Fiserv reports net income fall; board approves 10 million share buyback

Total revenues increased 11% to $1.2 billion for the fourth quarter and were up 12% to $4.5 billion for the full year 2006.

Earnings per share for the fourth quarter and full year were $0.61 and $2.53, respectively, for 2006, and were $0.81 and $2.70, respectively, for 2005. Fourth quarter adjusted earnings per share from continuing operations increased 19% to $0.64. For the full year, adjusted earnings per share from continuing operations increased 16% to $2.53.

"Our fourth quarter results were consistent with our expectations and capped a strong year for the Company," said Jeff Yabuki, president and chief executive officer of Fiserv. "In 2006, we delivered solid financial results, improved operating margins, and returned $560 million to our shareholders over the course of the year through our share buyback plan.

"In addition, we made progress against our long-term strategic priorities, which will better position us to increase value, opportunity and growth for our stakeholders," Yabuki added. "As the client-centric initiatives of Fiserv 2.0 take hold, we will begin to realize the incremental growth and stronger financial performance that underpin our long-term plans."

BOARD APPROVES NEW SHARE BUYBACK AUTHORIZATION

Fiserv announced today that its board of directors authorized the repurchase of an additional 10 million shares of its common stock. Under this new authorization, which does not expire, Fiserv may repurchase shares in the open market or in privately negotiated transactions at the discretion of management, subject to its assessment of market conditions and other factors. The company expects to hold common stock acquired through the program for issuance in connection with acquisitions or pursuant to Fiserv's equity plans and for other corporate purposes. Fiserv has completed its repurchase activity from previous authorizations.

"In addition to investing internally and pursuing high-quality acquisitions, we will continue to utilize share repurchase as an important element of our plan to deliver long-term value for shareholders," said Yabuki.

INSURANCE AND HEALTH BUSINESSES FORM A NEW REPORTING SEGMENT

Fiserv re-aligned its reporting segments based on organizational changes announced in the fourth quarter. The newly created Insurance Services (Insurance) segment includes the insurance businesses that provide a broad array of technology solutions primarily for life insurance and property and casualty insurance companies. These businesses had previously been part of the Financial Institution Services (Financial) segment. Additionally, the new segment includes the businesses which comprised the former Health Plan Management Services (Health) segment.

"An important objective of our long-term strategy is to bring high-value solutions to the broad-based insurance market," said Yabuki. "Our new organization approach is to provide integrated, technology-based solutions to each of the three main areas of the insurance industry - health, life, and property and casualty. We are uniquely suited to deliver comprehensive and market-leading value to the entire insurance industry."

In connection with this change, the company has provided a two-year historical re-classification of financial information by reporting segment, along with separately noted fourth quarter results for the former Health segment. (See pages 14-16 for details.)

OTHER BUSINESS AND OPERATING HIGHLIGHTS FOR THE QUARTER AND YEAR

• Financial segment adjusted operating income was up 20 percent to $150 million in the fourth quarter versus $126 million in the fourth quarter of 2005;
• Fourth quarter adjusted operating margin in the Financial segment improved 250 basis points to 23.6 percent in 2006 compared with 21.1 percent in 2005;
• Cash flow from operations increased to $635 million in 2006 from $601 million in 2005. Capital expenditures were $187 million in 2006 versus $165 million in 2005;
• The company repurchased 2.9 million shares of its common stock in the fourth quarter at an average price of $51.41 and a total of 12.7 million shares during 2006;
• The Fiserv Clearing Network (FCN) continued its strong growth, adding 84 new clients in the quarter and a total of 289 clients in 2006. FCN now has a total of 509 clients, and has 100 percent settlement bank coverage across the United States;
• Allstate Bank, an affiliate of Allstate Insurance Company, signed a core outsourcing agreement with Fiserv CBS Worldwide in the quarter. This is another example of Fiserv's leadership in providing direct banking services to non-traditional bank institutions;
• In the quarter, China Trust Bank, of Torrance, Calif., which had been using Fiserv's item processing solutions, significantly expanded its relationship with the company, selecting a number of its integrated product offerings, including core account processing, EFT, image processing and archiving and a number of risk management solutions;
• In January 2007, Exante Bank, Inc. selected Fiserv to provide technology and technology support for the bank's health savings account (HSA) services. Exante Bank, a division of UnitedHealth Group and the leading provider of HSA accounts in the United States, will use Fiserv ITI core processing solutions for fully integrated services, including account and transaction processing, financial accounting, document imaging and archiving, and platform automation; and
• In the fourth quarter, The Huntington National Bank, one of the largest banks in the Midwest, selected Fiserv to handle processing of its health savings accounts.