Fiserv Annual Report 2005

← All annual reports

FY2005 Annual Report · Fiserv

Loading PDF…

2
0
0
5
A
n
n
u
a
l

R
e
p
o
r
t

F
i
s
e
r
v
,

n
c
.

Strength in Leadership

Annual Report 2005

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

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

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

Cover 1

3/23/06 7:20:41 AM

Strength in Leadership

Contents
Financial Highlights • 1
Letter to Shareholders • 2
Q&A with Jeff Yabuki • 4
Fiserv at a Glance • 6
Strength in Leadership - Technology • 8
Strength in Leadership - Markets • 10
Strength in Leadership - Service Excellence • 12
Strength in Leadership - Products • 14
Financial Report • 16
Board of Directors • 48
Executive and Management Leadership • 49
Corporate Information • 51

About the Cover

Fiserv is well positioned for future growth. We
have a strong foundation that is built on our
industry-leading technology, market leadership,
service excellence and extensive product portfolio.
Above all, our business is about our people –

nearly 22,000 employees around the world who
every day put their talent and experience to work
in serving our clients and building value for our
shareholders. They are the driving force behind
our Strength in Leadership.

Corporate Headquarters
Fiserv, Inc.
255 Fiserv Drive
Brookﬁ eld, Wisconsin 53045
(262) 879-5000

Web site
http://www.ﬁ serv.com

Investor Relations
(800) 425-FISV

Information
Information

Corporate Information

Shareholder Information
Copies of the company’s 10-K and 10-Q reports as ﬁ led with the
Securities and Exchange Commission are available on request
from the company.

Visit our Web site, www.ﬁ serv.com, for updated news releases,
stock performance, ﬁ nancial reports, conference call Webcasts,
SEC ﬁ lings, corporate governance and other investor information.

Annual Shareholders’ Meeting
The 2006 Annual Meeting of Shareholders of Fiserv, Inc. will
be held on Wednesday, May 24, 2006 at 10 a.m. Central Time
at the Fiserv Corporate Headquarters, 255 Fiserv Drive,
Brookﬁ eld, Wisconsin.

Stock Listing and Symbol
Nasdaq National Market System
Symbol: FISV

Transfer Agent
Computershare Trust Company, N.A.
P.O. Box 43069
Providence, Rhode Island 02940-3069
(800) 446-2617
www.computershare.com

Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Milwaukee, Wisconsin

Cover 2

3/23/06 7:21:04 AM

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

2005

2004

% Change

Total revenues
Net Income*
Earnings per share*
Cash ﬂ ow from operations
Year-end market price per share

$ 4,059
440
$
2.30
$
$
597
$ 43.27

$ 3,730
378
$
1.91
$
$
698
$ 40.19

9
16
20
(14)
8

Highlights
Highlights

Financial Highlights

Total Revenues
(In Millions)

Net Income
(In Millions)

$440*

Cash Flow
from Operations
(In Millions)

$597

$4,059

Earnings Per Share
(In Dollars)

$2.30*

$4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

$2.50

2.00

1.50

1.00

0.50

$450

400

350

300

250

200

150

100

$800

700

600

500

400

300

200

100

* 2005 excludes a pre-tax gain of $86.8 million ($0.29 per share) from the sale of two investments, receipt of a large contract termination fee of

$26.3 million ($0.09 per share) and $5.7 million ($0.03 per share) of one-time tax beneﬁ ts related to discontinued operations.

Body-Pgs 01-16 1

3/21/06 2:24:14 PM

To Our Fellow Shareholders: 2005 was a year that in
many ways had that familiar ring for Fiserv shareholders. The
company simply did what it has done for each of the last 22 years:
delivered strong results for its clients and shareholders.

Total Revenues
(In Millions)

Earnings Per Share
(In Dollars. Adjusted for 2005)

$4,500

3,750

3,000

2,250

1,500

750

$2.30

$4,059

$2.50

2.00

1.50

1.00

0.50

takes loans from origination through sale in the secondary market.
This integrated platform increases market efﬁ ciencies and puts us
on the leading edge of technology in the mortgage industry.

Our global presence was enhanced with a 12-year contract to
process checks for three of Australia’s largest banks. This exciting
relationship provides us with a solid growth platform in that part
of the world. We also formed Fiserv Global Services, a new group
charged with making us a stronger global competitor as we
continue to explore opportunities outside of the U.S.

Another innovative step was the introduction of the Fiserv
Clearing Network, which enables check processing clients to clear
both paper and image items within our proprietary network. Now,

Shareholders
Shareholders

Strength in Leadership

We are pleased with our ﬁ nancial performance. We know that
this is one of the ways we must keep score. However, we are also
focused on those metrics that are leading indicators for our future.
These include organic revenue growth, client satisfaction and
strategic acquisitions.

Our overall organic revenue growth rate was 7% in 2005.
Especially noteworthy is the signiﬁ cant increase in the organic
growth rate in our ﬁ nancial institution segment to 6%, from 3% in
the prior year. Client satisfaction increased across our businesses,
over the already high levels achieved in 2004. We deployed our
capital to complete eight value-enhancing acquisitions during the
year which strengthened our capabilities in growing markets such
as lending, banking, insurance and health plan management.

2005 Achievements: In 2005, we took a number of steps to
enhance our market leadership and further differentiate Fiserv
in our industries.

The acquisition of BillMatrix Corp. expanded our strong presence
in traditional electronic bill payments with expedited electronic
payment services that allow customers to receive immediate credit
for online and telephone bill payments. We are focused on high-
growth areas of the electronic payments space, such as debit, credit,
stored-value, and online bill payment, and are also participating in
the development of newer, non-traditional payment vehicles.

Fiserv Lending delivered market-differentiating innovation to
the mortgage industry through a collaboration with several
institutions. The result is an all-electronic lending process that

both outsourced and in-house clients save time and expense
bypassing external clearing options such as the Federal Reserve.

Fiserv Health continued to grow through the January 2006
acquisition of CareGain, Inc., a technology provider that allows
health plan and ﬁ nancial institution clients to cost-effectively create
and administer consumer-directed health plans. Given our client
base and best-in-class capabilities, we are uniquely positioned to
lead the convergence of health and wealth in America.

This is just the short list. We took many other actions across our
portfolio of businesses with a single goal in mind: build long-
term shareholder value.

Strength in Leadership: At our core, Fiserv is about people.
We are the result of nearly 22,000 employees working together
to provide solutions that empower our clients to serve their
customers extraordinarily well. Our industry-leading retention
rates are a clear indication that our clients value their relationship
with Fiserv. This truly demonstrates leadership in action.

We are fortunate to have leadership bench strength – not only
at the executive level, but throughout our entire organization.
We invest in our people, providing training, experiences and
career opportunities to nurture the talent that will make this
already strong company even better.

After serving the company for over 22 years, Leslie M. Muma
retired as chief executive ofﬁ cer of Fiserv in December 2005. Les
led the company with distinction and can take great pride in the
company he helped to create. We extend our heartfelt thanks and

Body-Pgs 01-16 2

3/23/06 7:29:28 AM

Above: Leslie M. Muma
Left photo: Jeffery W. Yabuki (left)
and Donald F. Dillon

Recognizing Les Muma: You can’t
talk about Fiserv’s growth and success
without talking about Les Muma. Muma
co-founded the company with George
Dalton in 1984, merging their two
data processing companies to create
Fiserv. He served as president and COO
from 1984 to 1999, when he became
president and CEO.

Muma had a leading role in building
Fiserv from a ﬂ edgling ﬁ nancial
services data processor to a highly
respected global leader. Major successes
during his 22 years with the company
include Fiserv going public in 1986,
acquiring more than 135 companies to
strategically expand the business, and
delivering 20-year compound annual
growth rates of 24% in revenue, 28% in
net income and 21% in the stock price.
Muma’s greatest achievement, however,
is the positive impact Fiserv has had on
its nearly 22,000 employees and more
than 17,000 clients.

Muma, who moved back to Tampa,
Florida, where he launched his career,
will retire from the Fiserv Board in May
and consult with the company through
June 2006. Beginning in the fall of 2006,
he intends to become more involved
with his alma mater, the University of
South Florida, where he will co-chair a
major capital campaign.

appreciation to Les for his many years of personal commitment to
Fiserv. Because of it, today we are an industry leader.

A New Chapter: We are proud to be a partner with more
than 17,000 of the strongest and most well-known companies in
the world. While many things change, some never do. Attributes
like dependability, commitment, determination and an orientation
toward results will continue to drive Fiserv forward. These
characteristics are embedded in the organization’s DNA, and
provide a strong foundation for us to build upon. And build
upon it we will.

As a market leader, we have a responsibility to lead from a position
of strength. We must provide the right balance between producing
consistently strong results, while continually strengthening the
franchise for the long term. On that point, we, our clients and
shareholders are in perfect alignment: excel over the long term.
We will deliver for clients and shareholders equally, and in a
manner that is unrivaled in the industries of our choice. A big
aspiration – yes – and one that is motivating to our employees
around the world.

Opportunities abound for Fiserv. The legacy of what we have
done grants us permission to capture more than our fair share
of the future. The quality of our people will enable it to happen.
Let’s get started.

Jeffery W. Yabuki
President and Chief Executive Ofﬁ cer

Donald F. Dillon
Chairman of the Board

Body-Pgs 01-16 3

3/23/06 7:29:58 AM

Jeffery W. Yabuki joined Fiserv as chief executive ofﬁ cer on
December 1, 2005. In a far-ranging interview, he discusses his
plans, strategies and goals for Fiserv.

Q. What is the company’s strategic focus for
the future?

A. Over the last 22 years, we have strived to deliver excellent
service to clients. This service commitment grew out of our
roots in the banking business and now extends across each of
the industries we serve today. Our commitment to clients has
manifested itself into impressive ﬁ nancial performance over

dynamics. Therefore, we are examining our businesses in
the context of the long term, to understand the actions we
can take to create an even brighter future for our company.
We will be proactive in our reviews and take actions that
will assure our status as the market leader for many years
to come.

Q. Will there be changes in the acquisition
philosophy or strategy?

A. Fiserv has been an outstanding acquirer over the years.
We have tremendous competencies in both business

eople
People

Strength in Leadership

the years, beneﬁ ting both employees and shareholders. Our
goal is to deepen client relationships, continue to grow our
client base, and explore ways to extend the core competencies
of Fiserv to new, attractive opportunities. In the near term, we
are focused on unlocking the tremendous opportunities that
exist within our businesses.

Q. What are your plans for 2006?

A. Our current-year efforts are focused on three primary
areas. The first is profitable growth. Our growth should
come from increases in organic revenues and solid margin
management. Next, we will continue to run our business to
produce strong cash flow and putting that cash to work in
acquiring new businesses and technology that strengthen
our market position. The third strategy is to invest in high-
growth areas that will also further differentiate Fiserv in
the competitive marketplace. We will accomplish this by
identifying changing client needs and developing solutions
to meet those needs.

Q. What do you view as the company’s biggest
future challenge?

A. Ironically, our biggest challenge may be our past success.
We are in the enviable position of being the market leader;
strong revenue and earnings growth, coupled with our solid
financial position, has positioned us well for the future. At
the same time, we recognize our responsibility to continually
evaluate our business model in light of changing market

acquisition and integration. We will continue to leverage
these capabilities to build our business. Philosophically, we
will seek acquisitions that grow our core businesses, lead
to increased competitive differentiation and enhance future
growth. We will remain disciplined in our approach and will
continue to allocate capital in the best interests of
our shareholders.

Q. How is Fiserv developing its people to ensure
that a strong management team is in place for
the future?

A. We have great bench strength at Fiserv, and believe that
talent is fundamental to our future success. Recognizing
the need to develop the next generation of management,
we created the Fiserv Leadership Center in 2004. This
world-class management training program combines the
latest external academic programs with internal training on
Fiserv core values and leadership principles. The curriculum
is focused on strategic thinking, service excellence and
general business skills. In addition to developing our current
and future leaders, we provide opportunities for personal
and professional growth for all of our employees. These
opportunities include in-house training, job-related seminars
and educational reimbursement.

Q. What are your leadership philosophies?

A. Leadership is largely the art of influencing people
to achieve a desired outcome in a values-based way.

Body-Pgs 01-16 4

3/21/06 2:25:05 PM

I believe that people want to belong to something that is
bigger than what they do on a day-to-day basis. As leaders,
we must provide a clear long-term vision, and articulate the
roles and responsibilities of our people in bringing that vision
to life. An important part of my role at Fiserv is to work with
our leaders to ensure we have a well-understood mission and
vision. We must then ensure that as a company we have the
right organizational culture and values, appropriate resources,
and the personal accountability needed to achieve our long-
term objectives.

Q. How will you determine that you have
succeeded in this job?

A. I recognize that there will be a variety of factors used to
evaluate my performance over time and that is appropriate.
However, I believe my success should ultimately be defined
in terms of the strength of the organization and our ability to
deliver signiﬁ cant value for clients, shareholders and employees
over the long term. That’s what we should all be judged on.

