UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended ~~September~~June 30, ~~2020~~2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

Commission File Number 1-38962

FISERV, INC.

(Exact Name of Registrant as Specified in Its Charter)


Wisconsin						39-1506125
(State or Other Jurisdiction of Incorporation or Organization)						(I. R. S. Employer Identification No.)

255 Fiserv Drive, Brookfield, WI 53045

(Address of Principal Executive Offices and zip code)

(262) 879-5000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

FISV

The NASDAQ Stock Market LLC

0.375% Senior Notes due 2023

FISV23

The NASDAQ Stock Market LLC

1.125% Senior Notes due 2027

FISV27

The NASDAQ Stock Market LLC

1.625% Senior Notes due 2030

FISV30

The NASDAQ Stock Market LLC

2.250% Senior Notes due 2025

FISV25

The NASDAQ Stock Market LLC

3.000% Senior Notes due 2031

FISV31

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October~~July 23, ~~2020,~~2021, there were ~~670,437,918~~662,204,715 shares of common stock, $.01 par value, of the registrant outstanding.

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INDEX

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Fiserv, Inc.

Consolidated Statements of Income

(In millions, except per share data)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Revenue:	Revenue:									Revenue:
Processing and services (1)	Processing and services (1)	$	3,153	$	2,608	$	9,118	$	5,229	Processing and services (1)	$	3,361	$	2,890	$	6,415	$	5,965
Product	Product	633		520		1,902		913		Product	690		575		1,391		1,269
Total revenue	Total revenue	3,786		3,128		11,020		6,142		Total revenue	4,051		3,465		7,806		7,234
Expenses:	Expenses:									Expenses:
Cost of processing and services	Cost of processing and services	1,387		1,204		4,488		2,445		Cost of processing and services	1,498		1,466		2,895		3,101
Cost of product	Cost of product	481		413		1,467		755		Cost of product	469		454		979		986
Selling, general and administrative	Selling, general and administrative	1,412		1,137		4,193		1,821		Selling, general and administrative	1,440		1,377		2,813		2,781
Gain on sale of businesses		(36)		0		(464)		(10)
(Gain) loss on sale of business										(Gain) loss on sale of business	0		3		0		(428)
Total expenses	Total expenses	3,244		2,754		9,684		5,011		Total expenses	3,407		3,300		6,687		6,440
Operating income	Operating income	542		374		1,336		1,131		Operating income	644		165		1,119		794
Interest expense, net	Interest expense, net	(174)		(164)		(535)		(279)		Interest expense, net	(175)		(174)		(351)		(361)
Debt financing activities		0		49		0		(47)
Other income (expense)		13		(3)		34		0
Income before income taxes and income from investments in unconsolidated affiliates		381		256		835		805
Income tax provision		(124)		(53)		(176)		(144)
Income from investments in unconsolidated affiliates		19		22		3		12

Other income										Other income	1		1		22		21
Income (loss) before income taxes and income (loss) from investments in unconsolidated affiliates										Income (loss) before income taxes and income (loss) from investments in unconsolidated affiliates	470		(8)		790		454
Income tax (provision) benefit										Income tax (provision) benefit	(228)		27		(246)		(52)
Income (loss) from investments in unconsolidated affiliates										Income (loss) from investments in unconsolidated affiliates	42		(10)		58		(16)
Net income	Net income	276		225		662		673		Net income	284		9		602		386
Less: net income attributable to noncontrolling interests and redeemable noncontrolling interests		12		27		4		27
Less: net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests										Less: net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests	15		7		29		(8)
Net income attributable to Fiserv, Inc.	Net income attributable to Fiserv, Inc.	$	264	$	198	$	658	$	646	Net income attributable to Fiserv, Inc.	$	269	$	2	$	573	$	394

Net income attributable to Fiserv, Inc. per share – basic	Net income attributable to Fiserv, Inc. per share – basic	$	0.39	$	0.34	$	0.98	$	1.42	Net income attributable to Fiserv, Inc. per share – basic	$	0.41	$	0	$	0.86	$	0.58
Net income attributable to Fiserv, Inc. per share – diluted	Net income attributable to Fiserv, Inc. per share – diluted	$	0.39	$	0.33	$	0.96	$	1.39	Net income attributable to Fiserv, Inc. per share – diluted	$	0.40	$	0	$	0.85	$	0.57

Shares used in computing net income attributable to Fiserv, Inc. per share:	Shares used in computing net income attributable to Fiserv, Inc. per share:									Shares used in computing net income attributable to Fiserv, Inc. per share:
Basic	Basic	669.8		584.8		672.6		456.3		Basic	663.7		670.0		666.1		674.1
Diluted	Diluted	680.3		596.9		684.1		465.2		Diluted	672.7		680.8		676.3		686.0

(1)Includes processing and other fees charged to related party investments accounted for under the equity method of ~~$62~~$56 million and ~~$40~~$55 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$174~~$114 million and ~~$58~~$112 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively (see Note ~~21)~~18).

See accompanying notes to consolidated financial statements.

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Fiserv, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(In millions)

(Unaudited)

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
Net income $ 276 $ 225 $ 662 $ 673
Other comprehensive (loss) income:
Fair market value adjustment on cash flow hedges, net of income tax (provision) benefit of ($2 million), $1 million, $0 million and $46 million 6 (4) 1 (134)
Reclassification adjustment for net realized losses on cash flow hedges included in net interest expense, net of income tax provision of $1 million, $1 million, $4 million and $2 million 4 4 12 6
Foreign currency translation (180) (186) (636) (184)
Total other comprehensive loss (170) (186) (623) (312)
Comprehensive income $ 106 $ 39 $ 39 $ 361
Less: net income attributable to noncontrolling interests and redeemable noncontrolling interests 12 27 4 27
Less: other comprehensive income attributable to noncontrolling interests 17 0 28 0
Comprehensive income attributable to Fiserv, Inc. $ 77 $ 12 $ 7 $ 334


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income	$	284	$	9	$	602	$	386
Other comprehensive income (loss):
Fair market value adjustment on cash flow hedges, net of income tax (provision) benefit of $0 million, ($1 million), $0 million and $2 million	0		3		1		(5)
Reclassification adjustment for net realized (gains) losses on cash flow hedges included in cost of processing and services, net of income tax benefit (provision) of $0 million, $0 million, $1 million and $0 million	(2)		1		(4)		0
Reclassification adjustment for net realized losses on cash flow hedges included in net interest expense, net of income tax provision of $1 million, $1 million, $2 million and $2 million	4		4		8		8
Unrealized gain on defined benefit pension plans, net of income tax provision of $0 million	0		0		1		0
Foreign currency translation	213		182		51		(456)
Total other comprehensive income (loss)	215		190		57		(453)
Comprehensive income (loss)	$	499	$	199	$	659	$	(67)
Less: net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests	15		7		29		(8)
Less: other comprehensive income (loss) attributable to noncontrolling interests	2		23		(7)		11
Comprehensive income (loss) attributable to Fiserv, Inc.	$	482	$	169	$	637	$	(70)

See accompanying notes to consolidated financial statements.

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Fiserv, Inc.

Consolidated Balance Sheets

(In millions)

(Unaudited)


		September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	937	$	893	Cash and cash equivalents	$	841	$	906
Trade accounts receivable, less allowance for doubtful accounts	Trade accounts receivable, less allowance for doubtful accounts	2,323		2,782		Trade accounts receivable, less allowance for doubtful accounts	2,663		2,482
Prepaid expenses and other current assets	Prepaid expenses and other current assets	1,362		1,503		Prepaid expenses and other current assets	1,278		1,310
Settlement assets	Settlement assets	9,403		11,868		Settlement assets	12,945		11,521

Total current assets	Total current assets	14,025		17,046		Total current assets	17,727		16,219
Property and equipment, net	Property and equipment, net	1,630		1,606		Property and equipment, net	1,650		1,628
Customer relationships, net	Customer relationships, net	11,907		14,042		Customer relationships, net	10,845		11,603
Other intangible assets, net	Other intangible assets, net	3,742		3,600		Other intangible assets, net	3,866		3,755
Goodwill	Goodwill	35,908		36,038		Goodwill	36,668		36,322
Contract costs, net	Contract costs, net	647		533		Contract costs, net	755		692
Investments in unconsolidated affiliates	Investments in unconsolidated affiliates	2,772		2,720		Investments in unconsolidated affiliates	2,590		2,756
Other long-term assets	Other long-term assets	1,741		1,954		Other long-term assets	1,675		1,644
Total assets	Total assets	$	72,372	$	77,539	Total assets	$	75,776	$	74,619
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Accounts payable and accrued expenses	Accounts payable and accrued expenses	$	3,044	$	3,080	Accounts payable and accrued expenses	$	3,364	$	3,186
Short-term and current maturities of long-term debt	Short-term and current maturities of long-term debt	365		287		Short-term and current maturities of long-term debt	418		384
Contract liabilities	Contract liabilities	451		492		Contract liabilities	524		546
Settlement obligations	Settlement obligations	9,403		11,868		Settlement obligations	12,945		11,521
Total current liabilities	Total current liabilities	13,263		15,727		Total current liabilities	17,251		15,637
Long-term debt	Long-term debt	20,894		21,612		Long-term debt	20,425		20,300
Deferred income taxes	Deferred income taxes	4,532		4,247		Deferred income taxes	4,324		4,389
Long-term contract liabilities	Long-term contract liabilities	170		155		Long-term contract liabilities	181		187
Other long-term liabilities	Other long-term liabilities	824		941		Other long-term liabilities	802		777
Total liabilities	Total liabilities	39,683		42,682		Total liabilities	42,983		41,290
Commitments and Contingencies (see Note 20)
Commitments and Contingencies (see Note 17)						Commitments and Contingencies (see Note 17)	0		0
Redeemable Noncontrolling Interests	Redeemable Noncontrolling Interests	260		262		Redeemable Noncontrolling Interests	261		259
Fiserv, Inc. Shareholders’ Equity:	Fiserv, Inc. Shareholders’ Equity:					Fiserv, Inc. Shareholders’ Equity:
Preferred stock, 0 par value: 25.0 million shares authorized; NaN issued		0		0
Common stock, $0.01 par value: 1,800.0 million shares authorized; 791.4 million shares issued		8		8
Preferred stock, no par value: 25 million shares authorized; NaN issued						Preferred stock, no par value: 25 million shares authorized; NaN issued	0		0
Common stock, $0.01 par value: 1,800 million shares authorized; 784 million and 789 million shares issued, respectively						Common stock, $0.01 par value: 1,800 million shares authorized; 784 million and 789 million shares issued, respectively	8		8
Additional paid-in capital	Additional paid-in capital	23,771		23,741		Additional paid-in capital	22,960		23,643
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(831)		(180)		Accumulated other comprehensive loss	(323)		(387)
Retained earnings	Retained earnings	13,141		12,528		Retained earnings	14,014		13,441
Treasury stock, at cost, 121.1 million and 111.5 million shares		(4,397)		(3,118)
Treasury stock, at cost, 123 million and 121 million shares						Treasury stock, at cost, 123 million and 121 million shares	(4,866)		(4,375)
Total Fiserv, Inc. shareholders’ equity	Total Fiserv, Inc. shareholders’ equity	31,692		32,979		Total Fiserv, Inc. shareholders’ equity	31,793		32,330
Noncontrolling interests	Noncontrolling interests	737		1,616		Noncontrolling interests	739		740
Total equity	Total equity	32,429		34,595		Total equity	32,532		33,070
Total liabilities and equity	Total liabilities and equity	$	72,372	$	77,539	Total liabilities and equity	$	75,776	$	74,619

See accompanying notes to consolidated financial statements.

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Fiserv, Inc.

Consolidated Statements of Cash Flows

(In millions)

(Unaudited)


		Nine Months Ended September 30,					Six Months Ended June 30,
		2020		2019			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	662	$	673	Net income	$	602	$	386
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and other amortization	Depreciation and other amortization	833		386		Depreciation and other amortization	560		550
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	1,603		476		Amortization of acquisition-related intangible assets	1,050		1,099
Amortization of financing costs, debt discounts and other		36		116
Net foreign currency gain on financing activities		0		(50)
Amortization of financing costs and debt discounts						Amortization of financing costs and debt discounts	25		24

Share-based compensation	Share-based compensation	286		121		Share-based compensation	127		202

Deferred income taxes	Deferred income taxes	(125)		26		Deferred income taxes	(69)		(94)
Gain on sale of businesses		(464)		(10)
Income from investments in unconsolidated affiliates		(3)		(12)
Gain on sale of business						Gain on sale of business	0		(428)
(Income) loss from investments in unconsolidated affiliates						(Income) loss from investments in unconsolidated affiliates	(58)		16
Distributions from unconsolidated affiliates	Distributions from unconsolidated affiliates	12		6		Distributions from unconsolidated affiliates	13		12
Settlement of interest rate hedge contracts		0		(183)
Non-cash impairment charge		44		0

Non-cash impairment charges						Non-cash impairment charges	5		40
Other operating activities	Other operating activities	(4)		(3)		Other operating activities	(22)		(3)
Changes in assets and liabilities, net of effects from acquisitions and dispositions:	Changes in assets and liabilities, net of effects from acquisitions and dispositions:					Changes in assets and liabilities, net of effects from acquisitions and dispositions:
Trade accounts receivable	Trade accounts receivable	460		151		Trade accounts receivable	(154)		278
Prepaid expenses and other assets	Prepaid expenses and other assets	(150)		(41)		Prepaid expenses and other assets	(56)		62
Contract costs	Contract costs	(229)		(141)		Contract costs	(150)		(158)
Accounts payable and other liabilities	Accounts payable and other liabilities	34		117		Accounts payable and other liabilities	171		(54)
Contract liabilities	Contract liabilities	(34)		(15)		Contract liabilities	(31)		(13)
Net cash provided by operating activities	Net cash provided by operating activities	2,961		1,617		Net cash provided by operating activities	2,013		1,919
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures, including capitalized software and other intangibles	Capital expenditures, including capitalized software and other intangibles	(689)		(431)		Capital expenditures, including capitalized software and other intangibles	(494)		(488)
Proceeds from sale of businesses		578		39
Payments for acquisition of businesses, net of cash acquired and including working capital adjustments		(137)		(16,004)
Proceeds from sale of business						Proceeds from sale of business	0		584
Payments for acquisition of businesses, net of cash acquired						Payments for acquisition of businesses, net of cash acquired	(493)		(136)
Distributions from unconsolidated affiliates	Distributions from unconsolidated affiliates	94		85		Distributions from unconsolidated affiliates	52		66
Purchases of investments	Purchases of investments	0		(4)		Purchases of investments	(235)		0
Other investing activities		0		6
Net cash used in investing activities		(154)		(16,309)
Proceeds from sale of investments						Proceeds from sale of investments	472		0
Net cash (used in) provided by investing activities						Net cash (used in) provided by investing activities	(698)		26
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Debt proceeds	Debt proceeds	8,125		18,855		Debt proceeds	4,343		5,812
Debt repayments	Debt repayments	(9,307)		(3,051)		Debt repayments	(5,415)		(6,219)
Short-term borrowings, net		(28)		0
Payments of debt financing, redemption and other costs		(16)		(247)
Net proceeds from (repayments of) commercial paper and short-term borrowings						Net proceeds from (repayments of) commercial paper and short-term borrowings	1,047		(1)
Payments of debt financing costs						Payments of debt financing costs	0		(16)
Proceeds from issuance of treasury stock	Proceeds from issuance of treasury stock	108		116		Proceeds from issuance of treasury stock	60		86
Purchases of treasury stock, including employee shares withheld for tax obligations	Purchases of treasury stock, including employee shares withheld for tax obligations	(1,612)		(271)		Purchases of treasury stock, including employee shares withheld for tax obligations	(1,361)		(1,574)

Distributions paid to noncontrolling interests and redeemable noncontrolling interests	Distributions paid to noncontrolling interests and redeemable noncontrolling interests	(61)		(46)		Distributions paid to noncontrolling interests and redeemable noncontrolling interests	(21)		(52)
Payments of acquisition-related contingent consideration						Payments of acquisition-related contingent consideration	(28)		0
Other financing activities	Other financing activities	6		(5)		Other financing activities	(2)		5
Net cash (used in) provided by financing activities		(2,785)		15,351
Net cash used in financing activities						Net cash used in financing activities	(1,377)		(1,959)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(4)		(4)		Effect of exchange rate changes on cash, cash equivalents and restricted cash	(2)		(12)
Net change in cash, cash equivalents and restricted cash	Net change in cash, cash equivalents and restricted cash	18		655		Net change in cash, cash equivalents and restricted cash	(64)		(26)

Cash, cash equivalents and restricted cash, beginning balance	Cash, cash equivalents and restricted cash, beginning balance	933		415		Cash, cash equivalents and restricted cash, beginning balance	919		933
Cash, cash equivalents and restricted cash, ending balance	Cash, cash equivalents and restricted cash, ending balance	$	951	$	1,070	Cash, cash equivalents and restricted cash, ending balance	$	855	$	907

See accompanying notes to consolidated financial statements.

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Fiserv, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial statements have been included. Such adjustments consisted of normal recurring items. Interim results are not necessarily indicative of results for a full year. The consolidated financial statements and accompanying notes are presented as permitted by Form 10-Q and do not contain certain information included in the annual consolidated financial statements and accompanying notes of Fiserv, Inc. (the “Company”). These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~

On July 29, 2019, the Company acquired First Data Corporation (“First Data”) by acquiring 100% of the First Data stock that was issued and outstanding as of the date of acquisition for a total purchase price of $46.5 billion (see Note 4). First Data provides a wide-range of solutions to merchants, including retail point-of sale (“POS”) merchant transaction processing and acquiring, e-commerce services, mobile payment services and the cloud-based Clover® point-of-sale operating system, as well as technology solutions for bank and non-bank issuers. The consolidated financial statements include the financial results of First Data from the date of acquisition.

~~Segment Realignment~~

Effective in the first quarter of 2020, the Company realigned its reportable segments to correspond with changes to its operating model to reflect its new management structure and organizational responsibilities (“Segment Realignment”) following the acquisition of First Data. The Company’s new reportable segments are: Merchant Acceptance (“Acceptance”), Financial Technology (“Fintech”) and Payments and Network (“Payments”). Segment results for the three and nine months ended September 30, 2019 have been restated to reflect the Segment Realignment. See Note 22 for additional information.2020.

