrifts

outsourcing, systems and

services tailored to the needs

of financial institutions.

Clients

Banks, savings institutions, credit unions, insurance

companies and agents, leasing companies and mortgage lenders

Market Reach

Item Processing

Complete solution for the item and image processing needs of

financial institutions, providing resources and technology for

processing and automating paper-based payment transactions

Credit Union & Industry Products

Core account processing and value-added solutions for credit

unions, plastic card production and services, high-volume

Client relationships with more than 9,400 financial

laser printing and mailing, electronic document distribution

institutions and 2,900 insurance companies

and archival

• 295 million customer deposit, loan and lease accounts

Lending Solutions

processed annually

Outsourced and licensed software and services for the lending

• 5.5 billion electronic/ATM/POS transactions processed annually

industry, including mortgage loan servicing, automated

• 3.7 billion checks processed annually

property valuation, loan and lease portfolio management

• 4 billion images archived

for the auto finance market, loan settlement support and contact

Bank Systems

center services

In-house and outsourced core processing for banks and thrifts,

Insurance Solutions

including cash and treasury management solutions, risk

Comprehensive insurance processing services and products,

management, imaging solutions, customer contact solutions

emphasizing business process outsourcing for the life, annuity

and data warehousing

and property and casualty sectors

Fiserv provides technology solutions to the financial industry. Our software, systems and services

are used by more than 16,000 clients worldwide to process transactions, automate business

operations and manage information. The eight Business Groups that comprise our three reporting

segments specialize in solutions for many financial industry sectors, delivering the technology and

support our clients need to compete and flourish in today’s challenging marketplace.

69451_fiserv annual 2/14/05 5:21 PM Page 3

HEALTH PLAN MANAGEMENT
SERVICES »
Outsourced services for self-

funded and other medical,

dental, vision and disability

plans, including health plan

administration, care and

disease management, and pharmacy benefit management.

Clients

Self-insured commercial and government employers, health

insurance companies, health maintenance organizations

and pharmacies

Market Reach

• $6.6 billion in claims paid annually

Clients

Individual investors, small businesses and corporations,

and industry professionals

Market Reach

• $35 billion in retirement trust assets under administration

• More than 320,000 self-directed retirement and custodial

accounts serviced annually

2004 ACQUISITIONS »
The four companies Fiserv

acquired in 2004 are listed

below, along with the Business

Group they joined. These

acquisitions in fast-growing

areas of our business further

• More than 32 million claims processed annually

our goal to be the single-source technology services

• More than 1,700 client relationships

provider to our clients.

INVESTMENT SUPPORT
SERVICES »
Outsourced services for

individual and business

retirement plans, trustee,

custodial and recordkeeping,

back-office investment

support and tax reporting.

Company
RegEd, Inc.

Pharmacy
Fulfillment, Inc.

Business Group
Insurance Solutions

Health Plan Management

Results International
Systems, Inc.

Insurance Solutions

CheckAGAIN, LLC

Item Processing

2004 Processing and Services Revenues »

70%

4 %

26%

FINANCIAL INSTITUTION SERVICES »
Bank Systems
Bank Servicing
Item Processing
Credit Union & Industry Products
Lending Solutions
Insurance Solutions

HEALTH PLAN MANAGEMENT SERVICES »
INVESTMENT SUPPORT SERVICES »

69451_fiserv annual 2/14/05 5:21 PM Page 4

To Our Shareholders »

Your company celebrated its 20th anniversary in 2004. This milestone recognizes

two decades of steady expansion and strong performance, and even more important,

sets the stage for continued growth and increased shareholder value in the years ahead.

It is significant that our 20th anniversary is also our 20th
consecutive year of record financial results, excluding a
one-time charge in 1995 related to an acquisition. Revenues,
earnings and operating cash flow all reached new highs in
2004. Processing and services revenues increased 29% to
$3.4 billion. Net income rose 20% to $377.6 million or $1.91
per diluted share. Operating cash flow grew 17% to $698.4
million for the year.

Our ability to consistently deliver strong financial performance
is the result of our proven business model. From day one, this
growth-oriented model has focused on high recurring revenues,
profitable organic revenue growth, strict cost controls, and a
disciplined and effective acquisition strategy. But the real key

to our success is our people and the strong connection they
have forged with our clients and our markets.

Profitable organic revenue growth continues to be our top
priority. Our organic growth rate was 10% in 2004, up from
5% in 2003, due primarily to the success of our health plan
management segment. With technology spending in the U.S.
financial services industry over $110 billion and growing,
we believe there are excellent expansion opportunities for
Fiserv in our largest business segment, financial services,
as well as in our fast-growing health plan management business.
We are well positioned to capitalize on these opportunities
with our large existing client base, significant market share,
industry-leading technology and all-encompassing focus on

69451_fiserv annual 2/14/05 5:21 PM Page 5

Donald F. Dillon, Chairman of the Board (Left)
Leslie M. Muma, President and Chief Executive Officer

delivering results for our clients. Our organic revenue growth
strategy has three components: client retention and satisfaction,
new client sales and value-added cross sales.

Fiserv was founded on the complementary philosophies of
The Client Comes First and People Make the Difference. While
other companies may say this, all of us at Fiserv live it. Every
Fiserv employee is accountable for delivering the solutions and
service that drive client satisfaction. Our long-term client retention
rate is consistently the highest in the financial services industry,
underscoring the importance of service excellence to Fiserv.

In 2004, we expanded and restructured our financial
institution sales force to more effectively drive both new
sales and cross sales through multiple delivery channels.
At the same time, industry and regulatory trends, including
increased outsourcing and information technology spending,
the rapid expansion of debit cards, Internet banking and ATM
transactions, and the new Check 21 legislation, continue to
increase the demand for our transaction processing solutions.

The Fiserv integration initiative will assist in our organic
revenue growth. We formally began this extensive project more
than two years ago, as a direct response to the need we saw across
our broad client base for a complete portfolio of integrated
processing technologies. Our clients want to improve customer
service and increase profitability. By tightly integrating our
technology platform and operating solutions, we will enable
them to do just that – and much more.

The benefits from this initiative for Fiserv will include
increased sales of our products to existing clients, faster
new product development, greater timeliness to market, and
improved efficiency, which in turn contributes to increased
profit. This project is a key strategy for Fiserv in driving
organic revenue growth over the long term.

Our rapidly expanding health plan management services
business leverages our established financial transaction
processing expertise. We built Fiserv Health from the ground up
in just four years and it has grown very quickly, with revenues
increasing 122% in 2004. The timing is right for this business,
as health care costs and administrative requirements continue
to increase. We started Fiserv Health by offering core solutions
for the processing of medical and dental claims. We are now
expanding our client relationships through value-added services
that help manage the overall cost and quality of care. These
services include pharmacy benefits processing, plan design, plan
performance, and wellness care and disease management programs.

Acquisitions continue to be an important part of the Fiserv
growth strategy. We completed four acquisitions in 2004 that
enhance our payments, insurance and health management
businesses. During the past 20 years, we have completed 129
acquisitions that have strengthened our existing businesses
and enabled us to enter new, but related, business areas. We
continue to seek additional acquisitions in all areas of our business.

We also are continually evaluating our existing businesses.
In December 2004, we announced an agreement to sell our
securities clearing business for approximately $365 million.
The sale, which is expected to be completed in the first quarter
of 2005, will enable us to focus more capital and resources
on our financial institution, health plan administration and
investment support operations.

In 2004, we strengthened our commitment to developing our
future leaders with the creation of the Fiserv Leadership Center.
We partnered with a leading university to create what we believe
is a world-class management program that combines the latest
academic programs with our well-established leadership principles.
We are already seeing results from this program in the areas of
strategic planning, consultative skills and relationship management.

In late 2004, the Board of Directors formed a Succession
Committee to effect a smooth transition following the planned
retirement of Les Muma in June 2006. There are many strong
leaders in the Fiserv organization and in our industry, and we
look forward to working with the Succession Committee in the
selection process for our next CEO.

Fiserv’s 20 years of growth and success can be measured
in many ways. Revenues have grown from $21 million to
$3.4 billion. We had 160 clients 20 years ago, compared to
more than 16,000 today. We’ve grown from 350 employees
at three locations to nearly 22,000 employees at more than
200 locations worldwide.

Our many achievements are the result of our strong
connection – to our clients, to our employees and to our
shareholders. To everyone connected to Fiserv, thank you for
20 great years. We believe the next 20 will be even better.

Leslie M. Muma
President and Chief Executive Officer

Donald F. Dillon
Chairman of the Board

69451_fiserv annual 2/14/05 5:21 PM Page 6

Left to Right: Leslie M. Muma, President and Chief Executive Officer;
Norman J. Balthasar, Senior Executive Vice President and Chief Operating Officer;
Kenneth R. Jensen, Senior Executive Vice President and Chief Financial Officer

69451_fiserv annual 2/14/05 5:21 PM Page 7

Strong Connection »
Successful Past, Bright Future
Fiserv is a growth company – the numbers tell the story.

Since going public in 1986, our revenues have increased

at a compounded annual growth rate (CAGR) of 24%.

Earnings per share have grown at a CAGR of 21%.

Cash flow from operations has increased at a compounded

annual growth rate of 23% and our stock price has

appreciated at a CAGR of 21%.

The numbers reflect our successful strategies to grow by:
• Expanding our core businesses.
• Building and retaining a strong base of industry-leading clients.
• Identifying emerging trends and client needs, and developing the

technology solutions to meet them.

• Acquiring businesses that strengthen our operations by adding new

solutions and expanding our presence.

• Extending our business into adjacent markets that leverage our core
transaction processing competencies and offer opportunities for
fast-paced growth.

While it is satisfying to look back at past achievements, the real question for every
public company today is, “How are you going to build on what you’ve established
and continue to grow?”

The following pages highlight the Fiserv commitment to profitable organic revenue
growth and service excellence, and our dedication to helping our clients grow their
business through our integration initiative. Together, these strategies build on our
strengths and provide a strong connection to our future growth.

69451_fiserv annual 2/14/05 5:21 PM Page 8

Strong Connection » Organic Revenue Growth

The changing market dynamics of the financial institution and health plan management

businesses provide opportunities for Fiserv to leverage our transaction processing expertise

into increased revenues and net income in the years ahead. Our strategy is to add new clients

and expand our relationships with our 16,000-plus existing clients by providing highly

integrated solutions and value-added services that enable them to achieve their business goals.

69451_fiserv annual 2/14/05 5:21 PM Page 9

Left to Right: Karen Beata, Vice President, The Northern Trust Company; Joe Mikel,
Vice President Relationship Management, RemitStream Solutions; Marian Brooks,
Department Manager, RemitStream Solutions; Anna Quinlan, President, RemitStream
Solutions; and Lee Selander, Executive Vice President, The Northern Trust Company.

An example of the growth potential for Fiserv is the
dramatic change underway in the financial institution
marketplace. ATM and POS transactions are growing, online
debit card usage is expected to double within the next two years
and online bill payment transactions are expected to double in
the next four years. While paper check volume is declining, the
use of imaging technology is increasing. The new Check 21
legislation encourages banks to exchange checks electronically.
Financial institutions need a technology infrastructure that will
help them move from paper to electronic, automate the fee-
based services that increase their profitability, and increase the
return on their information technology (IT) investment.

As the number-one core financial processing provider, Fiserv
is well equipped to leverage our established client base into
increased cross sales. We have the most comprehensive,
integrated payment solutions portfolio in the market, offering

to settle checks and images completely within the Fiserv
system. Our national image archive and anti-fraud products
are additional competitive advantages.

In the lending area, we are delivering integrated, end-to-end
solutions that cover the entire lending continuum. Starting
with lead management and moving through applications,
settlement processing, closing services and loan servicing, our
bundled services approach provides all of the processing support
our mortgage lending and automobile loan and leasing clients
need from a single source. In addition, Fiserv lending solutions
enhance our clients’ return on investment through improved
customer service and reduced processing costs.

To step-up the pace of our organic revenue growth in banking,
we combined our in-house and service bureau sales forces into
one organization that can sell our complete technology portfolio.

THE NORTHERN TRUST COMPANY »
Through RemitStream Solutions, Fiserv handles all of the corporate
remittance processing for The Northern Trust Company, one of the
world’s leading financial institutions. The strong connection between
our two companies enables the experienced managers at Northern
Trust to focus on helping their large corporate clients manage the
financial side of their business, while Fiserv’s national reach and
experience in large-scale transaction processing provides Northern
Trust clients with the dedicated service and support they expect. This
builds on a relationship that began in 1998 with the outsourcing of
Northern Trust’s check processing to Fiserv and reflects the confidence
Northern Trust places in Fiserv as a true business partner.

both in-house and outsourced solutions. We’re the largest
independent third-party check processor, with more than 10%
of the North American check volume. We recently signed an
agreement with three of Australia’s largest banks that further
expands our global reach in transaction processing. We are also
the number-one provider of e-commerce solutions, with more
than 3,000 Internet banking clients.

Long term, we believe Check 21 offers excellent growth
opportunities for Fiserv. Our check processing centers are all
image-enabled and our Fiserv clearing network allows clients

We put more “feet on the street” to drive new client sales. We
strengthened our training in the areas of consultative skills and
relationship building, which play to the growing trend toward
outsourcing. We’ve aligned executive-level compensation with
organic growth drivers to reinforce our commitment to this
primary growth strategy.

The Fiserv organic growth strategy is market-driven
and solutions-oriented. Together, these two competitive
advantages provide a strong and growing connection to our
clients and our markets.

69451_fiserv annual 2/14/05 5:21 PM Page 10

Strong Connection » Service Excellence
The Client Comes First. People Make the Difference. These are the core values of

Fiserv. While much has changed during our 20 years in business, our focus on client

retention and satisfaction is stronger than ever. We listen to our clients and develop

solutions that help them operate their businesses more profitably and allow them to

do what they do best – serve their customers.

69451_fiserv annual 2/14/05 5:21 PM Page 11

Left to Right: Eileen Muir, Account Executive, IntegraSys; Tom Reimholz,
President, Abbott Laboratories Employees Credit Union; Scott Butler, President,
IntegraSys; and Amy Sutter, Field Service Representative, IntegraSys.