Above: Jeffery W. Yabuki
Left photo, from left: Kenneth R. Jensen, Senior
Executive Vice President and Chief Financial Ofﬁ cer;
Jeffery W. Yabuki, President and Chief Executive
Ofﬁ cer; Norman J. Balthasar, Senior Executive Vice
President and Chief Operating Ofﬁ cer

Jeffery W. Yabuki comes to Fiserv from
H&R Block, Inc., where he spent over six years
in leadership positions, serving as executive
vice president and chief operating ofﬁ cer since
2002. In that role, he oversaw the domestic
and international tax businesses, e-commerce
activities and the ﬁ nancial services business
units operating under the H&R Block brand,
as well as marketing, information technology,
compliance and corporate development. He also
served on the company’s planning and policy
committee and chaired the operating committee.

Prior to joining H&R Block, Yabuki spent 12
years with American Express, serving most
recently as president and chief executive ofﬁ cer
of American Express Tax and Business Services.
He also built and led a standalone capability
that acquired more than 75 professional ﬁ rms
for American Express. Yabuki, who is a Certiﬁ ed
Public Accountant, received a bachelor’s degree
in business administration from California State
University at Los Angeles.

Body-Pgs 01-16 5

3/23/06 7:30:18 AM

Fiserv provides information management systems and
services to the ﬁ nancial and health beneﬁ ts industries.
Our software, systems and services are used by more
than 17,000 clients worldwide to process transactions,
automate business operations and manage information.

Our three reporting segments specialize in
solutions for numerous industry sectors,
delivering the technology and support our
clients need to compete and flourish in today’s
challenging marketplace.

Overview
Overview

Fiserv at a Glance

Financial Institution Services

Market Reach

(cid:127) U.S. market leader with 35% core penetration

(cid:127) Leading Internet banking services provider serving over 3,000
client institutions

(cid:127) Top ﬁ ve processor of ATM and debit cards with 6.2 billion
transactions processed annually

(cid:127) Mortgage services provided to 27 of the top 30 U.S. lenders

(cid:127) Relationships with 98 of the top 100 U.S. banking institutions
(40 have ﬁ ve or more relationships with Fiserv)

(cid:127) Largest independent U.S. check processor with 10% market share;
more than 6.5 billion images archived

Growth Strategies

(cid:127) Increase sales to existing clients

(cid:127) Partner with clients to enable their growth

(cid:127) Accelerate expansion in high-growth areas including electronic

payments, mortgage services and Check 21 electronic imaging/

Fiserv Clearing Network

(cid:127) Increase presence in large ﬁ nancial institutions

(cid:127) Expand internationally

Health Plan Management Services

Proﬁ le
Fiserv provides outsourced services for self-funded and other
medical, dental, vision and disability plans, including health

Proﬁ le
Fiserv provides outsourcing, systems and services tailored
to the needs of financial institutions including banks,
savings institutions, credit unions, insurance companies
and agents, leasing companies and mortgage lenders. Our
in-house and core processing services for banks, thrifts and
credit unions include deposit and loan processing, cash and
treasury management, risk management, item and image
processing, EFT processing, credit processing services,
customer contact solutions, data warehousing and other
value-added client services. Additional services include
plastic card production and services, high-volume laser
printing and mailing, electronic document distribution and
archival. We serve the lending industry with outsourced
and licensed software and services including mortgage
loan servicing, automated property valuation, loan settlement
support and contact center services, as well as loan and
lease portfolio management for the auto finance market.
Our comprehensive insurance processing services and
products emphasize licensed sales, business process
outsourcing and education for the life, annuity and
property and casualty sectors.

Body-Pgs 01-16 6

3/23/06 7:30:46 AM

Overview

plan administration, care and disease management, and pharmacy
benefits management. Clients include self-insured commercial
and government employers, health insurance companies, health
maintenance organizations and pharmacies.

Market Reach
(cid:127) Leading independent health plan administrator to self-insured employers

(cid:127) More than 33 million health claims processed in 2005

(cid:127) More than 1,700 third-party administrator (TPA) client relationships

(cid:127) Provider of technology and process outsourcing to over 360,000

consumer-directed health plan members

Growth Strategies
(cid:127) Focus sales on key new clients

(cid:127) Increase sales to existing clients

(cid:127) Sell pharmacy services to new markets

(cid:127) Expand in high-growth areas including consumer-directed healthcare and

business process outsourcing

(cid:127) Pursue vertical market expansion

Investment Support Services

Proﬁ le
Fiserv provides outsourced services for individual and business retirement
plans, trustee, custodial and recordkeeping, back-office investment
support and tax reporting. Clients include individual investors, small
businesses and corporations, and industry professionals.

Market Reach
(cid:127) $39 billion in retirement trust assets under administration

(cid:127) More than 320,000 self-directed retirement and custodial accounts

serviced annually

Growth Strategies
(cid:127) Meet the growing need to service a variety of investment vehicles as

retirement population increases

(cid:127) Leverage product portfolio to expand in growth areas including

beneﬁ t plans, 401(k) plans, IRAs and alternative investments »

2005 Total Revenues

3%
^

25%

72%

Financial Institution Services

Health Plan
Management Services

Investment Support Services

2005 Acquisitions

The eight companies Fiserv acquired
in 2005 are listed below, along with
the business group they joined. These
acquisitions in growing areas of our
business further our goal to be the
single-source technology services
provider to our clients.

Company

Business Group

Administrative
Services Group, Inc.

Health Plan
Management

BillMatrix Corporation Bank Servicing
and ePayments

Del Mar Datatrac, Inc.

Lending Services

Emergis, Inc.’s
eLending U.S. business Lending Services

Interactive
Technologies, Inc.

J.W. Hutton, Inc.

Bank Systems

Health Plan
Management

VerticalPoint, Inc.

Insurance Solutions

Xcipio, Inc.

Insurance Solutions

Body-Pgs 01-16 7

3/23/06 7:32:46 AM

From left: Ardys Anderson, Vice President, Technology and
Integration, Nationwide Advantage Mortgage Company;
Lee Howlett, President and Chief Operating Ofﬁ cer –
Fulﬁ llment Services, Fiserv Lending Solutions; John R.
Tenuta, Division President, Loan Management Products,
Fiserv Lending Solutions; and Paul Swan, President of
Nationwide Advantage Mortgage Company.

Body-Pgs 01-16.indd 8

3/23/06 10:11:13 PM

Nationwide Advantage Mortgage Company, a full-service
mortgage lender, relies on integrated technology from Fiserv
to automate its loan origination and servicing operations.

A subsidiary of Nationwide® Insurance, the company originated
$1.2 billion in mortgages last year using Fiserv UniFi® PRO
lending software. UniFi PRO enables the ﬁ nancial institution
to manage diverse production channels, including its retail
Web site, call center, loan ofﬁ cers and insurance agents. The
recent addition of the Electronic Partner Connection allows
Nationwide Advantage Mortgage to order Fiserv title insurance,
home appraisals and bundled closing services directly through
UniFi PRO. The connection also delivers loan documents with
electronic signature and closing capabilities.

Nationwide Advantage Mortgage performs payment
processing, escrowing and customer service for its $4.5 billion
loan portfolio using the MortgageServ® loan servicing system.
Expert use of the Fiserv system has resulted in a 20% increase
in the number of loans serviced per associate in 2005. The
enhanced productivity has reduced costs and generated a solid
return on the mortgage company’s technology investment.

“We take great pride in providing premier customer
service throughout the lending lifecycle. The end-to-end
technology solutions from Fiserv have helped us to provide
seamless service, increase customer satisfaction and leverage
cross-selling opportunities,” said Paul Swan, President of
Nationwide Advantage Mortgage Company.

Technology
Technology

Industry-Leading Technology

In today’s ﬁ nancial institutions marketplace, Fiserv technology
is the backbone that helps our clients to build and grow their
business. We provide integrated in-house and outsourced
systems that enable ﬁ nancial institutions to stay on the leading
edge of a fast-changing and highly competitive marketplace.

Fiserv technology is helping our clients to process ATM and POS
sales that are growing at double-digit rates each year and manage
debit card transaction volume that is expected to grow more
than 50% in the next ﬁ ve years. We are one of the leaders in the
market in electronic imaging technology as part of the Check 21
legislation. We are also at the forefront of branch check capture,
an emerging technology that allows banks to create image
replacement documents at the branch level, saving the time and
expense of transporting physical checks to a check processing site.

The ultimate goal of our technology is to help our clients achieve
their business objectives, as well
as improve customer service.
An example is our customer
relationship management
products that enable a bank
teller to see the proﬁ tability
index of a customer in order
to sell additional products or
services that meet the needs of
both the customer and the bank.

Our service-oriented architecture
is the technology framework that
supports our future growth.

With integrated technology across our business units and
throughout our product portfolio, we are delivering on our
clients’ need for one platform that can handle all aspects of
their software requirements, provide ﬂ exibility in adding new
services and is easy to install and maintain. The beneﬁ ts to
Fiserv are enhanced opportunities to increase market share,
cross-sell products among our business units, bring new
technology to market faster and improve operating efﬁ ciency.

Industry-leading mortgage lending and servicing
software from Fiserv is the framework for the exceptional
customer service provided by Nationwide Advantage
Mortgage Company. End-to-end technology and services
integration helps the company to maintain its customer
focus while generating substantial productivity gains that
provide a solid return on investment.

Since 2002, Fiserv has sponsored
developer conferences to provide
education and strategic direction
on the adoption of service-oriented
architecture principles which
allow ease of integration not only
among Fiserv products, but with
third-party software as well.

Fiserv technology is a win-win for
our company and our clients. And
it’s a key strength that deﬁ nes

leadership at Fiserv.»

Body-Pgs 01-16 9

3/21/06 2:26:35 PM

From left: Tracey Scalata, Cash Management
Director, Rockland Trust Company; and
Jim Goodwin, Vice President, Fiserv
Braintree Item Processing Center Manager.

Body-Pgs 01-16.indd 10

3/23/06 9:55:56 PM

Rockland Trust Company of Rockland, Massachusetts, is one of
the ﬁ rst institutions in its market area to offer merchant capture
services. It is also one of the ﬁ rst Fiserv clients to take advantage of
the new, market-leading ImageStream Merchant Capture Solution
offered by Fiserv Item Processing.

This is where the market-differentiating back-end services
of Fiserv come in. Once the electronic ﬁ le is received, the
items can be printed as image replacement documents,
exchanged as an image or posted to the bank’s system,
depending upon client requirements.

ImageStream Merchant Capture is an integrated solution that
combines our BANKLINK Remote Deposit product, an image
quality analysis component from Fiserv Imagesoft and a complete
suite of image processing services. Rockland Trust business clients
install scanners in their ofﬁ ces to transmit their check deposits
electronically. Clients scan checks and upload them to the web-
based application, which then performs an image quality assessment
and transmits the images to the Fiserv item processing center.

“Merchant capture extends cutoff times and allows clients
to accelerate clearing times by making two or three deposits
per day. From the enthusiastic response we are receiving from
customers and prospects, we believe merchant capture will
help us to increase our overall customer base,” said George
Gousie, Vice President-Cash Management Ofﬁ cer of
Rockland Trust.

Leadership
Leadership

Market Leadership

These statistics illustrate Fiserv’s market leadership:

(cid:127) We have client relationships with more than 10,000 ﬁ nancial
institutions and more than 2,400 insurance companies.
(cid:127) We process 295 million customer deposit, loan and lease
accounts annually.
(cid:127) We process 3.3 billion checks annually.
(cid:127) We process $6.9 billion in healthcare claims paid annually.
(cid:127) We have a dominant market share in workers’ compensation
pharmacy claim processing for retail pharmacies.

We provide in-house and outsourced software, systems and
services used by more than 17,000 clients to handle functions
ranging from processing savings and checking deposits, debit
card and ATM transactions, mortgage, loan and lease payments,
to transferring funds electronically and providing electronic
imaging services as part of the Check 21 legislation. We process
transactions for medical, dental, vision, disability and pharmacy
beneﬁ t plans and provide support services for insurance
companies and the investment market.

We are well positioned to grow
revenues and market penetration by
leveraging our established client base
into increased cross-sales and new
client relationships. Developing and
enhancing the products and services
that drive our market leadership is
an ongoing process that combines
internal product development, strategic
acquisitions and creative partnerships
with other industry leaders. For example,

the recent sale to Putnam Investments, where Fiserv is managing
a distribution center that provides services including computer
print and automated mailing, fulﬁ llment and offset printing for
Putnam customers, also gives our custom-card business a signiﬁ cant
presence in the Northeast.

The new ImageStream Merchant Capture Solution
from Fiserv enables customers of Rockland Trust to
make deposits without leaving their ofﬁ ce, bringing
added convenience and increased efﬁ ciency to the
relationship. This innovative new software is just one
more way ﬁ nancial institutions across the globe beneﬁ t
from working with the market leader – Fiserv.