Principles of Consolidation

The consolidated financial statements include the accounts of Fiserv, Inc. and its subsidiaries in which the Company holds a controlling financial interest. All intercompany transactions and balances between the Company and its subsidiaries have been eliminated in consolidation. Control is normally established when ownership and voting interests in an entity are greater than 50%. Investments in which the Company has significant influence but not control are accounted for using the equity method of accounting, for which the Company’s share of net income or loss is reported within income (loss) from investments in unconsolidated affiliates and the related tax expense or benefit is reported within the income tax ~~provision~~(provision) benefit in the consolidated statements of income. Significant influence over an affiliate’s operations generally coincides with an ownership interest in an entity of between 20% and 50%. ~~All intercompany transactions and balances have been eliminated in consolidation.~~

The Company maintains a majority controlling ~~interests~~interest in certain entities, mostly related to consolidated merchant alliances (see ~~Notes 4 and 21)~~Note 18). Noncontrolling interests represent the minority shareholders’ share of the net income or loss and equity in consolidated subsidiaries. The Company’s noncontrolling interests presented in the consolidated statements of income include net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests. Noncontrolling interests are presented as a component of equity in the consolidated balance sheets and reflect the minority shareholders’ share of ~~acquired fair value in~~ the consolidated subsidiaries ~~along with their proportionate share of the earnings or losses of the subsidiaries,~~ net ~~of dividends or distributions.~~carrying value. Noncontrolling interests that are redeemable upon the occurrence of an event that is not solely within the Company’s control are presented outside of equity and are carried at their estimated redemption value if it exceeds the initial carrying value of the redeemable interest (see Note ~~12)~~9).

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S.”) 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 revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

~~Table of Contents~~

Risks and Uncertainties

~~In December 2019, a~~Since early 2020, the world has been, and continues to be, impacted by the novel strain of the coronavirus (“COVID-19”) ~~was identified~~pandemic. The COVID-19 pandemic, and has since continued to spread and negatively impact the economy of the United States and other countries around the world. In March 2020, the World Health Organization recognized the COVID-19 outbreak as a pandemic. In response to the COVID-19 pandemic,various measures imposed by the governments of many countries, states, cities and other geographic regions ~~have taken actions~~ to prevent ~~the~~its spread, of COVID-19, such as imposing travel restrictions and bans, quarantines, social distancing guidelines, shelter-in-place or lock-down orders and other similar limitations. Accordingly, the COVID-19 pandemic has adverselyhave negatively impacted global ~~economic activity and has contributed to significant volatility in financial markets during 2020.~~

~~Global~~ economic and market conditions, ~~impact~~including levels of consumer and business spending. Consequently, the Company’s operating performance, primarily within its merchant acquiring and payment-related businesses, which earn transaction-based fees, has been adversely affected, and may continue to be adversely affected, by the economic impact of the COVID-19 pandemic. The ~~extent of~~Company has continued to assess the impact of the COVID-19 pandemic on its consolidated financial statements and has determined that there have been no material changes to the significant accounting policies, including estimates and assumptions made by management, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The Company will continue to monitor developments related to the COVID-19 pandemic; however, the extent to which the COVID-19 pandemic may impact the Company’s future operational and financial performance will depend on, among other matters, the duration and intensity of the pandemic; governmental and private sector responses to the pandemic and the impact of such responses on the Company; and the impact of the pandemic on the Company’s employees, clients, vendors, operations and sales, all of which areremains uncertain and cannot be predicted. ~~These changing~~Changing conditions may also affect the estimates and assumptions made by ~~management. Such estimates~~management and assumptions affect, among other things, the valuations of the Company’s long-lived assets, definite-lived intangible assets and equity method investments; the Company’s deferred tax assets and related valuation allowances; the estimate of current expected credit losses; and certain pension plan assumptions. To the extent economic and market conditions do not continue to improve or deteriorate, the COVID-19 pandemic and the related economic and market decline may also impact the assumptions used in the Company’s annual impairment assessment of goodwill during the fourth quarter of 2020. Changes in any assumptions used may result in ~~a goodwill~~an impairment or other charge that, if incurred, could have a material adverse impact on the Company’s results of operations, total assets and total equity in the period recognized. Events and changes in circumstances arising subsequent to ~~September~~June 30, ~~2020,~~2021, including those resulting from the impacts of the COVID-19 pandemic, will be reflected in management’s estimates for future periods.

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Cash and Cash Equivalents

Cash and cash equivalents consist of cash and investments with original maturities of 90 days or less. Cash and cash equivalents are stated at cost in the consolidated balance sheets, which approximates market value. Cash and cash equivalents that were restricted from use due to regulatory or other requirements are included in other long-term assets in the consolidated balance sheets and totaled $14 million and ~~$40~~$13 million at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

Allowance for Doubtful Accounts

The Company analyzes the collectability of trade accounts receivable by considering historical bad debts, client creditworthiness, current economic ~~conditions, expectations of near term economic~~ trends, changes in client payment terms and collection trends when evaluating the adequacy of the allowance for doubtful ~~accounts for expected credit losses.~~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 allowance for doubtful accounts was ~~$47~~$55 million and ~~$39~~$48 million at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

Settlement Assets and Obligations

Settlement assets and obligations result from timing differences between collection and fulfillment of payment transactions primarily associated with the Company’s merchant acquiring services. Settlement assets represent cash received or amounts receivable from agents, payment networks, bank partners or directly from consumers. Settlement obligations represent amounts payable to merchants and payees. Certain merchant settlement assets that relate to settlement obligations are held by partner banks to which the Company does not have legal ownership but has the right to use the assets to satisfy the related settlement obligations. The Company records corresponding settlement obligations for amounts payable to merchants and for outstanding payment instruments issued to payees that have not yet been presented for settlement.

Reserve for Merchant Credit Losses

With respect to the Company’s merchant acquiring business, the Company’s merchant customers have the legal obligation to refund any charges properly reversed by the cardholder. However, in the event the Company is not able to collect the refunded amounts from the merchants, the Company may be liable for the reversed charges. The Company’s risk in this area primarily relates to situations where the cardholder has purchased goods or services to be delivered in the future. The Company requires cash deposits, guarantees, letters of credit or other types of collateral from certain merchants to minimize this obligation. Collateral held by the Company is classified within settlement assets and the obligation to repay the collateral is classified within settlement obligations in the ~~Company’s~~ consolidated balance sheets. The Company also utilizes a number of systems and procedures to manage merchant risk. Despite these efforts, the Company experiences some level of losses due to merchant defaults.

The aggregate merchant credit losses, included within cost of processing and services in the consolidated statements of income, incurred by the Company was ~~$35~~$11 million and ~~$89~~$24 million for the three ~~and nine~~ months ended ~~September~~June 30, 2021 and 2020, respectively, and ~~$17~~$33 million and $54 million for ~~both~~ the ~~three and nine~~six months ended ~~September~~June 30, ~~2019.~~2021 and 2020, respectively. The amount of collateral held by the Company was ~~$982 million~~$2.3 billion and ~~$510 million~~$1.2 billion at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The Company maintains reserves for merchant credit losses that are expected to exceed the amount of collateral held. The reserves include an estimated amount for anticipated chargebacks and fraud events that have been incurred on merchants’ payment transactions that have been processed but not yet reported to the Company (“IBNR Reserve”), which is recorded within accounts payable and accrued expenses in the consolidated balance sheets, as well as an allowance on refunded amounts to cardholders that have not yet been collected from the ~~merchants. The IBNR Reserve,~~merchants, which is recorded within ~~accounts payable~~

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prepaid expenses and ~~accrued expenses~~other current assets in the consolidated balance ~~sheets,~~sheets. The IBNR Reserve is based primarily on the Company’s historical experience of credit losses and other relevant factors such as economic downturns or increases in merchant fraud. The aggregate merchant credit loss ~~reserves were~~reserve was $6359 million ~~and $34 million~~ at each of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019, respectively.~~2020.

Goodwill

Goodwill represents the excess of purchase price over the fair value of identifiable assets acquired and liabilities assumed in a business combination. The Company evaluates goodwill for impairment on an annual basis, or more frequently if circumstances indicate possible impairment. Goodwill is tested for impairment at a reporting unit level, ~~determined to be at an operating segment level or~~which is one level ~~below. When assessing goodwill for~~below the Company’s reportable segments. The Company’s most recent annual impairment the Company considers (i) the amount of excess fair value over the carrying value of each reporting unit, (ii) the period of time since a reporting unit’s last quantitative test, (iii) the extent a reorganization or disposition changes the composition of one or more of the reporting units and (iv) other factors to determine whether or not to first perform a qualitative test. When performing a qualitative test, the Company assesses numerous factors to determine whether it is more likely than not that the fair valueassessment of its reporting units are less than their respective carrying values. Examples of qualitative factors that the Company assesses include its share price, its financial performance, market and competitive factors in its industry and other events specific to its reporting units. If the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company performs a quantitative impairment test by comparing reporting unit carrying values to estimated fair values.

~~The Company performed its annual assessment of its reporting units’ goodwill~~ in the fourth quarter of 2019 and 0 impairment was identified. In connection with the Segment Realignment described above, certain of the Company’s reporting units have changed in composition in which goodwill was allocated to such reporting units using a relative fair value approach. Accordingly, the Company performed an interim goodwill impairment assessment in the first quarter of 2020 ~~for those reporting units impacted by the Segment Realignment, and~~ determined that its goodwill was not impaired ~~based~~as the estimated fair values exceeded the carrying values. However, it is reasonably possible that future developments related to the economic impact of the COVID-19 pandemic on certain of the Company’s businesses acquired and recorded at fair value through the acquisition of First Data Corporation (“First Data”) in July 2019, such as an ~~assessment~~increased duration and intensity of ~~various qualitative factors as described above.~~the pandemic and/or government-imposed shutdowns, prolonged economic downturn or recession, or lack of governmental support for recovery, could have a future

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material impact on one or more of the estimates and assumptions used to evaluate goodwill impairment. There is 0 accumulated goodwill impairment for the Company through ~~September~~June 30, ~~2020. See Note 7 for additional information.~~2021.

Other Investments

The Company maintains investments in various equity securities without a readily determinable fair value. Such investments totaled ~~$165~~$122 million and ~~$167~~$160 million at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, and are included within other long-term assets in the ~~Company’s~~ consolidated balance sheets. The Company reviews these investments each reporting period to determine whether an impairment or observable price change for the investment has occurred. When such events or changes occur, the Company evaluates the fair value compared to its cost basis in the investment. Gains or losses from a change in fair value are included within other income ~~(expense)~~ in the consolidated statements of income for the period. ~~Adjustments~~During the six months ended June 30, 2021, the Company remeasured its equity interest in Ondot Systems, Inc. (“Ondot”) to fair value upon acquiring a remaining ownership interest in January 2021, resulting in the recognition of a pre-tax gain of $12 million (see Note 4). Other adjustments made to the values recorded for these equity securities during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020, were not significant.

Interest Expense, Net

Interest expense, net consists of interest expense primarily associated with the Company’s outstanding borrowings and finance lease obligations, as well as interest income primarily associated with the Company’s investment securities. ~~The Company recognized $176 million and $187 million~~Interest expense, net consisted of ~~interest expense and $2 million and $23 million of interest income during~~ the three months ended September 30, 2020 and 2019, respectively. The Company recognized $541 million and $309 million of interest expense and $6 million and $30 million of interest income for the nine months ended September 30, 2020 and 2019, respectively.following:



	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020
Interest expense	$	176	$	176	$	353	$	365
Interest income	1		2		2		4
Interest expense, net	$	175	$	174	$	351	$	361

2. Recent Accounting Pronouncements

~~Recently Adopted Accounting Pronouncements~~

In ~~2018,~~2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ~~No. 2018-15,~~ ~~Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~ (“ASU 2018-15”), which aligns the requirements for capitalizing implementation costs incurred in a cloud computing hosting arrangement that is a service contract within the requirements under Accounting Standards Codification (“ASC”) 350 for capitalizing implementation costs incurred to develop or obtain internal-use software. For public entities, ASU 2018-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Entities are permitted to apply either a retrospective or prospective transition approach to adopt the guidance. The Company adopted ASU 2018-15 effective January 1, 2020 using a prospective approach, and the adoption did not have a material impact on its consolidated financial statements.

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~~In 2018, the FASB issued ASU No. 2018-13,~~ ~~Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement~~ ~~(“ASU 2018-13”), which removes, modifies, and adds certain disclosure requirements of ASC Topic 820,~~ ~~Fair Value Measurement~~. ASU 2018-13 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019 with the additional disclosures required to be applied prospectively and the modified and removed disclosures required to be applied retrospectively to all periods presented. The Company adopted ASU 2018-13 effective January 1, 2020, and the adoption did not have a material impact on its disclosures.

~~In 2016, the FASB issued ASU No. 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326)~~ (“ASU 2016-13” or “CECL”), which prescribes an impairment model for most financial instruments based on expected losses rather than incurred losses. Under this model, an estimate of expected credit losses over the contractual life of the instrument is to be recorded as of the end of a reporting period as an allowance to offset the amortized cost basis, resulting in a net presentation of the amount expected to be collected on the financial instrument. For public entities, ASU 2016-13 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019. For most instruments, entities must apply the standard using a cumulative-effect adjustment to beginning retained earnings as of the beginning of the fiscal year of adoption.

~~The Company adopted~~ ~~ASU 2016-13~~ effective January 1, 2020 using the required modified retrospective approach, which resulted in a cumulative-effect decrease to beginning retained earnings of $45 million. Financial assets and liabilities held by the Company subject to the “expected credit loss” model prescribed by CECL include trade and other receivables, net investments in leases, settlement assets and other credit exposures such as financial guarantees not accounted for as insurance.

~~Recently Issued Accounting Pronouncements~~

~~In 2020, the FASB issued ASU~~ No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (“ASU 2020-01”), which clarifies certain interactions between the guidance to account for certain equity securities, investments under the equity method of accounting, and forward contracts or purchased options to purchase securities under Topic 321, Topic 323 and Topic 815. For public entities, ASU 2020-01 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2020. The Company ~~does not currently expect~~adopted ASU 2020-01 effective January 1, 2021, and the adoption todid not have a material impact on its consolidated financial ~~statements or disclosures.~~statements.

In 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which introduces a number of amendments that are designed to simplify the application of accounting for income taxes. Such amendments include removing certain exceptions for intraperiod tax allocation, interim reporting when a year-to-date loss exceeds the anticipated loss, reflecting the effect of an enacted change in tax laws or rates in the annual effective tax rate and recognition of deferred taxes related to outside basis differences for ownership changes in investments. ASU 2019-12 also provides clarification related to when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction. In addition, ASU 2019-12 provides guidance on the recognition of a franchise tax (or similar tax) that is partially based on income as an income-based tax and accounting for any incremental amount incurred as a non-income-based tax. For public entities, ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company ~~plans to adopt~~adopted ASU 2019-12 effective January 1, 2021, and ~~does not expect~~ the adoption todid not have a material impact on its consolidated financial statements.

In ~~2018,~~2016, the FASB issued ASU No. ~~2018-14,~~2016-13, ~~Compensation~~Financial Instruments - ~~Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans~~ Credit Losses (Topic 326)(“ (“ASU ~~2018-14”~~2016-13” or “CECL”), which ~~removes, clarifies and adds certain disclosure requirements~~prescribes an impairment model for most financial instruments based on expected losses rather than incurred losses. Under this model, an estimate of ~~ASC Topic 715,~~ ~~Compensation - Retirement Benefits~~.expected credit losses over the contractual life of the instrument is to be recorded as of the end of a reporting period as an allowance to offset the amortized cost basis, resulting in a net presentation of the amount expected to be collected on the financial instrument. For public entities, ASU ~~2018-14~~2016-13 is effective for fiscal years, ~~ending~~including interim periods within those fiscal years, beginning after December 15, ~~2020, with early adoption permitted. Entities~~2019. For most instruments, entities must apply the ~~disclosure updates retrospectively.~~ standard using a cumulative-effect adjustment to beginning retained earnings as of the beginning of the fiscal year of adoption.

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The Company ~~does~~adopted ASU 2016-13 effective January 1, 2020 using the required modified retrospective approach, which resulted in a cumulative-effect decrease to beginning retained earnings of $45 million. Financial assets and liabilities held by the Company subject to the “expected credit loss” model prescribed by CECL include trade and other receivables, net investments in leases, settlement assets and other credit exposures such as financial guarantees not ~~currently expect the adoption to have a material impact on its disclosures.~~accounted for as insurance.

3. Revenue Recognition

The Company generates revenue from the delivery of processing, service and product solutions. Revenue is measured based on consideration specified in a contract with a customer, and excludes any amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer which may be at a point in time or over time.

Disaggregation of Revenue

The Company’s operations are comprised of the Merchant Acceptance (“Acceptance”) segment, the ~~Fintech~~Financial Technology (“Fintech”) segment and the Payments and Network (“Payments”) segment. Additional information regarding the Company’s business segments is included in Note ~~22.~~19. The tables below present the

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Company’s revenue disaggregated by type of revenue, including a reconciliation with its reportable segments. ~~The Company’s disaggregation of revenue for the three and nine months ended September 30, 2019 have been restated to reflect the Segment Realignment.~~ The majority of the Company’s revenue is earned domestically, with revenue generated outside the United States comprising approximately 14% ~~of total revenue for both the three months ended September 30, 2020~~ and ~~2019, and 13% and 10%~~12% of total revenue for the ~~nine~~three months ended ~~September~~June 30, 2021 and 2020, respectively, and ~~2019, respectively.~~13% of total revenue for each of the six months ended June 30, 2021 and 2020.