Fiserv is a company that is driven by the needs of our
clients. We are continually asking ourselves, “What can
we do better?” “How can we help our clients grow their
business and increase their profitability?”

Every Fiserv employee is accountable for client retention and
satisfaction. That’s why we are so proud of our long-term client
retention rate – the highest in the industry. Our clients generate
a recurring revenue stream that contributes 85% of our annual
revenues. This significant contribution to our top and bottom
lines provides the financial stability that fuels our growth.

For both existing and new clients, Fiserv’s reputation for
service excellence is a significant competitive advantage.
We currently have relationships with 91 of the top 100 banks.
In 2004, we strengthened our team that focuses on development
in the large financial institution market to further expand our

Although we are in a technology business, at Fiserv, it’s always
about people. The key to our success is our strong client
relationships, which are created and fostered by our passion
and dedication to service excellence. We recruit and retain
great people throughout the company. They are the ones
who connect with our clients and who initiate and maintain
relationships, frequently over many years.

The new Fiserv Leadership Center is a major component of
our management development program. It is a vital tool in our
efforts to sustain the strengths of our current executive management
and develop a new generation of executive leadership. This
state-of-the-art learning environment is modeled after executive
education centers at various businesses throughout the country.

Managers from across our organization are invited to the
Leadership Center for training that focuses on strategic thinking,

ABBOTT LABORATORIES EMPLOYEES CREDIT UNION »
Since its formation in 1990, the Abbott Laboratories Employees
Credit Union has grown to more than 30,000 members. A strong
connection with Fiserv’s IntegraSys business unit has helped to facilitate
that growth by enabling Abbott Laboratories Employees Credit
Union to provide cost-effective, leading-edge services and convenience
to its members across the country. Credit union solutions provided
by IntegraSys have been the operations backbone of the Abbott
Laboratories Employees Credit Union from the beginning. With
core data processing and value-added services from IntegraSys,
Abbott Laboratories Employees Credit Union offers its members
a comprehensive portfolio of services ranging from mortgages and
home equity loans to Internet banking, IRAs, debit cards and online
bill payment, all delivered quickly and smoothly.

relationships within this key group of clients and potential
clients. Client satisfaction is essential among these top-tier
companies, and the Fiserv focus on service excellence is
fundamental to our success.

We track client satisfaction very closely and survey our
clients each year. We ask them if they are happy with our
service and what we can do better. Client satisfaction has
continued to improve as we have responded to their
suggestions and needs for additional products and services.

service excellence and general business acumen. In addition to
the many benefits for Fiserv, the Leadership Center also provides
benefits to our clients through enhanced consultative skills, a
strong focus on relationship management, and a commitment
to delivering the solutions and services that enable our clients
to succeed.

Our reputation for service excellence is a strong connection
to our clients and a continuing legacy for our executives,
managers and employees across the company.

69451_fiserv annual 2/14/05 8:31 PM Page 12

Strong Connection » Fiserv Integration Initiative

The Fiserv integration initiative will drive organic revenue growth by providing

standardized technology that aligns our business units, our products and our services.

It will meet the most frequently expressed need of our clients – tightly integrated

solutions that can handle all aspects of their technology and back-office requirements.

69451_fiserv annual 2/14/05 8:31 PM Page 13

Left to Right: Scott Collary, Vice President Retail Applications, Fifth Third Bank;
John R. Tenuta, Division President, Loan Management Products, Fiserv Lending Solutions;
Stewart M. Greenlee, Senior Vice President Residential Mortgage Lending, Fifth Third Bank;
and Dan Brenneman, Relationship Manager, Loan Management Products, Fiserv Lending Solutions.

With the Fiserv integration initiative, we are undertaking
a comprehensive process that touches everything we do –
our internal operations, our extensive product portfolio, our
delivery of technology and our employees. Most importantly,
it touches all of our clients – banks, thrifts, credit unions,
insurance, investment support and health. The initiative
establishes a foundation for integration in a way that has never
been achieved before.

The integration initiative responds to the increasing
challenges of technology, both for Fiserv and for our
clients. The cost of maintaining technology is continually
increasing, and many companies have various software platforms
that do not interface, or would require significant expense to
enable them to work together. At the same time, the Internet
has made it easier to develop real-time solutions that can
connect with each other.

The initiative enables us to leverage our position as the
largest aggregate core processor in the financial institution
arena by offering our products as a totally integrated
solution. With a completely integrated system, our clients
and prospects will see significant benefits, including greater
customer intimacy and increased efficiency. For example, our
technology enables a bank teller to see the profitability of each
customer as transactions are being completed. This helps
clients improve customer service at the retail level and build
stronger relationships with their most profitable customers.
Our clients are excited about this extensive initiative and the
many ways it can benefit their business.

There are numerous benefits to Fiserv as well. The integration
initiative is a key tool in cross-selling our solutions to more
clients. It facilitates faster new product development, greater
functionality of products and increased flexibility in responding

FIFTH THIRD BANK »
Through our UniFi PRO Mortgage and MortgageServ solutions,
Fiserv provides an integrated loan origination and servicing technology
package for Fifth Third Bank, one of the country’s largest financial
institutions with $94.5 billion in assets and more than 1,000 locations
in nine states. Fiserv lending technology enables Fifth Third to
apply consistent business rules to its loan decisions throughout the
markets it serves. The recent addition of Fiserv’s lending system
builds on a long-term relationship that also includes auto financing
solutions and check processing for Fifth Third’s Florida operations.
The strong connection between Fiserv and Fifth Third Bank helps
both companies to achieve their business goals.

With this industry backdrop, we determined that we could
realize many benefits from integrating our solutions and opening
up our technology. Having acquired many companies with
various forms of technology, some proprietary, we saw an
opportunity to bring these systems together across all of our
operating areas. We began the initiative more than two years
ago, developing interfaces that use a standard technology and
product methodology to integrate our systems with each other and
with our clients, and also allow third parties to connect.

to market changes. The initiative will also increase operating
efficiency, which in turn improves profit margins. The new
framework is mandatory in every business unit and for all
new technology and product development.

The integration initiative is a major commitment in both
time and resources for Fiserv, but one that we believe will
pay big dividends as a strong connection to future organic
revenue growth.

69451_fiserv annual 2/15/05 6:06 AM Page 14

Strong Connection » Fiserv Health

The dramatic growth of Fiserv Health in just four years is another example of the

success of the Fiserv business strategy. Health plan management services is an adjacent

market that extends our core competencies of processing financial transactions into a

new area with exciting growth potential.

69451_fiserv annual 2/15/05 6:06 AM Page 15

Clockwise from Top: John Sickels (standing), Vice President Sales & Marketing, Wausau Benefits; Rick Smith, Vice President of
Human Resources, Vail Resorts; Karyn Schulman, Account Manager, Wausau Benefits; Jennifer Law, Benefits Manager, Vail Resorts;
David Forbes, Benefits Analyst, Vail Resorts; Julie Jacoby, Senior Benefits Specialist, Vail Resorts; Carol Stannard, Account Manager,
Wausau Benefits; Rob Henderson, Sales Executive, Wausau Benefits; and Ann Kurronen, Director of Benefits, Vail Resorts.

One of the biggest challenges facing employers today is
managing their continually increasing health benefit costs.
We saw this as an opportunity to build a business that combines
our proven processing capabilities with value-added services to
help clients administer and manage their overall health care
benefit costs. The business model for Fiserv Health is the same
model we have used so successfully in developing our financial
institution businesses. Created through seven strategic acquisitions,
Fiserv Health is building momentum at a fast pace.

Our primary clients in this business are employers who
have self-funded health plans. The services we provide are
similar to the transactions we process for our financial institution
and insurance company clients. We process and pay medical,
dental, pharmacy and disability claims and provide other back-
office processing services. We also help our clients with plan
design and financial and plan performance reporting.

satisfaction. Our value-added services include care and disease
management and pharmacy benefit management. Using a
member-centric model and information resources, our care and
disease management services save clients money while improving
the lives of their employees. Our pharmacy benefit management
services help clients reduce pharmacy benefit costs through
negotiated pricing, formulary design and control, and utilization
management programs.

Growth areas in health plan management include products
for health insurance companies and managed care
organizations. In addition, we have a dominant and growing
market share in workers’ compensation pharmacy claim
processing for retail pharmacies.

Fiserv differentiates itself in a market with much larger
competitors through our flexibility and specialized services.

VAIL RESORTS »
As one of the leading resort operators in North America, Vail Resorts
requires a health benefit administrator and manager that is not only flexible,
but resourceful and attentive as well. Vail Resorts’ strong connection with
Fiserv’s Wausau Benefits unit resulted in the development of proprietary
medical and dental PPO networks designed to meet the needs of the
resorts in their many locations and highly seasonal workforce. Vail’s
health plan leads the hospitality industry in the level of benefits provided
to new and returning seasonal workers, while keeping claim costs
down through diligent plan management and timely, accurate claims
administration services. Wausau Benefits also works closely with AON
Consulting, Vail’s benefits consultants, to help identify opportunities
to generate cost savings, design custom medical management programs
and deliver meaningful benefits to Vail Resorts’ plan members.

We currently serve more than 1,200 employer customers, with
more than 4 million plan members, giving us a significant presence
in the corporate and government self-insured plan administration
business. We paid more than $6.6 billion in claims in 2004.

The value-added services we offer are the catalyst for
expanding this business. They help us in obtaining new
clients by offering a more comprehensive set of services. They
also provide excellent integration opportunities for existing
clients and contribute to increased client retention and

We optimize the use of more than 200 different provider
network options. We specialize in complex and non-standard
plan design and provide our pharmacy clients with clear and
understandable pricing that helps them to better monitor and
control their pharmacy benefit costs.

The strong connection we are building with clients in the
health plan management market is a strategic move that
enables Fiserv to drive growth by putting our established skill
sets to work in an adjacent market.

69451_fiserv annual 2/14/05 5:21 PM Page 16

Financial Report »

In 2004, Fiserv marked another year of strong performance.

Since going public in 1986, we have achieved success

through our established client relationships, industry

leadership, technology solutions and exceptional people.

This solid foundation provides a strong connection to

continued growth in the years ahead.

YEAR-END STOCK PRICE »
(In dollars)

$50

$3,500

3,000

2,500

2,000

1,500

1,000

500

$2.00

1.50

1.00

.50

86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04

PROCESSING AND SERVICES REVENUES »
(In millions)

86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04

DILUTED EARNINGS PER SHARE »
(In dollars)

86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04

Financial Report »

Consolidated Statements of Income »

Consolidated Balance Sheets »

Consolidated Statements of Shareholders’ Equity »

Consolidated Statements of Cash Flows »

Notes to Consolidated Financial Statements »

Management’s Discussion and Analysis of
Financial Condition and Results of Operations »

Selected Financial Data »

Market Price Information »

Quarterly Financial Information (unaudited) »

Reports of Independent Registered Public Accounting
Firm and Management’s Annual Report on Internal
Control over Financial Reporting »

Board of Directors »

Executive and Management Leadership »

Corporate Information »

Fiserv, Inc. and Subsidiaries

Consolidated Statements of Income »

(In thousands, except per share data)
YEARS ENDED DECEMBER 31,

REVENUES:
Processing and services
Customer reimbursements
TOTAL REVENUES

COST OF REVENUES:
Salaries, commissions and payroll related costs
Customer reimbursement expenses
Data processing costs and equipment rentals
Prescription costs
Other operating expenses
Depreciation and amortization
TOTAL COST OF REVENUES

OPERATING INCOME
Interest expense
Interest income

INCOME FROM CONTINUING OPERATIONS

BEFORE INCOME TAXES

Income tax provision

INCOME FROM CONTINUING OPERATIONS

2004

2003

2002

$3,350,595
379,151
3,729,746

1,320,760
379,151
212,052
439,576
533,284
185,363
3,070,186

659,560
(24,902)
6,708

641,366
246,468

394,898

$2,592,115
333,252
2,925,367

1,222,675
333,252
205,617
55,902
420,261
165,838
2,403,545

521,822
(22,895)
7,340

506,267
197,444

308,823

$2,099,038
290,354
2,389,392

1,053,923
290,354
153,202
–
323,223
134,389
1,955,091

434,301
(17,758)
8,589

425,132
165,801

259,331

INCOME (LOSS) FROM DISCONTINUED OPERATIONS,

NET OF INCOME TAXES

NET INCOME

(17,256)
$ 377,642

6,189
$ 315,012

6,806
$ 266,137

BASIC NET INCOME (LOSS) PER SHARE:

Continuing operations
Discontinued operations

TOTAL

DILUTED NET INCOME (LOSS) PER SHARE:

Continuing operations
Discontinued operations

TOTAL

SHARES USED IN COMPUTING NET INCOME (LOSS) PER SHARE:

Basic
Diluted

See notes to consolidated financial statements.

$ 2.03
(0.09)
$ 1.94

$ 2.00
(0.09)
$ 1.91

$1.60
0.03
$1.63

$1.58
0.03
$1.61

$1.36
0.04
$1.39

$1.33
0.03
$1.37

194,981
197,287

193,240
195,937

191,386
194,951

Fiserv, Inc. and Subsidiaries

Consolidated Balance Sheets »

(Dollars in thousands)
DECEMBER 31,

ASSETS
Cash and cash equivalents
Accounts receivable, less allowance for doubtful accounts
Prepaid expenses and other assets
Investments
Property and equipment
Intangible assets
Goodwill
Assets of discontinued operations held for sale
TOTAL

LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable
Short-term borrowings
Accrued expenses
Accrued income taxes
Deferred revenues
Customer funds held and retirement account deposits
Deferred income taxes
Long-term debt
Liabilities of discontinued operations held for sale
TOTAL LIABILITIES

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS’ EQUITY
Preferred stock, no par value:

25,000,000 shares authorized; none issued

Common stock, $0.01 par value:
450,000,000 shares authorized;
195,940,360 and 194,259,709 shares issued

Additional paid-in capital
Accumulated other comprehensive income
Accumulated earnings
Treasury stock, at cost, 1,691,500 shares at December 31, 2004
TOTAL SHAREHOLDERS' EQUITY
TOTAL

See notes to consolidated financial statements.