In the healthcare management area, we are bundling our business
process outsourcing capabilities through an agreement to offer the
EDS MetaVance® Administration & Finance Application. This agreement
will provide the marketplace with new
alternatives for lowering costs, reducing
staff workloads and delivering value.
And the acquisition of CareGain,
Inc. in early 2006 strengthens our
portfolio in the areas of managing
consumer-directed health plans and
healthcare spending accounts.

At Fiserv, strength in leadership means
continually looking for opportunities
to extend our capabilities to new

clients and new markets.»

Body-Pgs 01-16.indd 11

3/24/06 1:22:17 PM

From left: Andrea Hackett, Head of
Support, Governance and External
Relationships for Birmingham
Midshires and John Bower,
Managing Director,
Fiserv Europe.

Body-Pgs 01-16 12

3/23/06 7:43:25 AM

Birmingham Midshires is the U.K.’s number-one specialist
lender and one of the fastest growing savings providers in the
U.K. It is also part of Halifax Bank of Scotland, the ninth largest
bank in the world. Birmingham Midshires specializes in selling
mortgage products to niche markets via mortgage intermediaries.

When Birmingham Midshires was acquired by Halifax in 1999,
the company decided not to compete directly with its new parent.
Instead, it determined it would become the Halifax group’s
specialist lender, providing mortgage products to the specialist
sectors of buy-to-let (mortgages for landlords), sub-prime
(mortgages for those who have experienced ﬁ nancial bumps and
scrapes) and self-cert (mortgages for the self-employed).

Birmingham Midshires uses the Fiserv CBS Worldwide
International Core Banking System to efﬁ ciently process
mortgage, loan, savings and Internet accounts. The system’s
automated loan administration, accounting and maintenance, and
streamlined customer service has enabled Birmingham Midshires
to become one of the most efﬁ cient lenders in the U.K.

“The Fiserv CBS Worldwide team helped us to transform our
operating model to take advantage of opportunities presented
by the change in ownership. As a result, we’ve grown from
2 million customer accounts ﬁ ve years ago to over 3.3 million
today,” said Andrea Hackett, Head of Support, Governance
and External Relationships for Birmingham Midshires.

Excellence
Excellence

Service Excellence

Client satisfaction and retention are a top priority for Fiserv, as
evidenced by a long-term client retention rate that is among the
highest in the industry. We achieved this milestone by making
client service and satisfaction the responsibility of each and
every Fiserv employee.

exceptional employee dedication and our strong technology
network enabled us to continue providing check processing
services to our clients served by our New Orleans and Houston
area ofﬁ ces throughout the entire period these locations were
closed due to the hurricanes. We also provided disaster recovery

We survey our clients every year to gauge satisfaction and seek
suggestions on how we can better meet their needs. In fact, a
number of the products and services in our portfolio today were
developed in response to client feedback. Whether it’s in-house
or outsourced technology, Fiserv helps our clients to operate
their business more efﬁ ciently, more effectively and more
proﬁ tably – while they focus on serving their customers.

First and foremost, strong relationships are built by people.
That is why valuing our employees is a core Fiserv philosophy.
We are committed to helping our employees and managers grow
both personally and professionally through ongoing training,
advancement and educational opportunities. And the Fiserv
Leadership Center develops
our future leaders through
an innovative program that
combines the latest academic
programs with established
Fiserv business principles.

Our commitment to client service
was put to the test with Hurricane
Katrina in August 2005, and
Hurricane Rita three weeks later.
The successful combination of
behind-the-scenes maneuvering,

The Fiserv CBS Worldwide International Core Banking
System helped Birmingham Midshires to become the
number-one specialist lender in the U.K. A client since
1993, the lender has relied on a strong relationship
with Fiserv to signiﬁ cantly expand its business and
achieve its ranking as one of the most efﬁ cient lenders
in the U.K. market.

services for numerous ﬁ nancial institutions that could no longer
utilize their own operations and processed work for the New
Orleans Branch of the Federal Reserve Bank of Atlanta through our

Atlanta-area ofﬁ ce. Today, our
ofﬁ ces in these areas are back
in service, against overwhelming
odds, and our clients and
employees are well on their
way to rebuilding their lives.

As this example illustrates, Fiserv
employees across the globe are
dedicated to our clients and
their business – making service
excellence the cornerstone of our

strong leadership.»

Body-Pgs 01-16 13

3/23/06 7:43:55 AM

From left: James T. Cross, President, Fiserv
Brookﬁ eld ITI Outsourcing and Ronald R.
Hunt, Senior Vice President – Operations
of American Chartered Bank.

Body-Pgs 01-16 14

3/21/06 2:28:14 PM

When American Chartered Bank of Schaumburg, Illinois
decided to enter the Health Savings Account (HSA) market
two years ago, Fiserv helped to make it happen.

We assisted the bank in implementing software that automates
processing, including government tax and exception reporting.
Customers ﬁ ll out an online HSA application, with the data
fed automatically into the bank’s account opening process. A
signature card can then be printed, and the customer is required
to acknowledge participation in a high deductible health plan.

Account features include check writing, debit cards, image
statements and sweep/transfer capabilities. Customers can
also view their HSA account information online and make
payments to providers directly from their HSA account.

The $2 billion American Chartered Bank now ranks
among the most active in the industry for HSAs opened.
More than 90% of these accounts are owned by customers
new to the bank, opening the door to cross-sales of
other products.

“We saw an opportunity to help smaller companies
reduce their healthcare benefits costs, while at the same
time generating additional deposits to fund our loan
portfolio. With technology solutions for both the financial
and health benefits industries, Fiserv was an ideal partner
in developing our product,” said Ronald R. Hunt, Senior
Vice President – Operations of American Chartered Bank.

Portfolio
Portfolio

Extensive Product Portfolio

Financial institutions and other service providers process an
astounding amount of transactions and information every
day. That’s why they need a strong technology partner with a
comprehensive portfolio of solutions to meet their needs. And
that’s where Fiserv excels.

Fiserv clients have an ever-growing need to process increasing
amounts of data faster, more efﬁ ciently and at a lower cost. We’re
continually introducing new products and product enhancements to
meet changing market needs, such as the fast growth of electronic
payments, ATM transactions, debit cards and Internet banking.

Our extensive portfolio of solutions was built around our core
competency of transaction processing. We are leveraging these
core processing services to expand our product portfolio into
fast-growing related markets such as the health plan management
services business. In just ﬁ ve years, Fiserv Health has earned a
position as the ﬁ fth-largest provider of ERISA plan administration
and the sixth-largest provider of
consumer-driven health plan
enrollment administration in the U.S.

With more than $1.8 trillion
spent on healthcare in 2005,
employers are continually looking
for creative ways to manage
healthcare costs. The latest
development is the growth of the
Health Savings Account (HSA).
HSAs are basic deposit accounts
that consumers can open at a
bank or credit union, as long

as they participate in a high deductible health plan. HSAs are
expected to increase dramatically, with a total value of $3.6 billion
in HSAs estimated by 2008, up from about $120 million today.
In 2005, Fiserv unveiled a major healthcare banking program

With our broad, integrated software solutions
portfolio, Fiserv was in a strong position to help
American Chartered Bank to become an early leader in
the fast-growing health savings account market. Our
integrated technology platform automates everything
from applications to processing, check writing, debit
cards and online bill payments, enabling the bank to
do what it does best – grow its business.

that enables our clients to offer core system capabilities for HSAs
as well as features including the ability to move HSA money into
other investments, specialized content that helps consumers to
make more informed healthcare
buying decisions, and marketing
and educational tools that help
banks understand HSAs and
inform their customers.

Our broad and deep portfolio of
products, systems and services is
the fuel that will drive our future
growth – and the key to our
success in increasing revenues,
adding new clients and cross-

selling our services.»

Body-Pgs 01-16 15

3/21/06 2:28:45 PM

Strength in Leadership at Fiserv is underscored by our consistently strong ﬁ nancial
performance. 2005 was another record year for Fiserv, with steady increases in the key
measures of ﬁ nancial performance.

Report

Financial Report

$50

Stock Price
(In Dollars)

$5,000

Total Revenues
(In Millions)

4,000

3,000

2,000

1,000

$2.5

Earnings Per Share*
(In Dollars)

2.0

1.5

1.0

0.5

* 2005 excludes a pre-tax gain of $86.8 million ($0.29 per share) from the sale of two investments, receipt of a large contract termination fee of

$26.3 million ($0.09 per share) and $5.7 million ($0.03 per share) of one-time tax beneﬁ ts related to discontinued operations.

Body-Pgs 17-50 3/23/06 7:48 AM Page 17

Financial Report

Consolidated Statements of Income • 18

Consolidated Balance Sheets • 19

Consolidated Statements of Shareholders’ Equity • 20

Consolidated Statements of Cash Flows • 21

Notes to Consolidated Financial Statements • 22

Management’s Discussion and Analysis of
Financial Condition and Results of Operations • 34

Selected Financial Data • 44

Market Price Information • 44

Quarterly Financial Information (unaudited) • 45

Reports of Independent Registered Public
Accounting Firm and Management’s Annual Report
on Internal Control over Financial Reporting • 46

Board of Directors • 48

Executive and Management Leadership • 49

Corporate Information • 51

Body-Pgs 17-50 3/23/06 7:48 AM Page 18

Income

Consolidated Statements of Income

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

REVENUES:
Processing and services
Product

TOTAL REVENUES

EXPENSES:
Cost of processing and services
Cost of product
Selling, general and administrative

TOTAL EXPENSES

OPERATING INCOME
Interest expense
Interest income
Realized gain from sale of investments

INCOME FROM CONTINUING OPERATIONS

BEFORE INCOME TAXES

Income tax provision

INCOME FROM CONTINUING OPERATIONS

INCOME (LOSS) FROM DISCONTINUED OPERATIONS,

NET OF INCOME TAXES

NET INCOME

BASIC NET INCOME (LOSS) PER SHARE:

Continuing operations
Discontinued operations

TOTAL

DILUTED NET INCOME (LOSS) PER SHARE:

Continuing operations
Discontinued operations

TOTAL

2005

2004

2003

$2,891,552
1,167,926

4,059,478

1,855,247
942,708
516,127

3,314,082

745,396
(27,828 )
13,561
86,822

817,951
306,594

511,357

$2,739,732
990,014

3,729,746

$2,420,728
504,639

2,925,367

1,822,733
795,965
451,488

3,070,186

659,560
(24,902 )
6,708
–

641,366
246,468

394,898

1,659,923
351,395
392,227

2,403,545

521,822
(22,895 )
7,340
–

506,267
197,444

308,823

5,081

(17,256 )

6,189

$ 516,438

$ 377,642

$ 315,012

$ 2.71
0.03

$ 2.74

$ 2.68
0.03

$ 2.70

$ 2.03
(0.09 )

$ 1.94

$ 2.00
(0.09 )

$ 1.91

$1.60
0.03

$1.63

$1.58
0.03

$1.61

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

Basic
Diluted

188,807
190,967

194,981
197,287

193,240
195,937

See notes to consolidated financial statements.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:41 AM Page 19

Balance Sheets

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, net
Intangible assets, net
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;
197,507,892 and 195,940,360 shares issued

Additional paid-in capital
Accumulated other comprehensive income
Accumulated earnings
Treasury stock, at cost, 15,753,675 and 1,691,500 shares

TOTAL SHAREHOLDERS' EQUITY

TOTAL

See notes to consolidated financial statements.