(In millions)	(In millions)	Reportable Segments										(In millions)	Reportable Segments
Three Months Ended September 30, 2020		Acceptance		Fintech		Payments		Corporate and Other		Total
Three Months Ended June 30, 2021												Three Months Ended June 30, 2021	Acceptance		Fintech		Payments		Corporate and Other		Total

Type of Revenue	Type of Revenue											Type of Revenue
Processing	Processing	$	1,245	$	364	$	1,112	$	9	$	2,730	Processing	$	1,420	$	385	$	1,122	$	10	$	2,937
Hardware, print and card production	Hardware, print and card production	179		12		176		0		367		Hardware, print and card production	214		12		199		0		425
Professional services	Professional services	9		120		59		0		188		Professional services	9		115		66		0		190
Software maintenance	Software maintenance	0		141		1		0		142		Software maintenance	0		139		2		0		141
License and termination fees	License and termination fees	7		41		21		0		69		License and termination fees	11		50		14		0		75
Output solutions postage	Output solutions postage	0		0		0		207		207		Output solutions postage	0		0		0		202		202
Other	Other	14		49		18		2		83		Other	12		53		18		(2)		81
Total Revenue	Total Revenue	$	1,454	$	727	$	1,387	$	218	$	3,786	Total Revenue	$	1,666	$	754	$	1,421	$	210	$	4,051


(In millions)	(In millions)	Reportable Segments										(In millions)	Reportable Segments
Three Months Ended September 30, 2019		Acceptance		Fintech		Payments		Corporate and Other		Total
Three Months Ended June 30, 2020												Three Months Ended June 30, 2020	Acceptance		Fintech		Payments		Corporate and Other		Total

Type of Revenue	Type of Revenue											Type of Revenue
Processing	Processing	$	861	$	346	$	911	$	40	$	2,158	Processing	$	1,038	$	349	$	1,063	$	13	$	2,463
Hardware, print and card production	Hardware, print and card production	133		10		142		0		285		Hardware, print and card production	159		9		160		0		328
Professional services	Professional services	3		126		56		3		188		Professional services	8		115		58		0		181
Software maintenance	Software maintenance	0		144		1		3		148		Software maintenance	0		141		0		0		141
License and termination fees	License and termination fees	4		61		16		1		82		License and termination fees	6		52		18		0		76
Output solutions postage	Output solutions postage	0		0		0		180		180		Output solutions postage	0		0		0		198		198
Other	Other	11		48		27		1		87		Other	12		48		21		(3)		78
Total Revenue	Total Revenue	$	1,012	$	735	$	1,153	$	228	$	3,128	Total Revenue	$	1,223	$	714	$	1,320	$	208	$	3,465

(In millions) Reportable Segments
Nine Months Ended September 30, 2020 Acceptance Fintech Payments Corporate
and Other Total
Type of Revenue
Processing $ 3,466 $ 1,064 $ 3,265 $ 47 $ 7,842
Hardware, print and card production 531 33 528 0 1,092
Professional services 20 347 174 1 542
Software maintenance 0 423 2 2 427
License and termination fees 19 139 61 0 219
Output solutions postage 0 0 0 640 640
Other 42 153 63 0 258
Total Revenue $ 4,078 $ 2,159 $ 4,093 $ 690 $ 11,020

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(In millions)	(In millions)	Reportable Segments										(In millions)	Reportable Segments
Nine Months Ended September 30, 2019		Acceptance		Fintech		Payments		Corporate and Other		Total
Six Months Ended June 30, 2021												Six Months Ended June 30, 2021	Acceptance		Fintech		Payments		Corporate and Other		Total

Type of Revenue	Type of Revenue											Type of Revenue
Processing	Processing	$	861	$	1,030	$	1,938	$	129	$	3,958	Processing	$	2,598	$	763	$	2,199	$	22	$	5,582
Hardware, print and card production	Hardware, print and card production	133		33		292		0		458		Hardware, print and card production	404		23		431��		0		858
Professional services	Professional services	3		364		105		7		479		Professional services	18		226		129		0		373
Software maintenance	Software maintenance	0		430		2		11		443		Software maintenance	0		278		4		0		282
License and termination fees	License and termination fees	4		181		47		1		233		License and termination fees	21		88		27		0		136
Output solutions postage	Output solutions postage	0		0		0		324		324		Output solutions postage	0		0		0		407		407
Other	Other	11		153		82		1		247		Other	22		112		36		(2)		168
Total Revenue	Total Revenue	$	1,012	$	2,191	$	2,466	$	473	$	6,142	Total Revenue	$	3,063	$	1,490	$	2,826	$	427	$	7,806


(In millions)	Reportable Segments
Six Months Ended June 30, 2020	Acceptance		Fintech		Payments		Corporate and Other		Total

Type of Revenue
Processing	$	2,221	$	700	$	2,153	$	38	$	5,112
Hardware, print and card production	352		21		352		0		725
Professional services	11		227		115		1		354
Software maintenance	0		282		1		2		285
License and termination fees	12		98		40		0		150
Output solutions postage	0		0		0		433		433
Other	28		104		45		(2)		175
Total Revenue	$	2,624	$	1,432	$	2,706	$	472	$	7,234

Contract Balances

The following table provides information about contract assets and contract liabilities from contracts with customers:


(In millions)	(In millions)	September 30, 2020		December 31, 2019		(In millions)	June 30, 2021		December 31, 2020
Contract assets	Contract assets	$	383	$	382	Contract assets	$	500	$	433
Contract liabilities	Contract liabilities	621		647		Contract liabilities	705		733

Contract assets, reported within other long-term assets in the consolidated balance sheets, primarily result from revenue being recognized where payment is contingent upon the transfer of services to a customer over the contractual period. Contract liabilities primarily relate to advance consideration received from customers (deferred revenue) for which transfer of control occurs, and therefore revenue is recognized, as services are provided. Contract balances are reported in a net contract asset or liability position on a contract-by-contract basis at the end of each reporting period. The Company recognized ~~$424~~$350 million of revenue during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 that was included in the contract liability balance at the beginning of the period.

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Transaction Price Allocated to Remaining Performance Obligations

The following table includes estimated processing, services and product revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at ~~September~~June 30, ~~2020:~~2021:

(In millions)
Year ending December 31,
Remainder of 2020 $ 544
2021 1,839
2022 1,442
2023 1,129
Thereafter 2,093



(In millions)
Year Ending December 31,
Remainder of 2021	$	1,020
2022	1,868
2023	1,565
2024	1,190
Thereafter	2,105

The Company applies the optional exemption under ~~ASC~~Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”) and does not disclose information about remaining performance obligations for account- and transaction-based processing fees that qualify for recognition under the as-invoiced practical expedient. These multi-year contracts contain variable consideration for stand-ready performance obligations for which the exact quantity and mix of transactions to be processed are contingent upon the customer’s request. The Company also applies the optional exemptions under ASC 606 and does not disclose information for variable consideration that is a sales-based or usage-based royalty promised in exchange for a license of intellectual property or that is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service in a series. The amounts disclosed above as remaining performance obligations consist primarily of fixed or monthly minimum processing fees and maintenance fees under contracts with an original expected duration of greater than one year.

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4. Acquisitions and Dispositions

Acquisition of ~~First Data~~Ondot

On ~~July 29, 2019,~~January 22, 2021, the Company ~~completed the acquisition of First Data,~~acquired a ~~global leader~~remaining ownership interest in ~~commerce-enabling technology and solutions~~Ondot, a digital experience platform provider for ~~merchants,~~ financial institutions, ~~and card issuers, by acquiring 100%~~for approximately $271 million, net of ~~the First Data stock that was issued and outstanding as~~$13 million of the date of acquisition. The acquisition increases the Company’s footprint as a global payments and financial technology provider by expanding the portfolio of services provided to financial institutions, corporate and merchant clients, and consumers.

As a result of the acquisition, First Data stockholders received 286 million shares of common stock of Fiserv, Inc., at an exchange ratio of 0.303 shares of Fiserv, Inc. for each share of First Data common stock, with cash paid in lieu of fractional shares.acquired cash. The Company ~~also converted 15 million outstanding First Data~~previously held a noncontrolling equity ~~awards into corresponding equity awards relating to common stock of Fiserv, Inc.~~interest in ~~accordance with the exchange ratio. In addition, concurrent with the closing of the acquisition, the Company made a cash payment of $16.4 billion to repay existing First Data debt.~~Ondot, which was accounted for at cost. The ~~Company funded the transaction-related expenses and the repayment of First Data debt through a combination of available cash on-hand and proceeds from debt issuances.~~

~~The total purchase price paid for First Data is as follows:~~



~~(In millions)~~
~~Fair value of stock exchanged for shares of Fiserv, Inc.~~ ~~(1)~~	$	~~29,293~~
~~Repayment of First Data debt~~	~~16,414~~
~~Fair value of vested portion of First Data stock awards exchanged for Fiserv, Inc. awards~~ ~~(2)~~	~~768~~
~~Total purchase price~~	$	~~46,475~~

~~(1)The fair value of the 286 million shares~~remeasurement of the Company’s ~~common stock issued as~~previously held equity interest to its acquisition-date fair value resulted in the recognition of a pre-tax gain of $12 million included within other income in the ~~acquisition date was determined based on a per share price~~consolidated statements of ~~$102.30, which was~~income during the ~~closing price of~~six months ended June 30, 2021. Ondot is included within the Payments segment and further expands the Company’s ~~common stock on July 26, 2019, the last trading day before the acquisition closed the morning~~digital capabilities, enhancing its suite of ~~July 29, 2019. This includes a nominal amount of cash paid in lieu of fractional shares.~~integrated payments, banking and merchant solutions.

~~(2)~~Represents the portion of the fair value of the replacement awards related to services provided prior to the acquisition. The remaining portion of the fair value is associated with future service and will be recognized as expense over the future service period.

~~The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC 805,~~ ~~Business Combinations~~ (“ASC 805”). The purchase price was allocated to the assets acquired and liabilities assumed based on the estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill, none of which is deductible for tax purposes. Goodwill is primarily attributed to synergies from future expected economic benefits, including enhanced revenue growth from expanded capabilities and geographic presence as well as substantial cost savings from duplicative overhead, streamlined operations and enhanced operational efficiency.

~~The assets and liabilities of First Data have been measured at estimated fair value as of the acquisition date.~~ During the ~~current year through the measurement period~~three months ended ~~July 29, 2020,~~June 30, 2021, the Company identified and recorded measurement period adjustments to the preliminary Ondot purchase price allocation, which were the result of additional analysis performed and information identified based on facts and circumstances that existed as of the acquisition date. These measurement period adjustments resulted in ~~an increase~~a decrease to goodwill of ~~$304~~$33 million. The offsetting amounts to the change in goodwill were primarily related to an increase in acquired software and technology of $30 million, customer ~~relationship intangible assets, noncontrolling interests, property and equipment, payables and accrued expenses including legal contingency reserves,~~relationships of $15 million and deferred income ~~taxes.~~tax liabilities of $12 million. The Company recorded a measurement period ~~adjustment of $155 million~~adjustments to ~~reduce~~ the ~~fair value of customer relationship~~ intangible assets as a result of additional refinements to attrition rates. A measurement period adjustment of $126 million was recorded to reduce the fair value of noncontrolling interests based on changes to the fair value of the underlying customer relationship intangible assets and the incorporation of additional facts and circumstances that existed as of the acquisition date. A measurement period adjustment of $25 million was recorded to reduce the fair value of property and equipment to thevaluations, including estimated fair value of certain real property acquired. Measurement period adjustments were recorded to increase payables and accrued expenses by $37 million, reduce investments in unconsolidated affiliates by $23 million, and increase other long-term liabilities by $21 million. In addition, the Company recorded $178 million to increase recognized deferred tax liabilities related to measurement period adjustments.future cash flows. Such measurement period adjustments did not have a material impact on the Company’s consolidated statements of income. ~~The allocation of purchase price recorded for First Data was finalized in the third quarter of 2020 as follows:~~

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The updated preliminary allocation of purchase price recorded for Ondot was as follows:



(In millions)
~~Assets acquired~~ ~~(1)~~
Cash and cash equivalents	$	~~310~~13
~~Trade accounts receivable~~Receivables and other assets	~~1,747~~9
~~Prepaid expenses and other current~~Intangible assets	~~1,047~~142
~~Settlement assets~~Goodwill	~~10,398~~177
~~Property~~Payables and ~~equipment~~other liabilities	~~1,156~~
~~Customer relationships~~	~~13,458~~
~~Other intangible assets~~	~~2,814~~
~~Goodwill~~	~~30,811~~
~~Investments in unconsolidated affiliates~~	~~2,676~~
~~Other long-term assets~~	~~1,191~~ (35)
Total ~~assets acquired~~consideration	$	~~65,608~~306

~~Liabilities assumed~~ ~~(1)~~
~~Accounts payable and accrued expenses~~Less: Fair value of previously held equity interest	$		~~1,613~~
~~Short-term and current maturities of long-term debt~~ ~~(2)~~	~~243~~ (22)
~~Contract liabilities~~	71
~~Settlement obligations~~	~~10,398~~
~~Deferred income taxes~~	~~3,671~~
~~Long-term contract liabilities~~	16
~~Long-term debt and other long-term liabilities~~ ~~(3)~~	~~1,261~~
~~Total liabilities assumed~~	$	~~17,273~~

~~Net assets acquired~~	$	~~48,335~~
~~Redeemable noncontrolling interests~~	~~252~~
~~Noncontrolling interests~~	~~1,608~~
Total purchase price	$	~~46,475~~284

~~(1)~~In connection with the acquisition of First Data, the Company acquired 2 businesses which it intended to sell and subsequently sold in October 2019. Therefore, such businesses were classified as held for sale and were included within prepaid expenses and other current assets and accounts payable and accrued expenses in the aboveThe allocation of the purchase ~~price.~~

~~(2)Includes foreign lines~~price above remains preliminary and is subject to further adjustment, pending additional refinement and final completion of ~~credit, current portion of finance lease obligations and other financing obligations.~~

~~(3)Includes the receivable securitized loan and the long-term portion of finance lease obligations.~~

The fair values of the assets acquired and liabilities assumed were determined using the income and cost approaches. In many cases, the determination of the fair values required estimates about discount rates, growth and attrition rates, future expected cash flows and other future events that are judgmental. The fair value measurements werevaluations. Goodwill, not deductible for tax purposes, is primarily ~~based on significant inputs that are not observable in the market and thus represent a Level 3 measurement of the fair value hierarchy as defined in ASC 820,~~ ~~Fair Value Measurements~~. Intangible assets consisting of customer relationships, technology and trade names were valued using the multi-period excess earnings method (“MEEM”), or the relief from royalty (“RFR”) method, both are forms of the income approach. A cost and market approach was applied, as appropriate, for property and equipment, including land.

•Customer relationship intangible assets were valued using the MEEM method. The significant assumptions used include the estimated annual net cash flows (including appropriate revenue and profit attributableattributed to the ~~asset, retention rate, applicable tax rate,~~anticipated value created by the combined scale of integrated digital solutions to consumers, merchants, acquirers, networks and contributory asset charges, among other factors), the discount rate, reflecting the risks inherent in the future cash flow stream, an assessment of the asset’s life cycle, and the tax amortization benefit, among other factors.

•~~Technology and trade name intangible assets were valued using the RFR method.~~card issuers. The significant assumptions used include the estimated annual net cash flows (including appropriate revenue attributable to the asset, applicable tax rate, royalty rate, and other factors such as technology related obsolescence rates), the discount rate, reflecting the risks inherent in the future cash flow stream, and the tax amortization benefit, among other factors.

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•The cost approach, which estimates value by determining the current cost of replacing an asset with another of equivalent economic utility, was used, as appropriate, for property and equipment. The cost to replace a given asset reflects the estimated reproduction or replacement cost for the property, less an allowance for loss in value due to depreciation.

•~~The market approach, which estimates value by leveraging comparable land sale data/listings and qualitatively comparing them to the in-scope properties, was used to value the land.~~

•An income approach was applied to derive fair value for both consolidated investments with a noncontrolling interest and equity method investments accounted for under the equity method of accounting. The significant assumptions used include the estimated annual cash flows, the discount rate, the long-term growth rate and operating margin, among other factors.

~~The Company believes that the information provided a reasonable basis for estimating the fair values of the acquired assets and assumed liabilities.~~

~~The~~preliminary amounts allocated to identifiable intangible assets are as follows:



(In millions)	Gross Carrying Amount		Weighted-Average Useful Life
~~Customer relationships~~	$	~~13,458~~	~~15 years~~
Acquired software and technology	~~2,324~~$	90	6 years
Customer relationships	35		10 years
Non-compete agreements and other	17		3 years
Total	$	142	7 years
~~Trade names~~	~~490~~		~~9 years~~
~~Total~~	$	~~16,272~~	~~14 years~~

The ~~Company incurred transaction expenses of approximately $47 million~~ ~~and $172 million~~ ~~for the~~ ~~three and nine months endedSeptember 30,~~ ~~2019, respectively. Approximately~~ ~~$45 million and $74 million of these expenses were included in selling, general and administrative expenses and $2 million~~ ~~and $98 million in debt financing activities within the Company’s consolidated statements of income for the~~ ~~three and nine months endedSeptember 30,~~ ~~2019, respectively.~~

~~The following unaudited supplemental pro forma combined financial information presents the Company’s~~ results of operations for Ondot are included in the ~~nine months ended~~ ~~September 30, 2019 as if~~consolidated results of the ~~acquisition~~Company from the date of ~~First Data had occurred on January 1, 2019. The pro~~acquisition. Pro forma ~~financial~~ information ~~is presented~~ for ~~comparative purposes only and~~this acquisition is not ~~necessarily indicative~~provided because it did not have a material effect on the Company’s consolidated results of operations.

Acquisition of Pineapple Payments

On May 4, 2021, the Company acquired Pineapple Payments Holdings, LLC (“Pineapple Payments”), an independent sales organization that provides payment processing, proprietary technology, and payment acceptance solutions for merchants, for approximately $206 million, net of $6 million of acquired cash, and including earn-out provisions estimated at a fair value of $30 million (see Note 6). Pineapple Payments is included within the Acceptance segment, and expands the reach of the Company’s ~~operating results that may have actually occurred had~~payment solutions through its technology- and relationship-led distribution channels. The preliminary allocation of purchase price resulted in the ~~acquisition~~recognition of ~~First Data been completed on January 1, 2019. In addition,~~identifiable intangible assets, consisting primarily of customer relationships and residual buyout intangible assets, of approximately $81 million, and goodwill of approximately $124 million. The allocation of the ~~unaudited pro forma financial information does not give effect~~purchase price is preliminary and is subject to ~~any~~further adjustment, pending additional refinement and final completion of valuations. Goodwill, of which approximately $90 million is expected to be deductible for tax purposes, is primarily attributed to the anticipated ~~cost savings, operating efficiencies or other synergies that may be associated with the acquisition, or any estimated costs that have been or will be incurred~~value created by the ~~Company~~accelerated delivery of new and innovative capabilities to ~~integrate the assets and operations of First Data.~~

~~(In millions, except for per share data)~~

~~Nine Months Ended September 30, 2019~~

~~Total revenue~~

~~11,730~~

~~Net income~~

~~463~~

~~Net income attributable to Fiserv, Inc.~~

~~400~~

~~Net income per share attributable to Fiserv, Inc.:~~

~~Basic~~

~~0.59~~

~~Diluted~~

~~0.58~~

merchant clients. The ~~unaudited pro forma financial information reflects pro forma adjustments to present the combined pro forma~~ results of operations ~~as if~~for Pineapple Payments are included in the ~~acquisition had occurred on January 1,~~ ~~2019~~ ~~to give effect to certain events the Company believes to be directly attributable to the acquisition. These pro forma adjustments primarily include:~~

•~~a net increase in amortization expense that would have been recognized due to acquired intangible assets;~~

•~~an adjustment to interest expense to reflect (i) the additional borrowings~~consolidated results of the Company from the date of acquisition. Pro forma information for this acquisition is not provided because it did not have a material effect on the Company’s consolidated results of operations.