2004

2003

$ 516,127
437,764
100,810
1,984,536
213,799
519,449
1,859,347
2,751,517
$8,383,349

$ 202,616
100,000
363,513
44,955
226,080
1,829,639
134,330
505,327
2,412,467
5,818,927

$ 162,668
417,521
98,415
1,838,925
200,579
548,912
1,721,322
2,225,833
$7,214,175

$ 179,191
100,000
256,110
23,453
208,996
1,582,698
95,276
699,116
1,869,527
5,014,367

–

1,959
679,573
26,695
1,920,539
(64,344)
2,564,422
$8,383,349

1,943
637,623
17,345
1,542,897
–
2,199,808
$7,214,175

Fiserv, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity »

(In thousands)
Balance at December 31, 2001
Net income
Foreign currency translation
Change in unrealized gains on available-

for-sale investments - net of tax

Reclassification adjustment for realized

investment gains included in net income

Fair market value adjustment on
cash flow hedges - net of tax

Comprehensive income
Shares issued under stock plans including

income tax benefits
Purchase of treasury stock
Balance at December 31, 2002
Net income
Foreign currency translation
Change in unrealized gains on available-

for-sale investments - net of tax

Reclassification adjustment for realized

investment gains included in net income

Fair market value adjustment on
cash flow hedges - net of tax

Comprehensive income
Shares issued under stock plans including

income tax benefits

Shares issued for acquired companies
Balance at December 31, 2003
Net income
Foreign currency translation
Change in unrealized gains on available-

for-sale investments - net of tax
Fair market value adjustment on
cash flow hedges - net of tax

Comprehensive income
Shares issued under stock plans including

income tax benefits

Purchase of treasury stock

Common Stock

Shares
190,281

Amount
$1,903

Additional
Paid-In
Capital
$564,959

Accumulated
Other

Comprehensive Comprehensive Accumulated

Income

$266,137
1,166

Income
Earnings
$76,216 $ 961,748
266,137

1,166

Treasury
Stock
–

(45,184)

(1,573)

(6,743)
$213,803

(6,743)

2,169

34,741

192,450

1,924

599,700

$315,012
1,078

23,882

1,078

1,227,885
315,012

$ 7,856
(33,578)
(25,722)

1,265
545
194,260

13
6
1,943

20,411
17,512
637,623

(927)

(10,264)

3,576
$308,475

3,576

$377,642
634

3,253

5,463
$386,992

17,345

634

3,253

5,463

11,761
13,961
–

1,542,897
377,642

1,680

41,950

–
(64,344)

Balance at December 31, 2004

195,940 $1,959

$679,573

$26,695 $1,920,539 $(64,344)

See notes to consolidated financial statements.

Fiserv, Inc. and Subsidiaries

Consolidated Statements of Cash Flows »

(In thousands)
YEARS ENDED DECEMBER 31,

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
Adjustment for discontinued operations
Adjustments to reconcile net income to net cash

provided by operating activities from continuing operations:

Deferred income taxes
Depreciation and amortization

Changes in assets and liabilities, net of effects from

acquisitions of businesses:
Accounts receivable
Prepaid expenses and other assets
Accounts payable and accrued expenses
Deferred revenues
Accrued income taxes

Net cash provided by operating activities from continuing operations

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, including capitalization of software

costs for external customers

Payment for acquisitions of businesses, net of cash acquired
Investments
Net cash used in investing activities from continuing operations

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings
Proceeds from long-term debt
Repayments of long-term debt
Issuance of common stock and treasury stock
Purchases of treasury stock
Customer funds held and retirement account deposits
Net cash provided by financing activities from continuing operations

Change in cash and cash equivalents
Beginning balance
Ending balance

2004

2003

2002

$377,642
17,256

$315,012
(6,189)

$266,137
(6,806)

23,022
185,363

(19,177)
(4,518)
54,445
17,826
46,524
698,383

(161,093)
(64,896)
(139,258)
(365,247)

–
17,303
(210,243)
30,666
(64,344)
246,941
20,323

353,459
162,668
$516,127

27,488
165,838

17,268
4,803
33,371
9,420
28,674
595,685

(139,111)
(735,917)
139,432
(735,596)

–
248,268
(32,474)
18,585
–
(124,760)
109,619

(30,292)
192,960
$162,668

26,296
134,389

6,022
(7,144)
12,401
10,072
39,756
481,123

(137,126)
(362,578)
(307,406)
(807,110)

43,514
156,481
(16,908)
11,420
(33,578)
260,884
421,813

95,826
97,134
$192,960

Net cash (used in) provided by discontinued operations

$ (4,251)

5,821

$ (4,675)

See notes to consolidated financial statements.

Fiserv, Inc. and Subsidiaries

Notes to Consolidated Financial Statements »

For the years ended December 31, 2004, 2003 and 2002

1. SUMMARY OF SIGNIFICANT ACCOUNTING

PRINCIPLES OF CONSOLIDATION »

POLICIES »

DESCRIPTION OF THE BUSINESS »

Fiserv, Inc. and subsidiaries (the “Company”) is an independent
provider of data processing systems and related information
management services and products to financial institutions,
other financial intermediaries and employers who self-insure
their health plans. The Company’s operations are primarily
in the United States and consist of three business segments
based on the services provided by each: Financial institution
outsourcing, systems and services; Health plan management
services; and Investment support services. The Financial
institution outsourcing, systems and services segment provides
account and transaction processing products and services to
financial institutions and other financial intermediaries. The
Health plan management services segment provides services
primarily to employers who self-insure their health plans,
including services such as handling payments to healthcare
providers, assisting with cost controls, plan design services
and prescription benefit management. The Investment support
services segment provides retirement plan administration services
to individual retirement plan and pension administrators,
financial planners and financial institutions.

DISCONTINUED OPERATIONS »

On December 16, 2004, the Company announced it had
reached a definitive agreement to sell its securities clearing
businesses to the National Financial unit of Fidelity Investments
for a price of approximately $365 million. The transaction is
subject to standard and customary closing conditions and is
expected to close in the first quarter of 2005. In accordance
with Statement of Financial Accounting Standards (“SFAS”)
No. 144, “Accounting for the Impairment or Disposal of
Long-Lived Assets,” the financial results of the Company’s
securities clearing businesses are reported as discontinued
operations for all periods presented.

The consolidated financial statements include the accounts of
Fiserv, Inc. and all majority owned subsidiaries. All significant
intercompany transactions and balances have been eliminated
in consolidation.

RECLASSIFICATIONS »

Certain amounts reported in prior periods have been reclassified
to conform to the 2004 presentation. The reclassifications did
not impact the Company's net income or net income per share.

USE OF ESTIMATES »

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
of America requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

FAIR VALUES »

The fair values of cash equivalents, accounts receivable, accounts
payable, short-term borrowings, accrued expenses and customer
funds held and retirement account deposits approximate the
carrying values due to the short period of time to maturity.
The fair value of investments is determined based on quoted
market prices. The fair value of long-term debt is estimated
using discounted cash flows based on the Company’s current
incremental borrowing rates or dealer quotes and the fair value
of derivative instruments is determined based on dealer quotes.

Fiserv, Inc. and Subsidiaries

Notes continued

NEW ACCOUNTING PRONOUNCEMENT »

In December 2004, the Financial Accounting Standards Board
issued SFAS No. 123 (revised 2004), “Share-Based Payment”
(“SFAS 123R”), that requires companies to expense the value
of employee stock options, discounts on employee stock purchase
plans and similar awards. Under SFAS 123R, share-based payment
awards result in a cost that will be measured at fair value on the
awards’ grant date, based on the estimated number of awards
that are expected to vest. SFAS 123R is effective for periods
beginning after June 15, 2005 and applies to all outstanding
and unvested share-based payment awards at the adoption date.
The Company has not completed its evaluation of the impact
of adopting SFAS 123R.

DERIVATIVE INSTRUMENTS »

The Company accounts for its derivative instruments in
accordance with SFAS Nos. 133, 137 and 149 related to
“Accounting for Derivative Instruments and Hedging
Activities” (“SFAS No. 133, as amended”). Derivative instruments
are recorded on the balance sheet as either an asset or liability
measured at their fair value. If the derivative is designated as a
fair value hedge, the changes in the fair value of the derivative
are recognized in earnings. To the extent the hedge is effective,
there is an offsetting adjustment to the basis of the item being
hedged. If the derivative is designated as a cash flow hedge, the
effective portions of the changes in the fair value of the derivative
are recorded as a component of accumulated other comprehensive
income and recognized in the consolidated statements of
income when the hedged item affects earnings. Ineffective
portions of changes in the fair value of hedges are recognized
in earnings.

The Company’s existing fair value and cash flow hedges are
effective. As a result, there is no current impact on earnings due
to hedge ineffectiveness. It is the policy of the Company to
execute such instruments with credit-worthy banks and not to
enter into derivative financial instruments for speculative purposes.

REVENUE RECOGNITION »

Revenues from the sale of data processing services, consulting
and administration fees on investment accounts are recognized
as the related services are provided or when the product is shipped.

Revenues from investment support services include net invest-
ment income of $74.1 million, $67.4 million and $76.0 mil-
lion in 2004, 2003 and 2002, respectively. Revenues from soft-
ware license fees (representing approximately 4%, 5% and 7%
of 2004, 2003 and 2002 processing and services revenues, respec-
tively) are recognized when written contracts are signed, deliv-
ery of the product has occurred, the fee is fixed or
determinable and collection is probable. Maintenance fee
revenues are recognized ratably over the term of the related
support period; generally 12 months. Deferred revenues consist
primarily of advance billings for services and are recognized
as revenues when the services are provided.

Revenues from our pharmacy network contracts where we are
the principal are recognized on a gross basis, at the prescription
price (ingredient cost plus dispensing fee) negotiated with our
clients, excluding the portion of the price to be settled directly
by the member (co-payment), plus our administrative fees.
Our responsibilities under our client contract to adjudicate
member claims properly, our separate contractual pricing
relationships and responsibilities to the pharmacies in our
networks, and our interaction with members, among other
factors, qualify us as the principal under the indicators set
forth in Emerging Issues Task Force No. 99-19 “Reporting
Gross Revenues as a Principal vs. Net as an Agent” in the
majority of our transactions with customers.

CASH AND CASH EQUIVALENTS »

Cash and cash equivalents consist of cash and investments with
original maturities of 90 days or less.

ALLOWANCE FOR DOUBTFUL ACCOUNTS »

The Company specifically analyzes accounts receivable and
historical bad debts, customer credit-worthiness, current economic
trends, and changes in our customer payment terms and
collection trends when evaluating the adequacy of its allowance
for doubtful accounts. Any change in the assumptions used
in analyzing a specific account receivable may result in an
additional allowance for doubtful accounts being recognized
in the period in which the change occurs. The balance in the
allowance for doubtful accounts was $29.5 million and $25.9
million at December 31, 2004 and 2003, respectively.

Fiserv, Inc. and Subsidiaries

Notes continued

INVESTMENTS »

The following summarizes the Company’s investments at December 31:

2004
(In thousands)
Mortgage-backed obligations
Corporate debt obligations
Other fixed income obligations
Total held-to-maturity investments
Available-for-sale investments
Money market mutual funds
Repurchase agreements
Other investments
TOTAL

2003
(In thousands)
Mortgage-backed obligations
Corporate debt obligations
Private mortgage-backed securities
Other fixed income obligations
Total held-to-maturity investments
Available-for-sale investments
Money market mutual funds
Repurchase agreements
Other investments
TOTAL

Amortized/
Historical Cost
$1,496,969
27,658
990
1,525,617
30,436
131,872
225,000
21,487
$1,934,412

Amortized/
Historical Cost
$1,604,737
30,422
9,383
3,711
1,648,253
8,069
61,968
55,030
20,466
$1,793,786

Gross
Unrealized Gains
$ 8,249
3,218
4
11,471
50,124
–
–
–
$61,595

Gross
Unrealized Gains
$11,052
4,401
242
108
15,803
45,139
–
–
–
$60,942

Gross
Unrealized Losses
$(33,647 )
–
–
(33,647 )
–
–
–
–
$(33,647 )

Gross
Unrealized Losses
$(28,732 )
–
–
–
(28,732 )
–
–
–
–
$(28,732 )

Estimated
Fair Value
$1,471,571
30,876
994
1,503,441
80,560
131,872
225,000
21,487
$1,962,360

Estimated
Fair Value
$1,587,057
34,823
9,625
3,819
1,635,324
53,208
61,968
55,030
20,466
$1,825,996

Carrying
Value
$1,496,969
27,658
990
1,525,617
80,560
131,872
225,000
21,487
$1,984,536

Carrying
Value
$1,604,737
30,422
9,383
3,711
1,648,253
53,208
61,968
55,030
20,466
$1,838,925

Fiserv, Inc. and Subsidiaries

Notes continued

The Company’s Investment support services subsidiaries accept
money market deposits from customers and invest the funds in
securities. Such amounts due to customers represent the primary
source of funds for the Company’s investment securities and
amounted to $1.8 billion and $1.5 billion as of December 31,
2004 and 2003, respectively. The Company’s mortgage-backed
obligations consist primarily of GNMA, FNMA and FHLMC
mortgage-backed pass-through securities and collateralized
mortgage obligations rated AAA by Standard and Poor’s.
Mortgage-backed obligations may contain prepayment risk and
the Company has never experienced a default on these types of
securities. Substantially all of the Investment support services
subsidiary’s investments are rated AAA or equivalent except for
certain corporate debt obligations which are classified as investment
grade. Investments in mortgage-backed obligations and certain
fixed income obligations had an average duration of approximately
three years and five months at December 31, 2004. These
investments are accounted for as held-to-maturity and are
carried at amortized cost as the Company has the ability
and intent to hold these investments to maturity.

Available-for-sale investments are carried at market, based upon
quoted market prices. Unrealized gains or losses on available-for-
sale investments are accumulated in shareholders’ equity as
accumulated other comprehensive income, net of related deferred
income taxes. Realized gains or losses are computed based on specific
identification of the investments sold, based on the trade date.