2005

$ 184,471
553,402
105,782
2,126,538
226,013
593,808
2,249,502
–

$6,039,516

$ 241,751
–
365,651
4,266
240,105
1,960,626
165,992
595,385
–

3,573,776

2004

$ 516,127
437,764
100,810
1,984,536
200,709
532,539
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

–

1,975
693,715
1,321
2,436,977
(668,248 )

2,465,740

$6,039,516

1,959
679,573
26,695
1,920,539
(64,344 )

2,564,422

$8,383,349

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 7:48 AM Page 20

Equity

Consolidated Statements of Shareholders’ Equity

Common Stock

Shares
192,450

Amount
$ 1,924 $ 599,700

Additional
Paid-In
Capital

Accumulated
Other
Comprehensive Comprehensive Accumulated
Income
$23,882

Income

Earnings
$ 1,227,885
315,012

Treasury Stock

Shares
805

Amount
$ (25,722)

(In thousands)
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 -
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

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

$ 315,012
1,078

1,078

(927)

(10,264)

3,576
$ 308,475

3,576

17,345

634

3,253

5,463

$ 377,642
634

3,253

5,463
$ 386,992

1,265
545
194,260

13
6
1,943

20,411
17,512
637,623

(362)
(443)
–

11,761
13,961
–

1,542,897
377,642

income tax benefits

1,680

41,950

Purchase of treasury stock
Balance at December 31, 2004
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 -
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

195,940

1,959

679,573

$516,438
767

26,695

767

1,920,539
516,438

1,692
1,692

(64,344)
(64,344)

(228)

(31,902)

5,989
$491,064

5,989

1,568

14,142

(1,171)
15,233

48,671
(652,575)

Balance at December 31, 2005

197,508

$1,975

$693,715

$ 1,321 $2,436,977 15,754 $(668,248 )

See notes to consolidated financial statements.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:41 AM Page 21

Cash Flows

Consolidated Statements of Cash Flows

2005

2004

2003

$516,438
(5,081)

$377,642
17,256

$315,012
(6,189)

(In thousands)
YEARS ENDED DECEMBER 31,

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

provided by operating activities from continuing operations:

Realized gain from sale of investments
Deferred income taxes
Depreciation and amortization
Changes in assets and liabilities, net of effects from

acquisitions and dispositions 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
Proceeds from sale of businesses, net of expenses paid
Cash distribution received from discontinued operations prior to sale
Investments

Net cash used in investing activities from continuing operations

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of 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 (used in) provided by financing activities from continuing operations

Change in cash and cash equivalents
Beginning balance

Ending balance

(86,822)
19,183
179,179

(83,367)
(7,085)
52,676
14,389
(2,388)

597,122

(164,951)
(509,630)
282,236
68,000
(104,810)

(429,155)

(100,000)
129,580
(39,744)
32,129
(652,575)
130,987

(499,623)

(331,656)
516,127

$184,471

DISCONTINUED OPERATIONS CASH FLOW INFORMATION (Revised – See Note 1):
Net cash (used in) provided by operating activities - discontinued operations
Net cash (used in) provided by investing activities - discontinued operations
Net cash (used in) provided by financing activities - discontinued operations

$ (6,306)
(36,749)
39,600

Total net cash (used in) provided by discontinued operations

Cash and cash equivalents - discontinued operations - beginning of year
Cash and cash equivalents - sold

Cash and cash equivalents - discontinued operations - end of year

(3,455)

35,849
32,394

–

See notes to consolidated financial statements.

Fiserv, Inc. and Subsidiaries

–
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

$ 89,659
(64,910)
(29,000)

(4,251)

40,100
–

$ 35,849

–
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

$ (77,584)
44,405
39,000

5,821

34,279
–

$ 40,100

Body-Pgs 17-50 3/23/06 9:41 AM Page 22

Notes

Notes to Consolidated Financial Statements
For the years ended December 31, 2005, 2004 and 2003

1. Summary of Significant Accounting Policies

DESCRIPTION OF THE BUSINESS

Fiserv, Inc. and subsidiaries (the “Company”) provides information
management systems and services to the financial and health benefits
industries, including transaction processing outsourcing, business
process outsourcing and software and systems solutions. 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.

PRINCIPLES OF CONSOLIDATION

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.

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.

NEW ACCOUNTING PRONOUNCEMENT

In December 2004, the Financial Accounting Standards Board
(“FASB”) issued Statement of Financial Accounting Standards
(“SFAS”) No. 123 (revised 2004), “Share-Based Payment” (“SFAS
123R”), that requires companies to expense the value of employee
stock purchase plans, stock option grants and similar awards at the
beginning of their next fiscal year that begins after June 15, 2005
and requires the use of either the modified prospective or the
modified retrospective application method. The Company will adopt
SFAS 123R on January 1, 2006 under the modified prospective
method, which requires the application of SFAS 123R to new
awards and to awards modified, repurchased, or cancelled after
the effective date. Additionally, compensation cost for the portion
of outstanding awards for which service has not been rendered
(such as unvested options) that are outstanding as of the date
of adoption shall be recognized as the remaining services are
rendered. Had the Company adopted SFAS 123R in prior periods,
the Company believes the impact of the standard would have
approximated the impact of SFAS No. 123, “Accounting for Stock-
Based Compensation” (“SFAS 123”) as described in the following
“Stock-Based Compensation” disclosure. The incremental share-
based compensation expense under SFAS 123R is estimated to be in
the range of $0.09 to $0.11 per share in 2006. The ultimate impact
of adopting SFAS 123R on 2006’s results of operations and financial
position will depend upon many factors including the level of stock-
based compensation granted in 2006, the fair value of those
options which will be determined at the date of grant, the level of
participation in the employee stock purchase plan, the
related tax benefits recorded and the diluted shares outstanding.

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.”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.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:41 AM Page 23

Notes continued

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.

RECLASSIFICATIONS AND REVISIONS

Certain amounts reported in prior periods have been reclassified to
conform to the 2005 presentation. During 2005, the Company revised
the format of its consolidated statement of income. All prior periods
have been revised to be consistent with the 2005 presentation. This
revision did not impact the Company’s total revenue, total
expenses, operating income, net income or net income per share.

In addition, in 2005, the Company revised the presentation of its
consolidated statements of cash flows to present separate
disclosure of, rather than as a single line item, the cash flows from
operating, investing and financing activities of the discontinued
operations and revised the consolidated statements of cash flows
for the years ended December 31, 2004 and 2003.

REVENUE RECOGNITION

Processing and services revenues are primarily derived from account
and transaction-based fees for data processing, related consulting
services, software maintenance fees and from administration fees
on investment accounts and are recognized as the related services
are provided. Revenues from investment support services include
net investment income of $81.2 million, $74.1 million and $67.4 million
in 2005, 2004 and 2003, respectively. Software maintenance fee
revenues for on-going customer support 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.

Product revenues are primarily derived from the Company’s pharmacy
businesses, software license sales and integrated print and electronic
communications. Product 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 contracts 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”
(“EITF 99-19”) in the majority of our transactions with clients. The
Company also recognizes product revenues such as software license
sales when written contracts are signed, delivery of the product has
occurred, the fee is fixed or determinable and collection is probable.

The Company also includes customer reimbursements, such as postage
and telecommunication costs, in both processing and services and
product revenue and expense in accordance with Emerging Issues
Task Force No. 01-14,”Income Statement Characterization of
Reimbursements Received for 'Out-of-Pocket' Expenses Incurred”
(“EITF 01-14”). These costs, which are pass-through expenses to clients
included in both revenues and expenses were $351.0 million,
$379.2 million and $333.3 million in 2005, 2004 and 2003, respectively.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses primarily consist of
salaries, wages and related expenses paid to sales personnel,
administrative employees and management; advertising and
promotional costs; and other selling expenses.

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 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 $33.5 million
and $29.5 million at December 31, 2005 and 2004, respectively.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:41 AM Page 24

Notes

Notes continued

INVESTMENTS

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

2005
(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

Amortized/
Historical Cost

Gross
Unrealized Gains

Gross
Unrealized Losses

$1,845,019
16,255
492
1,861,766
14,590
148,607
100,000
1,521
$2,126,484

$ 2,713
1,365
1
4,079
54
–
–
–
$ 4,133

$(50,614 )
–
–
(50,614 )
–
–
–
–
$(50,614 )

2004
(In thousands)

Amortized/
Historical Cost

Gross
Unrealized Gains

Gross
Unrealized Losses

TOTAL

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

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

$ (33,647)
–
–
(33,647)
–
–
–
–
$ (33,647)

Estimated
Fair Value

$1,797,118
17,620
493
1,815,231
14,644
148,607
100,000
1,521
$2,080,003

Estimated
Fair Value

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

Carrying
Value

$1,845,019
16,255
492
1,861,766
14,644
148,607
100,000
1,521
$2,126,538

Carrying
Value

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

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 $1.9 billion
and $1.8 billion as of December 31, 2005 and 2004, 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;
however, the Company has never experienced a default on these
types of securities. Substantially all of the Investment support services
subsidiaries’ 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

eight months at December 31, 2005. 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 value, 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. During 2005, the Company sold its remaining
3.2 million shares of Bisys Group, Inc. common stock (included in
available-for-sale investments) realizing a pre-tax gain of $43.5 million
and its investment in INTRIA Items, Inc. (included in other investments)
realizing a pre-tax gain of $43.4 million. Realized gains or losses are
computed based on specific identification of the investments sold,
based on the trade date.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:41 AM Page 25

Notes continued

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation and amortization
are computed primarily using the straight-line method over the shorter
of the estimated useful life of the asset or the leasehold period, if
applicable. Property and equipment consist of the following at
December 31:

Estimated
Useful Lives
3 to 5 years

5 to 40 years
3 to 10 years

2005

2004
$389,989 $354,780

126,269
131,424
647,682

125,179
122,056
602,015

421,669

401,306
$226,013 $200,709

(In thousands)
Data processing equipment
Buildings and leasehold

improvements

Furniture and equipment

Less accumulated depreciation

and amortization

TOTAL

INTANGIBLE ASSETS

Intangible assets consist of the following at December 31:

2005
(In thousands)
Software development costs

for external customers

Purchased software
Customer base
Trade names
Other

TOTAL

Gross

Carrying Accumulated Net Book
Amount Amortization

Value

$394,340
163,901
104,490
–
4,323
$667,054

$171,218
90,343
270,340
57,744
4,163
$593,808

$ 565,558
254,244
374,830
57,744
8,486
$1,260,862

Gross

2004
(In thousands)
Software development costs

for external customers

Purchased software
Customer base
Trade names
Other

TOTAL

Carrying Accumulated Net Book
Amount Amortization

Value

$ 507,122
226,002
312,091
57,744
10,041
$ 1,113,000

$ 352,429
136,905
86,996
–
4,131
$ 580,461

$ 154,693
89,097
225,095
57,744
5,910
$ 532,539

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.

Gross software development costs for external customers capitalized
for new products and enhancements to existing products totaled
$50.0 million, $47.8 million and $51.9 million in 2005, 2004 and
2003, respectively. Amortization of previously capitalized development
costs was $48.7 million, $60.2 million and $47.8 million in 2005,
2004 and 2003, 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,
generally 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 $104.8 million,
$110.5 million and $90.0 million for the years ended December 31,
2005, 2004 and 2003, respectively. Aggregate amortization expense
with respect to existing intangible assets with finite lives resulting
from acquisitions of businesses, excluding purchased software
amortization, should approximate $25 million annually.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:41 AM Page 26

Notes

Notes continued

GOODWILL

The excess of the purchase price over the estimated fair value of tangible and identifiable intangible assets acquired is recorded as goodwill.
The Company reviews, on an annual basis, or more frequently if circumstances indicate possible impairment, the carrying value of goodwill by
comparing balances to fair values and has determined that no impairment exists. The changes in the carrying amount of goodwill by business
segment during the years ended December 31, 2005 and 2004 are as follows:

(In thousands)

Balance, December 31, 2003

Goodwill additions

Balance, December 31, 2004

Goodwill additions

Balance, December 31, 2005

Financial Institution
Outsourcing,
Systems and Services

$1,332,523

68,728

1,401,251

375,937

$1,777,188

Health Plan
Management
Services

$387,206

69,297

456,503

14,218

$470,721

Investment
Support
Services

$1,593

–

1,593

–

$1,593

Total

$1,721,322

138,025

1,859,347

390,155

$2,249,502

IMPAIRMENT OF LONG-LIVED ASSETS

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.

DISCONTINUED OPERATIONS

financial statements. During 2005, the Company recorded $0.03 per
share in diluted earnings in discontinued operations primarily as a
result of favorable resolutions of income tax uncertainties.

Also, in the third quarter of 2005, the Company received an
indemnification notice under the stock purchase agreement
regarding FSI’s past maintenance of certain documentation related
to FSI’s introducing broker dealers’ customers. The Company is
currently investigating the merits of this matter and is unable to
estimate or predict the ultimate outcome or determine whether this
matter will have a material adverse impact on the Company’s
discontinued operations’ results.

The Company's securities clearing businesses are excluded from
reported total revenues, total expenses and operating cash flows
and have been reported as discontinued operations for all periods
presented. Summarized financial information for discontinued
operations included in the financial statements for the years ended
December 31 is as follows:

(In thousands)

Total revenues
Total expenses

Operating (loss) income
before income taxes

Income tax benefit (expense)
Loss on sale of businesses, net of

2005

2004

2003

$26,391 $115,457
132,820

26,809

$108,303
98,157

(418)
5,862

(17,363)
107

10,146
(3,957)

income taxes of $48,670

(363)

–

Income (loss) from discontinued
operations, net of tax

$ 5,081 $ (17,256) $ 6,189

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/25/06 8:40 AM Page 27

Notes continued

Assets and liabilities of the discontinued operations were sold on
March 24, 2005. At the time of the sale, cash of $32.4 million was
included on the balance sheet sold to the buyer. The Company reports
its cash flows from continuing operations separate from cash flows
from discontinued operations on its consolidated statements of
cash flows. The discontinued operations cash flow disclosure includes
a $68.0 million cash distribution that the securities clearing
business made to the Company prior to completion of the sale.