Other Acquisitions

On June 14, 2021, the Company acquired Spend Labs Inc. (“SpendLabs”), a mobile-native, cloud-based software provider of commercial card payment solutions. SpendLabs is included within the Payments segment and further expands the Company’s digital capabilities across mobile and desktop devices for small and mid-sized businesses. On March 1, 2021, the Company acquired Radius8, Inc. (“Radius8”), a provider of a platform that uses consumer location and other information to drive incremental merchant transactions. Radius8 is included within the Acceptance segment and enhances the Company’s ability to help merchants increase sales, expand mobile application registration and improve one-to-one target marketing. The Company acquired these businesses for an aggregate purchase price of approximately $49 million. The preliminary allocation of purchase price for these acquisitions resulted in ~~conjunction with~~ the ~~acquisition~~recognition of identifiable intangible assets, consisting primarily of acquired software and ~~(ii) the repayment~~technology, of ~~First Data’s historical debt in conjunction with the acquisition;~~

•~~a reduction in operating revenues due to the elimination~~approximately $20 million and goodwill of ~~deferred revenues assigned no value at the acquisition date;~~

•~~an adjustment to stock compensation expense to reflect the cost~~approximately $30 million. The allocation of the ~~replacement awards as if they had been issued on January 1,~~ ~~2019~~;purchase price is preliminary and

•~~the related income tax effects~~ is subject to further adjustment, pending additional refinement and final completion of ~~the adjustments noted above.~~valuations. Goodwill,

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~~Other Acquisitions~~not expected to be deductible for tax purposes, is primarily attributed to the anticipated value created by advancing digital capabilities to the Company’s clients and the customers they serve. The results of operations for these acquired businesses are included in the consolidated results of the Company from the respective dates of acquisition. Pro forma information for these acquisitions is not provided because they did not have a material effect on the Company’s consolidated results of operations.

On March 2, 2020, the Company acquired MerchantPro Express LLC (“MerchantPro”), an independent sales organization that provides processing services, point-of-sale equipment and merchant cash advances to businesses across the United States. MerchantPro is included within the Acceptance segment and further expands the Company’s merchant services business. On March 18, 2020, the Company acquired Bypass Mobile, LLC (“Bypass”), an independent software vendor and innovator in enterprise point-of-sale systems for sports and entertainment venues, food service management providers and national restaurant chains. Bypass is included within the Acceptance segment and further enhances the Company’s ~~omni-commerce capabilities, enabling enterprise~~ability to help businesses to deliver a seamless ~~customer experience that spans~~ physical and digital ~~channels.~~customer experiences. On May 11, 2020, the Company acquired Inlet, LLC (“Inlet”), a provider of secure digital delivery solutions for enterprise and middle-market ~~billers’~~biller invoices and statements. Inlet is included within the Payments segment and further enhances the Company’s digital bill payment strategy.

The Company acquired these businesses for an aggregate purchase price of $167 million, net of $2 million of acquired cash, and including earn-out provisions estimated at a fair value of $45 million (see Note 8)6). The ~~preliminary~~ purchase price allocations for these acquisitions resulted in ~~software and customer~~the recognition of identifiable intangible assets totaling ~~approximately $56 million, residual buyout intangible assets of approximately $35~~$81 million, goodwill of ~~approximately $82~~$90 million, and net assumed liabilities of ~~approximately $6~~$4 million. The purchase price allocation for the MerchantPro acquisition was finalized in the third quarter of 2020, and for the Bypass and Inlet acquisitions in the fourth quarter of 2020. Measurement period adjustments did not have a material impact on the consolidated statements of income. The ~~purchase price allocation for the Bypass and Inlet acquisitions are based on preliminary valuations and subject to final adjustment. The~~ goodwill recognized from these transactions, of which $36 million is deductible for tax purposes, is primarily attributed to synergies and the anticipated value created by selling the Company’s products and services to the acquired businesses’ existing client base. ~~Approximately $35 million of goodwill is expected~~

The amounts allocated to ~~be deductible for tax purposes.~~identifiable intangible assets were as follows:



(In millions)	Gross Carrying Amount		Weighted-Average Useful Life
Customer relationships	$	32	14 years
Residual buyouts	35		9 years
Acquired software and technology	14		8 years
Total	$	81	11 years

The results of operations for these acquired businesses have been included in the ~~accompanying~~ consolidated ~~statements~~results of ~~income~~the Company from the respective dates of acquisition. Pro forma information for these acquisitions is not provided because they did not have a material effect on the Company’s consolidated results of operations.

Dispositions

Effective July 1, 2020, the Company and Bank of America (“BANA”) dissolved the Banc of America Merchant Services joint venture (“BAMS” or the “joint venture”), of which the Company maintained a 51% controlling ownership interest. Upon ~~the~~ dissolution of the joint venture’s operations, the joint venture transferred a proportionate share of value, primarily the client contracts, to each party via an agreed upon contractual separation. The remaining activities of the joint venture ~~will~~ consist of supporting the transition of the business to each party and an orderly wind down of remaining BAMS assets and liabilities. Pursuant to the separation agreement, the joint venture retains the responsibility for certain contingencies that may arise from pre-dissolution activities, including potential credit losses for specified merchants in excess of established reserves and certain legal claims and contingencies. The Company may be obligated to fund a proportionate share of any such losses as incurred.

The transfer of value to BANA was accounted for at fair value as a non pro rata distribution of nonmonetary assets, resulting in the recognition of a pre-tax gain of $36 million, with a related tax expense of $13 million. The pre-tax gain included the revaluation of client contracts allocated to BANA to a fair value of $700 million, as well as an estimated $24 million for certain additional consideration due from the Company to BANA in connection with the dissolution. The pre-tax net gain is recorded within gain on sale of businesses and the tax expense is recorded within the income tax provision in the consolidated statements of income. Noncontrolling interests of the Company have been reduced by $726 million and the Company’s additional paid-in capital was reduced by $36 million to account for the wind down of the joint venture and the transfer of a proportionate share of the joint venture’s fair value to BANA (see Note 13). The transfer of value to the Company was accounted for at carryover basis as the Company maintains control of such assets. The business transferred to the Company will continue to be operated and managed within the Company’s Acceptance segment.

The fair value of the client contracts upon dissolution of the joint venture was determined using the MEEM method, a form of the income approach. The determination of the fair values required estimates about discount rates, growth and attrition rates, future expected cash flows and other future events that are judgmental in nature. The fair value measurements were primarily based on significant inputs that are not observable in the market and thus represent a Level 3 measurement of the fair value hierarchy as defined in ASC 820, ~~Fair Value Measurements~~. The significant assumptions used include the estimated annual net cash flows (including appropriate revenue and profit attributable to the asset, retention rate, applicable tax rate, and contributory asset charges, among other factors), the discount rate, reflecting the risks inherent in the future cash flow stream, an assessment of the asset’s life cycle, and the tax amortization benefit, among other factors.

~~Additionally, the Company will continue~~continues to provide merchant processing and related services to former BAMS clients allocated to BANA, at BAMS pricing, through June 2023. The Company ~~will~~ also ~~provide~~provides processing and other support services to new

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BANA merchant clients pursuant to a five-year non-exclusive agreement which, after June 2023, will also apply to the former BAMS clients allocated to BANA. In addition, both the Company and BANA are entitled to certain transition services, at fair value, from each other through June 2023. The business transferred to the Company is included within the Acceptance segment.

On February 18, 2020, the Company ~~completed the sale of~~sold a 60% controlling interest of its Investment Services business, ~~which is reported within Corporate and Other following the Segment Realignment.~~subsequently renamed as Tegra118, LLC (“Tegra118”). The Company received pre-tax proceeds of ~~$578~~$584 million, net of related expenses, resulting in a pre-tax gain on the sale of $428 million, with the related tax expense of $112 million recorded through the income tax provision, in the consolidated statements of ~~income.~~income for the six months ended June 30, 2020. The pre-tax gain included $176 million related to the remeasurement of the Company’s 40% retained interest based upon the enterprise value of the business. The Company’s remaining 40% ownership interest of the Investment Services business is accounted for as an equity method investment, with the Company’s share of net loss reported within income from investments in unconsolidated affiliates and the related tax benefit reported within the income tax provision in the consolidated statements of income. The Company’s investment in the Investment Services business was $178 million at September 30, 2020 and is reported within other long-term assets in the consolidated balance sheet. The revenues, expenses and cash flows of the Investment Services business were consolidated into the Company’s financial

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results through the date of the sale ~~transaction.~~transaction, and are reported within Corporate and Other (see Note 19). In conjunction with the sale transaction, the Company also entered into transition services agreements to provide, at fair value, various administration, business process outsourcing, technical and data center related services for defined periods to ~~the Investment Services business (see Note 21).~~Tegra118.

~~5. Settlement Assets and Obligations~~

Settlement assets and obligations represent intermediary balances arising from the settlement process which involves the transferring of funds between card issuers, payment networks, merchants and consumers. The Company records settlement assets and obligations upon processingOn February 2, 2021, Tegra118 completed a ~~payment transaction. Settlement assets represent amounts receivable from agents and from payment networks for submitted merchant transactions, and funds received by the Company~~merger with a third party, resulting in ~~advance of paying to the merchant or payee. Settlement obligations represent the unpaid amounts that are due to merchants or payees for their payment transactions.~~

~~The principal components~~a dilution of the Company’s ~~settlement assets~~ownership interest in the combined new entity, Wealthtech Holdings, LLC, which was subsequently renamed as InvestCloud Holdings, LLC (“InvestCloud”). In connection with the transaction, the Company made an additional capital contribution of $200 million into the combined entity and ~~obligations were as follows:~~

(In millions) September 30, 2020 December 31, 2019
Settlement assets
Cash and cash equivalents $ 1,386 $ 1,656
Receivables 8,017 10,212
Total settlement assets $ 9,403 $ 11,868
Settlement obligations
Payment instruments outstanding $ 391 $ 345
Card settlements due to merchants 9,012 11,523
Total settlement obligations $ 9,403 $ 11,868

~~The changes~~recognized a pre-tax gain of $28 million within income (loss) from investments in ~~settlement assets and obligations are presented on a net basis within operating activities~~unconsolidated affiliates in the consolidated statements of ~~cash flows. However, because~~income, with related tax expense of $6 million recorded through the ~~changes~~income tax provision, during the six months ended June 30, 2021. On June 30, 2021, the Company sold its entire ownership interest in InvestCloud for $466 million, resulting in a pre-tax gain of $33 million recorded within income (loss) from investments in unconsolidated affiliates in the ~~settlement assets balance exactly offset changes in settlement obligations,~~consolidated statements of income, with related tax expense of $8 million recorded through the ~~activity nets~~income tax provision, during the three months ended June 30, 2021. The Company will continue to ~~zero.~~

provide various technical and data center related services under the terms of a pre-existing transition services agreement with InvestCloud, as described above.

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6.5. Intangible Assets

Identifiable intangible assets consisted of the following:


(In millions)	(In millions)	Gross Carrying Amount		Accumulated Amortization				Net Book Value		(In millions)	Gross Carrying Amount				Accumulated Amortization			Net Book Value
September 30, 2020
June 30, 2021										June 30, 2021	Gross Carrying Amount				Accumulated Amortization			Net Book Value
Customer relationships	Customer relationships	$	15,124			$	3,217						$	11,907			Customer relationships
Acquired software and technology	Acquired software and technology	2,555		802				1,753		Acquired software and technology		2,673				1,037				1,636
Trade names	Trade names	616		154				462		Trade names	622				205				417
Purchased software										Purchased software	1,069				394			675
Capitalized software and other intangibles	Capitalized software and other intangibles	1,236		400				836		Capitalized software and other intangibles	1,628				490			1,138
Purchased software		930		239				691
Total	Total	$	20,461	$	4,812			$	15,649	Total	$	21,365			$	6,654		$	14,711


(In millions)	(In millions)	Gross Carrying Amount		Accumulated Amortization				Net Book Value		(In millions)	Gross Carrying Amount				Accumulated Amortization			Net Book Value
December 31, 2019
December 31, 2020										December 31, 2020	Gross Carrying Amount				Accumulated Amortization			Net Book Value
Customer relationships	Customer relationships	$	16,187			$	2,145						$	14,042			Customer relationships
Acquired software and technology	Acquired software and technology	2,607		639				1,968		Acquired software and technology		2,562				879				1,683
Trade names	Trade names	620		105				515		Trade names	618				172				446
Purchased software										Purchased software	913				207			706
Capitalized software and other intangibles	Capitalized software and other intangibles	942		332				610		Capitalized software and other intangibles	1,332				412			920
Purchased software		680		173				507
Total	Total	$	21,036	$	3,394			$	17,642	Total	$	20,696			$	5,338		$	15,358

Amortization expense associated with the above identifiable intangible assets was as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	(In millions)	2020		2019		2020		2019		(In millions)	2021		2020		2021		2020
Amortization expense	Amortization expense	$	623	$	459	$	1,934	$	650	Amortization expense	$	653	$	664	$	1,295	$	1,311

Amortization expense during the three and ~~nine~~six months ended ~~September~~June 30, 2020 ~~includes~~ ~~$18~~included $24 million and ~~$53~~$34 million, respectively, of accelerated amortization associated with the termination of certain vendor contracts (see Note ~~16)~~13).

~~The Company estimates that annual amortization expense with respect to intangible assets recorded at September 30, 2020 will be as follows:~~

(In millions)
Year ending December 31,
Remainder of 2020 $ 621
2021 2,432
2022 2,244
2023 1,979
2024 1,531
Thereafter 6,842
Total $ 15,649

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~~7. Goodwill~~

~~The changes in goodwill during the nine months ended September 30, 2020 were as follows:~~

Reportable Segments
(In millions) Acceptance Fintech Payments Total
Goodwill - December 31, 2019 (1)
$ 21,189 $ 2,104 $ 12,745 $ 36,038
Acquisitions and valuation adjustments 325 0 60 385
Foreign currency translation (438) 0 (77) (515)
Goodwill - September 30, 2020 $ 21,076 $ 2,104 $ 12,728 $ 35,908

~~(1)Amounts have been restated to reflect the Segment Realignment effective in the first quarter of 2020 (see Note 22).~~

8.6. Fair Value Measurements

The fair values of cash equivalents, trade accounts receivable, settlement assets and obligations, accounts payable, and client deposits approximate their respective carrying values due to the short period of time to maturity. The Company’s derivative instruments are measured on a recurring basis based on foreign currency spot rates and forwards quoted by banks and foreign currency dealers and are ~~marked-to-market~~marked to market each period (see Note ~~14)~~11). ~~The Company’s net contingent~~Contingent consideration ~~liability, primarily~~ related to ~~the March 2020 acquisitions~~certain of ~~MerchantPro and Bypass~~the

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Company’s acquisitions (see Note 4), is estimated based on the present value of a probability-weighted assessment approach derived from the likelihood of achieving the earn-out criteria. The fair value of the Company’s contingent liability for current expected credit losses associated with its debt guarantees, as further described below, is estimated based on assumptions of future risk of default and the corresponding level of credit losses at the time of default.

Assets and liabilities measured at fair value on a recurring basis consisted of the following:

Fair Value

(In millions)

Classification

Fair Value Hierarchy

September 30,
2020

December 31,
2019

(In millions)

Classification

Fair Value Hierarchy

June 30,
2021

December 31,
2020

Assets

Cash flow hedges

Prepaid expenses and other current assets

Level 2

Cash flow hedges

Prepaid expenses and other current assets

Level 2

Liabilities

Contingent consideration

Accounts payable and accrued expenses

Level 3

Contingent consideration

Accounts payable and accrued expenses

Level 3

Contingent consideration

Other long-term liabilities

Level 3

Contingent consideration

Other long-term liabilities

Level 3

Contingent debt guarantee

Other long-term liabilities

Level 3

Contingent debt guarantee

Other long-term liabilities

Level 3

The Company’s senior notes are recorded at amortized cost but measured at fair value for disclosure purposes. The estimated fair value of senior notes was based on matrix pricing which considers readily observable inputs of comparable securities (Level 2 of the fair value hierarchy). The carrying value of the Company’s ~~term loan~~foreign lines of credit, ~~agreement, revolving credit facility borrowings and~~ debt associated with the receivables securitization agreement, term loan credit agreement, commercial paper notes and revolving credit facility borrowings approximates fair value as these instruments have variable interest rates and the Company has not experienced any change to its credit ratings (Level 2 of the fair value hierarchy). The estimated fair value of total debt, excluding finance leases and other financing obligations, was ~~$22.8~~$21.8 billion and ~~$22.6~~$22.5 billion at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, and the carrying value was ~~$20.5~~$20.1 billion and ~~$21.5~~$19.9 billion at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

The Company maintains annoncontrolling ownership ~~interest~~interests in defi SOLUTIONS Group, LLC and Sagent M&C, LLC, respectively, which ~~were subsidiaries~~are accounted for using the equity method of ~~the Company that owned its Lending Solutions business (collectively, the “Lending Joint Ventures”). The Lending Joint Ventures~~accounting. These joint ventures maintain variable-rate term loan facilities with aggregate outstanding borrowings of ~~$390~~$375 million in senior unsecured debt at June 30, 2021 and variable-rate revolving credit facilities with an aggregate borrowing capacity of $45 million with a syndicate of banks, which mature in March 2023. ~~The Company has guaranteed this debt of the Lending Joint Ventures and does not anticipate that the Lending Joint Ventures will fail to fulfill their debt obligations.~~ Outstanding borrowings on the revolving credit facilities at ~~September~~June 30, ~~2020~~2021 were $5$13 million. The Company has guaranteed this debt and does not anticipate that the respective joint ventures will fail to fulfill their debt obligations. The Company maintains a liability for its non-contingent obligations to perform over the term of the guarantees, which is reported ~~primarily~~ within accounts payable and accrued expenses and other long-term liabilities in the consolidated balance sheets. The non-contingent component of the Company’s debt guarantee arrangements is recorded at amortized cost but measured at fair value for disclosure purposes. The carrying value of the Company’s non-contingent liability of ~~$20~~$14 million and ~~$26~~$18 million approximates the fair value at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~

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2020, respectively (Level 3 of the fair value hierarchy). Such guarantees will be amortized in future periods over the contractual term. In addition, the Company ~~has recorded, in conjunction with the~~ ~~adoption of CECL~~,maintains a contingent liability ($106 million and $8 million at ~~September~~June 30, 2021 and December 31, 2020, respectively, as reported within other long-term liabilities in the consolidated balance ~~sheet)~~sheets), representing the current expected credit losses to which the Company is exposed. This contingent liability is estimated based on certain financial metrics of the ~~Lending Joint Ventures~~respective joint ventures and historical industry data, which is used to develop assumptions of the likelihood the guaranteed parties will default and the level of credit losses in the event a default occurs (Level 3 of the fair value hierarchy). The Company recognized $4$3 million and $2$4 million during the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~recognized $10 million and $5~~$6 million during each of the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, within other income ~~(expense)~~ in its consolidated statements of income related to its release from risk under the non-contingent guarantees as well as a change in the provision of estimated credit losses associated with the indebtedness of the ~~Lending Joint Ventures.~~joint ventures. The Company has not made any payments under the guarantees, nor has it been called upon to do so.