PROPERTY AND EQUIPMENT »

Property and equipment are stated at cost. Depreciation and
amortization are computed primarily using the straight-line
method over the estimated useful lives of the assets. Property
and equipment consist of the following at December 31:

(In thousands)
Data processing equipment
Buildings and leasehold

improvements

Furniture and equipment

Less accumulated depreciation

and amortization

TOTAL

Estimated
Useful Lives
3 to 5 years

5 to 40 years
3 to 10 years

2004

2003

$368,502 $318,594

125,179
122,056
615,737

120,109
119,011
557,714

401,938

357,135
$213,799 $200,579

INTANGIBLE ASSETS »

Intangible assets consist of the following at December 31:

2004
(In thousands)
Software development costs
for external customers

Purchased software
Customer base
Trade names
Other
TOTAL

2003
(In thousands)
Software development costs
for external customers

Purchased software
Customer base
Trade names
Other
TOTAL

Gross

Carrying Accumulated Net Book
Amount Amortization

Value

$352,429
136,273
86,996
–
4,131
$579,829

$154,693
76,007
225,095
57,744
5,910
$519,449

$ 507,122
212,280
312,091
57,744
10,041
$1,099,278

Gross

Carrying Accumulated Net Book
Amount Amortization

Value

$ 446,550
188,484
333,309
56,911
4,846
$1,030,100

$294,727
112,103
71,951
–
2,407
$481,188

$151,823
76,381
261,358
56,911
2,439
$548,912

Software development costs for external customers include
internally generated computer software for external customers
and software acquired in conjunction with acquisitions of
businesses. The Company capitalizes certain costs incurred to
develop new software or enhance existing software which is
marketed externally or utilized by the Company to process
customer transactions in accordance with SFAS No. 86,
“Accounting for the Costs of Computer Software to Be Sold,
Leased, or Otherwise Marketed.” Costs are capitalized
commencing when the technological feasibility of the software
has been established. Routine maintenance of software products,
design costs and development costs incurred prior to establishment
of a product’s technological feasibility are expensed as incurred.
Amortization of all software is computed on a straight-line
basis over the expected useful life of the product, generally
three to five years.

Fiserv, Inc. and Subsidiaries

Notes continued

Gross software development costs for external customers capitalized
for new products and enhancements to existing products totaled
$47.8 million, $51.9 million and $44.9 million in 2004, 2003
and 2002, respectively. Amortization of previously capitalized
development costs, included in depreciation and amortization,
was $60.2 million, $47.8 million and $38.3 million in 2004,
2003 and 2002, respectively, resulting in net capitalized
(amortized) development costs of $(12.4) million, $4.1 million
and $6.6 million in 2004, 2003 and 2002, respectively.

Customer base intangible assets represent customer contracts
and relationships obtained as part of acquired businesses and
are amortized using the straight-line method over their estimated

useful lives, ranging from five to 20 years. Trade names have
been determined to have indefinite lives and therefore are not
amortized in accordance with the provisions of SFAS No. 142
“Goodwill and Other Intangible Assets.” Other intangible
assets consist primarily of non-compete agreements, which
are generally amortized over their estimated useful lives.

Amortization expense for intangible assets was $110.5 million,
$90.0 million and $74.4 million for the years ended December 31,
2004, 2003 and 2002, respectively. Aggregate amortization
expense with respect to existing intangible assets with finite
lives resulting from acquisitions of businesses, excluding software
amortization, should approximate $20 million annually.

GOODWILL »

The excess of the purchase price over the estimated fair value of tangible and identifiable intangible assets acquired is recorded as
goodwill. The changes in the carrying amount of goodwill by business segment during the years ended December 31, 2004 and 2003
are as follows:

(In thousands)
Balance, December 31, 2002
Goodwill additions
Balance, December 31, 2003
Goodwill additions
Balance, December 31, 2004

Financial Institution
Outsourcing,
Systems and Services
$1,013,267
319,256
1,332,523
68,728
$1,401,251

Health Plan
Management
Services
$171,090
216,116
387,206
69,297
$456,503

Investment
Support
Services
$1,593
–
1,593
–
$1,593

Total
$1,185,950
535,372
1,721,322
138,025
$1,859,347

IMPAIRMENT OF LONG-LIVED ASSETS »

SHORT-TERM BORROWINGS »

The Company assesses the likelihood of recovering the cost
of long-lived assets based on current and projected operating
results and cash flows of the related business operations using
undiscounted cash flow analyses. These factors, along with
management’s plans with respect to the operations, are considered
in assessing the recoverability of property and equipment and
intangible assets subject to amortization. Measurement of any
impairment loss is based on discounted operating cash flows.

The Company’s Investment support services subsidiaries had
short-term borrowings of $100.0 million as of December 31,
2004 and 2003, with an average interest rate of 2.6% and
1.6% as of December 31, 2004 and 2003, respectively, and
were collateralized by investments valued at $102.0 million
at December 31, 2004 and 2003.

Fiserv, Inc. and Subsidiaries

Notes continued

INCOME TAXES »

STOCK-BASED COMPENSATION »

The Company accounts for income taxes under SFAS No.
109, “Accounting for Income Taxes.” Under these rules, certain
assumptions are made which represent significant estimates.
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between financial
statement carrying amounts of existing assets and liabilities and
their respective tax basis, net operating loss and tax credit
carryforwards, and tax contingencies. Deferred tax assets and
liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. A valuation
allowance is recorded against deferred tax assets for which
utilization of the asset is not likely.

NET INCOME PER SHARE »

Basic net income per share is computed using the weighted-
average number of common shares outstanding during the
periods. Diluted net income per share is computed using the
weighted-average number of common and dilutive common
equivalent shares outstanding during the periods. Common
equivalent shares consist primarily of stock options and are
computed using the treasury stock method. During the years ended
December 31, 2004, 2003 and 2002, the Company excluded
4.1 million, 3.4 million and 1.3 million weighted-average
shares under stock options, respectively, from the calculation
of common equivalent shares as the impact was anti-dilutive.

The computation of the number of shares used in calculating
basic and diluted net income per common share is as follows:

(In thousands)

2004

2003

2002

Weighted-average common

shares outstanding used for
calculation of net income
per share - basic

Common stock equivalents
Total shares used for calculation of
net income per share - diluted

194,981
2,306

193,240
2,697

191,386
3,565

197,287

195,937

194,951

The Company has accounted for its stock-based compensation
plans in accordance with the intrinsic value provisions of
Accounting Principles Board Opinion No. 25, “Accounting for
Stock Issued to Employees.” Accordingly, the Company did
not record compensation expense in the consolidated financial
statements for its stock-based compensation plans. The fair
value of each option issued prior to January 1, 2004 was estimated
on the date of grant using a Black-Scholes option-pricing
model. For options issued on or after January 1, 2004, the fair
value of each option was estimated on the date of grant using
a binomial option-pricing model and are amortized utilizing
tranche-specific vesting. Stock options are typically granted
in the first quarter of the year, generally vest 20% on the date
of grant and 20% each year thereafter and expire 10 years from
the date of the award. The following table illustrates the effect
on net income and net income per share had compensation
expense been recognized consistent with the fair value provisions
of SFAS No. 123, “Accounting for Stock-Based Compensation.”

(In thousands, except per share data)
Net income:
As reported
Less: stock compensation
expense - net of tax

2004

2003

2002

$377,642

$315,012

$266,137

(18,000)

(17,000)

(18,200)

Pro forma

$359,642

$298,012

$247,937

Reported net income per share:

Basic
Diluted

Pro forma net income per share:

Basic
Diluted

$1.94
1.91

$1.84
1.82

$1.63
1.61

$1.54
1.52

$1.39
1.37

$1.30
1.27

Fiserv, Inc. and Subsidiaries

Notes continued

The fair value of each stock option granted in 2004 was
estimated on the date of grant using a binomial option-pricing
model; the 2003 and 2002 stock options were estimated on
the date of grant using the Black-Scholes option-pricing model
with the following assumptions:

Expected life (in years)

Risk-free interest rate

Volatility

Dividend yield

2004

5.5

3.1%

33.6%

0.0%

2003

2002

5.0

3.0%

52.3%

0.0%

5.0

4.4%

50.0%

0.0%

The weighted-average estimated fair value of stock options
granted during the years ended December 31, 2004, 2003 and
2002 was $13.56, $15.14 and $20.24 per share, respectively.

SHAREHOLDER RIGHTS PLAN »

The Company has a shareholder rights plan. Under this plan, each
shareholder holds one preferred stock purchase right for each
outstanding share of the Company’s common stock held. The
stock purchase rights are not exercisable until certain events occur.

2. ACQUISITIONS »

ACCUMULATED OTHER COMPREHENSIVE INCOME »

Accumulated other comprehensive income consists of the
following at December 31:

(In thousands)

2004

2003

Unrealized gains on investments,

net of tax

Unrealized losses on cash flow hedges,

$32,085

$28,832

net of tax

(5,673)

(11,136)

Foreign currency translation

adjustments

TOTAL

283

(351)

$26,695

$17,345

SUPPLEMENTAL CASH FLOW INFORMATION »

(In thousands)

Interest paid

2004

2003

2002

$ 25,495

$ 22,164

$17,724

Income taxes paid

177,017

144,130

97,808

Liabilities assumed in

acquisitions of businesses

10,507

85,072

29,033

During 2004, 2003 and 2002, the Company completed the following acquisitions of businesses. The results of operations of these
acquired businesses have been included in the accompanying consolidated statements of income from the dates of acquisition.

Company

2004:
RegEd, Inc.
Pharmacy Fulfillment, Inc.
Results International Systems, Inc.
CheckAGAIN, LLC

Month
Acquired

Jan.
Aug.
Aug.
Oct.

Service

Insurance/securities training
Health plan management
Insurance data processing
Item processing

Consideration

Cash for stock
Cash for stock
Cash for stock
Cash for assets

Fiserv, Inc. and Subsidiaries

Consideration

Stock for stock
Cash for stock
Cash for stock
Cash for stock

Cash for assets
Cash for stock
Cash for assets
Cash for stock
Cash for stock
Cash for assets
Cash for assets
Cash for stock

Cash for stock
Cash for assets
Cash for assets

Cash for assets
Cash for stock

Month
Acquired

Service

Health plan management
Software and services
Insurance services
Health plan management

Credit union data processing
Lending services
Insurance data processing
Insurance data processing
Lending services
Item processing
Insurance software systems
Health plan management

Lending services
Securities clearing services*
Health plan management

EFT data processing
Lending services

3. DISPOSITIONS »

Notes continued

Company

2003:
AVIDYN, Inc.
Precision Computer Systems, Inc.
ReliaQuote, Inc.
WBI Holdings Corporation
Electronic Data Systems Corporation’s Credit Union

Industry Group business

Chase Credit Systems Inc. & Chase Credit Research Inc.
Unisure, Inc.
Insurance Management Solutions Group, Inc.
GAC Holdings Corporation
Federal Home Loan Bank of Indianapolis IP services
MI-Assistant Software, Inc.
MedPay Corporation

2002:
Case, Shiller, Weiss, Inc.
Investec Ernst & Company’s clearing operations
Willis Group’s TPA operations
Electronic Data Systems Corporation’s
Consumer Network Services business

Lenders Financial Services

* Results included in discontinued operations

Jan.
Mar.
Apr.
May

July
July
Sept.
Sept.
Sept.
Oct.
Nov.
Dec.

May
Aug.
Nov.

Dec.
Dec.

During 2004, 2003 and 2002, the Company completed four,
12 and five acquisitions, respectively. Net cash paid for these
acquisitions was $35.7 million, $702.8 million and $322.9
million, respectively, subject to certain adjustments. Pro forma
information for 2004 is not being provided as the 2004 acquisitions
did not have a material effect on the Company’s results of operations.

The Company may be required to pay additional cash consideration
for acquisitions up to maximum estimated payments of $129.9
million through 2007, if certain of the acquired entities achieve
specific escalating operating income targets. The Company has
recorded a liability of $74.3 million at December 31, 2004 as
an estimate of the additional cash consideration to be paid.
During 2004, as a result of previously acquired entities achieving
their operating income targets, the Company paid additional
cash consideration of $29.2 million. The additional consideration
was treated as additional purchase price.

On December 16, 2004, the Company entered into an
Agreement among Fiserv, Inc., Fiserv Clearing, Inc. and National
Financial Services LLC (“National Financial”) to sell its securities
clearing businesses pursuant to which National Financial will
acquire all of the outstanding shares of BHC Investments, Inc.,
a subsidiary of Fiserv (“BHC”), for approximately $349 million
in cash payable at closing, subject to certain post-closing
adjustments, plus a contingent payment of up to $15 million
to be paid after the first anniversary of the closing date based
on achievement of specific revenue targets. Consummation of
the transaction is subject to customary conditions to closing,
including receipt of regulatory approvals. The Agreement provides
that the Company will be required to retain certain liabilities
of BHC, including, among others, those relating to the previously
announced Securities and Exchange Commission investigation
of Fiserv Securities, Inc. (see Note 7).

Fiserv, Inc. and Subsidiaries

Notes continued

The transaction is expected to be completed in the first quarter
of 2005 and the Company does not anticipate a material gain
or loss as a result of this transaction. Pursuant to SFAS No.
144, “Accounting for the Impairment or Disposal of Long-Lived
Assets,” the assets and liabilities, results of operations and cash flows
of the securities clearing businesses have been accounted for as
“Discontinued Operations” in the accompanying Consolidated
Financial Statements and all prior periods have been restated.