At December 31, 2004, the assets and liabilities of the discontinued
operations were 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 consisted of the following:

(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

SHORT-TERM BORROWINGS

2004

$
35,849
2,404,215
27,632
128,279
4,140
151,402

$2,751,517

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

$2,412,467

The Company’s Investment support services subsidiaries had no
short-term borrowings as of December 31, 2005 and $100.0 million
of short-term borrowings as of December 31, 2004. The short-term
borrowings outstanding at December 31, 2004 had an average
interest rate of 2.6% and were collateralized by investments valued
at $102.0 million at December 31, 2004.

INCOME TAXES

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, 2005, 2004 and 2003, the Company
excluded 0.1 million, 4.1 million and 3.4 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)

2005

2004

2003

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

188,807
2,160

194,981
2,306

193,240
2,697

190,967

197,287

195,937

STOCK-BASED COMPENSATION

The Company has accounted for its stock-based awards and
employee stock purchase 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 options and employee stock
purchase plans as all options granted under the stock option plans
had an exercise price not less than 100% of the fair value of the
underlying common stock on the date of grant, and the discount for
the employee stock purchase plans did not exceed fifteen percent.
The value of the Company’s restricted stock awards, based on market
prices, is recognized as compensation expense over the restriction
period on a straight-line basis.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:41 AM Page 28

Notes

Notes continued

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 123. 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.

(In thousands, except per share data) 2005

2004

2003

$516,438

$377,642

$315,012

The weighted-average estimated fair value of stock options granted
during the years ended December 31, 2005, 2004 and 2003 was
$14.46, $13.56 and $15.14 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.

Net income:

As reported
Add: reported stock

compensation expense -
net of tax

Less: fair value stock

compensation expense -
net of tax

2,500

405

316

ACCUMULATED OTHER COMPREHENSIVE INCOME

(23,380)

(18,405)

(17,316)

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

Pro forma

$495,558

$359,642

$298,012

Reported net income per share:

Basic
Diluted

Pro forma net income per share:

Basic
Diluted

$2.74
2.70

$2.62
2.59

$1.94
1.91

$1.84
1.82

$1.63
1.61

$1.54
1.52

The fair value of each stock option granted in 2005 and 2004 was
estimated on the date of grant using a binomial option-pricing model;
the fair value of each stock option granted in 2003 was estimated
on the date of grant using the Black-Scholes option-pricing model,
with the following weighted-average assumptions:

(In thousands)

Unrealized (losses) gains

on investments, net of tax

Unrealized gains (losses)

2005

2004

$ (45)

$32,085

on cash flow hedges, net of tax

316

(5,673)

Foreign currency translation

adjustments

TOTAL

1,050

$1,321

283

$26,695

SUPPLEMENTAL CASH FLOW INFORMATION

Expected life (in years)

Risk-free interest rate

Volatility

Dividend yield

2005
5.4

3.9%

32.2%

0.0%

2004
5.5

3.1%

33.6%

0.0%

2003
5.0

3.0%

52.3%

0.0%

(In thousands)

Interest paid

2005

2004

2003

$ 26,696

$ 25,495

$ 22,164

Income taxes paid (including
discontinued operations)

Liabilities assumed in

335,601

177,017

144,130

acquisitions of businesses

39,478

10,507

85,072

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:42 AM Page 29

Notes continued

2. Acquisitions

During 2005, 2004 and 2003, 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
2005:
Del Mar Datatrac, Inc.
Emergis, Inc.’s eLending U.S. business
Interactive Technologies, Inc.
Administrative Services Group, Inc.
J.W. Hutton, Inc.
BillMatrix Corporation
VerticalPoint, Inc.
Xcipio, Inc.

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

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

Month
Acquired

Service

Consideration

Mar.
May
June
June
Aug.
Aug.
Aug.
Nov.

Jan.
Aug.
Aug.
Oct.

Jan.
Mar.
Apr.
May

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

Lending services
Lending services
Software and services
Health plan management
Health plan management
Data processing
Insurance software systems
Insurance software systems

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

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

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

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

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

During 2005, 2004 and 2003, the Company completed eight, four and
twelve acquisitions, respectively. Net cash paid for these acquisitions
was $440.3 million, $35.7 million and $702.8 million, respectively,
subject to certain adjustments. At December 31, 2005, the preliminary
purchase price allocation for the 2005 acquisitions resulted in goodwill
of approximately $374 million and other intangible assets of $83 million,
primarily related to customer base and software. The amounts allocated
to goodwill and intangible assets are based on preliminary estimates
and are subject to final adjustment. Pro forma information for 2005
is not being provided as the 2005 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 $54.5 million
through 2008, if certain of the acquired entities achieve specific
escalating operating income targets. The Company has recorded a
liability of $34.7 million at December 31, 2005 as an estimate of
the additional cash consideration to be paid. During 2005, as a
result of previously acquired entities achieving their operating
income targets, the Company paid additional cash consideration
of $69.3 million. The additional consideration was treated as
additional purchase price.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 7:48 AM Page 30

Notes

Notes continued

3. Long-Term Debt

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

The Company has available $700.0 million of unsecured credit and
commercial paper facilities with a syndicate of banks. The Company
had $308.2 million of outstanding indebtedness under the credit
and commercial paper facilities at December 31, 2005, with a
weighted-average variable interest rate of 4.8% and 2.8% at
December 31, 2005 and 2004, respectively. The credit facilities
consist of a $465.3 million five-year revolving credit facility, which
expires in March 2009, 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 under the facilities, maintain a minimum
net worth of $2.0 billion as of December 31, 2005 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 2005.

At December 31, 2005, the Company had cash flow interest rate
swap agreements to fix the interest rates on certain floating-rate
debt at a rate of approximately 5.0% (based on current bank fees
and spreads) for a notional amount of $150.0 million until
December 2008. 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
then current bank fees and spreads) for a notional amount of
$200.0 million until December 2005. The estimated fair values of
the Company’s cash flow hedges are $0.5 million and ($9.1) million
as of December 31, 2005 and 2004, respectively, and are included
in the accompanying consolidated balance sheets in prepaid
expenses and other assets in 2005 and accrued expenses in 2004
and as a component of accumulated other comprehensive income,
net of deferred taxes in both years.

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 5.1% at December 31,
2005. The estimated fair values of the fair value hedges are
($5.5) million and ($2.0) million as of December 31, 2005 and 2004,
respectively, and are included in the accompanying consolidated
balance sheets in accrued expenses and long-term debt.

(In thousands)

Bank notes and

commercial paper,
at short-term rates

3.0% senior notes

2005

Carrying
Value

Estimated
Fair Value

2004
Carrying Estimated
Fair Value

Value

$308,182 $308,182 $194,993 $194,993

payable, due 2008

99,945

94,375

99,922

95,877

4.0% senior notes

payable, due 2008

144,400

144,000

147,957

148,875

Other

42,858

42,516

62,455

62,837

Total long-term debt

$595,385 $589,073 $505,327 $502,582

Annual principal payments required under the terms of the long-
term debt agreements are as follows at December 31, 2005:

(In thousands)
Years ending December 31,
2006
2007
2008
2009
2010
TOTAL

4. Income Taxes

$ 14,186
5,466
264,092
311,638
3
$595,385

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

2005
35%

2004
35%

2003
35%

$286,283

$224,478

$177,193

25,863
–
(5,552)

22,983
(2,431)
1,438

19,047
–
1,204

TOTAL

$306,594

$246,468

$197,444

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/25/06 8:30 AM Page 31

Notes continued

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

(In thousands)
Current:

Federal
State
Foreign

Deferred:

Federal
State
Foreign

TOTAL

2005

2004

2003

$235,966
36,093
15,352

$181,981
34,148
7,317

$138,010
27,506
4,440

287,411

223,446

169,956

20,994
409
(2,220 )
19,183
$306,594

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

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

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

Net operating loss carryforwards
Other

Total deferred tax assets

2005

2004

$ 11,675

$ 10,137

17,990

30,976
5,437
9,133

75,211

22,461

26,667
2,932
16,913

79,110

Prepaid expenses
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

(8,059)

(4,940)

(44,812)
(20,101)
(148,876)
–
(19,355)

(241,203)
$(165,992)

(40,384)
(25,463)
(105,912)
(18,081)
(18,660)

(213,440)
$(134,330)

Tax benefits associated with the exercise of non-qualified employee
stock options were credited directly to additional paid-in capital
and amounted to $30.7 million, $11.3 million and $13.2 million in
2005, 2004 and 2003, respectively.

At December 31, 2005, the Company has state net operating loss
carryforwards of $46.2 million, with expiration dates ranging from
2006 through 2025, and foreign net operating loss carryforwards of
$8.0 million, with no expiration dates.

5. Employee Benefit Plans

STOCK OPTION AND RESTRICTED STOCK PLAN

The Company’s Stock Option and Restricted Stock Plan (the “Plan”)
provides for grants to the Company’s employees and directors of
restricted stock and either incentive or non-qualified options to
purchase shares of the Company’s common stock. The options are
granted at a price not less than 100% of the fair value of the shares
at the date of grant. For restricted stock, during the period of
restriction, the holder has voting rights and is entitled to receive
all distributions including dividends paid with respect to the stock.
At December 31, 2005, options to purchase 4.4 million shares were
available for grant under the Plan.

Changes in stock options outstanding are as follows:

Outstanding, December 31, 2002
Granted
Forfeited
Exercised

Outstanding, December 31, 2003
Granted
Forfeited
Exercised

Outstanding, December 31, 2004
Granted
Forfeited
Exercised

Outstanding, December 31, 2005

Number
of Shares
In thousands

Weighted-
Average
Exercise Price

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

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

11,560
1,789
(192)
(3,043)

10,114

$21.77
30.96
36.90
9.37

$24.21
38.19
36.19
12.42

$26.71
39.45
36.82
17.08

$31.67

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 7:48 AM Page 32

Notes

Notes continued

The number of shares under option that were exercisable at
December 31, 2005, 2004 and 2003 was 7.0 million, 8.5 million
and 8.2 million, at weighted-average exercise prices of $28.89,
$23.44 and $20.19, respectively. The following summarizes
information about the Company’s stock options outstanding
and exercisable at December 31, 2005:

Options
Outstanding

Options
Outstanding
and Exercisable

Range of
Exercise Prices
$ 7.85 - $16.00
16.01 - 30.95
30.96 - 37.00
37.01 - 38.15
38.16 - 39.40
39.41 - 46.09
$ 7.85 - $46.09

Number
of Shares

Weighted-
Average

In thousands Exercise Price

1,114
1,990
1,619
1,527
2,308
1,556
10,114

$13.86
21.16
31.55
37.05
38.40
42.69
$31.67

Weighted-Average
Remaining
Contractual Life
In years
1.7
3.7
7.2
5.1
8.7
7.0
5.9

Weighted-
Number Average
Exercise
of Shares
Price
In thousands
$13.86
1,114
21.01
1,948
31.27
851
37.04
1,506
38.50
643
41.63
912
$28.89
6,974

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 each of the years ended
December 31, 2005 and 2004, 0.6 million shares were issued under
the employee stock purchase plan. As of January 1, 2006, 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 $53.8 million,
$45.6 million and $44.3 million in 2005, 2004 and 2003, respectively.

6. Leases, Other Commitments and Contingencies

LEASES

The Company leases certain office facilities and equipment under
operating leases. Most leases contain renewal options for varying
periods. Future minimum rental payments on operating leases with
initial noncancelable lease terms in excess of one year were due as
follows as of December 31, 2005:

(In thousands)
Years ending December 31,
2006
2007
2008
2009
2010
Thereafter

TOTAL

$ 93,673
78,633
66,216
53,768
39,763
92,458
$424,511

Rent expense applicable to all operating leases was approximately
$113.8 million, $115.6 million and $111.2 million during the years
ended December 31, 2005, 2004 and 2003, respectively.