In addition, certain of the Company’s non-financial assets are measured at fair value on a non-recurring basis, including property and equipment, ~~operating~~ lease right-of-use (“ROU”) assets, equity securities without a readily determinable fair value, goodwill and other intangible assets, and are subject to fair value adjustment in certain circumstances. Additional information about fair value adjustments recorded on a non-recurring basis during the three and ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, is included in Note 1613 to the consolidated financial statements.

~~9. Leases~~

~~Company as Lessee~~

~~The Company primarily leases office space, land, data centers and equipment from third parties. The Company’s leases have remaining lease terms ranging from~~ ~~one~~ ~~to 18 years.~~

~~Components of Lease Cost~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions) 2020 2019 2020 2019
Operating lease cost (1)
$ 60 $ 64 $ 183 $ 141
Finance lease cost (2)
Amortization of right-of-use assets 48 16 137 18
Interest on lease liabilities 7 3 16 3
Total lease cost $ 115 $ 83 $ 336 $ 162

~~(1)~~Operating lease expense is included within cost of processing and services, cost of product and selling, general and administrative expense, dependent upon the nature and use of the right-of-use (“ROU”) asset, in the consolidated statements of income. Operating lease cost includes approximately $8 million and $14 million of variable lease costs for the three months ended September 30, 2020 and 2019, respectively, and $27 million and $42 million for the nine months ended September 30, 2020 and 2019, respectively.

~~(2)~~Finance lease expense is recorded as depreciation and amortization expense within cost of processing and services, cost of product and selling, general and administrative expense, dependent upon the nature and use of the ROU asset, and interest expense, net in the consolidated statements of income. Finance lease expense during the three and nine months ended September 30, 2020 includes $17 million and $62 million, respectively, of accelerated amortization associated with the termination of certain vendor contracts (see Note 16).

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~~Supplemental Cash Flow Information~~

Nine Months Ended
September 30,
(In millions) 2020 2019
Cash paid for amounts included in the measurement of lease liabilities:
     Operating cash flows from operating leases $ 116 $ 94
     Operating cash flows from finance leases 16 3
     Financing cash flows from finance leases 161 17
Right-of-use assets obtained in exchange for lease liabilities: (1)
     Operating leases $ 2 $ 459
     Finance leases 331 288

~~(1)Amounts in 2019 include the right-of-use assets and lease liabilities obtained through the acquisition of First Data.~~

~~Company as Lessor~~

~~In connection with the acquisition of First Data, the Company owns certain POS terminal equipment which it leases to merchants. The terms of the leases typically range from~~ ~~two~~ ~~to five years.~~

~~Components of Lease Income~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions) 2020 2019 2020 2019
Sales-type leases:
Selling profit (1)
$ 8 $ 8 $ 34 $ 8
Interest income (1)
20 15 57 15
Operating lease income (2)
21 14 69 14

~~(1)~~Selling profit includes $26 million and $78 million recorded within product revenue with a corresponding charge of $18 million and $44 million recorded within cost of product in the consolidated statements of income for the three and nine months ended September 30, 2020, respectively. Selling profit includes $21 million recorded within product revenue with a corresponding charge of $13 million recorded within cost of product in the consolidated statements of income for the both the three and nine months ended September 30, 2019. Interest income is included within product revenue in the consolidated statements of income.

~~(2)~~Operating lease income includes a nominal amount of variable lease income and is included within product revenue in the consolidated statements of income for the three and nine months ended September 30, 2020 and 2019.

~~Lease Payment Receivables Portfolio~~

The Company accounts for lease payment receivables in connection with POS terminal equipment as a single portfolio. The Company recognizes an allowance for expected credit losses on lease payment receivables at the commencement date of the lease by considering the vintage, geography and internal credit risk ratings of such lease. The internal credit risk ratings are established based on lessee specific risk factors, such as FICO score, number of years the lessee has been in business and the nature of the lessee’s industry, which are considered indicators of the likelihood a lessee may default in the future. The established reserve for estimated credit losses on lease payment receivables upon adoption of ~~ASU 2016-13~~ ~~on January 1, 2020 was $56 million. Such reserve for estimated credit losses at September 30, 2020 was $60 million.~~

The Company determines delinquency status on lease payment receivables based on the number of calendar days past due. The Company considers lease payments that are 90 days or less past due as performing. Lease payments that are greater than 90 days past due are placed on non-accrual status in which interest income is no longer recognized. Lease payment receivables are fully written off in the period they become delinquent greater than 180 days past due. The amortized cost balance of net

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~~investment leases at September 30, 2020 was $233 million. Lease payment receivables that were determined to be on non-accrual status were nominal at each of~~ ~~September 30, 2020~~ ~~and December 31, 2019.~~

~~10.~~7. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:


(In millions)	(In millions)	September 30, 2020		December 31, 2019		(In millions)	June 30, 2021		December 31, 2020
Trade accounts payable	Trade accounts payable	$	373	$	392	Trade accounts payable	$	479	$	437
Client deposits	Client deposits	689		650		Client deposits	740		702
Accrued compensation and benefits	Accrued compensation and benefits	377		378		Accrued compensation and benefits	389		419
Accrued taxes	Accrued taxes	93		137		Accrued taxes	147		130
Accrued interest	Accrued interest	182		224		Accrued interest	246		220
Other accrued expenses	Other accrued expenses	1,330		1,299		Other accrued expenses	1,363		1,278
Total	Total	$	3,044	$	3,080	Total	$	3,364	$	3,186

~~11.~~8. Debt

The Company’s debt consisted of the following:

(In millions) September 30, 2020 December 31, 2019
Short-term and current maturities of long-term debt:
Lines of credit $ 121 $ 150
Finance lease and other financing obligations 244 137
Total short-term and current maturities of long-term debt $ 365 $ 287
Long-term debt:
2.7% senior notes due 2020 $ 0 $ 850
4.75% senior notes due 2021 400 400
3.5% senior notes due 2022 700 700
3.8% senior notes due 2023 1,000 1,000
0.375% senior notes due 2023 584 559
2.75% senior notes due 2024 2,000 2,000
3.85% senior notes due 2025 900 900
2.25% senior notes due 2025 676 687
3.2% senior notes due 2026 2,000 2,000
1.125% senior notes due 2027 584 559
2.25% senior notes due 2027 1,000 0
4.2% senior notes due 2028 1,000 1,000
3.5% senior notes due 2029 3,000 3,000
1.625% senior notes due 2030 584 559
2.65% senior notes due 2030 1,000 0
3.0% senior notes due 2031 676 687
4.4% senior notes due 2049 2,000 2,000
Receivable securitized loan 500 500
Term loan facility 1,750 3,950
Unamortized discount and deferred financing costs (161) (160)
Revolving credit facility 219 174
Finance lease and other financing obligations 482 247
Total long-term debt $ 20,894 $ 21,612



(In millions)	June 30, 2021		December 31, 2020
Short-term and current maturities of long-term debt:
Foreign lines of credit	$	131	$	144
Finance lease and other financing obligations	287		240
Total short-term and current maturities of long-term debt	$	418	$	384

Long-term debt:
4.750% senior notes due June 2021	$	0	$	400
3.500% senior notes due October 2022	700		700
0.375% senior notes due July 2023 (Euro-denominated)	596		612
3.800% senior notes due October 2023	1,000		1,000
2.750% senior notes due July 2024	2,000		2,000
3.850% senior notes due June 2025	900		900
2.250% senior notes due July 2025 (British Pound-denominated)	729		709
3.200% senior notes due July 2026	2,000		2,000
2.250% senior notes due June 2027	1,000		1,000
1.125% senior notes due July 2027 (Euro-denominated)	596		612
4.200% senior notes due October 2028	1,000		1,000
3.500% senior notes due July 2029	3,000		3,000
2.650% senior notes due June 2030	1,000		1,000
1.625% senior notes due July 2030 (Euro-denominated)	596		612
3.000% senior notes due July 2031 (British Pound-denominated)	729		709
4.400% senior notes due July 2049	2,000		2,000
Receivable securitized loan	425		425
Term loan facility	755		1,250
Unamortized discount and deferred financing costs	(141)		(155)
U.S. commercial paper notes	1,060		0
Revolving credit facility	0		22
Finance lease and other financing obligations	480		504
Total long-term debt	$	20,425	$	20,300

The Company was in compliance with all financial debt covenants during the first ~~nine~~six months of ~~2020. Annual maturities of the Company’s total debt were as follows at September 30, 2020:~~

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(In millions)
Year ending December 31,
Remainder of 2020 $ 282
2021 177
2022 1,346
2023 2,334
2024 3,843
Thereafter 13,438
Total principal payments 21,420
Unamortized discount and deferred financing costs (161)
Total debt $ 21,259

On May 13, 2020, the Company completed an offering of $2.0 billion of senior notes comprised of $1.0 billion aggregate principal amount of 2.25% senior notes due in June 2027 and $1.0 billion aggregate principal amount of 2.65% senior notes due in June 2030.2021. The senior notes pay interest semi-annually on June 1 and December 1, commencing on December 1, 2020. The indentures governing the senior notes contain covenants that, among other matters, limit (i) the Company’s ability to consolidate or merge with or into, or convey, transfer or lease all or substantially all of its properties and assets to, another person, (ii) the Company’s and certain of its subsidiaries’ ability to create or assume liens, and (iii) the Company’s and certain of its subsidiaries’ ability to engage in sale and leaseback transactions. The Company may, at its option, redeem the senior notes, in whole or from time to time in part, at any time prior to the applicable maturity date. The Company used the net proceeds from these senior notes offerings to repay the outstanding principal balance of $850 million under its 2.7% senior notes due in June 2020 and outstanding borrowings under its amended and restated revolving credit facility totaling $1.1 billion.

The Company maintains an amended and restated revolving credit facility, which matures in September 2023, with aggregate commitments available for $3.5 billion of total capacity. ~~At September~~

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In May 2021, the Company initiated a U.S. unsecured commercial paper notes program, the proceeds of which are to be used for general corporate purposes. The Company may issue, from time to time, commercial paper notes with maturities of up to 397 days from the date of issuance. Outstanding borrowings under the program were $1.1 billion at June 30, ~~2020,~~2021, with a weighted average interest rate of 0.182%. The Company intends to maintain available capacity under its revolving credit facility in an amount at least equal to the ~~4.75% senior~~outstanding borrowings under its commercial paper notes ~~due in June 2021 were~~program. Outstanding borrowings under the commercial paper notes program are classified in the consolidated balance sheet as long-term, ~~and within the debt maturity schedule above as maturing in September 2023, the date that the Company’s revolving credit facility expires,~~ as the Company has the intent to refinance ~~this debt~~these notes on a long-term basis through the continued issuance of new commercial paper notes upon maturity, and the Company also has the ability to ~~do so~~refinance such notes under its revolving credit facility.

During the three months ended June 30, 2021, the Company used the net proceeds from the issuance of commercial paper notes and from the sale of its remaining ownership interest in InvestCloud (see Note 4) to repay outstanding borrowings under its amended and restated revolving credit facility, to repay its 4.750% senior notes that matured in June 2021, and to pay down outstanding borrowings on its term loan facility.

~~12.~~9. Redeemable Noncontrolling Interests

The ~~Company maintains~~minority partners in 2 of the Company’s merchant alliance joint ventures maintain redeemable noncontrolling interests which are presented outside of equity and carried at their estimated redemption values. Each minority partner owns 1% of the equity in the respective joint venture; in addition, each minority partner is entitled to a contractually determined share of the respective entity’s income. The agreements contain redemption features whereby interests held by the minority partner are redeemable either (i) at the option of the holder or (ii) upon the occurrence of an event that is not solely within the Company’s control. The ~~minority interests have a total estimated redemption value of $260 million, which~~joint ventures may be terminated by either party for convenience any time after September 1, 2021 and December 31, 2024, respectively. In the event of termination for cause, as a result of a change in control, or for convenience after the predetermined date, the Company may be required to purchase the minority partner membership interests at a price equal to the fair market value of the minority interest. At June 30, 2021, redeemable noncontrolling interests had a total estimated redemption value of $261 million.

The following table presents a summary of the redeemable noncontrolling interests activity during the ~~nine~~six months ended ~~September 30, 2020:~~June 30:



~~(In millions)~~
~~Balance at December 31, 2019~~	$	~~262~~

~~Distributions paid to redeemable noncontrolling interests~~	~~(31)~~
~~Share of income~~	29

~~Balance at September 30, 2020~~	$	~~260~~



(In millions)	2021		2020
Balance at beginning of period	$	259	$	262
Distributions paid to redeemable noncontrolling interests	(20)		(22)
Share of income	22		18

Balance at end of period	$	261	$	258

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~~13.~~10. Equity

The following tables provide changes in equity during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020:

Fiserv, Inc. Shareholders’ Equity
Three Months Ended
September 30, 2020 Number of Shares Amount
(In millions) Common Shares Treasury Shares Common Stock Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Loss Retained
Earnings Treasury Stock Noncontrolling Interests Total Equity
Balance at June 30, 2020 791 122 $ 8 $ 23,771 $ (644) $ 12,877 $ (4,429) $ 1,445 $ 33,028
Net income (1)
264 1 265
Net adjustment to noncontrolling interests from dissolution (see Note 4) (36) (726) (762)
Other comprehensive income (loss) (187) 17 (170)
Share-based compensation 84 84
Shares issued under stock plans (1) (48) 32 (16)
Balance at September 30, 2020 791 121 $ 8 $ 23,771 $ (831) $ 13,141 $ (4,397) $ 737 $ 32,429



	Fiserv, Inc. Shareholders’ Equity

Three Months Ended June 30, 2021	Number of Shares		Amount
(In millions)	Common Shares	Treasury Shares	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock		Noncontrolling Interests		Total Equity

Balance at March 31, 2021	789	123	$	8	$	23,522	$	(536)	$	13,745	$	(4,888)	$	735	$	32,586
Net income (1)									269				3		272


Distributions paid to noncontrolling interests (2)													(1)		(1)

Other comprehensive income							213						2		215

Share-based compensation					61										61
Shares issued under stock plans		0			(35)						22				(13)
Purchases of treasury stock		5									(588)				(588)
Retirement of treasury stock (see Note 18)	(5)	(5)			(588)						588				0

Balance at June 30, 2021	784	123	$	8	$	22,960	$	(323)	$	14,014	$	(4,866)	$	739	$	32,532

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(1)The total net income presented in equity for the three months ended ~~September~~June 30, 2021 is different than the amount presented in the consolidated statement of income due to the net income attributable to redeemable noncontrolling interests of $12 million not included in equity.

(2)The total distributions presented in equity for the three months ended June 30, 2021 excludes $10 million in distributions paid to redeemable noncontrolling interests not included in equity.



	Fiserv, Inc. Shareholders’ Equity

Three Months Ended June 30, 2020	Number of Shares		Amount
(In millions)	Common Shares	Treasury Shares	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock				Total Equity
													Noncontrolling Interests
Balance at March 31, 2020	791	117	$	8	$	23,693	$	(811)	$	12,875	$	(3,922)	$	1,444	$	33,287

Net income (loss) (1)									2				(2)		0
Measurement period adjustments related to First Data acquisition (3)													(4)		(4)
Distributions paid to noncontrolling interests (2)													(16)		(16)
Other comprehensive income							167						23		190

Share-based compensation					94										94
Shares issued under stock plans		(1)			(16)						43				27
Purchases of treasury stock		6									(550)				(550)

Balance at June 30, 2020	791	122	$	8	$	23,771	$	(644)	$	12,877	$	(4,429)	$	1,445	$	33,028

(1)The total net income presented in equity for the three months ended June 30, 2020 is different than the amount presented in the consolidated statement of income due to the net income attributable to redeemable noncontrolling interests of ~~$11~~$9 million not included in equity.

Fiserv, Inc. Shareholders’ Equity
Three Months Ended
September 30, 2019 Number of Shares Amount
(In millions) Common Shares Treasury Shares Common Stock Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Loss Retained
Earnings Treasury Stock Total Equity
Noncontrolling Interests
Balance at June 30, 2019 791 399 $ 8 $ 1,056 $ (193) $ 12,083 $ (10,408) $ 0 $ 2,546
Shares issued to acquire First Data (see Note 4) (286) 22,582 7,478 1,119 31,179
Distributions paid to noncontrolling interests (51) (51)
Net income (1)
198 23 221
Other comprehensive loss (186) (186)
Share-based compensation 87 87
Shares issued under stock plans (2) (57) 57 0
Purchases of treasury stock 0 (36) (36)
Balance at September 30, 2019 791 111 $ 8 $ 23,668 $ (379) $ 12,281 $ (2,909) $ 1,091 $ 33,760
(2)The total distributions presented in equity for the three months ended June 30, 2020 excludes $10 million in distributions paid to redeemable noncontrolling interests not included in equity.

(3)During the three months ended June 30, 2020, the Company identified and recorded measurement period adjustments to the preliminary purchase price allocation related to the acquisition of First Data. Accordingly, a measurement period adjustment was recorded to reduce the fair value of noncontrolling interests based on changes to the fair value of the underlying customer relationship intangible assets and the incorporation of additional facts and circumstances that existed as of the acquisition date. Additional information about measurement period adjustments identified and recorded by the Company related to the First Data acquisition is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.



	Fiserv, Inc. Shareholders’ Equity

Six Months Ended June 30, 2021	Number of Shares		Amount
(In millions)	Common Shares	Treasury Shares	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock		Noncontrolling Interests		Total Equity

Balance at December 31, 2020	789	121	$	8	$	23,643	$	(387)	$	13,441	$	(4,375)	$	740	$	33,070
Net income (1)									573				7		580

Distributions paid to noncontrolling interests (2)													(1)		(1)

Other comprehensive income (loss)							64						(7)		57

Share-based compensation					127										127
Shares issued under stock plans		(3)			(222)						121				(101)
Purchases of treasury stock		10									(1,200)				(1,200)
Retirement of treasury stock (see Note 18)	(5)	(5)			(588)						588				0

Balance at June 30, 2021	784	123	$	8	$	22,960	$	(323)	$	14,014	$	(4,866)	$	739	$	32,532

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(1)The total net income presented in equity for the ~~three~~six months ended ~~September~~June 30, ~~2019~~2021 is different than the amount presented in the consolidated statement of income due to the net income attributable to redeemable noncontrolling interests of $4$22 million not included in equity.