Assets and liabilities of discontinued operations are presented
separately under the captions “Assets of discontinued operations
held for sale” and “Liabilities of discontinued operations held
for sale,” respectively, in the accompanying Consolidated
Balance Sheets and consist of the following at December 31:

(In thousands)
Assets of discontinued operations:
Cash and cash equivalents

Securities processing receivables
Prepaid expenses and other assets
Investments
Property and equipment
Intangible assets and goodwill

TOTAL

Liabilities of discontinued operations:
Accounts payable and accruals
Securities processing payables
Short-term borrowings

TOTAL

2004

2003

35,849

40,100

2,404,215
27,632
128,279
4,140
151,402
$2,751,517

53,328
$
2,349,139
10,000
$2,412,467

1,940,414
21,753
65,236
5,497
152,833
$2,225,833

43,764
1,786,763
39,000
$1,869,527

Processing and services revenues from the securities clearing
businesses included in “Income (loss) from discontinued
operations” were $114.8 million, $107.5 million and $106.7
million in 2004, 2003 and 2002, respectively. Income tax
expense (benefit) for the securities clearing businesses was
$(0.1 million), $4.0 million and $4.4 million for the years
ended December 31, 2004, 2003 and 2002, respectively.
Future minimum operating lease commitments for the
securities clearing businesses at December 31, 2004 were
$38.7 million.

4. LONG-TERM DEBT »

The Company has available a $700.0 million unsecured line
of credit and commercial paper facility with a group of banks,
of which $195.0 million was in use at December 31, 2004,
with a weighted-average variable interest rate of 2.8% and
1.8% at December 31, 2004 and 2003, respectively. The credit
facilities, which expire in May 2009, consist of a $465.3 million
five-year revolving credit facility and a $234.7 million 364-day
revolving credit facility which is subject to renewal annually
through 2009. There were no significant commitment fees or
compensating balance requirements under these facilities. The
Company must, among other requirements, maintain a minimum
net worth of $1.8 billion as of December 31, 2004 and limit
its total debt to no more than three and one-half times the
Company’s earnings before interest, taxes, depreciation and
amortization. The Company was in compliance with all debt
covenants throughout 2004.

At December 31, 2004, the Company had cash flow interest
rate swap agreements to fix the interest rates on certain floating-
rate debt at a rate approximating 6.8% (based on current bank
fees and spreads) for a notional amount of $200.0 million
until December 2005. During the second quarter of 2003, the
Company entered into additional cash flow interest rate swap
agreements to fix the interest rates on certain floating-rate debt
at an average rate approximating 5.0% (based on current bank
fees and spreads) for a notional amount of $150.0 million
from December 2005 to 2008. The estimated fair values of the
cash flow hedges are $9.1 million and $18.0 million as of
December 31, 2004 and 2003, respectively, and are included
in the accompanying consolidated balance sheets in accrued
expenses and as a component of accumulated other comprehensive
income, net of deferred taxes.

In addition, the Company had fixed-to-floating interest rate swap
agreements on the $150.0 million 4% senior notes due April
2008, with a variable interest rate of approximately 3.0% at
December 31, 2004. The estimated fair values of the fair value
hedges are $2.0 million and $0.5 million as of December 31, 2004
and 2003, respectively, and are included in the accompanying
consolidated balance sheets in accrued expenses and long-term debt.

Fiserv, Inc. and Subsidiaries

Notes continued

The carrying value and estimated fair values of the Company’s
long-term debt are as follows at December 31:

The provision for income taxes from continuing operations
consisted of the following at December 31:

(In thousands)

Bank notes and

commercial paper,
at short-term rates

3.0% senior notes

2004

Carrying
Value

Estimated
Fair Value

2003
Carrying Estimated
Fair Value

Value

$194,993 $194,993 $395,600 $395,600

payable, due 2008

99,922

95,877

99,900

96,921

4.0% senior notes

payable, due 2008

147,957

148,875

149,897

151,540

Other

62,455

62,837

53,719

55,235

Total long-term debt

$505,327 $502,582 $699,116 $699,296

Annual principal payments required under the terms of the
long-term debt agreements are as follows at December 31, 2004:

(In thousands)
Years ending December 31,
2005
2006
2007
2008
2009
TOTAL

5. INCOME TAXES »

$ 47,486
3,917
3,863
251,619
198,442
$505,327

A reconciliation of recorded income tax expense from continuing
operations with income tax computed at the statutory federal
tax rates is as follows for the three years ended December 31:

(In thousands)
Statutory federal tax rate
Tax computed at
statutory rate
State income taxes,

net of federal effect
Foreign tax credit carryover
Other - net

2004
35%

2003
35%

2002
35%

$224,478

$177,193

$148,796

22,983
(2,431)
1,438

19,047
–
1,204

15,794
–
1,211

TOTAL

$246,468

$197,444

$165,801

(In thousands)
Current:

Federal
State
Foreign

Deferred:
Federal
State
Foreign

TOTAL

2004

2003

2002

$181,981
34,148
7,317

$138,010 $116,252
21,490
1,763

27,506
4,440

223,446

169,956

139,505

22,894
1,134
(1,006)
23,022
$246,468

28,890
1,431
(2,833)
27,488
$197,444

25,511
1,592
(807)
26,296
$165,801

Significant components of the Company’s deferred tax assets
and liabilities consist of the following at December 31:

(In thousands)

Reserve for bad debts
Purchased incomplete software

technology

Accrued expenses not currently

deductible
Deferred revenues
Unrealized losses on cash flow hedges
Net operating loss carryforwards
Other

Total deferred tax assets

Software development costs for

external customers

Excess of tax over book depreciation
Excess of tax over book amortization
Unrealized gains on investments
Other

Total deferred tax liabilities
TOTAL

2004

2003

$ 10,137

8,528

22,461

26,667
4,728
3,418
2,932
8,767

79,110

(40,384)
(25,463)
(105,912)
(18,081)
(23,600)

(213,440)
$(134,330)

26,672

22,474
14,203
7,003
1,950
7,212

88,042

(42,499)
(21,750)
(87,102)
(16,341)
(15,626)

(183,318)
$ (95,276)

Fiserv, Inc. and Subsidiaries

Notes continued

Tax benefits associated with the exercise of non-qualified
employee stock options were credited directly to additional
paid-in capital and amounted to $11.3 million, $13.2 million
and $31.2 million in 2004, 2003 and 2002, respectively.

the year, generally vest 20% on the date of grant and 20% each
year thereafter and expire 10 years from the date of the award.
At December 31, 2004, options to purchase 6.1 million shares
were available for grant under the Plan.

At December 31, 2004, the Company has state net operating
loss carryforwards of $35.4 million, with expiration dates ranging
from 2005 through 2024. At December 31, 2004, the Company
also has foreign tax credit carryforwards of $3.8 million with
expiration dates ranging from 2005 through 2012.

6. EMPLOYEE BENEFIT PLANS »

STOCK OPTION AND RESTRICTED STOCK PLAN »

The Company’s Stock Option and Restricted Stock Plan (the
“Plan”) provides for the granting to its employees and directors
of restricted stock and either incentive or non-qualified options
to purchase shares of the Company’s common stock for a price
not less than 100% of the fair value of the shares at the date of
grant. Stock options are typically granted in the first quarter of

Changes in stock options outstanding are as follows:

Outstanding, December 31, 2001
Granted
Forfeited
Exercised

Outstanding, December 31, 2002
Granted
Forfeited
Exercised

Outstanding, December 31, 2003
Granted
Forfeited
Exercised

Outstanding, December 31, 2004

Number
of Shares
In thousands

Weighted-
Average
Exercise Price

13,003
1,519
(116)
(2,796)

11,610
1,719
(326)
(1,414)

11,589
1,282
(188)
(1,123)

11,560

$17.18
41.21
24.49
10.70

$21.77
30.96
36.90
9.37

$24.21
38.19
36.19
12.42

$26.71

The number of shares under option that were exercisable at December 31, 2004, 2003 and 2002 were 8.5 million, 8.2 million and
8.1 million, at weighted-average exercise prices of $23.44, $20.19 and $16.69, respectively. The following summarizes information
about the Company’s stock options outstanding and exercisable at December 31, 2004:

Range of
Exercise Prices

$ 5.38 - $10.67
10.89 - 16.00
17.00 - 21.33
21.67 - 30.99
32.46 - 37.04
37.21 - 45.99
$ 5.38 - $45.99

Options Outstanding

Weighted-Average
Exercise Price

$ 9.32
15.50
20.63
30.28
36.68
40.29
$26.71

Weighted-Average
Remaining
Contractual Life
In years
1.5
3.0
4.6
7.8
6.5
8.0
5.4

Number of Shares
In thousands
1,630
1,514
2,283
1,673
2,046
2,414
11,560

Options Outstanding
and Exercisable

Number of Shares
In thousands
1,630
1,514
2,260
709
1,441
987
8,541

Weighted Average
Exercise Price

$ 9.32
15.50
20.66
29.70
36.99
40.96
$23.44

Fiserv, Inc. and Subsidiaries

Notes continued

EMPLOYEE STOCK PURCHASE PLAN »

The Company’s employee stock purchase plan provides that eligible
employees may purchase a limited number of shares of common
stock each quarter through payroll deductions, at a purchase
price equal to 85% of the closing price of the Company’s common
stock on the last business day of each calendar quarter. During
the year ended December 31, 2004, 0.6 million shares were issued
under the employee stock purchase plan. As of January 1, 2005,
there were 1.0 million shares available for grant under this plan.

EMPLOYEE SAVINGS PLAN »

The Company and its subsidiaries have defined contribution
savings plans covering substantially all employees, under which
eligible participants may elect to contribute a specified percentage
of their salaries, subject to certain limitations. The Company
makes matching contributions, subject to certain limitations,
and makes discretionary contributions based upon the attainment
of certain profit goals. Company contributions vest ratably
at 20% for the first five years of each employee’s service.
Company contributions charged to operations under these
plans approximated $45.6 million, $44.3 million and $41.5
million in 2004, 2003 and 2002, respectively.

7. LEASES, OTHER COMMITMENTS AND
CONTINGENCIES »

LEASES »

The Company leases certain office facilities and equipment
under operating leases. Future minimum rental payments on
operating leases with initial noncancellable lease terms in excess
of one year were due as follows as of December 31, 2004:

(In thousands)
Years ending December 31,
2005
2006
2007
2008
2009
Thereafter
TOTAL

$ 85,664
73,817
59,917
49,011
37,112
105,799
$411,320

Rent expense applicable to all operating leases was approximately
$115.6 million, $111.2 million and $93.8 million during the
years ended December 31, 2004, 2003 and 2002, respectively.

OTHER COMMITMENTS AND CONTINGENCIES »

During 2004, the Company’s broker-dealer subsidiary, Fiserv
Securities, Inc. (“FSI”), responded to inquiries from the
Securities and Exchange Commission (the “SEC”) as part of its
industry-wide review of mutual fund trading practices. FSI has
engaged in settlement discussions with the SEC as a result of
an SEC investigation of FSI with respect to these matters. As
a result of these discussions, FSI recorded a $16 million charge,
included in discontinued operations, in 2004 with respect to
these matters. A portion of any settlement amount with the SEC
may be non-deductible for tax purposes. While no settlement
with the SEC has been reached and no assurance can be given
that these matters will be settled consistent with the amounts
reserved, the Company does not anticipate any further material
liability arising out of the SEC investigation.

In the normal course of business, the Company and its
subsidiaries are named as defendants in various lawsuits in
which claims are asserted against the Company. In the opinion
of management, the liabilities, if any, which may ultimately
result from such lawsuits are not expected to have a material
adverse effect on the consolidated financial statements of
the Company.

The Company’s Investment support services subsidiaries had
fiduciary responsibility for the administration of approximately
$35 billion in trust funds as of December 31, 2004. The
Company is also the custodian of cash deposited by customers
with specific instructions as to its disbursement from active
escrow and account servicing files. The balances in these custodial
accounts were $90 million and $44 million at December 31,
2004 and 2003, respectively, and have not been included in
the consolidated financial statements.

Fiserv, Inc. and Subsidiaries

Notes continued

8. BUSINESS SEGMENT INFORMATION »

In 2004, the Company reclassified its reportable segments for all periods presented to better align with how the chief operating
decision maker of the Company currently manages its businesses. The previously reported “All other and corporate” segment was
removed as the printing and plastic card businesses included in that segment were reclassified to the “Financial institution outsourcing,
systems and services” segment and corporate expenses were allocated to each segment based on the segment’s operating income as a
percentage of total operating income. The securities clearing businesses which were historically presented in the Investment support
services segment are reported under discontinued operations and are not included in the segment information below. The following
table excludes the revenues and expenses associated with customer reimbursements because management believes that it is not appropriate
to include the customer reimbursements in analyzing the current performance of the Company as these balances offset in revenues and
expenses with no impact on operating income and these amounts are not an indicator of current or future business trends. Summarized
financial information by business segment is as follows for each of the three years ended December 31:

(In thousands)
2004
Processing and services revenues
Operating income
Identifiable assets
Capital expenditures, including

capitalization of software development
costs for external customers

Depreciation and amortization expense
2003
Processing and services revenues
Operating income
Identifiable assets
Capital expenditures, including

capitalization of software development
costs for external customers

Depreciation and amortization expense
2002
Processing and services revenues
Operating income
Identifiable assets
Capital expenditures, including

capitalization of software development
costs for external customers

Depreciation and amortization expense

Financial Institution
Outsourcing
Systems and Services

Health Plan
Management
Services

$2,339,143
563,645
2,501,855

143,958
154,558

$2,076,435
457,783
2,467,727

124,889
138,146

$1,759,637
383,384
1,956,901

121,994
111,616

$885,916
75,365
696,543

11,829
16,700

$399,066
47,472
598,163

10,141
11,852

$216,145
32,422
257,339

7,580
7,371

Investment
Support
Services

$ 125,536
20,550
2,142,773

5,306
14,105

$ 116,614
16,567
1,889,080

4,081
15,840

$ 123,256
18,495
2,072,224

7,552
15,402

Total

$3,350,595
659,560
5,341,171

161,093
185,363

$2,592,115
521,822
4,954,970

139,111
165,838

$2,099,038
434,301
4,286,464

137,126
134,389

A reconciliation of reportable segment identifiable asset amounts
to the Company’s consolidated balance sheets is as follows:

(In thousands)
Assets:
Reportable segments
Corporate
Discontinued operations
TOTAL

2004

2003

2002

$5,341,171
290,661
2,751,517
$8,383,349

$4,954,970
33,372
2,225,833
$7,214,175

$4,286,464
97,421
2,054,820
$6,438,705

The Company’s domestic operations comprised approximately
97%, 96% and 95% of processing and services revenues for
the years ended December 31, 2004, 2003 and 2002, respectively.
No single customer accounted for more than 2%, 3% and 3%
of consolidated processing and services revenues during the
years ended December 31, 2004, 2003 and 2002, respectively.