OTHER COMMITMENTS AND CONTINGENCIES

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
$39 billion in trust funds as of December 31, 2005. 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
$420 million and $90 million at December 31, 2005 and 2004,
respectively, and have not been included in the consolidated
financial statements. The increase in 2005 primarily relates to
government funds which will be paid out by the Company's flood
insurance claim processing business. The Company has purchase
obligations primarily related to agreements to purchase or
license data processing equipment and software for approximately
$60.2 million at December 31, 2005.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:42 AM Page 33

Notes continued

7. Business Segment Information

(In thousands)
2005
Processing and services
Product
Total revenues
Operating income
Identifiable assets
Capital expenditures, including

capitalization of software development
costs for external customers

Depreciation and amortization expense

2004
Processing and services
Product
Total revenues
Operating income
Identifiable assets
Capital expenditures, including

capitalization of software development
costs for external customers

Depreciation and amortization expense

2003
Processing and services
Product
Total revenues
Operating income
Identifiable assets
Capital expenditures, including

capitalization of software development
costs for external customers

Depreciation and amortization expense

Financial

Health

Investment

Total

$2,383,963
524,116
2,908,079
639,927
3,056,896

140,999
150,016

$ 2,226,137
476,599
2,702,736
563,645
2,501,855

143,958
154,558

$ 1,967,051
441,966
2,409,017
457,783
2,467,727

124,889
138,146

$ 373,181
643,810
1,016,991
80,434
749,548

13,764
17,414

$ 388,059
513,415
901,474
75,365
696,543

11,829
16,700

$ 337,063
62,673
399,736
47,472
598,163

10,141
11,852

$ 134,408
–
134,408
25,035
2,196,997

10,188
11,749

$ 125,536
–
125,536
20,550
2,142,773

5,306
14,105

$ 116,614
–
116,614
16,567
1,889,080

$2,891,552
1,167,926
4,059,478
745,396
6,003,441

164,951
179,179

$ 2,739,732
990,014
3,729,746
659,560
5,341,171

161,093
185,363

$ 2,420,728
504,639
2,925,367
521,822
4,954,970

4,081
15,840

139,111
165,838

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

2005

2004

$6,003,441

$5,341,171

36,075

–

290,661

2,751,517

$6,039,516

$8,383,349

The Company’s domestic operations comprised approximately 96%,
97% and 96% of total revenues for the years ended December 31,
2005, 2004 and 2003, respectively. No single customer accounted
for more than 3%, 2% and 3% of total revenues during the years
ended December 31, 2005, 2004 and 2003, respectively.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:42 AM Page 34

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

Discussion

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 under “Risk Factors” discussed in the Company’s
Annual Report on Form 10-K filed with the Securities and Exchange
Commission. Shareholders, potential investors and other readers are
urged to consider these factors carefully in evaluating the forward-
looking statements and are cautioned not to place undue reliance on
such forward-looking statements. 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. Revenues are primarily
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, which uses various
assumptions, at least annually or more frequently if circumstances
indicate possible impairment. 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

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:42 AM Page 35

Management’s Discussion continued

SFAS 123R in prior periods, the Company believes the impact of the
standard would have approximated the impact of SFAS No. 123,
“Accounting for Stock-Based Compensation” (“SFAS 123”) as
described in the “Stock-Based Compensation” disclosure in Note 1
to the consolidated financial statements. The incremental share-based
compensation expense under SFAS 123R is estimated to be in the
range of $0.09 to $0.11 per share in 2006. The ultimate impact of
adopting SFAS 123R on 2006's results of operations and financial
position will depend upon many factors including the level of stock-
based compensation granted in 2006, the fair value of those options
which will be determined at the date of grant, the level of
participation in the employee stock purchase plan, the related tax
benefits recorded and the diluted shares outstanding.

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. At December 31, 2005
mortgage-backed obligations have an average duration of approximately
three years and eight months with most of the remaining investments
having a maturity of one year or less. 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 45% of the Company's long-term
debt having fixed interest rates as of December 31, 2005. Based on
the Company’s long-term debt with variable interest rates as of
December 31, 2005, a 1% increase in the Company’s borrowing rate
would increase annual interest expense by approximately $3.3 million.
Based on the controls in place, management believes the risks
associated with financial instruments at December 31, 2005, will
not have a material effect on the Company’s consolidated financial
position or results of operations.

RESULTS OF OPERATIONS

Components of Revenue and Expenses
The following briefly describes the components of revenues
and expenses as presented in the consolidated statements
of income. A description of the Company’s revenue
recognition policies is included in Note 1 to the consolidated
financial statements.

Processing and Services
Processing and services revenues are primarily generated from
account and transaction-based fees under long term contracts,
generally three to five years. Revenue is recognized when the
related transactions are processed and services have been rendered.
Processing and services revenues are most reflective of the
Company’s core business performance as a significant amount of
the Company’s total operating profit is generated from these
services. Cost of processing and services includes costs directly
associated with providing services to clients and includes the
following: personnel, equipment and data communication,
infrastructure costs including costs to maintain applications,
customer support, depreciation and other operating expenses.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 7:48 AM Page 36

Discussion

Management’s Discussion continued

Product
Product revenue is primarily derived from the pharmacy businesses,
software license fees and integrated print and electronic
communications. A significant amount of product revenue is
derived from the Company’s pharmacy businesses within the Health
segment as the Company includes in both revenues and expenses
the prescription product costs associated with these businesses. The
Company does not manufacture or generally distribute prescription
product, but the Company is considered a principal under EITF 99-19,
as more fully described in Note 1 to the consolidated financial
statements and therefore, records these revenues and expenses on
a gross basis. Prescription product costs included in both product
revenues and cost of product were $540.0 million, $439.6 million
and $55.9 million in 2005, 2004 and 2003, respectively. Cost of
products, in addition to pharmacy product costs, include personnel
and other costs directly associated with product revenue.

The Company also includes customer reimbursements, such as
postage and telecommunication costs, in both processing and
services and product revenue and expense captions in the table
below in accordance with EITF 01-14. These costs, which are pass-
through expenses to clients included in both revenues and expenses
were $351.0 million, $379.2 million and $333.3 million in 2005,
2004 and 2003, respectively.

Selling, General and Administrative
Selling, general and administrative expenses primarily consist
of salaries, wages and related expenses paid to sales personnel,
administrative employees and management; advertising and
promotional costs; and other selling expenses.

The following table presents, for the periods indicated, certain amounts included in the Company’s consolidated statements of income,
the relative percentage that those amounts represent to 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.

Years Ended December 31,
(In millions)

Percentage (1)(2)
Years Ended December 31,

2005

2004

2003

2005

2004

2003

REVENUES:

Processing and services
Product

Total revenues

EXPENSES:

$2,891.6
1,167.9

$2,739.7
990.0

$2,420.7
504.6

71%
29%

$4,059.5

$3,729.7

$2,925.4

100%

Cost of processing and services (1)
Cost of product (1)

Sub-total (2)
Selling, general and administrative (2)

$1,855.2
942.7

2,798.0
516.1

$1,822.7
796.0

2,618.7
451.5

$1,659.9
351.4

2,011.3
392.2

Total expenses (2)

$3,314.1

$3,070.2

$2,403.5

OPERATING INCOME (2)

$ 745.4

$ 659.6

$ 521.8

64%
81%

69%
13%

82%

18%

73%
27%

100%

67%
80%

70%
12%

82%

18%

83%
17%

100%

69%
70%

69%
13%

82%

18%

(1) Each percentage equals the relevant expense amount divided by the related component of total revenues.
(2) Each percentage equals the relevant expense or operating income amount divided by total revenues.

Percentage
Increase

2005
vs.
2004

2004
vs.
2003

6%
18%

2%
18%

7%
14%

13%

13%
96%

27%

10%
127%

30%
15%

28%

26%

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:42 AM Page 37

Management’s Discussion continued

Total Revenues
Total revenues increased $329.7 million, or 9%, in 2005 compared to
2004 and $804.4 million, or 27%, in 2004 compared to 2003. The
internal revenue growth rate was 7% in 2005 and 10% in 2004 with
the remaining growth resulting from acquisitions, which had a much
greater impact on 2004 revenue growth than 2005. Overall internal
revenue growth is primarily derived from sales to new clients, cross-
sales to existing clients and increases in transaction volumes from
existing clients. The decrease in the total revenue growth rate for the
Company in 2005 compared to 2004 was primarily due to slower
revenue growth in the Company's Health segment.

Processing and services revenues increased 6% in 2005 compared to
13% in 2004 and product revenues increased 18% in 2005 compared
to 96% in 2004. Revenue increases in both of these captions were
greater in 2004 than 2005 primarily driven by a more significant
impact of acquisitions in 2004. Product revenues are impacted
significantly on a year over year basis by the inclusion of prescription
product costs in the Health segment's revenues and expenses of
$540.0 million, $439.6 million and $55.9 million in 2005, 2004 and
2003, respectively.

Processing and services revenues were positively impacted by early
contract termination and assignment fees of $57.9 million,
$36.4 million and $9.8 million in 2005, 2004 and 2003, respectively.
The financial segment businesses generally enter into three to five
year contracts with clients that contain early contract termination
fees. These fees are generated when an existing client is acquired by
another financial institution and can vary significantly from period to
period based on the number and size of clients that are acquired and
how early in the contract term a client is acquired.

Total Expenses
Total expenses increased $243.9 million, or 8%, in 2005 compared to
2004 and $666.6 million, or 28%, in 2004 compared to 2003. The
significant increase in 2004 expenses was driven by the significant
increase in prescription product costs. Total expenses as a percentage

of total revenues were 82% in 2005, 2004 and 2003. Cost of
processing and services as a percentage of processing and services
revenues declined over the last 3 years from 69% of processing and
services revenues in 2003 to 64% in 2005 due to a number of factors
including: changes in the mix of the Company's businesses due to
acquisitions, the impact of operating efficiencies generated from the
consolidation of bank and EFT processing platforms within the
Company's Financial segment and revenue associated with a higher
amount of contract termination fees that do not result in any
significant incremental cost. Cost of product has increased as a
percentage of product revenue from 70% in 2003 to 81% in 2005,
primarily driven by the significant increase in prescription product
costs. Selling, general and administrative expenses have remained
relatively consistent as a percentage of total revenues in 2005, 2004
and 2003.

Operating Income and Operating Margin
Operating income increased $85.8 million, or 13%, in 2005 compared
to 2004 and $137.7 million, or 26%, in 2004 compared to 2003.
Operating income increases in 2004 were greater than 2005 primarily
due to a greater impact of acquisitions in 2004 than 2005. The
operating income increases were primarily derived from the Financial
segment, which increased operating income $76.3 million in 2005
and $105.9 million in 2004 compared to prior years. Operating
margins were relatively consistent on a year over year basis and were
positively impacted by a higher operating margin on processing and
services revenue and negatively impacted by reduced product margin
due to the increase of prescription product costs over the last 3 years.
The negative impact on operating margins due to the inclusion of
prescription product costs in revenue and expense was 3 percentage
In addition,
points in 2005 and 2 percentage points in 2004.
the inclusion of customer reimbursements of $351.0 million,
$379.2 million and $333.3 million in 2005, 2004 and 2003,
respectively, in both revenue and expense, had a negative impact on
operating margins of 2 percentage points in 2005, 2004 and 2003.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 8:50 AM Page 38

Discussion

Management’s Discussion continued

SEGMENT RESULTS

The Company provides information management systems and services to the financial and health benefits industries, including transaction processing
outsourcing, business process outsourcing and software and systems solutions. 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”). Adjusted revenues presented in this table exclude the revenues associated with customer reimbursements and the pass-
through portion of the prescription product costs since both of these items offset in revenues and expenses. Adjusted revenue is a non-GAAP financial
measure that the Company believes is useful to investors because it provides a measurement of growth excluding pass-through revenue and expense
as management does not believe these items are necessarily an indicator of the Company’s current or future performance. Adjusted revenues as
calculated by the Company is not necessarily comparable to similarly titled measures presented by other companies.

Revenue (In millions)

Health

Investment

Total

Years Ended December 31,
2005
Total revenues
Less:
Customer reimbursements
Prescription product costs
Adjusted revenues

2004
Total revenues
Less:
Customer reimbursements
Prescription product costs
Adjusted revenues

2003
Total revenues
Less:
Customer reimbursements
Prescription product costs
Adjusted revenues

Total Revenue growth: (1)
2005
2004

Adjusted Revenue growth: (1)
2005
2004

Financial

$2,908.1

345.3
–
$2,562.8

$ 2,702.7

363.6
–
$ 2,339.1

$ 2,409.0

332.6
–
$ 2,076.4

8%
12%

10%
13%

$1,017.0

5.8
540.0
$ 471.2

$ 901.5

15.6
439.6
$ 446.3

$ 399.7

0.7
55.9
$ 343.2

13%
126%

6%
30%

$134.4

–
–
$134.4

$125.5

–
–
$125.5

$116.6

–
–
$116.6

7%
8%

(1) Represents total and adjusted revenue growth over the prior year period.

Years Ended December 31,
Operating income:
2005
2004
2003

Operating Income Growth: (1)
2005
2004

Operating Margin:
2005
2004
2003

Financial

Health

Investment

Operating Income (In millions)

$639.9
563.6
457.8

14%
23%

22%
21%
19%

$80.4
75.4
47.5

7%
59%

8%
8%
12%

$25.0
20.6
16.6

22%
24%

19%
16%
14%

(1) Represents operating income growth over the prior year period.