22(2)The total distributions presented in equity for the six months ended June 30, 2021 excludes $20 million in distributions paid to redeemable noncontrolling interests not included in equity.

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		Fiserv, Inc. Shareholders’ Equity																	Fiserv, Inc. Shareholders’ Equity

Nine Months Ended September 30, 2020		Number of Shares		Amount
Six Months Ended June 30, 2020																		Six Months Ended June 30, 2020	Number of Shares		Amount
(In millions)	(In millions)	Common Shares	Treasury Shares	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock		Noncontrolling Interests		Total Equity		(In millions)	Common Shares	Treasury Shares	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock				Total Equity
																																				(In millions)	Common Shares	Treasury Shares	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Retained Earnings	Treasury Stock	Noncontrolling Interests	Total Equity
Balance at December 31, 2019	Balance at December 31, 2019	791	112	$	8	$	23,741	$	(180)	$	12,528	$	(3,118)	$	1,616	$	34,595	Balance at December 31, 2019	791	112	$	8	$	23,741	$	(180)	$	12,528	$	(3,118)	$	1,616		$	34,595

Net income (loss) (1)	Net income (loss) (1)									658				(25)		633		Net income (loss) (1)									394				(26)		368
Measurement period adjustments related to First Data acquisition (see Note 4)														(126)		(126)
Measurement period adjustments related to First Data acquisition (3)																		Measurement period adjustments related to First Data acquisition (3)													(126)		(126)

Distributions paid to noncontrolling interests (2)	Distributions paid to noncontrolling interests (2)													(30)		(30)		Distributions paid to noncontrolling interests (2)													(30)		(30)
Net adjustment to noncontrolling interests from dissolution (see Note 4)						(36)								(726)		(762)
Other comprehensive (loss) income	Other comprehensive (loss) income							(651)						28		(623)		Other comprehensive (loss) income							(464)						11		(453)

Share-based compensation	Share-based compensation					286										286		Share-based compensation					202										202
Shares issued under stock plans	Shares issued under stock plans		(5)			(220)						156				(64)		Shares issued under stock plans		(4)			(172)						124				(48)
Purchases of treasury stock	Purchases of treasury stock		14									(1,435)				(1,435)		Purchases of treasury stock		14									(1,435)				(1,435)

Cumulative-effect adjustment of ASU 2016-13 adoption	Cumulative-effect adjustment of ASU 2016-13 adoption									(45)						(45)		Cumulative-effect adjustment of ASU 2016-13 adoption									(45)						(45)
Balance at September 30, 2020		791	121	$	8	$	23,771	$	(831)	$	13,141	$	(4,397)	$	737	$	32,429
Balance at June 30, 2020																		Balance at June 30, 2020	791	122	$	8	$	23,771	$	(644)	$	12,877	$	(4,429)	$	1,445	$	33,028

(1)The total net income presented in equity for the ~~nine~~six months ended ~~September~~June 30, 2020 is different than the amount presented in the consolidated statement of income due to the net income attributable to redeemable noncontrolling interests of ~~$29~~$18 million not included in equity.

(2)The total distributions presented in equity for the ~~nine~~six months ended ~~September~~June 30, 2020 excludes ~~$31~~$22 million in distributions paid to redeemable noncontrolling interests not included in equity.

Fiserv, Inc. Shareholders’ Equity
Nine Months Ended
September 30, 2019 Number of Shares Amount
(In millions) Common Shares Treasury Shares Common Stock Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Loss Retained
Earnings Treasury Stock Total Equity
Noncontrolling Interests
Balance at December 31, 2018 791 399 $ 8 $ 1,057 $ (67) $ 11,635 $ (10,340) $ 0 $ 2,293
Shares issued to acquire First Data (See Note 4) (286) 22,582 7,478 1,119 31,179
Distributions paid to noncontrolling interests (51) (51)
Net income (1)
646 23 669
Other comprehensive loss (312) (312)
Share-based compensation 121 121
Shares issued under stock plans (4) (92) 109 17
Purchases of treasury stock 2 (156) (156)
Balance at September 30, 2019 791 111 $ 8 $ 23,668 $ (379) $ 12,281 $ (2,909) $ 1,091 $ 33,760

~~(1)~~(3)~~The total net income presented~~During the six months ended June 30, 2020, the Company identified and recorded measurement period adjustments to the preliminary purchase price allocation related to the acquisition of First Data. Accordingly, a measurement period adjustment was recorded to reduce the fair value of noncontrolling interests based on changes to the fair value of the underlying customer relationship intangible assets and the incorporation of additional facts and circumstances that existed as of the acquisition date. Additional information about measurement period adjustments identified and recorded by the Company related to the First Data acquisition is included in ~~equity~~the Company’s Annual Report on Form 10-K for the ~~nine months~~year ended September 30, 2019 is different than the amount presented in the consolidated statement of income due to net income attributable to the redeemable noncontrolling interests of $4 million not included in equity.December 31, 2020.

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~~14.~~11. Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component, net of income taxes, consisted of the following:

Three Months Ended September 30, 2020
(In millions) Cash Flow
Hedges Foreign
Currency
Translation Pension Plans Total
Balance at June 30, 2020 $ (138) $ (500) $ (6) $ (644)
Other comprehensive income (loss) before reclassifications 6 (197) 0 (191)
Amounts reclassified from accumulated other comprehensive loss 4 0 0 4
Net current-period other comprehensive income (loss) 10 (197) 0 (187)
Balance at September 30, 2020 $ (128) $ (697) $ (6) $ (831)

Three Months Ended September 30, 2019
(In millions) Cash Flow
Hedges Foreign
Currency
Translation Pension Plans Total
Balance at June 30, 2019 $ (144) $ (47) $ (2) $ (193)
Other comprehensive loss before reclassifications (4) (186) 0 (190)
Amounts reclassified from accumulated other comprehensive loss 4 0 0 4
Net current-period other comprehensive loss 0 (186) 0 (186)
Balance at September 30, 2019 $ (144) $ (233) $ (2) $ (379)

Nine Months Ended September 30, 2020
(In millions) Cash Flow
Hedges Foreign
Currency
Translation Pension Plans Total
Balance at December 31, 2019 $ (141) $ (33) $ (6) $ (180)
Other comprehensive income (loss) before reclassifications 1 (664) 0 (663)
Amounts reclassified from accumulated other comprehensive loss 12 0 0 12
Net current-period other comprehensive income (loss) 13 (664) 0 (651)
Balance at September 30, 2020 $ (128) $ (697) $ (6) $ (831)

Nine Months Ended September 30, 2019
(In millions) Cash Flow
Hedges Foreign
Currency
Translation Pension Plans Total
Balance at December 31, 2018 $ (16) $ (49) $ (2) $ (67)
Other comprehensive loss before reclassifications (134) (184) 0 (318)
Amounts reclassified from accumulated other comprehensive loss 6 0 0 6
Net current-period other comprehensive loss (128) (184) 0 (312)
Balance at September 30, 2019 $ (144) $ (233) $ (2) $ (379)



	Three Months Ended June 30, 2021
(In millions)	Cash Flow Hedges		Foreign Currency Translation		Pension Plans		Total
Balance at March 31, 2021	$	(118)	$	(407)	$	(11)	$	(536)
Other comprehensive income before reclassifications	0		211		0		211
Amounts reclassified from accumulated other comprehensive loss	2		0		0		2
Net current-period other comprehensive income	2		211		0		213
Balance at June 30, 2021	$	(116)	$	(196)	$	(11)	$	(323)

2418

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	Three Months Ended June 30, 2020
(In millions)	Cash Flow Hedges		Foreign Currency Translation		Pension Plans		Total
Balance at March 31, 2020	$	(146)	$	(659)	$	(6)	$	(811)
Other comprehensive income before reclassifications	3		159		0		162
Amounts reclassified from accumulated other comprehensive loss	5		0		0		5
Net current-period other comprehensive income	8		159		0		167



Balance at June 30, 2020	$	(138)	$	(500)	$	(6)	$	(644)



	Six Months Ended June 30, 2021
(In millions)	Cash Flow Hedges		Foreign Currency Translation		Pension Plans		Total
Balance at December 31, 2020	$	(121)	$	(254)	$	(12)	$	(387)
Other comprehensive income before reclassifications	1		58		1		60
Amounts reclassified from accumulated other comprehensive loss	4		0		0		4
Net current-period other comprehensive income	5		58		1		64
Balance at June 30, 2021	$	(116)	$	(196)	$	(11)	$	(323)




	Six Months Ended June 30, 2020
(In millions)	Cash Flow Hedges		Foreign Currency Translation		Pension Plans		Total
Balance at December 31, 2019	$	(141)	$	(33)	$	(6)	$	(180)


Other comprehensive loss before reclassifications	(5)		(467)		0		(472)
Amounts reclassified from accumulated other comprehensive loss	8		0		0		8
Net current-period other comprehensive (loss) income	3		(467)		0		(464)

Balance at June 30, 2020	$	(138)	$	(500)	$	(6)	$	(644)

The Company has entered into forward exchange contracts, which have been designated as cash flow hedges, to hedge foreign currency exposure to the Indian Rupee. ~~At September 30, 2020, the~~The notional amount of these derivatives was ~~$206~~$273 million and $259 million, and the fair value totaling $5 million and $9 million is reported primarily within prepaid expenses and other current assets in the ~~Company’s~~ consolidated balance ~~sheet. At~~sheets at June 30, 2021 and December 31, 2019, the notional amount of these derivatives was $178 million and the fair value totaling $4 million is reported primarily within prepaid expenses and other current assets in the Company’s consolidated balance sheet.2020, respectively. Based on the amounts recorded in accumulated other comprehensive loss at ~~September~~June 30, ~~2020,~~2021, the Company estimates that it will recognize gains of approximately $4$5 million in cost of processing and services during the next twelve months as foreign exchange forward contracts settle.

~~In March 2019, the~~The Company had previously entered into treasury lock agreements (“Treasury Locks”), designated as cash flow hedges, in the aggregate notional amount of $5.0 billion to manage exposure to fluctuations in benchmark interest rates in anticipation of the issuance of fixed rate debt in connection with the acquisition and refinancing of certain indebtedness of First Data and its subsidiaries. In June 2019, concurrent with the issuance of U.S dollar-denominated senior notes, the Treasury Locks were settled resulting in a payment ~~included in cash flows from operating activities,~~ of $183 million recorded in accumulated other comprehensive loss, net of income taxes, that will be amortized to earnings over the terms of the originally forecasted interest payments. Based on the amounts recorded in accumulated other comprehensive loss at ~~September~~June 30, ~~2020,~~2021, the Company estimates that it will recognize approximately ~~$21~~$20 million in interest expense, net during the next twelve months related to settled interest rate hedge contracts.

To reduce exposure to changes in the value of the Company’s net investments in certain of its foreign currency-denominated subsidiaries due to changes in foreign currency exchange rates, the Company uses its foreign currency-denominated debt as an

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economic hedge of its net investments in such foreign currency-denominated subsidiaries. ~~In conjunction with the acquisition of First Data, the~~The Company has designated its Euro- and British Pound-denominated senior notes as net investment hedges to hedge a portion of its net investment in certain subsidiaries whose functional currencies are the Euro and the British Pound. Accordingly, foreign currency transaction gains or losses on the qualifying net investment hedge instruments are recorded as foreign currency translation within other comprehensive income (loss) ~~income~~ in the consolidated statements of comprehensive income (loss) and will remain in accumulated other comprehensive loss in the consolidated balance sheets until the sale or complete liquidation of the underlying foreign subsidiaries. The Company recorded a foreign currency translation (loss) gain, ~~(loss),~~ net of tax, of ~~$(92)~~$(26) million and ~~$(38)~~$(1) million in other comprehensive income (loss) ~~income~~ during the three ~~and nine~~ months ended ~~September~~June 30, 2021 and 2020, respectively, and ~~$28~~$6 million ~~during both~~and $54 million for the ~~three~~six months ended June 30, 2021 and ~~nine months endedSeptember 30,~~ ~~2019~~,2020, respectively, from the Euro- and British Pound-denominated senior notes.

~~15.~~12. Share-Based Compensation

The Company recognized ~~$84~~$61 million and ~~$87~~$94 million of share-based compensation expense during the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$286~~$127 million and ~~$121~~$202 million of ~~share-based~~share based compensation expense during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The Company’s annual grant of share-based awards generally occurs in the first quarter. At ~~September~~June 30, ~~2020,~~2021, the total remaining unrecognized compensation cost for unvested stock options, restricted stock units and awards and performance share units, ~~and awards,~~ net of estimated forfeitures, of ~~$343~~$373 million is expected to be recognized over a weighted-average period of ~~2.0~~2.2 years. During the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, stock options to purchase ~~2.2~~2.4 million and ~~3.3~~1.8 million shares, respectively, were exercised.

A summary of stock option activity is as follows:

Shares
(In thousands) Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (In millions)
Stock options outstanding - December 31, 2019 15,989 $ 42.83
Granted 1,503 112.87
Forfeited (158) 92.47
Exercised (2,195) 34.31
Stock options outstanding - September 30, 2020 15,139 $ 50.51 4.82 $ 810
Stock options exercisable - September 30, 2020 12,438 $ 40.82 4.00 $ 774

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	Shares (In thousands)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (In millions)
Stock options outstanding - December 31, 2020	14,689	$	50.82

Granted	4	102.69
Forfeited	(38)	107.18
Exercised	(2,387)	33.56
Stock options outstanding - June 30, 2021	12,268	$	54.02	4.45	$	655
Stock options exercisable - June 30, 2021	10,806	$	47.15	3.92	$	646

A summary of restricted stock unit, restricted stock award and performance share unit activity is as follows:


									Restricted Stock Units and Awards			Performance Share Units
		Restricted Stock Units			Performance Share Units				Shares (In thousands)	Weighted-Average Grant Date Fair Value		Shares (In thousands)	Weighted-Average Grant Date Fair Value
		Shares (In thousands)	Weighted-Average Grant Date Fair Value		Shares (In thousands)	Weighted-Average Grant Date Fair Value
Units - December 31, 2019		6,869	$	93.80	2,328	$	94.61
Units - December 31, 2020								Units - December 31, 2020	4,797	$	98.29	1,821	$	95.20

Granted	Granted	1,336	111.71		0	0		Granted	2,243	104.61		255	108.68
Forfeited	Forfeited	(220)	92.28		(28)	90.44		Forfeited	(181)	104.24		(74)	98.67
Vested	Vested	(3,227)	95.84		(479)	92.62		Vested	(2,087)	98.99		(223)	79.70
Units - September 30, 2020		4,758	$	97.46	1,821	$	95.20
Units - June 30, 2021								Units - June 30, 2021	4,772	$	100.65	1,779	$	97.23

~~A summary of restricted stock award activity is as follows:~~

Restricted Stock Awards
Shares
(In thousands) Weighted-Average Grant Date Fair Value
Awards - December 31, 2019 48 $ 102.30
Granted 0 0
Forfeited 0 0
Vested 0 0
Awards - September 30, 2020 48 $ 102.30

~~16.~~13. Restructuring and Other Charges

In connection with the July 2019 acquisition of First Data, the Company continues to implement ~~certain~~ integration plans focused on reducing the Company’s overall cost structure, including reducing vendor spend and eliminating duplicate costs. The Company recorded restructuring charges related to certain of these integration activities of ~~$41~~$6 million and ~~$181~~$92 million, primarily reported in cost of processing and services and selling, general and administrative expenses within the consolidated statements of income, based upon committed actions during the three ~~and nine~~ months ended ~~September~~June 30, 2021 and 2020, respectively, and $28 million and $140 million during the six months ended June 30, 2021 and 2020, respectively. The Company continues to evaluate operating efficiencies and anticipates incurring additional costs in connection with these activities but is unable to estimate those amounts at this time as such plans are not yet finalized.

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Employee Termination Costs

The Company recorded ~~$28~~$5 million and ~~$105~~$37 million of employee termination costs related to severance and other separation costs for terminated employees in connection with the acquisition of First Data during the three ~~and nine~~ months ended ~~September~~June 30, 2021 and 2020, respectively, and $18 million and $77 million during the six months ended June 30, 2021 and 2020, respectively. The following table summarizes the changes in the reserve related to the Company’s employee severance and other separation ~~costs during the nine months ended September 30, 2020:~~costs:



~~(In millions)~~
~~Balance at December 31, 2019~~	$	14
~~Severance and other separation costs~~	~~105~~
~~Non-cash adjustments~~	~~(6)~~
~~Cash payments~~	~~(88)~~

~~Balance at September 30, 2020~~	$	25



	Six Months Ended June 30,
(In millions)	2021		2020
Balance at beginning of period	$	27	$	14
Severance and other separation costs	18		77

Cash payments	(32)		(62)

Balance at end of period	$	13	$	29

The employee severance and other separation costs accrual balance of ~~$25~~$13 million at ~~September~~June 30, ~~2020~~2021 is expected to be paid within the next twelve months. In addition, the Company recorded share-based compensation costs of $9$1 million and ~~$32~~$15 million during the three ~~and nine~~ months ended ~~September~~June 30, 2021 and 2020, respectively, and $5 million and $23 million during the six months ended June 30, 2021 and 2020, respectively, related to the accelerated vesting of equity awards for terminated employees. ~~The Company expects to incur additional employee termination costs as a result of finalizing and executing further integration activities in 2020.~~

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Facility Exit Costs

The Company has identified certain leased facilities that have been or will be exited in the future as part of the Company’s efforts to reduce facility costs. During the first ~~nine~~six months of 2021 and 2020, the Company permanently vacated certain of these leased facilities in advance of the non-cancellable lease terms. In conjunction with the exit of these leased facilities, the Company assessed the respective operating lease ROU assets for impairment by comparing the carrying values of the ROU assets to the discounted cash flows from estimated sublease payments (Level 3 of the fair value hierarchy). In addition, the Company assessed certain property and equipment associated with the leased facilities for impairment. As a result, the Company recorded non-cash impairment charges of $4$0 million and ~~$44~~$5 million, reported in selling, general and administrative expense within the consolidated statements of income during the three and ~~nine~~six months ended ~~September~~June 30, 2021, respectively, and $40 million during both the three and six months ended June 30, 2020, respectively, associated with the early exit of these leased facilities.