Fiserv, Inc. and Subsidiaries

Management’s Discussion and Analysis of
Financial Condition and Results of Operations »

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 »

Certain matters discussed herein are “forward-looking statements”
intended to qualify for the safe harbor from liability established
by the Private Securities Litigation Reform Act of 1995. These
forward-looking statements can generally be identified as such
because the context of the statement will include words such as
“believes,” “anticipates,” or “expects,” or words of similar import.
Similarly, statements that describe future plans, objectives or
goals of the Company are also forward-looking statements.
Such forward-looking statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially
from those currently anticipated. Factors that could affect results
include, among others, economic, competitive, governmental,
regulatory and technological factors affecting the Company’s
operations, markets, services and related products, prices and other
factors discussed in the Company’s prior filings with the Securities
and Exchange Commission including the Company’s ability to
complete the proposed sale of its securities clearing businesses.
Shareholders, potential investors and other readers are urged to
consider these factors carefully in evaluating the forward-looking
statements and are cautioned not to place undue reliance on
such forward-looking statements. The Company assumes no
obligation to update any forward-looking statements, whether
as a result of new information, future events or otherwise.

CRITICAL ACCOUNTING POLICIES »

The Company’s consolidated financial statements and
accompanying notes have been prepared in accordance with
accounting principles generally accepted in the United States
of America. The preparation of these financial statements requires
the Company’s management to make estimates, judgments and
assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses. The Company continually evaluates the
accounting policies and estimates it uses to prepare the consolidated
financial statements. The Company bases its estimates on
historical experience and assumptions believed to be reasonable
under current facts and circumstances. Actual amounts and
results could differ from these estimates made by management.

The majority of the Company’s revenues are generated from
monthly account and transaction-based fees in which revenue

is recognized when the related services have been rendered.
The revenues are recognized under service agreements having
stipulated terms and conditions which are long-term in nature,
generally three to five years, and do not require management
to make significant judgments or assumptions. Given the
nature of the Company’s business and the applicable rules
guiding revenue recognition, the Company’s revenue recognition
practices do not contain significant estimates that materially
affect its results of operations.

The Company has reviewed the carrying value of goodwill and
other intangible assets by comparing such amounts to their fair
values and has determined that the carrying amounts of goodwill
and other intangible assets do not exceed their respective fair
values. The Company is required to perform this comparison
at least annually or more frequently if circumstances indicate
possible impairment. When determining fair value, the
Company uses various assumptions, including projections of
future cash flows. Given the significance of goodwill and other
intangible asset balances, an adverse change to the fair value
could result in an impairment charge, which could be material
to the Company’s financial statements.

The Company does not participate in, nor has it created, any
off-balance sheet variable interest entities or other off-balance
sheet financing, other than operating leases. In addition, the
Company does not enter into any derivative financial instruments
for speculative purposes and uses derivative financial instruments
primarily for managing its exposure to changes in interest rates
and managing its ratio of fixed to floating-rate long-term debt.

NEW ACCOUNTING PRONOUNCEMENT »

In December 2004, the FASB issued SFAS No. 123 (revised
2004), “Share-Based Payment” (“SFAS 123R”), that requires
companies to expense the value of employee stock options,
discounts on employee stock purchase plans and similar awards.
Under SFAS 123R, share-based payment awards result in a cost
that will be measured at fair value on the awards’ grant date, based
on the estimated number of awards that are expected to vest.
SFAS 123R is effective for periods beginning after June 15, 2005,
and applies to all outstanding and unvested share-based payment
awards at the adoption date. The Company has not completed
its evaluation of the impact of adopting SFAS 123R.

Fiserv, Inc. and Subsidiaries

Management’s Discussion continued

MARKET RISK »

Market risk refers to the risk that a change in the level of one
or more market prices, interest rates, indices, correlations or
other market factors, such as liquidity, will result in losses for a
certain financial instrument or group of financial instruments.
The Company is exposed primarily to interest rate risk and
market price risk on investments and borrowings. The Company
actively monitors these risks through a variety of control procedures
involving senior management.

The Company’s Investment support services subsidiaries accept
money market account deposits from customers and invest those
funds in marketable securities. Substantially all of the investments
are rated within the highest investment grade categories for
securities. The Company’s Investment support services subsidiaries
utilize simulation models for measuring and monitoring interest
rate risk and market value of portfolio equities. A formal Asset
Liability Committee of the Company meets quarterly to review
interest rate risks, capital ratios, liquidity levels, portfolio
diversification, credit risk ratings and adherence to investment
policies and guidelines. Substantially all of the investments at
December 31, 2004 have contractual maturities of one year
or less except for mortgage-backed obligations, which have an
average duration of approximately three years and five months.
The Company does not believe any significant changes in
interest rates would have a material impact on the consolidated
financial statements.

The Company manages its debt structure and interest rate risk
through the use of fixed and floating-rate debt and through
the use of interest rate swaps. The Company uses interest rate
swaps to partially hedge its exposure to interest rate changes
and to control its financing costs. Generally, under these
swaps, the Company agrees with a counter party to exchange
the difference between fixed-rate and floating-rate interest
amounts based on an agreed notional amount. While changes
in interest rates could decrease the Company’s interest income
or increase its interest expense, the Company does not believe
that it has a material exposure to changes in interest rates,
primarily due to approximately 60% of the Company’s long-
term debt having fixed interest rates as of December 31, 2004.

Based on the Company’s long-term debt with variable interest
rates as of December 31, 2004, a 1% increase in the Company’s
borrowing rate would increase annual interest expense by
approximately $1.9 million. Based on the controls in place,
management believes the risks associated with financial instruments
at December 31, 2004 will not have a material effect on the
Company’s consolidated financial position or results of operations.

RESULTS OF OPERATIONS »

The Company is an independent provider of financial data
processing systems and related information management services
and products to financial institutions, other financial intermediaries
and employers who self-insure their health plans. During 2004,
the Company reclassified its reportable segments to better align
with how the chief operating decision maker of the Company
currently manages its businesses. The previously reported “All
other and corporate” segment was removed as the printing and
plastic card businesses included in that segment were reclassified
to the “Financial institution outsourcing, systems and services”
segment and corporate expenses were allocated to each segment
based on the segment’s operating income as a percentage of
total operating income. The Company’s continuing operations
are classified into three business segments: Financial institution
outsourcing, systems and services (“Financial”); Health plan
management services (“Health”); and Investment support
services (“Investment”).

On December 16, 2004, the Company announced it had
reached a definitive agreement to sell its securities clearing
businesses to the National Financial unit of Fidelity Investments
for a price of approximately $365 million. The transaction is
subject to standard and customary closing conditions and is
expected to close in the first quarter of 2005. In accordance
with Statement of Financial Accounting Standards (“SFAS”)
No. 144, “Accounting for the Impairment or Disposal of Long-
Lived Assets,” the financial results of the Company’s securities
clearing businesses are reported as discontinued operations for
all periods presented and are not included in the following
segment information.

Fiserv, Inc. and Subsidiaries

Management’s Discussion continued

The following table presents, for the period indicated, certain amounts included in the Company’s consolidated statements of income,
the relative percentage that those amounts represent to processing and services revenues, and the percentage change in those amounts
from year to year. This information should be read along with the consolidated financial statements and notes thereto. This table and
the following discussion exclude the revenues and expenses associated with customer reimbursements because management believes that
it is not appropriate to include the customer reimbursements in analyzing the current performance of the Company as these balances
offset in revenues and expenses with no impact on operating income and these amounts are not an indicator of current or future business
trends. Customer reimbursements, which primarily consist of pass-through expenses such as postage and data communication costs,
were $379.2 million, $333.3 million and $290.4 million for the years ended December 31, 2004, 2003 and 2002, respectively.

Year Ended December 31,
(In millions)

Percent of Processing Revenue
Year Ended December 31,

2004

2003

2002

2004

2003

2002

Percent
Increase (Decrease)
2003
2004
vs.
vs.
2002
2003

$2,339.1
885.9
125.5
$3,350.6

$2,076.4
399.1
116.6
$2,592.1

$1,759.6
216.1
123.3
$2,099.0

70%
26%
4%
100%

80%
15%
4%
100%

84%
10%
6%
100%

$1,320.8

$1,222.7

$1,053.9

39%

47%

212.1
439.6
533.3
185.4
$2,691.0

205.6
55.9
420.3
165.8
$2,070.3

153.2
–
323.2
134.4
$1,664.7

$563.6
75.4
20.6
$659.6

$457.8
47.5
16.6
$521.8

$383.4
32.4
18.5
$434.3

6%
13%
16%
6%
80%

24%
9%
16%
20%

8%
2%
16%
6%
80%

22%
12%
14%
20%

50%

7%
–
15%
6%
79%

22%
15%
15%
21%

13%
122%
8%
29%

3%
686%
27%
12%
30%

23%
59%
24%
26%

18%
85%
(5)%
23%

16%

34%
–
30%
23%
24%

19%
46%
(10)%
20%

PROCESSING AND SERVICES
REVENUES:
Financial
Health
Investment
TOTAL

COST OF REVENUES:
Salaries, commissions and

payroll related costs
Data processing costs and

equipment rentals

Prescription costs
Other operating expenses
Depreciation and amortization
TOTAL

OPERATING INCOME:
Financial(1)
Health(1)
Investment(1)
TOTAL

(1)Percent of segment revenues is calculated as a percent of the Financial, Health and Investment segment's processing and services revenues.

Fiserv, Inc. and Subsidiaries

Management’s Discussion continued

INTERNAL REVENUE GROWTH »

Internal revenue growth percentages are measured as the increase or decrease in total processing and services revenues for the current
period less “acquired revenue from acquisitions” divided by total processing and services revenues from the prior year period plus
“acquired revenue from acquisitions.” “Acquired revenue from acquisitions” represents pre-acquisition normalized revenue of acquired
companies, less dispositions, for the comparable prior year periods. Internal revenue growth percentage is a non-GAAP financial
measure that the Company believes is useful to investors because it provides a breakdown of internal and acquisition-related revenue
growth. The following table sets forth the calculation of internal revenue growth percentages:

Year Ended December 31,
(In millions)

2004

2003

Increase
(Decrease)

2004
Internal
Growth %

2003

2002

Increase
(Decrease)

2003
Internal
Growth %

$3,350.6

$2,592.1
456.0
$3,048.1

$758.5
(456.0 )
$302.5

$2,592.1

10%

$2,592.1

$2,099.0
359.4
$2,458.4

$493.1
(359.4)
$133.7

$2,339.1

$2,076.4
206.1
$2,282.5

$262.7
(206.1 )
$ 56.6

$2,076.4

$1,759.6
270.8
$2,030.4

$316.8
(270.8)
$ 46.0

$ 885.9

$ 399.1
249.9
$ 649.0

$486.9
(249.9 )
$237.0

$ 399.1

37%

$ 399.1

$ 216.1
88.5
$ 304.6

$ 182.9
(88.5)
$ 94.4

31%

$ 125.5

$ 116.6

$ 8.9

$ 116.6

$ 123.3

$ (6.6)

(5)%

TOTAL COMPANY:
Processing and services revenues
Acquired revenue from acquisitions
Adjusted revenues

BY SEGMENT:

FINANCIAL
Processing and services revenues
Acquired revenue from acquisitions
Adjusted revenues

HEALTH
Processing and services revenues
Acquired revenue from acquisitions
Adjusted revenues

INVESTMENT
Processing and services revenues

Fiserv, Inc. and Subsidiaries

Management’s Discussion continued

PROCESSING AND SERVICES REVENUES »

Total processing and services revenues increased $758.5 million, or
29%, in 2004 compared to 2003 and $493.1 million, or 23%,
in 2003 compared to 2002. The internal revenue growth rate
was 10% in 2004 and 5% in 2003 with the remaining growth
resulting from acquisitions in the Financial and Health segments.
Overall internal revenue growth was primarily derived from
sales to new clients, cross-sales to existing clients and increases
in transaction volumes from existing clients. The increase in
the internal revenue growth rate in 2004 to 10% from 5% in
2003 was primarily driven by strong internal revenue growth
in the Health segment.

The Financial segment had revenue growth of $262.7 million,
or 13%, in 2004 compared to 2003 and $316.8 million,
or 18%, in 2003 compared to 2002. The internal revenue
growth rate in the Financial segment was 2% in both 2004 and
2003 with the remaining growth resulting from acquisitions.
The Financial segment’s businesses generally enter into three
to five year contracts with its customers that contain early contract
termination fees. The internal revenue growth rate in this
segment was positively impacted by approximately 1% in 2004
compared to 2003, due to an increase of $27 million in revenue
associated with one-time early contract termination and assignment
fees. Approximately $13 million of the increase in one-time
fees in 2004 was due to one large contract assignment fee and
one contract terminated early in the contract term caused by a
customer being acquired by another financial institution. The
internal revenue growth rate in 2004 was negatively impacted
by approximately 1% due to the loss of an item processing
customer announced in 2003.

The Health segment had revenue growth of $486.9 million,
or 122%, in 2004 compared to 2003 and $182.9 million, or 85%,
in 2003 compared to 2002. Total revenue growth in 2004 for
this segment was positively impacted by an increase of $383.7
million related to the inclusion in revenues and cost of revenues of
the prescription ingredient cost in the pharmacy services businesses.
The Company entered the pharmacy services business in the second
quarter of 2003. The average operating margins of the Company’s
pharmacy services businesses are in the mid single digits. The internal
revenue growth rate in this segment for 2004 was 37% and for 2003
was 31% with the remaining growth resulting from acquisitions.

Revenue in the Investment segment increased by $8.9 million,
or 8%, in 2004 compared to 2003 and decreased by $6.6
million, or 5%, in 2003 compared to 2002. During 2004, new
customer sales and an increase in assets under administration
resulted in an increase in trust administration fees. In addition,
the combination of increased investments and rising interest
rates increased investment income in 2004.