Fiserv, Inc. and Subsidiaries

$4,059.5

351.0
540.0
$3,168.4

$ 3,729.7

379.2
439.6
$ 2,911.0

$ 2,925.4

333.3
55.9
$ 2,536.2

9%
27%

9%
15%

Total

$745.4
659.6
521.8

13%
26%

18%
18%
18%

Body-Pgs 17-50 3/23/06 7:48 AM Page 39

Management’s Discussion continued

INTERNAL REVENUE GROWTH

Internal revenue growth percentages are measured as the increase or decrease in total revenues for the current period less "acquired revenue from
acquisitions" divided by total revenues from the prior year period plus "acquired revenue from acquisitions." "Acquired revenue from acquisitions"
represents pre-acquisition revenue of acquired companies, less dispositions, for the comparable prior year period. 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:

TOTAL COMPANY:
Total revenues
Acquired revenue from acquisitions
Total
Internal revenue growth percentages:
Total revenues
Adjusted revenues (1)

BY SEGMENT:

FINANCIAL
Total revenues
Acquired revenue from acquisitions
Total
Internal revenue growth percentages:
Total revenues
Adjusted revenues (1)

HEALTH
Total revenues
Acquired revenue from acquisitions
Total
Internal revenue growth percentages:
Total revenues
Adjusted revenues (1)

INVESTMENT
Total revenues
Internal revenue growth percentages
Total revenues

Years Ended December 31,
(In millions)

2005

2004

Increase
(Decrease)

Years Ended December 31,
(In millions)

2004

2003

Increase
(Decrease)

$4,059.5

$3,729.7
67.5
$3,797.2

$329.7
(67.5)
$262.2

$3,729.7

$2,925.4
456.0
$3,381.4

$804.4
(456.0)
$348.4

7%
7%

10%
4%

$2,908.1

$2,702.7
45.7
$2,748.5

$205.3
(45.7)
$159.6

$2,702.7

$2,409.0
206.1
$2,615.1

$293.7
(206.1)
$ 87.6

6%
7%

3%
2%

$1,017.0

$ 901.5
21.7
$ 923.2

$115.5
(21.7)

$ 93.8

$ 901.5

$ 399.7
249.9
$ 649.6

$501.7
(249.9)
$251.9

10%
3%

39%
10%

$ 134.4

$ 125.5

$ 8.9

$ 125.5

$ 116.6

$ 8.9

(1) Adjusted revenue growth is calculated based on adjusted revenues excluding customer reimbursements and prescription product pass-through
costs. Acquired revenues in the Health segment include prescription product costs of $11.1 million and $186.8 million in 2004 and 2003, respectively.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:42 AM Page 40

Discussion

Management’s Discussion continued

Financial
The Financial segment increased total revenues by $205.3 million, or
8%, in 2005 and $293.7 million, or 12%, in 2004. The internal
revenue growth rate in the Financial segment was 6% in 2005 and
3% in 2004 with the remaining growth resulting from acquisitions.
Adjusted internal revenue growth, excluding the impact of customer
reimbursements, was 7% in 2005 and 2% in 2004. The largest
contributors to the 2005 internal revenue growth rate in this segment
were increased volumes and new clients in the lending division's loan
settlement and loan servicing businesses, increased revenue
associated with new client growth and cross sales in the bank and
credit union operations, incremental revenue associated with the
Australian check processing business that began operations in mid-
April 2005, higher than normal revenues associated with flood
insurance claims processing and an increase in contract termination
fees over those received in 2004.

Operating margins in the Financial segment were 22% in 2005, 21%
in 2004 and 19% in 2003. Operating margins in 2005 were
positively impacted by 60 basis points over 2004 due to an increase
in contract termination fees of $21.5 million compared to 2004. 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 contract termination and
assignment fees of $26.6 million or 80 basis points. Customer
reimbursements negatively impacted operating margins in the
Financial segment by approximately 3 percentage points in 2005,
2004 and 2003.

Health
The Health segment had revenue growth of $115.5 million, or 13%,
in 2005 compared to 2004 and $501.7 million, or 126%, in 2004
compared to 2003. The internal revenue growth rate in this segment
was 10% in 2005 and 39% in 2004 with the remaining growth from
acquisitions. Adjusted internal revenue growth, excluding the impact
of prescription product and other customer reimbursement costs, was
3% in 2005 and 10% in 2004. The decrease in the 2005 internal

revenue growth rate compared to 2004 was primarily due to
significant growth of the Company's pharmacy businesses in early
2004 based on the signing of some large clients. In addition, growth
of the health plan administration businesses in 2005 was negatively
impacted by increased competition in the large commercial employer
market.

Operating margins in the Health segment were 8% in 2005 and
2004 and 12% in 2003. The decrease in operating margins in the
Health segment in 2005 and 2004 compared to 2003 was due
to the Company's entrance into the pharmacy business in mid-2003
and significant revenue growth in this business, which generates
operating margins in the mid-single digits due to the inclusion
of prescription product costs in revenues and expenses. Prescription
product costs negatively impacted operating margins in the
Health segment by approximately 9 percentage points in 2005
and 8 percentage points in 2004.

Investment
The Investment segment had revenue growth of $8.9 million in 2005
and 2004, representing revenue growth of 7% and 8%, respectively.
Revenue growth was primarily derived from continued new client
growth. Operating margins in the Investment segment were 19%
in 2005, 16% in 2004 and 14% in 2003. The increase in operating
margin in 2005 compared to the prior periods was primarily due
to a temporary increase in cash investment balances in 2005 that
improved net investment income. The 2004 increase in operating
margins over 2003 was primarily due to increased trust
administration fees and investment income and the completion
of the Investment segment’s consolidation to one technology
platform and into a single location.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:42 AM Page 41

Management’s Discussion continued

DISCONTINUED OPERATIONS

INTEREST INCOME

In 2005, interest income was $13.6 million compared to
$6.7 million in 2004 and $7.3 million in 2003. The increase in
2005 was primarily due to interest income earned on increased
cash balances in 2005 resulting from the proceeds received on
the sale of the securities clearing businesses.

REALIZED GAIN FROM SALE OF INVESTMENTS

In 2005, the Company recorded a pre-tax realized gain of
$43.5 million, or $0.14 per share after tax, from the sale of its
remaining ownership of 3.2 million shares of Bisys Group, Inc.
common stock. In addition, the Company sold its investment
in INTRIA Items, Inc. to its partner, Canadian Imperial Bank of
Commerce (CIBC), recognizing a pre-tax gain of $43.4 million,
or $0.15 per share after tax, subject to post-closing adjustments.
CIBC decided to purchase the Company’s share as a part of its
ongoing reorganization of the bank’s Canadian retail network
and supporting back-office operations.

INCOME TAX PROVISION

The effective income tax rate on continuing operations was 37.5%
in 2005, 38.4% in 2004 and 39.0% in 2003. The decrease in the
2005 tax rate was primarily due to a lower tax rate on the sale of
its investments mentioned previously and certain one-time tax
benefits associated with a number of factors including tax law
changes, tax audits closing and finalization of various tax returns.
The income tax rate on continuing operations for 2006 is expected
to be 38.7%.

On March 24, 2005, the Company completed the sale of its
securities clearing businesses to Fidelity Global Brokerage Group,
Inc. for $344.9 million paid in cash at closing, subject to certain
post-closing adjustments. Prior to completion of the sale, the
securities clearing businesses paid a $68.0 million cash distribution
to the Company. The sales proceeds, net of related expenses,
including taxes that became due upon the sale of the securities
clearing businesses, approximated the Company’s carrying value
of its investment. In 2005, the Company recorded a net loss on
the sale of discontinued operations of $0.4 million, net of related
income taxes of $48.7 million. The higher income tax expense on
the sale of the securities clearing operations was primarily due to
a significantly lower tax basis than book basis in the discontinued
operations due primarily to a tax free exchange in the Company’s
initial purchase of one of the companies included in discontinued
operations. The stock purchase agreement also provides for a
contingent payment of up to $15.0 million to be paid after the first
anniversary of the closing date based on achievement of certain
revenue targets. In addition, the stock purchase agreement
provided that the Company retained the liability associated with
the SEC investigation of the Company’s former subsidiary, Fiserv
Securities, Inc. (“FSI”). In April 2005, FSI settled with the SEC on
this matter for $15.0 million, which was fully accrued for in the
Company’s 2004 financial statements. During 2005, the Company
recorded $0.03 per share in diluted earnings in discontinued
operations primarily as a result of favorable resolutions of income
tax uncertainties.

In the third quarter of 2005, the Company received an
indemnification notice under the stock purchase agreement
regarding FSI’s past maintenance of certain documentation related
to FSI’s introducing broker dealers’ customers. The Company is
currently investigating the merits of this matter and is unable to
estimate or predict the ultimate outcome or determine whether this
matter will have a material adverse impact on the Company’s
discontinued operations’ results.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:42 AM Page 42

Discussion

Management’s Discussion continued

Free cash flow decreased by $105.1 million in 2005 compared to
2004 primarily due to higher estimated tax payments made in 2005
compared to 2004 resulting in a negative impact of $48.9 million
on free cash flow and an increase in accounts receivable resulting
in a negative impact on free cash flow of $64.2 million compared
to 2004. The increase in accounts receivable was primarily due to
increased internal revenue growth in the Financial segment and
no further improvements relating to the significant improvements
made in prior years in receivable collections and days sales
outstanding. In 2005, the Company primarily used its free cash flow
of $432.2 million, cash of $282.2 million received from the sale of
the securities businesses and the $68.0 million cash distribution
received from the discontinued operations prior to its sale to fund
acquisitions of $509.6 million and to repurchase $652.6 million
of stock.

Long-term debt includes $308.2 million borrowed under the
Company’s $700.0 million credit and commercial paper facilities,
which are 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 under the facilities, maintain
a minimum net worth of $2.0 billion as of December 31, 2005
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, 2005, the Company had
$595.4 million of long-term debt, while shareholders’ equity
was $2.5 billion. The Company was in compliance with all debt
covenants throughout 2005.

NET INCOME PER SHARE - DILUTED

Net income per share-diluted for 2005 was $2.70 compared to
$1.91 in 2004 and $1.61 in 2003. Net income per share-diluted
from continuing operations for 2005 was $2.68 compared to
$2.00 in 2004 and $1.58 in 2003. The $2.68 in net income from
continuing operations per share for 2005 was positively impacted
by $0.29 per share due to the realized gain on sale of investments
and $0.07 per share from an increase in contract termination fees
in 2005 compared to 2004.

Historically, 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 and existing operations
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.

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)

2005

2004

2003

Net cash provided by

operating activities from
continuing operations

Capital expenditures,

including capitalization
of software costs for
external customers

$597.1

$698.4

$595.7

(165.0 )

(161.1)

(139.1 )

Free cash flow

$432.2

$537.3

$456.6

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:42 AM Page 43

Management’s Discussion continued

OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL

OBLIGATIONS

The Company does not have any material off-balance sheet
arrangements. Purchase obligations primarily relate to agreements
to purchase or license data processing equipment and software.
The following table details the Company’s contractual cash
obligations at December 31, 2005:

(In millions)

Total

Less
than
1 year

1-3
years

3-5
years

More
than
5 years

Long-term debt

$ 595.4

$ 14.2 $269.6

$311.6

–

Minimum operating
lease payments

Purchase obligations

424.5

60.2

93.7

20.1

144.8

39.2

93.5

$92.5

0.9

–

TOTAL

$1,080.0

$128.0 $453.6

$406.1

$92.5

At December 31, 2005, the Company had operating lease
commitments for office facilities and equipment aggregating
$424.5 million, of which $93.7 million will be incurred in 2006.
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 in 2006. At December 31, 2005, the Company had
$398.8 million available for borrowing and $184.5 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.
In 2004, the Company’s Board of Directors authorized the
repurchase of 8.3 million shares of the Company's common stock
which the Company fully utilized by December 31, 2005. In July
2005, the Company’s Board of Directors authorized the repurchase
of an additional 10.0 million shares of the Company’s common
stock. During 2005, the Company repurchased 15.2 million shares
for $652.6 million and as of December 31, 2005, 3.1 million shares
remained authorized for repurchase under the current stock buy
back plan. On February 21, 2006, the Board of Directors authorized
the repurchase of up to 10.0 million additional shares of the
Company’s common stock. Shares purchased under the existing
authorizations 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.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:42 AM Page 44

Selected Data

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,

Total 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

Total assets
Long-term debt
Shareholders’ equity

2005

$4,059,478
511,357

5,081
516,438

$2.71
0.03
$2.74

$2.68
0.03
$2.70

2004

$3,729,746
394,898

2003

$2,925,367
308,823

2002

$2,389,392
259,331

2001

$2,023,776
198,676

(17,256 )
377,642

6,189
315,012

6,806
266,137

9,541
208,217

$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

$6,039,516
595,385
2,465,740

$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

Market Price

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

2005

2004

March 31

June 30

September 30

December 31

$40.58 $36.33

$40.61 $35.02

44.25

38.94

41.00

34.10

46.85

42.06

39.05

32.20

46.89

41.05

41.01

33.28

At December 31, 2005, the Company’s common stock was held by
10,353 shareholders of record. It is estimated that an additional
69,000 shareholders own the Company’s stock through nominee or
street name accounts with brokers. The closing sale price for the
Company’s stock on February 28, 2006, was $41.50 per share.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 9:17 AM Page 45