Other Costs

~~During the first quarter of 2020, in~~In connection with initiatives to reduce the Company’s overall cost structure following the acquisition of First Data, the Company terminated certain of its existing lease agreements to upgrade and consolidate its computing infrastructure. The Company upgraded or replaced certain leased hardware under separate, new lease agreements, resulting in the early termination and disposal of existing hardware under the current lease agreements. As such, the Company ~~has~~ adjusted the amortization period for these existing lease agreements to coincide with the modified remaining term. Finance lease expense during the three and ~~nine~~six months ended ~~September~~June 30, 2020 ~~includes $17~~included $7 million and ~~$62~~$45 million, respectively, of accelerated amortization associated with the termination of these vendor contracts. In addition, the Company executed similar terminations to certain of its existing software financing agreements. Amortization expense during the three and ~~nine~~six months ended ~~September~~June 30, 2020 ~~includes $18~~included $24 million and ~~$53~~$34 million, respectively, of accelerated amortization associated with the termination of these vendor contracts.

~~17.~~14. Income Taxes

The Company’s income tax ~~provision~~(provision) benefit and effective income tax rate were as follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	(In millions)	2020			2019			2020			2019			(In millions)	2021			2020			2021			2020
Income tax provision		$	124		$	53		$	176		$	144
Income tax (provision) benefit														Income tax (provision) benefit	$	(228)		$	27		$	(246)		$	(52)
Effective income tax rate	Effective income tax rate	32.5		%	20.7		%	21.1		%	17.9		%	Effective income tax rate	48.5		%	337.5		%	31.1		%	11.5		%

The income tax ~~provision~~(provision) benefit as a percentage of income (loss) before income taxes and income (loss) from investments in unconsolidated affiliates was ~~32.5%~~48.5% and ~~20.7%~~337.5% for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and was ~~21.1%~~31.1% and ~~17.9%~~11.5% for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively.

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The effective income tax rate for the three months ended ~~September~~June 30, ~~2020~~2021 includes ~~$32~~$134 million of income tax expense ~~related~~attributed to the revaluation of certain net deferred tax liabilities, ~~as a result~~primarily related to intangible assets and investments in joint ventures recognized at fair value in connection with the acquisition of ~~an increase~~First Data, reflecting the effect of enacted corporate income tax rate changes in the United Kingdom ~~corporate~~(tax rate increase from 19% to 25% starting in 2023) and Argentina (tax rate increase from 25% to 35%), partially offset by decreases in uncertain tax positions. For the three months ended June 30, 2020, the income tax ~~rate~~benefit of $27 million on an $8 million loss before income taxes and loss from ~~17% to 19%~~investments in ~~the quarter.~~unconsolidated affiliates included equity compensation related tax benefits, changes in uncertain tax positions and other discrete tax items.

The effective income tax rate for the ~~nine~~six months ended ~~September~~June 30, 2021 includes $134 million of income tax expense noted above, partially offset by discrete tax benefits from subsidiary restructurings and equity compensation related tax benefits. The effective income tax rate for the six months ended June 30, 2020 ~~also includes~~included $112 million of income tax expense associated with the $428 million gain on the sale of a 60% interest of the Company’s Investment Services business (see Note 4)~~. The effective income tax rate in~~, partially offset by the ~~nine months ended September 30, 2019 included discrete~~impact of equity compensation related tax benefits ~~due to~~on a ~~loss from subsidiary restructuring.~~lower level of pre-tax income and changes in uncertain tax positions.

The Company’s potential liability for unrecognized tax benefits before interest and penalties was approximately ~~$185~~$160 million at ~~September~~June 30, ~~2020.~~2021. The Company believes it is reasonably possible that the liability for unrecognized tax benefits may decrease by up to ~~$66~~$35 million over the next twelve months as a result of possible closure of federal tax audits, potential settlements with certain states, and ~~foreign countries, and~~ the lapse of the statutes of ~~limitations~~limitation in various ~~state and foreign~~ jurisdictions.

As of ~~September~~June 30, ~~2020,~~2021, the Company’s U.S. federal income tax returns for ~~2016 through~~2017, 2019 and 2020, and tax returns in certain states and foreign jurisdictions for 2005 through ~~2019,~~2020, remain subject to examination by taxing authorities. ~~In connection with the acquisition of First Data, the Company is subject to income tax examination from 2008 forward in relation to First Data’s U.S. federal income tax return.~~ State and local examinations are substantially complete through 2010 in relation to First Data’s state and local tax filings. Foreign jurisdictions generally remain subject to examination by their respective authorities from ~~2007~~2010 forward in relation to First Data’s foreign tax filings, none of which are considered significant jurisdictions.

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During the three months ended September 30, 2020, the U.S. Department of Treasury released certain proposed and final regulations relating to provisions that were enacted under the Tax Cuts and Jobs Act of 2017. The new regulations did not have a material impact on the Company’s consolidated financial statements.

~~18.~~15. Shares Used in Computing Net Income Per Share Attributable to Fiserv, Inc.

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


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended June 30,		Six Months Ended June 30,
(In millions)	(In millions)	2020	2019	2020	2019	(In millions)	2021	2020	2021	2020
Weighted-average common shares outstanding used for the calculation of net income attributable to Fiserv, Inc. per share - basic	Weighted-average common shares outstanding used for the calculation of net income attributable to Fiserv, Inc. per share - basic	669.8	584.8	672.6	456.3	Weighted-average common shares outstanding used for the calculation of net income attributable to Fiserv, Inc. per share - basic	663.7	670.0	666.1	674.1
Common stock equivalents	Common stock equivalents	10.5	12.1	11.5	8.9	Common stock equivalents	9.0	10.8	10.2	11.9
Weighted-average common shares outstanding used for the calculation of net income attributable to Fiserv, Inc. per share - diluted	Weighted-average common shares outstanding used for the calculation of net income attributable to Fiserv, Inc. per share - diluted	680.3	596.9	684.1	465.2	Weighted-average common shares outstanding used for the calculation of net income attributable to Fiserv, Inc. per share - diluted	672.7	680.8	676.3	686.0

For the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, stock options for ~~2.6~~1.2 million and ~~1.2~~3.1 million shares, respectively, were excluded from the calculation of weighted-average outstanding shares - diluted because their impact was anti-dilutive. For the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, stock options for ~~2.0~~1.4 million and ~~1.1~~1.8 million shares, respectively, were excluded from the calculation of weighted-average outstanding shares - diluted because their impact was anti-dilutive.

~~19.~~16. Cash Flow Information

Supplemental cash flow information consisted of the following:


		Nine Months Ended September 30,					Six Months Ended June 30,
(In millions)	(In millions)	2020		2019		(In millions)	2021		2020
Interest paid	Interest paid	$	548	$	149	Interest paid	$	301	$	320
Income taxes paid	Income taxes paid	143		155		Income taxes paid	290		72
Treasury stock purchases settled after the balance sheet date		0		10
Distribution of nonmonetary assets (see Notes 4 and 13)		726		0

Financed software arrangements	Financed software arrangements	130		0		Financed software arrangements	68		97
Right-of-use assets obtained in exchange for lease liabilities - operating leases						Right-of-use assets obtained in exchange for lease liabilities - operating leases	71		0
Right-of-use assets obtained in exchange for lease liabilities - finance leases						Right-of-use assets obtained in exchange for lease liabilities - finance leases	95		315

~~20.~~

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17. Commitments and Contingencies

Litigation

In the normal course of business, the Company or its subsidiaries are named as defendants in lawsuits in which claims are asserted against the Company. In addition, the Company assumed certain legal proceedings in connection with the acquisition of First Data ~~(see Note 4)~~ primarily associated with its merchant business including claims related to alleged processing errors and a tax matter. In the second quarter of 2020, the Company resolved a matter with the Federal Trade Commission related to a U.S.-based wholesale independent sales organization resulting in a payment of $40 million, for which the Company previously had accrued. The Company maintained reserves of ~~$27~~$43 million and ~~$43~~$32 million at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, related to its various legal proceedings, primarily associated with the Company’s merchant business as described above. The Company’s estimate of the possible range of exposure for various litigation matters in excess of amounts accrued is ~~approximately~~ $0 million to ~~$60~~approximately $65 million. 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 Company’s consolidated financial statements.

Electronic Payments Transactions

In connection with the Company’s processing of electronic payments transactions, funds received from subscribers are invested from the time the Company collects the funds until payments are made to the applicable recipients. These subscriber funds are invested in short-term, highly liquid investments. Subscriber funds, which are not included in the Company’s consolidated balance sheets, can fluctuate significantly based on consumer bill payment and debit card activity and totaled approximately $1.0 billion and ~~$2.0~~$1.7 billion at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

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Indemnifications and Warranties

The Company may indemnify its clients from certain costs resulting from claims of patent, copyright or trademark infringement associated with its clients’ use of the Company’s products or services. The Company may also warrant to clients that its products and services will operate substantially in accordance with identified specifications. From time to time, in connection with sales of businesses, the Company agrees to indemnify the buyers of such businesses for liabilities associated with the businesses that are sold. Payments, net of recoveries, under such indemnification or warranty provisions were not material to the Company’s consolidated ~~results of operations or~~ financial ~~position.~~statements.

~~21.~~18. Related Party Transactions

Merchant Alliances

The Company maintains ~~various~~ ownership interests of significant influence in various merchant alliances and strategic investments in companies in related markets. ~~At September 30, 2020, the Company had 16 affiliates, the most significant of which are related to the Company’s merchant bank alliance affiliates.~~ A merchant alliance ~~as it pertains to investments accounted for under the equity method,~~ is an agreement between the Company and a financial institution that combines the processing capabilities and management expertise of the Company with the visibility and distribution channel of the ~~bank.~~financial institution. A merchant alliance acquires credit and debit card transactions from merchants. The Company provides processing and other services to the alliance and charges fees to the alliance primarily based on contractual pricing.

A significant portion of the Company’s business is conducted through merchant alliances between the Company and financial institutions. To the extent the Company maintains a controlling financial interest in an alliance, the alliance’s financial statements are consolidated with those of the Company and the related processing fees are treated as an intercompany transaction and eliminated in consolidation. To the extent the Company has significant influence but not control in an alliance, the Company uses the equity method of accounting to account for its investment in the alliance. As a result, the ~~Company’s consolidated revenues include~~ processing ~~fees, administrative service fees,~~ and other service fees charged to merchant alliances accounted for under the equity ~~method.~~method are recognized in the Company’s consolidated statements of income primarily as processing and services revenue. Such fees totaled ~~$47~~$45 million and ~~$134~~$41 million for the three ~~and nine~~ months ended ~~September~~June 30, 2021 and 2020, respectively, and ~~$31~~$90 million and $87 million for ~~both~~ the ~~three and nine~~six months ended ~~September~~June 30, ~~2019.~~2021 and 2020, respectively. No directors or officers of the Company have ownership interests in any of the alliances. The formation of each of these alliances generally involves the Company and the ~~bank~~financial institution contributing contractual merchant relationships to the alliance and a cash payment from one owner to the other to achieve the desired ownership percentage for each. The Company and the ~~bank~~financial institution enter into a long-term processing service agreement as part of the negotiation process. This agreement governs the Company’s provision of transaction processing services to the alliance. The Company had ~~$36~~$34 million and ~~$35~~$37 million of amounts due from unconsolidated merchant alliances included within trade accounts receivable, net in the ~~Company’s~~ consolidated balance sheets at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

Effective July 1, 2020, the Company and Bank of America dissolved their BAMS joint venture, of which the Company maintained a 51% controlling ownership interest. Upon the dissolution of the operations, the joint venture transferred a proportionate share of value, primarily the client contracts, to each party via an agreed upon contractual separation. The revenues and expenses of the BAMS joint venture were consolidated into the Company’s financial results through the date of dissolution. See Note 4 for additional information.

Joint Venture Transition Services Agreements

Pursuant to certain transition services agreements, the Company provides, at fair value, various administration, business process outsourcing, and technical and data center related services for defined periods to ~~the Lending Joint Ventures and Investment Services business (see Notes 4 and 8).~~certain joint ventures. Amounts transacted

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through these agreements totaled ~~$16~~$13 million and $9$16 million during the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$43~~$26 million and $27 million ~~for~~during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and were primarily recognized as processing and services revenue in the ~~Company’s~~ consolidated statements of income.

Share Repurchase

~~22.~~On May 3, 2021, New Omaha Holdings L.P. (“New Omaha”), a shareholder of the Company, completed an underwritten secondary public offering of 23.0 million shares of Fiserv, Inc. common stock (the “offering”). The Company did not sell any shares in, nor did it receive any proceeds from, the offering. New Omaha received all of the net proceeds from the offering. In connection with the offering, the Company repurchased from the underwriters 5.0 million shares of its common stock that were subject to the offering, at a price equal to the price per share paid by the underwriters to New Omaha in the offering (the “share repurchase”). The share repurchase totaled $588 million and was funded with cash on hand. The repurchased shares were cancelled and no longer outstanding following the completion of the share repurchase. Prior to the offering, New Omaha owned approximately 13% of the Company’s outstanding shares of common stock, and following the offering, New Omaha owned approximately 9% as of June 30, 2021.

19. Business Segment Information

~~Following the Segment Realignment (see Note 1), the~~The Company’s operations are comprised of the Acceptance segment, the Fintech segment and the Payments segment.

The businesses in the Acceptance segment provide a wide range of ~~products~~commerce-enabling solutions and ~~services to~~serve merchants of all sizes around the ~~world, including~~world. These services include point-of-sale merchant acquiring and ~~e-commerce services,~~digital commerce services; mobile payment ~~services,~~services; security and fraud protection ~~products,~~products; CaratSM, the Company’s omnichannel commerce solution; and the Company’s cloud-based Clover ~~POS platform, which includes a marketplace for proprietary and third-party business applications.~~® point-of-sale platform. The Company distributes the products and services in the global Acceptance segment businesses ~~are distributed~~ through a variety of channels, including ~~through~~ direct sales teams, strategic partnerships with ~~indirect non-bank~~agent sales forces, independent software vendors, financial institutions and ~~bank and non-bank~~other strategic partners in the form of joint venture alliances, revenue sharing alliances and referral

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agreements. ~~Many merchants,~~Merchants, financial institutions and distribution partners ~~within~~in the Acceptance segment are ~~also customers~~frequently clients of the Company’s other segments.

The businesses in the Fintech segment provide financial institutions around the world with the technology solutions they need to run their operations, including ~~an institution’s general ledger and central information files and~~ products and services that enable financial institutions to process customer deposit and loan ~~accounts.~~accounts and manage an institution’s general ledger and central information files. As a complement to the core account processing functionality, the ~~businesses in the~~ global Fintech segment businesses also provide digital banking, financial and risk ~~management, cash~~ management, professional services and consulting, item processing and source capture, and other products and services that support numerous types of financial transactions. ~~In addition, some~~Some of the businesses in the Fintech segment provide products or services to corporate clients to facilitate the management of financial processes and transactions. Many of the products and services offered in the Fintech segment are integrated with ~~solutions from~~products and services provided by the Company’s other segments.

The businesses in the Payments segment provide financial institutions and corporate clients around the world with the products and services required to process digital payment transactions. This includes card transactions such as debit, credit and prepaid card processing and ~~services,~~services; a range of network services, security and fraud protection ~~products,~~products; card production and print services. In addition, the global Payments segment businesses offer non-card digital payment software and services, including bill payment, account-to-account transfers, person-to-person payments, electronic billing, and security and fraud protection products. Clients of the ~~global~~ Payments segment businesses reflect a wide range of industries, including merchants, distribution partners and financial institution customers in the Company’s other segments.

Corporate and Other supports the reportable segments described above, and consists of amortization of acquisition-related intangible assets, unallocated corporate expenses and other activities that are not considered when management evaluates segment performance, such as gains or losses on sales of businesses, costs associated with acquisition and divestiture activity, and the Company’s Output Solutions postage reimbursements. Corporate and Other also includes the historical results of the Company’s Investment Services business prior to the Company’s disposal of ~~which the Company sold a 60%~~its controlling financial interest in February 2020 (see Note 4), as well as certain transition services revenue associated with various dispositions.

~~Operating results~~

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Revenue and operating income (loss) for each reportable segment are presented below and include the results of First Data from July 29, 2019, the date of acquisition. Segment results for the three and nine months ended September 30, 2019 have been restated to reflect the Segment Realignment.were as follows:


													Reportable Segments
(In millions)	(In millions)	Acceptance		Fintech		Payments		Corporate and Other		Total		(In millions)	Acceptance		Fintech		Payments		Corporate and Other		Total
Three Months Ended September 30, 2020
Three Months Ended June 30, 2021												Three Months Ended June 30, 2021
Processing and services revenue	Processing and services revenue	$	1,256	$	684	$	1,203	$	10	$	3,153	Processing and services revenue	$	1,432	$	708	$	1,211	$	10	$	3,361
Product revenue	Product revenue	198		43		184		208		633		Product revenue	234		46		210		200		690
Total revenue	Total revenue	$	1,454	$	727	$	1,387	$	218	$	3,786	Total revenue	$	1,666	$	754	$	1,421	$	210	$	4,051
Operating income (loss)	Operating income (loss)	$	423	$	265	$	599	$	(745)	$	542	Operating income (loss)	$	524	$	273	$	629	$	(782)	$	644
Three Months Ended September 30, 2019
Three Months Ended June 30, 2020												Three Months Ended June 30, 2020
Processing and services revenue	Processing and services revenue	$	867	$	692	$	1,002	$	47	$	2,608	Processing and services revenue	$	1,049	$	675	$	1,153	$	13	$	2,890
Product revenue	Product revenue	145		43		151		181		520		Product revenue	174		39		167		195		575
Total revenue	Total revenue	$	1,012	$	735	$	1,153	$	228	$	3,128	Total revenue	$	1,223	$	714	$	1,320	$	208	$	3,465
Operating income (loss)	Operating income (loss)	$	296	$	223	$	476	$	(621)	$	374	Operating income (loss)	$	245	$	252	$	548	$	(880)	$	165
Nine Months Ended September 30, 2020
Six Months Ended June 30, 2021												Six Months Ended June 30, 2021
Processing and services revenue	Processing and services revenue	$	3,495	$	2,032	$	3,540	$	51	$	9,118	Processing and services revenue	$	2,621	$	1,397	$	2,375	$	22	$	6,415
Product revenue	Product revenue	583		127		553		639		1,902		Product revenue	442		93		451		405		1,391
Total revenue	Total revenue	$	4,078	$	2,159	$	4,093	$	690	$	11,020	Total revenue	$	3,063	$	1,490	$	2,826	$	427	$	7,806
Operating income (loss)	Operating income (loss)	$	985	$	721	$	1,712	$	(2,082)	$	1,336	Operating income (loss)	$	911	$	519	$	1,207	$	(1,518)	$	1,119
Nine Months Ended September 30, 2019
Six Months Ended June 30, 2020												Six Months Ended June 30, 2020
Processing and services revenue	Processing and services revenue	$	867	$	2,054	$	2,160	$	148	$	5,229	Processing and services revenue	$	2,239	$	1,348	$	2,337	$	41	$	5,965
Product revenue	Product revenue	145		137		306		325		913		Product revenue	385		84		369		431		1,269
Total revenue	Total revenue	$	1,012	$	2,191	$	2,466	$	473	$	6,142	Total revenue	$	2,624	$	1,432	$	2,706	$	472	$	7,234
Operating income (loss)	Operating income (loss)	$	296	$	647	$	1,038	$	(850)	$	1,131	Operating income (loss)	$	562	$	456	$	1,113	$	(1,337)	$	794

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This quarterly report contains “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those that express a plan, belief, expectation, estimation, anticipation, intent, contingency, future development or similar expression, and can generally be identified as forward-looking because they include words such as “believes,” “anticipates,” “expects,” “could,” ~~“should”~~“should,” or words of similar meaning. Statements that describe our future plans, objectives or goals are also forward-looking statements.