COST OF REVENUES »

Cost of revenues increased $620.7 million, or 30%, in 2004
compared to 2003 and $405.6 million, or 24%, in 2003 compared
to 2002. As a percentage of processing and services revenues,
cost of revenues were 80% in 2004 and 2003, and 79% in
2002. The make up of cost of revenues each year has been
affected by business acquisitions and significantly impacted
by changes in the mix of the Company's business.

As a percentage of processing and services revenues, salaries,
commissions and payroll related costs were 39% in 2004,
47% in 2003 and 50% in 2002, and data processing costs and
equipment rentals were 6% in 2004, 8% in 2003, and 7% in
2002. The decline in salaries, commissions and payroll related
costs and data processing costs and equipment rentals as a
percentage of revenue from 2003 to 2004 was primarily the
result of the revenue growth of $486.9 million in the Health
segment in 2004, primarily driven by the pharmacy services
businesses. The pharmacy services businesses’ revenue growth
contributed to a significant increase of prescription costs
of $383.7 million. The increase in prescription costs as a
percentage of processing and services revenue in 2004 resulted
in a decrease in these other expense categories as a percentage
of processing and services revenue.

As a percentage of processing and services revenues, other
operating expenses were 16% in 2004 and 2003, and 15% in
2002. Other operating expenses as a percentage of processing
and services revenues were relatively consistent year over year
as the impact of the prescription ingredient costs mentioned
previously was offset by the impact of acquisitions in the
Financial segment, which have a higher proportion of other
operating expenses, primarily third party contractor costs,
than other expense categories.

Fiserv, Inc. and Subsidiaries

Management’s Discussion continued

OPERATING INCOME »

Operating income increased $137.7 million, or 26%, in 2004
compared to 2003 and $87.5 million, or 20%, in 2003 compared
to 2002. The operating income increase in 2004 compared to
2003 was primarily derived from the Financial segment which
increased operating income $105.9 million in 2004 compared
to 2003 and the Health segment which increased operating
income $27.9 million in 2004 compared to 2003.

Operating margins in the Financial segment were 24% in 2004
and 22% in 2003 and 2002. The increase in operating margins
in 2004 compared to 2003 in the Financial segment was primarily
due to continued operating efficiencies and the impact of
increased one-time termination and assignment fees of $27
million which increased operating margins by approximately 1%.

Operating margins in the Health segment were 9% in 2004,
12% in 2003 and 15% in 2002. The decrease in operating
margins in the Health segment in 2004 compared to 2003
and 2002 was due to the significant growth in the pharmacy
services businesses, which generate operating margins in the
mid single digits as previously discussed.

Operating margins in the Investment segment were 16% in
2004, 14% in 2003 and 15% in 2002. Operating margins
increased by 2% over 2003 primarily due to increased trust
administration fees and investment income, and the completion
of the Investment support services operations consolidation
to one technology platform and into one location.

DISCONTINUED OPERATIONS »

The net loss from discontinued operations was $17.3 million
for the year ended December 31, 2004, or $(0.09) per share,
compared to net income from discontinued operations of $6.2
million, or $0.03 per share, for the year ended December 31,
2003. The increased loss in 2004 was primarily due to a charge
of $16 million, or $(0.07) per share, related to inquiries from
the Securities Exchange Commission as part of its industry-wide
review of mutual fund practices, including market timing
and late trading. The Company’s broker-dealer subsidiary,

Fiserv Securities, Inc. (“FSI”), has engaged in settlement
discussions with the SEC as a result of an SEC investigation of
FSI with respect to these matters. A portion of any settlement
amount with the SEC may be non-deductible for tax purposes.
While no settlement with the SEC has been reached and no
assurance can be given that these matters will be settled consistent
with the amounts reserved, the Company does not anticipate
any further material liability arising out of the SEC investigation
(see Notes 3 and 7).

INCOME TAX PROVISION »

The effective income tax rate on continuing operations was
38.4% in 2004 and 39.0% in 2003 and 2002. The decrease
in the 2004 tax rate of 0.6% was primarily due to tax benefits
associated with recently enacted federal tax law changes that
impacted the utilization of foreign tax credits. The income tax
rate on continuing operations for 2005 is expected to be 38.7%.

NET INCOME PER SHARE - DILUTED »

Net income per share-diluted for 2004 was $1.91 compared to
$1.61 in 2003 and $1.37 in 2002. Net income per share-diluted
from continuing operations for 2004 was $2.00 compared to
$1.58 in 2003 and $1.33 in 2002. The $2.00 in net income
from continuing operations per share for 2004 was positively
impacted by approximately $0.08 per share, compared to
2003, due to an increase of $27 million in one-time early
termination and assignment fees in our Financial segment
discussed previously.

The Company’s growth has been accomplished, to a significant
degree, through the acquisition of businesses that are
complementary to its operations. Management believes that a
number of acquisition candidates are available that would further
enhance the Company’s competitive position and plans to pursue
them vigorously. Management is engaged in an ongoing program
to reduce expenses related to acquisitions by eliminating
operating redundancies. The Company’s approach has been
to move slowly in achieving this goal in order to minimize the
amount of disruption experienced by its clients and the potential
loss of clients due to this program.

Fiserv, Inc. and Subsidiaries

Management’s Discussion continued

LIQUIDITY AND CAPITAL RESOURCES »

Free cash flow is measured as net cash provided by operating
activities from continuing operations less capital expenditures
including capitalization of software costs for external customers,
as reported in the Company’s consolidated statements of cash
flows. Free cash flow is a non-GAAP financial measure that
the Company believes is useful to investors because it provides
another measure of available cash flow after the Company has
satisfied the capital requirements of its operations. The following
table summarizes free cash flow for the Company during the
years ended December 31:

(In millions)
Net cash provided by

operating activities from
continuing operations

Capital expenditures,

including capitalization
of software costs for
external customers

2004

2003

2002

$698.4

$595.7

$481.1

(161.1)

(139.1)

(137.1)

Free cash flow

$537.3

$456.6

$344.0

Free cash flow increased by $80.7 million, or 18%, in 2004
compared to 2003 primarily due to an increase in net income.
In 2004, the Company primarily used its free cash flow of
$537.3 million to repay long-term debt of $210.2 million, to
repurchase $64.3 million of stock and to build cash balances.

Long-term debt includes $195.0 million borrowed under the
Company’s $700.0 million credit and commercial paper facility,
which is comprised of a $465.3 million five-year revolving
credit facility due in 2009 and a $234.7 million 364-day
revolving credit facility, which is renewable annually through
2009. The Company must, among other requirements, maintain
a minimum net worth of $1.8 billion as of December 31, 2004,
and limit its total debt to no more than three and one-half times
the Company’s earnings before interest, taxes, depreciation and
amortization. At December 31, 2004, the Company had
$505.3 million of long-term debt, while shareholders’ equity
was $2.6 billion. The Company was in compliance with all
covenants throughout 2004.

At December 31, 2004, the Company had operating lease
commitments for office facilities and equipment aggregating
$411.3 million, of which $85.7 million will be incurred in
2005. The Company believes that its cash flow from operations
together with other available sources of funds will be adequate
to meet its operating requirements, debt repayments, contingent
payments in connection with business acquisitions and ordinary
capital spending needs. At December 31, 2004, the Company
had $503.8 million available for borrowing and $516.1 million
in cash and cash equivalents. In the event that the Company
makes significant future acquisitions, however, it may raise
funds through additional borrowings or the issuance of securities.

The Company’s current policy is to retain earnings to support future
business opportunities, rather than to pay dividends. During 1999,
the Company’s Board of Directors authorized the repurchase of
up to 4.9 million shares of the Company’s common stock, which
the Company fully utilized by December 31, 2004. In 2004, the
Company’s Board of Directors authorized the repurchase of an
additional 8.3 million shares of the Company’s common stock.
Shares purchased under the authorization are made through open
market transactions as market conditions warrant. Shares acquired
have historically been held for issuance in connection with acquisitions
and employee stock option and purchase plans. During 2004,
the Company repurchased 1.7 million shares for $64.3 million to
complete the 1999 Board authorization. As of December 31, 2004,
approximately 8.3 million shares from the 2004 authorization
remained available under the repurchase authorization.

OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL
OBLIGATIONS »

The Company does not have any material off-balance sheet
arrangements. The following table details certain of the
Company’s contractual cash obligations at December 31, 2004:

(In millions)

Total

Less
than
1 year

1-3
years

3-5
years

More
than
5 years

Long-term debt

$ 505.3

$ 47.5 $ 7.8

$450.1

–

Minimum operating
lease payments

Short-term debt

Purchase obligations

411.3

100.0

9.1

85.7

133.7

86.1 $105.8

100.0

4.9

–

2.4

–

1.8

–

TOTAL

$1,025.6

$238.1 $143.9

$538.0 $105.8

Fiserv, Inc. and Subsidiaries

Selected Financial Data »

The following data, which has been affected by acquisitions, should be read in conjunction with the consolidated financial statements
and related notes thereto included elsewhere in this Annual Report.

(In thousands, except per share data)
YEARS ENDED DECEMBER 31,

Processing and services revenues
Income from continuing operations
Income (loss) from discontinued

operations
Net income

Basic net income (loss) per share:

Continuing operations
Discontinued operations

TOTAL

Diluted net income (loss) per share:

Continuing operations
Discontinued operations

TOTAL

2004

$3,350,595
394,898

2003

$2,592,115
308,823

2002

$2,099,038
259,331

2001

$1,761,625
198,676

2000

$1,473,123
130,224

(17,256)
377,642

6,189
315,012

6,806
266,137

9,541
208,217

46,797
177,021

$2.03
(0.09)
$1.94

$2.00
(0.09)
$1.91

$1.60
0.03
$1.63

$1.58
0.03
$1.61

$1.36
0.04
$1.39

$1.33
0.03
$1.37

$1.06
0.05
$1.11

$1.04
0.05
$1.09

$0.71
0.25
$0.96

$0.69
0.24
$0.93

Total assets
Long-term debt
Shareholders’ equity

$8,383,349
505,327
2,564,422

$7,214,175
699,116
2,199,808

$6,438,705
482,824
1,827,669

$5,322,242
343,093
1,604,826

$5,586,320
334,958
1,252,072

Note: The above information excludes the revenues and expenses associated with customer reimbursements recorded in accordance with EITF No. 01-14.
Operating results have been restated to include all activities related to the securities clearing businesses in discontinued operations for all periods presented.

Market Price Information »

The following information relates to the high and low sales
price of the Company’s common stock, which is traded on
the Nasdaq Stock Market under the symbol FISV.

Quarter Ended

High

Low

High

Low

2004

2003

March 31

June 30

September 30

December 31

$40.61 $35.02

$36.25 $27.23

41.00

34.10

37.51

28.64

39.05

32.20

40.77

35.30

41.01

33.28

40.00

32.87

At December 31, 2004, the Company’s common stock was
held by 11,169 shareholders of record. It is estimated that an
additional 55,800 shareholders own the Company’s stock
through nominee or street name accounts with brokers. The
closing sale price for the Company’s stock on January 31, 2005
was $38.25 per share.

Fiserv, Inc. and Subsidiaries

Quarterly Financial Information (Unaudited) »

(In thousands, except per share data)
2004
Processing and services revenues
Cost of revenues
Operating income
Interest expense - net
Income from continuing operations

before income taxes
Income tax provision
Income from continuing operations
Loss from discontinued operations,

net of tax
Net income

Basic net income (loss) per share:

Continuing operations
Discontinued operations

TOTAL

Diluted net income (loss) per share:

Continuing operations
Discontinued operations

TOTAL

(In thousands, except per share data)
2003
Processing and services revenues
Cost of revenues
Operating income
Interest expense - net
Income from continuing operations

before income taxes
Income tax provision
Income from continuing operations
Income from discontinued operations,

net of tax
Net income

Basic net income per share:
Continuing operations
Discontinued operations

TOTAL

Diluted net income per share:

Continuing operations
Discontinued operations

TOTAL

First

Second

Third

Fourth

Total

Quarters

$811,556
650,218
161,338
(4,732)

156,606
60,897
95,709

(2,911)
$ 92,798

$0.49
(0.01)
$0.48

$0.49
(0.01)
$0.47

$829,842
667,930
161,912
(4,486 )

157,426
61,331
96,095

(1,061 )
$ 95,034

$0.49
(0.01 )
$0.49

$0.49
(0.01 )
$0.48

$843,095
669,397
173,698
(4,395 )

169,303
65,008
104,295

(11,938 )
$ 92,357

$0.53
(0.06 )
$0.47

$866,102
703,490
162,612
(4,581)

158,031
59,232
98,799

$3,350,595
2,691,035
659,560
(18,194 )

641,366
246,468
394,898

(1,346)
$ 97,453

(17,256 )
$ 377,642

$0.51
(0.01)
$0.50

$0.50
(0.01)
$0.49

$2.03
(0.09 )
$1.94

$2.00
(0.09 )
$1.91

First

Second

Third

Fourth

Total

Quarters

$580,578
457,123
123,455
(2,977)

120,478
46,987
73,491

697
$ 74,188

$0.38
_

$0.39

$0.38
_

$0.38

$616,816
487,178
129,638
(3,474 )

126,164
49,203
76,961

1,477
$ 78,438

$0.40
0.01
$0.41

$0.39
0.01
$0.40

$673,935
541,109
132,826
(4,472 )

128,354
50,058
78,296

2,116
$ 80,412

$0.40
0.01
$0.42

$0.40
0.01
$0.41

$720,786
584,883
135,903
(4,632)

131,271
51,196
80,075

$2,592,115
2,070,293
521,822
(15,555 )

506,267
197,444
308,823

1,899
$ 81,974

6,189
$ 315,012

$0.41
0.01
$0.42

$1.60
0.03
$1.63

$1.58
0.03
$1.61

Note: The above information excludes the revenues and expenses associated with customer reimbursements recorded in accordance with EITF No. 01-14.
Results have been restated to include all activities related to the securities clearing businesses in discontinued operations for all periods presented.