Quarterly Data

Quarterly Financial Information (Unaudited)

(In thousands, except per share data)
2005
Total revenues
Total expenses
Operating income
Interest expense - net
Realized gain from sale of investments
Income from continuing operations

before income taxes
Income tax provision
Income from continuing operations
Income (loss) 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

$973,114
785,098
188,016
(3,662 )
43,452

227,806
88,161
139,645

$996,426
809,181
187,245
(1,280 )
–

185,965
71,968
113,997

$1,011,645
840,126
171,519
(3,429 )
–

168,090
58,751
109,339

$1,078,293
879,677
198,616
(5,896 )
43,370

236,090
87,714
148,376

$4,059,478
3,314,082
745,396
(14,267 )
86,822

817,951
306,594
511,357

(619 )
$139,026

–
$113,997

3,600
$ 112,939

2,100
$ 150,476

5,081
$ 516,438

$0.72
–
$0.72

$0.71
–
$0.71

$0.60
–
$0.60

$0.59
–
$0.59

Quarters

$0.58
0.02
$0.60

$0.81
0.01
$0.82

$0.80
0.01
$0.81

$2.71
0.03
$2.74

$2.68
0.03
$2.70

(In thousands, except per share data)

First

Second

Third

Fourth

Total

2004
Total revenues
Total expenses
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

$ 908,877
747,539
161,338
(4,732)

156,606
60,897
95,709

$ 919,773
757,861
161,912
(4,486)

157,426
61,331
96,095

934,692
760,994
173,698
(4,395)

169,303
65,008
104,295

966,404
803,792
162,612
(4,581)

158,031
59,232
98,799

$3,729,746
3,070,186
659,560
(18,194)

641,366
246,468
394,898

(2,911)
$ 92,798

(1,061)

$ 95,034

(11,938)
92,357

(1,346)
97,453

(17,256)
$ 377,642

$0.49
(0.01)
$0.48

$0.49
(0.01)
$0.47

$0.49
(0.01)
$0.49

$0.49
(0.01)
$0.48

$0.53
(0.06)
$0.47

$0.51
(0.01)
$0.50

$0.50
(0.01)
$0.49

$2.03
(0.09)
$1.94

$2.00
(0.09)
$1.91

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 7:48 AM Page 46

Report

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF FISERV, INC.

We have audited the accompanying consolidated balance sheets of Fiserv, Inc. and subsidiaries (the “Company”) as of December 31, 2005 and 2004, and the
related consolidated statements of income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2005. 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, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005,
in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1, during 2005 the Company revised the format of its statement of income. All prior periods have been revised to be consistent with
the 2005 presentation. This revision to the income statement presentation did not impact previously reported total revenues, total expenses, operating income,
net income or net income per share. In addition, as also discussed in Note 1, in 2005, the Company revised its presentation of the statements of cash flows
to present separate disclosure of the cash flows from operating, investing and financing activities of the discontinued operations and has revised the statements
of cash flows for the years ended December 31, 2004 and 2003.

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, 2005, based on the criteria established in Internal Control - Integrated Frameworkissued by the Committee
of Sponsoring Organizations of the Treadway Commission and our report dated March 13, 2006 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
March 13, 2006

Management’s Annual Report on Internal Control over Financial Reporting

Report

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, 2005.
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, 2005, 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.

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/23/06 7:48 AM Page 47

Report

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS 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 internal control over financial reporting as of December 31, 2005, based on criteria
established in Internal Control - Integrated Frameworkissued 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, 2005, is
fairly stated, in all material respects, based on the criteria established in Internal Control - Integrated Frameworkissued by the COSO. Also, in our opinion,
the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on the criteria
established in Internal Control - Integrated Frameworkissued 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, 2005 of the Company and our report dated March 13, 2006 expressed an unqualified opinion on
those financial statements (which report includes an explanatory paragraph relating to revisions to the income statement and statement of cash flows
presentation as described in Note 1).

Deloitte & Touche LLP
Milwaukee, Wisconsin
March 13, 2006

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/25/06 9:24 AM Page 48

Directors

Board of Directors

Donald F. Dillon
65, 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.

Glenn M. Renwick
50, 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.

Kenneth R. Jensen
62, 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
66, Financial Consultant. With more than 30 years in the banking,
insurance and legal professions, Mr. Kearney has served as a
Director since 1999.

Kim M. Robak
50, Partner at Ruth, Mueller & Robak, LLC. With more than 20 years
of experience in the fields of law, education and public service,
Ms. Robak has served as a director since 2003.

L. William Seidman
84, 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. Seidman
has served as a Director since 1992.

Gerald J. Levy
73, 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.

Thomas C. Wertheimer
65, Financial Consultant. With more than 35 years in the financial
services profession, Mr. Wertheimer has served as a director
since 2003.

Leslie M. Muma
61, Retired 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.

Jeffery W. Yabuki
46, President and Chief Executive Officer of Fiserv, Inc. With nearly
20 years in the financial services industry, Mr. Yabuki joined Fiserv
and its Board of Directors in 2005.

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

Fiserv, Inc. and Subsidiaries

Body-Pgs 17-50 3/21/06 2:33 PM Page 49

Executive

Executive Committee

Norman J. Balthasar
59, 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.

Jeffery W. Yabuki
See Board of Directors for profile.

Management Committee

Robert H. Beriault
54, 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
57, 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
42, 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
59, 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
52, 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
55, Group President, Marketing & Sales. With nearly 30 years
in the data processing industry, Mr. Schmelzer has been with
Fiserv since 1992.

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

Gordon L. Schroeder
57, Executive Vice President, Human Resources. With more than 20
years in the financial services industry, Mr. Schroeder joined Fiserv
in 2005.

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

Michael D. Gantt
54, 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.

Arun Maheshwari
61, President, Fiserv Global Services. With more than 30 years in the
financial services industry, Mr. Maheshwari joined Fiserv in 2005.

Charles W. Sprague
56, Executive Vice President, General Counsel, Secretary & Chief
Administrative Officer. With more than 30 years in the legal
profession and the financial services industry, Mr. Sprague has
been with Fiserv since 1984.

Terry R. Wade
46, 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

Body-Pgs 17-50 3/21/06 2:33 PM Page 50

Leadership

Executive Leadership

Bank Servicing &
ePayments Group
Grant P. Christenson, 54
Chief Executive Officer, Fiserv EFT
Paul A. Frank, 63
President, ePayments
Max S. Narro, 43
President, Credit Processing
Services
Michael J. Rigney, 55
President, Fiserv VISION
Scott Walker, 50
President, BillMatrix

Bank Systems Group
Anthony S. Catalfano, 42
President, Fiserv CBS
Worldwide/SourceOne Division
James T. Cross, 42
President, ITI Outsourcing –
Central Region
Thomas M. Cypher, 55
President, CEO & COO,
Information Technology, Inc.
Thomas Dackow, 63
President, Interactive
Technologies
Julie Gabelmann, 50
President, Bank Products
Division
William A. Fontaine, Jr., 49
President, Houston ITI/CF
Gary J. Kasik, 49
President, BANKLINK
Sam L. Langham, 48
President, Los Angeles ITI
James A. LeVan, 63
President, Glastonbury ITI
Craig R. Marvin, 53
President, Des Moines ITI
Donald J. Phillips, 57
President, Atlanta ITI
Regis G. Rapp, 47
President, Customer Centered
Solutions
Dave W. Santi, 45
President, CBS USA & SourceOne
Frank M. Smeal, 63
President, ITI Outsourcing
Ronald E. Thompson, 58
President, Fiserv ImageSoft
David E. Ulrich, 49
President, IPS-Sendero
Michael K. Young, 50
President, Fiserv ITI Division

Lending Solutions Group
Stuart H. Angert, 64
President, Fiserv Automotive
Solutions
Paul E. Brammeier, 63
President, CredStar
Kevin J. Collins, 48
Chief Executive Officer, Fiserv
Automotive Solutions
Thomas J. Gorman, 53
President, Loan Servicing
Products
Leslie J. Howlett, 47
President & COO, Fulfillment
Services
David W. Price, 58
President, Technology Services
Andrew J. Shaevel, 41
President & Chief Executive
Officer, RSA Solutions
Gerald A. Smith, 59
Co-Chief Executive Officer,
Fulfillment Services Division
Richard A. Snedden, 52
Co-Chief Executive Officer,
Fulfillment Services Division
John R. Tenuta, 58
Division President, Loan
Management Products
John F. Walsh, 45
President, Del Mar Database

Credit Union & Industry
Products Group
Joseph A. Antellocy, 46
President, AFTECH
Joseph A. Barry, 52
President, Credit Union Eastern
Region
Jeffery S. Butler, 43
President, IntegraSys
Dennis L. Connick, 57
President, CUSA
Jorge M. Diaz, 41
President, Personix
John A. Edwards, 59
President, XP Systems
Richard P. Fitzgerald, 56
President, Fiserv DirectSource
Roger L. Kuhns, 58
President, Credit Union
Western Region
Timothy M. Milz, 43
President, GalaxyPlus

John N. Schooler, 51
President, USERS
Kevin L. Sparks, 49
President, Summit

Insurance Solutions
Group
Paul Peterson, 45
President, Emerald Publications
William E. Jerro, 34
President, ReliaQuote
P. Michael Jones, 56
President, Flood Insurance Division
Robert Meyerson, 59
President, Fiserv FSC
Anthony T. Perdichezzi, 58
President, Fiserv Insurance
Solutions
John M. Schobel, 57
President, RegEd

Investment Support
Services Group
Robert H. Beriault, 54
President, Investment Support
Services

Item Processing Group
Kenneth R. Acheson, 57
Division President, Fiserv
Solutions of Canada
Therese K. Carstensen, 50
Division President, U.S. Operations
Frank E. Eisel, Jr., 48
Chief Technology Officer
Richard J. Franas, 57
President, Northern Trust
Operations
Guy J. Fries, 48
President, IP Operations
Southern Region
W. David Hamilton, 54
President, IP Operations Central
Region
Norman S. Himes, 62
National Product Delivery Executive
Douglas Kabel, 59
President, JPM Chase Operations
Robert F. McPherson, 59
President, IP Operations Eastern
Region
Anna M. Quinlan, 54
President, RemitStream
Thomas R. Taylor, 58
Executive Vice President,
Consultant Services

Kenneth P. True, 41
President, Australian Operations
Stephen J. Ward, 53
Division President, Market
Development & Product Delivery

Fiserv Health Group
Jay M. Anliker, 44
President, Health Plan Services
Division
Mark Campbell, 44
President, Pharmacy Services
Division
Joseph A. Hensley, 51
President, Workers
Compensation Services Division
William A. Howard, 51
Executive Vice President
Jeffrey D. Mills, 46
President, Fiserv Health Third
Party Administration
Elaine H. Mischler, M.D., 62
Chief Medical Officer
Alfred P. Moore, 60
Chief Operating Officer
Connie Schweyen, 50
President, Fiserv Health Plan
Management
Bryan L. Troyer, 41
President, Fiserv Health Specialty
Services

Fiserv Global Services
Arun Maheshwari, 61
President, Fiserv Global Services

Corporate Management
Brian D. Brunner, 49
Division President, Bank Sales
Christina Slemon-Dokos, 50
Corporate Senior Vice President,
Marketing
Thomas J. Hirsch, 42
Corporate Senior Vice President,
Controller
Daniel F. Murphy, 56
Corporate Senior Vice President,
Director of Audit
Daniel C. Pyzik, 53
Corporate Senior Vice President,
Telecommunications
Thomas E. Wachtl, 52
Corporate Senior Vice President,
Product and Technology
Nancy H. Wedelstaedt, 41
Corporate Senior Vice President, Tax

Fiserv, Inc. and Subsidiaries

Strength in Leadership

About the Cover

Corporate Headquarters
Fiserv, Inc.
255 Fiserv Drive
Brookﬁ eld, Wisconsin 53045
(262) 879-5000

Web site
http://www.ﬁ serv.com

Investor Relations
(800) 425-FISV

Information
Information

Corporate Information

Shareholder Information
Copies of the company’s 10-K and 10-Q reports as ﬁ led with the
Securities and Exchange Commission are available on request
from the company.

Visit our Web site, www.ﬁ serv.com, for updated news releases,
stock performance, ﬁ nancial reports, conference call Webcasts,
SEC ﬁ lings, corporate governance and other investor information.

Stock Listing and Symbol
Nasdaq National Market System
Symbol: FISV

Transfer Agent
Computershare Trust Company, N.A.
P.O. Box 43069
Providence, Rhode Island 02940-3069
(800) 446-2617
www.computershare.com

Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Milwaukee, Wisconsin

Cover 2

3/23/06 7:21:04 AM

2
0
0
5
A
n
n
u
a
l

R
e
p
o
r
t

F
i
s
e
r
v
,

n
c
.

Strength in Leadership

Annual Report 2005

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

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

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

Cover 1

3/23/06 7:20:41 AM