Fiserv, Inc. and Subsidiaries

Report of Independent
Registered Public Accounting Firm »

SHAREHOLDERS AND DIRECTORS OF FISERV, INC.

We have audited the accompanying consolidated balance sheets of Fiserv, Inc. and subsidiaries (“the Company”) as of December 31,
2004 and 2003, and the related consolidated statements of income, shareholders’ equity and cash flows for each of the three years in
the period ended December 31, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility
is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Fiserv, Inc. and
subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in
the period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
effectiveness of the Company’s internal control over financial reporting as of December 31, 2004 based on the criteria established in
Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated February 7, 2005 expressed an unqualified opinion on management’s assessment of the Company’s internal control over
financial reporting and an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Deloitte & Touche LLP
Milwaukee, Wisconsin
February 7, 2005

Management’s Annual Report on
Internal Control over Financial Reporting »

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term
is defined in Rule 13a-15(f ) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2004. In making
this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control – Integrated Framework. Based on our management’s assessment, our management believes that,
as of December 31, 2004, our internal control over financial reporting was effective based on those criteria.

Our independent registered public accounting firm has issued their attestation report on our assessment of our internal control over
financial reporting. The independent registered public accounting firm report appears on page 45.

Fiserv, Inc. and Subsidiaries

Report of Independent
Registered Public Accounting Firm »

SHAREHOLDERS AND DIRECTORS OF FISERV, INC.

We have audited management’s assessment, included in the accompanying Management’s Annual Report on Internal Control over
Financial Reporting, that Fiserv, Inc. and subsidiaries (the “Company”) maintained effective control over financial reporting as of
December 31, 2004 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”). The Company’s management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility
is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over
financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinions.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal
executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors,
management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors
of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper
management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis.
Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject
to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of
December 31, 2004, is fairly stated, in all material respects, based on the criteria established in Internal Control - Integrated Framework
issued by the COSO. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2004, based on the criteria established in Internal Control - Integrated Framework issued by the COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated financial statements as of and for the year ended December 31, 2004 of the Company and our report dated February 7,
2005, expressed an unqualified opinion on those financial statements.

Deloitte & Touche LLP
Milwaukee, Wisconsin
February 7, 2005

Fiserv, Inc. and Subsidiaries

Board of Directors »

Donald F. Dillon
64, Chairman of the Board of Directors of Fiserv, Inc.
With more than 35 years in the financial and data processing
businesses, Mr. Dillon has served on the Fiserv Board
since 1995.

Kenneth R. Jensen
61, Senior Executive Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary of Fiserv, Inc. With more
than 40 years in the data processing industry, Mr. Jensen has
served as a Director since 1984.

Daniel P. Kearney
65, Financial Consultant. With more than 30 years in the
banking, insurance and legal professions, Mr. Kearney has
served as a Director since 1999.

Gerald J. Levy
72, Lead Director, Fiserv, Inc.; Chairman of the Board
of Guaranty Bank, S.S.B. With over 40 years experience
in the financial and business arenas, Mr. Levy has served
as a Director since 1986.

Leslie M. Muma
60, President and Chief Executive Officer of Fiserv, Inc. With
more than 35 years in the data processing industry, Mr. Muma
has served as a Director since 1984.

For complete profiles of the Fiserv Board of Directors, please see the proxy statement.

Glenn M. Renwick
49, President and Chief Executive Officer of the Progressive
Corporation. With more than 15 years in the insurance industry,
Mr. Renwick has served as a Director since 2001.

Kim M. Robak
49, Partner at Ruth, Mueller & Robak, LLC. With more than
20 years of experience in the fields of law, education and
public service, Ms. Robak joined the Fiserv Board in 2003.

L. William Seidman
83, Chief Commentator for CNBC-TV, Publisher of
Bank Director and Board Member magazines, and Industry
Consultant. With more than 45 years in the business, financial
and political arenas, Mr. Siedman has served as a Director
since 1992.

Thomas C. Wertheimer
64, Financial Consultant. With more than 35 years in the
financial services profession, Mr. Wertheimer joined the Fiserv
Board in 2003.

Fiserv, Inc. and Subsidiaries

Executive Committee »

Norman J. Balthasar
58, Senior Executive Vice President and Chief Operating
Officer. With more than 35 years in the financial services
industry, Mr. Balthasar has been with Fiserv and its predecessor
company since 1974.

Kenneth R. Jensen
See Board of Directors for profile.

Leslie M. Muma
See Board of Directors for profile.

Management Committee »

Robert H. Beriault
53, Group President, Investment Support Services. With more
than 20 years in the financial services industry, Mr. Beriault
has been with Fiserv since 1995.

Thomas A. Neill
55, Group President, Credit Union & Industry Products.
With nearly 30 years in the financial services industry,
Mr. Neill has been with Fiserv since 1993.

James W. Cox
41, Group President, Fiserv Health. With more than 15 years
in the financial services and health administration industries,
Mr. Cox has been with Fiserv since 2001.

James C. Puzniak
58, Group President, Lending Solutions. With more than
35 years in the financial services industry, Mr. Puzniak has
been with Fiserv since 1993.

Douglas J. Craft
51, Executive Vice President, Operating Group Chief Financial
Officer. With more than 20 years in the financial industry,
Mr. Craft has been with Fiserv since 1985.

Dean C. Schmelzer
54, Group President, Marketing & Sales. With nearly 30 years
in the data processing industry, Mr. Schmelzer has been with
Fiserv since 1992.

Mark J. Damico
36, Group President, Item Processing. With nearly 15 years in
the financial and data processing industries, Mr. Damico has
been with Fiserv since 1995.

Patrick C. Foy
50, Group President, Bank Servicing. With more than 25 years
in the financial services industry, Mr. Foy has been with Fiserv
since 2001.

Michael D. Gantt
53, Group President, Bank Systems. With nearly 20 years in
the financial services industry, Mr. Gantt was with Fiserv from
2000 to 2003 and rejoined the company in 2004.

Charles W. Sprague
55, Executive Vice President, General Counsel & Chief
Administrative Officer. With nearly 30 years in the legal
profession and the financial services industry, Mr. Sprague
has been with Fiserv since 1994.

Terry R. Wade
44, Group President, Insurance Solutions. With nearly 20
years in the insurance, technology and outsourcing industries,
Mr. Wade has been with Fiserv since 2003.

Fiserv, Inc. and Subsidiaries

Executive Leadership »

Paul E. Brammeier, 62
President, CredStar
Kevin J. Collins, 47
President, LeMans
Andrew J. Shaevel, 40
Co-President & CEO,
RSA Solutions
Gerald A. Smith, 58
Co-CEO, Settlement Services
Division
Richard A. Snedden, 51
Co-CEO, Settlement Services
Division
John R. Tenuta, 57
Division President, Loan
Management Products

CREDIT UNION & INDUSTRY
PRODUCTS GROUP
Joseph A. Antellocy, 45
President, AFTECH
Joseph A. Barry, 51
President, Credit Union
Eastern Region
Jeffery S. Butler, 42
President, IntegraSys
Dennis L. Connick, 56
President, CUSA
Jorge M. Diaz, 40
President, Personix
John A. Edwards, 58
President, XP Systems
Richard P. Fitzgerald, 55
President, Fiserv Document
Solutions
Pedro E. Kaufmann, 46
President, EPSIIA
Roger L. Kuhns, 57
President, Credit Union
Western Region
Timothy M. Milz, 42
President, GalaxyPlus
John N. Schooler, 50
President, USERS
Kevin L. Sparks, 48
President, Summit

INSURANCE SOLUTIONS GROUP
Craig J. Faulkner, 51
President, Emerald Publications
William E. Jerro, 33
President, ReliaQuote
P. Michael Jones, 55
President, Flood Insurance Division
Robert Meyerson, 58
President, Fiserv FSC
Anthony T. Perdichezzi, 57
President, Fiserv Insurance
Solutions

John M. Schobel, 56
President, RegEd

SECURITIES & INVESTMENT
SUPPORT SERVICES GROUP
Walter J. Koller, 40
President, Securities
D. Terry Reitan, 58
President, Investment Support
Services
Nancy M. Sympson, 52
President & CEO, TradeStar
Investments, Inc., Fiserv
Investor Services, Inc.

Operations

ITEM PROCESSING GROUP
Kenneth R. Acheson, 56
President, Fiserv Solutions of
Canada & INTRIA Items, Inc.
Donald T. Bauernfeind, 41
President, CheckAGAIN, LLC
Therese K. Carstensen, 49
President IP Operations Western
Region, Item Processing Service
Bureau Operations
Frank E. Eisel, Jr., 47
President, IP Operations Rocky
Mountain Region, Item Processing
Service Bureau Operations
Richard J. Franas, 56
President, JPM Chase
Guy J. Fries, 47
President, IP Operations
Southern Region, Item Processing
Service Bureau Operations
W. David Hamilton, 53
President, IP Operations Midwest
Region, Item Processing Service
Bureau Operations
Norman S. Himes, 61
President, IP Operations Mid-
Atlantic Region, Item Processing
Service Bureau Operations
Robert F. McPherson, 58
President, IP Operations
Northern Region, Item Processing
Service Bureau Operations
Anna M. Quinlan, 53
President, RemitStream Solutions
Thomas R. Taylor, 57
EVP, Item Processing Technology
& Support Operations
Kenneth P. True, 40
President, Northern Trust
Operations
Stephen J. Ward, 52
EVP, Fiserv Item Processing;
EVP Market Development

FISERV HEALTH GROUP
Jay M. Anliker, 43
President, Wausau Benefits
Rita M. Ayers, 48
President, DirectComp Rx
Mark Campbell, 43
President, Innoviant
Joseph A. Hensley, 50
Division President
William A. Howard, 50
Executive Vice President
Joseph J. McCann, 44
President, Innoviant Pharmacy
Jeffrey D. Mills, 45
President, Harrington Benefits
Elaine H. Mischler, M.D., 61
Chief Medical Officer
Alfred P. Moore, 59
Executive Vice President
James R. Petrich, 51
President, Fiserv Health Kansas;
President, Fiserv Health Tennessee
Omar Rodriguez, 46
President, Benefit Planners
J. R. Thompson, 48
President, Third Party Solutions
Bryan L. Troyer, 40
President, Benesight
John D. Weymer, 53
President, Avidyn Health

CORPORATE
MANAGEMENT
Brian D. Brunner, 48
Division President, Bank Sales
Jack P. Bucalo, 66
Corporate SVP, Human Resources,
Management Development &
Service Excellence
Christina Slemon-Dokos, 49
Corporate SVP, Marketing
Thomas J. Hirsch, 41
Corporate SVP, Controller
Daniel F. Murphy, 55
Corporate SVP, Director of Audit
Jeffrey Perzan, 44
Corporate SVP, Deputy
General Counsel
Daniel C. Pyzik, 52
Corporate SVP,
Telecommunications
Thomas E. Wachtl, 51
Corporate SVP, Product and
Technologies
Nancy H. Wedelstaedt, 40
Corporate SVP, Tax

BANK SERVICING GROUP
Jeffrey G. Brandmaier, 45
President, SourceOne
Anthony S. Catalfano, 41
President, Fiserv EFT
Grant P. Christenson, 53
Chief Executive Officer, Fiserv EFT
Paul A. Frank, 61
President, ePayments
Max S. Narro, 42
President, Credit Processing
Services
Michael J. Rigney, 54
President, Fiserv VISION

BANK SYSTEMS GROUP
James T. Cross, 41
President, Brookfield ITI
Thomas M. Cypher, 54
President, Information
Technology, Inc.
Julie Gabelmann, 49
President, Bank Products Division
Gregory A. Green, 45
COO, Fiserv CBS Worldwide
Division
Alexander H. Groenendyk, 48
President, Fiserv CBS
Worldwide Division
Gary J. Kasik, 48
President, BANKLINK
Sam L. Langham, 47
President, Los Angeles ITI
James A. Le Van, 62
President, Glastonbury ITI
Craig R. Marvin, 52
President, Des Moines ITI
Donald J. Phillips, 56
President, Atlanta ITI
Regis G. Rapp, 46
General Manager, Customer
Centered Solutions
David W. Santi, 44
President, CBS Domestic
Frank M. Smeal, 62
President, ITI Outsourcing
Ronald E. Thompson, 57
President, Fiserv Imagesoft
David E. Ulrich, 48
President, IPS-Sendero
Michael K. Young, 49
President, Fiserv ITI Division

LENDING SOLUTIONS GROUP
Stuart H. Angert, 63
Co-President & CEO, RSA
Solutions

Fiserv, Inc. and Subsidiaries

Strong Connection »

Management Leadership

Corporate Information

1
2
4
6
8
10
12
14
16
46

47
49

Corporate Information »
CORPORATE HEADQUARTERS »
Fiserv, Inc.
255 Fiserv Drive
Brookfield, WI 53045
(262) 879-5000

WEB SITE »
http://www.fiserv.com

INVESTOR RELATIONS »
(800) 425-FISV

SHAREHOLDER INFORMATION »
Copies of the company’s 10-K and 10-Q reports as filed with the Securities
and Exchange Commission are available on request from the company.

Visit our Web site, www.fiserv.com, for updated news releases, stock performance,
financial reports, conference call Webcasts, SEC filings, corporate governance and
other investor information.

STOCK LISTING AND SYMBOL »
Nasdaq National Market System
Symbol: FISV

TRANSFER AGENT »
EquiServe Trust Company, N.A.
P.O. Box 43069
Providence, Rhode Island 02940-3069
(800) 446-2617
www.equiserve.com

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS »
Deloitte & Touche LLP
Milwaukee, Wisconsin

Strong
Connection »

2004 ANNUAL REPORT

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Corporate Headquarters
255 Fiserv Drive
Brookfield, Wisconsin 53045
P.O. Box 979
Brookfield, Wisconsin 53008-0979
United States

Phone:
262-879-5000
Toll Free: 800-872-7882
262-879-5013
Fax:
general_info@fiserv.com
www.fiserv.com

Fiserv is a registered trademark of
Fiserv, Inc. All product and brand
names mentioned are property of
their respective companies.