The forward-looking statements in this report involve significant risks and uncertainties, and a number of factors, both foreseen and unforeseen, that could cause actual results to differ materially from our current expectations. The factors that may affect our results include, among others, the following, many of which are, and ~~will~~may continue to be, amplified by the COVID-19 pandemic: the duration and intensity of the COVID-19 pandemic, including how quickly the global economy recovers from the impact of the pandemic; governmental and private sector responses to the COVID-19 pandemic and the impact of such responses on us; the impact of the COVID-19 pandemic on our employees, clients, vendors, operations and sales; the possibility that we may be unable to achieve expected synergies and operating efficiencies from the acquisition of First Data Corporation (“First Data”) within the expected time frames or ~~at all or to successfully integrate~~that the ~~operations~~integration of First Data ~~into our operations; such integration~~ may be more difficult, time-consuming or costly than expected; profitability following the transaction may be lower than expected, including due to unexpected costs, charges or expenses resulting from the transaction; operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) may be greater than expected following the transaction; unforeseen risks relating to our liabilities or those of First Data may exist; our ability to meet expectations regarding the accounting and tax treatments of the transaction; our ability to compete effectively against new and existing competitors and to continue to introduce competitive new products and services on a timely, cost-effective basis; changes in customer demand for our products and services; the ability of our technology to keep pace with a rapidly evolving marketplace; the successful management of our merchant alliance program which involves several alliances not under our sole control; the impact of a security breach or operational failure on our business including disruptions caused by other participants in the global financial system; the failure of our vendors and merchants to satisfy their obligations; the successful management of credit and fraud risks in our business and merchant alliances; changes in local, regional, national and international economic or political conditions and the impact they may have on us and our customers; the effect of proposed and enacted legislative and regulatory actions affecting us or the financial services industry as a whole; our ability to comply with government regulations and applicable card association and network rules; the protection and validity of intellectual property rights; the outcome of pending and future litigation and governmental proceedings; our ability to successfully identify, complete and integrate acquisitions, and to realize the anticipated benefits associated with the same; the impact of our strategic initiatives; our ability to attract and retain key personnel; volatility and disruptions in financial markets that may impact our ability to access preferred sources of financing and the terms on which we are able to obtain financing or increase our costs of borrowing; adverse impacts from currency exchange rates or currency controls; changes in corporate tax and interest rates; and other factors ~~identified~~included in ~~this Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 and~~"Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020 and in other documents that we file with the Securities and Exchange ~~Commission.~~Commission, which are available at http://www.sec.gov. You should consider these factors carefully in evaluating forward-looking statements and are cautioned not to place undue reliance on such statements, which speak only as of the date of this report. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report.

Management’s discussion and analysis of financial condition and results of operations is provided as a supplement to our unaudited consolidated financial statements and accompanying notes to help provide an understanding of our financial condition, the changes in our financial condition and our results of operations. Our discussion is organized as follows:

•Overview. This section contains background information on our company and the services and products that we provide, acquisitions and dispositions, and the trends affecting our industry in order to provide context for management’s discussion and analysis of our financial condition and results of operations.

•Changes in critical accounting policies and estimates. This section contains a discussion of changes since our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 in the accounting policies that we believe are important to our financial condition and results of operations and that require judgment and estimates on the part of management in their application.

•Results of operations. This section contains an analysis of our results of operations presented in the accompanying unaudited consolidated statements of income by comparing the results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 to the comparable periods in ~~2019.~~2020.

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•Liquidity and capital resources. This section provides an analysis of our cash flows and a discussion of our outstanding debt at ~~September~~June 30, ~~2020.~~2021.

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Overview

Company Background

We are a leading global provider of payments and financial services technology solutions. We provide account processing and digital banking ~~solutions,~~solutions; card issuer processing and network ~~services, payments, e-commerce,~~services; payments; e-commerce; merchant acquiring and ~~processing,~~processing; and the Clover® cloud-based point-of-sale (“POS”) solution. We serve clients around the globe, including banks, credit unions, other financial institutions, corporate clients and merchants.

We aspire to move money and information in a way that moves the world by delivering superior value for our clients through leading technology, targeted innovation and excellence in everything we do. We ~~achieve this through active portfolio management~~are focused on driving growth and creating value by assembling a high-performing and diverse team, integrating our solutions, delivering operational excellence, allocating capital in a disciplined manner, including share repurchase and merger and acquisition activity, and delivering breakthrough innovation.

Our operations are comprised of ~~our businesses, enhancing~~ the overall value of our existing client relationships, improving operational effectiveness, being disciplined in our allocation of capital, and differentiating our products and services through innovation. Our long-term priorities are to (i) deliver integration value from the First Data acquisition; (ii) continue to build high-quality revenue while meeting our earnings goals; (iii) enhance client relationships with an emphasis on digital and payment solutions; and (iv) deliver innovation and integration which enables differentiated value for our clients.

On July 29, 2019, we acquired First Data, a global leader in commerce-enabling technology and solutions for merchants, financial institutions and card issuers. Effective in the first quarter of 2020, we realigned our reportable segments to correspond with changes to our operating model to reflect our new management structure and organizational responsibilities (“Segment Realignment”) following the acquisition of First Data. Our new reportable segments are: Merchant Acceptance (“Acceptance”), segment, the Financial Technology (“Fintech”) segment and the Payments and Network (“Payments”). segment.

The businesses in our Acceptance segment provide a wide range of ~~products~~commerce-enabling solutions and ~~services to~~serve merchants of all sizes around the ~~world, including point-of-sale (“POS”)~~world. These services include POS merchant acquiring and ~~e-commerce services,~~digital commerce services; mobile payment ~~services,~~services; security and fraud protection ~~products,~~products; CaratSM, our omnichannel commerce solution; and our cloud-based Clover® POS ~~platform, which includes a marketplace for proprietary and third-party business applications. The~~platform. We distribute the products and services in the global Acceptance segment businesses ~~are distributed~~ through a variety of channels, including ~~through~~ direct sales teams, strategic partnerships with ~~indirect non-bank~~agent sales forces, independent software vendors, financial institutions, and ~~bank and non-bank~~other strategic partners in the form of joint venture alliances, revenue sharing alliances, and referral agreements. ~~Many merchants,~~Merchants, financial institutions and distribution partners ~~within~~in the Acceptance segment are ~~also customers~~frequently clients of our other segments.

The businesses in our Fintech segment provide financial institutions around the world with the technology solutions they need to run their operations, including ~~an institution's general ledger and central information files and~~ products and services that enable financial institutions to process customer deposit and loan ~~accounts.~~accounts and manage an institution's general ledger and central information files. As a complement to the core account processing functionality, the ~~businesses in the~~ global Fintech segment businesses also provide digital banking, financial and risk ~~management, cash~~ management, professional services and consulting, item processing and source capture, and other products and services that support numerous types of financial transactions. ~~In addition, some~~Some of the businesses in the Fintech segment provide products or services to corporate clients to facilitate the management of financial processes and transactions. Many of the products and services offered in the Fintech segment are integrated with ~~solutions from~~products and services provided by our other segments.

The businesses in our Payments segment provide financial institutions and corporate clients around the world with the products and services required to process digital payment transactions. This includes card transactions such as debit, credit and prepaid card processing and ~~services,~~services; a range of network services, security and fraud protection ~~products,~~products; card production and print services. In addition, the global Payments segment businesses offer non-card digital payment software and services, including bill payment, account-to-account transfers, person-to-person payments, electronic billing, and security and fraud protection products. Clients of the ~~global~~ Payments segment businesses reflect a wide range of industries, including merchants, distribution partners and financial institution customers in our other segments.

Corporate and Other supports the ~~reporting~~reportable segments described above, and consists of amortization of acquisition-related intangible assets, unallocated corporate expenses and other activities that are not considered when we evaluate segment performance, such as gains or losses on sales of businesses, costs associated with acquisition and divestiture activity, and our Output Solutions postage reimbursements. Corporate and Other also includes the historical results of our Investment Services business prior to the disposition of ~~which we sold a 60%~~our controlling financial interest in February 2020, as well as certain transition services revenue associated with various dispositions.

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Acquisitions and Dispositions

We frequently review our portfolio to ensure we have the right set of businesses to execute on our strategy. We expect to acquire businesses when we identify: a compelling strategic need, such as a product, service or technology that helps meet client demand; an opportunity to change industry dynamics; a way to achieve business scale; or similar considerations. We expect to divest businesses that are not in line with our market, product or financial strategies.

Acquisitions

On ~~July 29, 2019,~~June 14, 2021, we ~~completed~~acquired Spend Labs Inc. (“SpendLabs”), a mobile-native, cloud-based software provider of commercial card payment solutions. SpendLabs is included within the ~~acquisition~~Payments segment and further expands our digital capabilities across

Table of ~~First Data~~Contents

mobile and desktop devices for small and mid-sized businesses. On May 4, 2021, we acquired Pineapple Payments Holdings, LLC (“Pineapple Payments”), an independent sales organization that provides payment processing, proprietary technology, and payment acceptance solutions for merchants. Pineapple Payments is included within the Acceptance segment, and expands the reach of our payment solutions through its technology- and relationship-led distribution channels. On March 1, 2021, we acquired Radius8, Inc. (“Radius8”), a ~~total~~provider of a platform that uses consumer location and other information to drive incremental merchant transactions. Radius8 is included within the Acceptance segment and enhances our ability to help merchants increase sales, expand mobile application registration and improve one-to-one target marketing. On January 22, 2021, we acquired a remaining ownership interest in Ondot Systems, Inc. (“Ondot”), a digital experience platform provider for financial institutions. We previously held a noncontrolling equity interest in Ondot, which was accounted for at cost. Ondot is included within the Payments segment and further expands our digital capabilities, enhancing our suite of integrated payments, banking and merchant solutions. We acquired these businesses for an aggregate purchase price of ~~$46.5 billion by acquiring 100%~~approximately $526 million, net of ~~the First Data stock that was issued~~$19 million of acquired cash, and ~~outstanding as of the date of acquisition. As a result of the acquisition, First Data stockholders received 286 million shares of common stock of Fiserv, Inc.,~~including earn-out provisions estimated at an ~~exchange ratio~~aggregate fair value of ~~0.303 shares~~$33 million. The results of ~~Fiserv, Inc.~~operations for ~~each share of First Data common stock, with cash paid~~these acquired businesses are included in lieu of fractional shares. We also converted 15 million outstanding First Data equity awards into corresponding equity awards relating to common stock of Fiserv, Inc. in accordance with the exchange ratio. In addition, concurrent with the closing of the acquisition, we made a cash payment of $16.4 billion to repay existing First Data debt. We funded the transaction-related expenses and the repayment of First Data debt through a combination of available cash on-hand, proceedsour consolidated results from the ~~issuance~~respective dates of senior notes and term loan and revolving credit facility borrowings. The acquisition of First Data increases our footprint as a global payments and financial technology provider by expanding the portfolio of services provided to financial institutions, corporate and merchant clients and consumers.acquisition.

On March 2, 2020, we acquired MerchantPro Express LLC (“MerchantPro”), an independent sales organization that provides processing services, point-of-sale equipment and merchant cash advances to businesses across the United States. MerchantPro is included within the Acceptance segment and further expands our merchant services business. On March 18, 2020, we acquired Bypass Mobile, LLC (“Bypass”), an independent software vendor and innovator in enterprise point-of-sale systems for sports and entertainment venues, food service management providers and national restaurant chains. Bypass is included within the Acceptance segment and further enhances our ~~omni-commerce capabilities, enabling enterprise~~ability to help businesses to deliver a seamless ~~customer experience that spans~~ physical and digital ~~channels.~~customer experiences. On May 11, 2020, we acquired Inlet, LLC (“Inlet”), a provider of secure digital delivery solutions for enterprise and middle-market ~~billers’~~biller invoices and statements. Inlet is included within the Payments segment and further enhances our digital bill payment strategy. We acquired these businesses for an aggregate purchase price of $167 million, net of $2 million of acquired cash, and including earn-out provisions estimated at aan aggregate fair value of $45 million. The results of operations for these acquired businesses are included in our consolidated results from the respective dates of acquisition.

Dispositions

Effective July 1, 2020, we and Bank of America (“BANA”) dissolved the Banc of America Merchant Services joint venture (“BAMS” or the “joint venture”), of which we maintained a 51% controlling ownership interest. Upon ~~the~~ dissolution of the joint venture’s operations, the joint venture transferred a proportionate share of value, primarily the client contracts, to each party via an agreed upon contractual separation. The remaining activities of the joint venture ~~will~~ consist of supporting the transition of the business to each party and an orderly wind down of remaining BAMS assets and liabilities. The revenues and expenses of the BAMS joint venture were consolidated into our financial results ~~though~~through the date of dissolution.

The business transferred to us is included within our Acceptance segment.

We ~~will~~ continue to provide merchant processing and related services to former BAMS clients allocated to BANA, at BAMS pricing, through June 2023. We ~~will~~ also provide processing and other support services to new BANA merchant clients pursuant to a five-year non-exclusive agreement which, after June 2023, will also apply to the former BAMS clients allocated to BANA. In addition, both companies are entitled to certain transition services, at fair value, from each other through June 2023.

On February 18, 2020, we ~~completed the sale of~~sold a 60% controlling interest of our Investment Services business, ~~which is reported within Corporate and Other following the Segment Realignment.~~subsequently renamed as Tegra118, LLC (“Tegra118”). We received pre-tax proceeds of ~~$578~~$584 million, net of related expenses, resulting in a pre-tax gain on the sale of $428 million, with a related tax expense of $112 million. ~~Following the transaction, we began accounting for our 40% retained interest~~The revenues, expenses and cash flows of the Investment Services business were consolidated into our financial results through the date of the sale transaction, and is reported within Corporate and Other. On February 2, 2021, Tegra118 completed a merger with a third party, resulting in a dilution of our ownership interest in the combined new entity, Wealthtech Holdings, LLC, which was subsequently renamed as InvestCloud Holdings, LLC (“InvestCloud”). In connection with the transaction, we made an ~~equity method investment.~~additional capital contribution of $200 million into the combined entity and recognized a pre-tax gain of $28 million, with a related tax expense of $6 million. On June 30, 2021, we sold our entire ownership interest in InvestCloud for $466 million, resulting in a pre-tax gain of $33 million, with a related tax expense of $8 million. We will continue to provide various technical and data center related services for defined periods under the terms of a pre-existing transition services agreement.

Industry Trends

The global payments landscape continues to evolve, with rapidly advancing technologies and a steady expansion of digital payments, e-commerce, and innovation in real-time payments infrastructure. Because of this growth, competition also continues to evolve. Business and consumer expectations continue to rise, with a focus on convenience and security. To meet these

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expectations, payments companies are focused on modernizing their technology, ~~utilizing~~expanding the use of data and enhancing the customer experience.

Merchants

~~Table~~The rapid growth in and globalization of ~~Contents~~mobile and e-commerce, driven by consumers’ desire for simpler, more efficient shopping experiences, has created an opportunity for merchants to reach consumers in high-growth online and mobile settings, which often requires a merchant acquiring provider to enable and optimize the acceptance of payments. Merchants are demanding simpler, integrated, and modern POS systems to help manage their everyday business operations. When combined with the ever-increasing ways a consumer can pay for goods and services, merchants have sought modern POS systems to streamline this complexity. Furthermore, merchants can now search, discover, compare, purchase and even install a new POS system through direct, digital-only experiences. This direct, digital-only channel is quickly becoming a source of new merchant acquisition opportunities, especially with respect to smaller merchants.

In addition, there are numerous software-as-a-service (“SaaS”) solutions in the industry, many of which have chosen to integrate merchant acquiring within their software as a way to further monetize their client relationships. SaaS solutions that integrate payments are often referred to as independent software vendors, and we believe there are thousands of these potential distribution partnership opportunities available to us.

We believe that our merchant acquiring products and solutions create compelling value propositions for merchant clients of all sizes, from small and mid-sized businesses to medium-sized regional businesses to global enterprise merchants, and across all verticals. Furthermore, we believe that our sizable and diverse client base, combined with valued partnerships with merchant acquiring businesses of small, medium and large financial institutions, and non-financial institutions, gives us a solid foundation for growth.

Financial Institutions

The market for products and services offered by financial institutions continues to evolve rapidly. The traditional financial industry and other market entrants regularly introduce and implement new payment, deposit, risk management, lending and investment products, and the distinctions among the products and services traditionally offered by different types of financial institutions continue to narrow as they seek to serve the same customers. At the same time, the evolving global regulatory and cybersecurity landscape has continued to create a challenging operating environment for financial institutions. These conditions are driving heightened interest in solutions that help financial institutions win and retain customers, generate incremental revenue, comply with regulations and enhance operating efficiency. Examples of these solutions include electronic payments and delivery methods such as internet, mobile and tablet banking, sometimes referred to as “digital ~~channels”.~~channels.”

The focus on digital channels by both financial institutions and their customers, as well as the growing volume and types of payment transactions in the marketplace, continues to elevate the data and transaction processing needs of financial institutions. We expect that financial institutions will continue to invest significant capital and human resources to process transactions, manage information, maintain regulatory compliance and offer innovative new services to their customers in this rapidly evolving and competitive environment. We anticipate that we will benefit over the long term from the trend of financial institutions moving from in-house technology to outsourced solutions as they seek to remain current on technology changes in an evolving marketplace. We believe that economies of scale in developing and maintaining the infrastructure, technology, products, services and networks necessary to be competitive in such an environment are essential to justify these investments, and we anticipate that demand for products that facilitate customer interaction with financial institutions, including electronic transactions through digital channels, will continue to increase, which we expect to create revenue opportunities for us.

In addition to the trends described above, the financial institutions marketplace has experienced change in composition as well. During the past 25 years, the number of financial institutions in the United States has declined at a relatively steady rate of approximately 3% per year, primarily as a result of voluntary mergers and acquisitions. Rather than reducing the overall market, these consolidations have transferred accounts among financial institutions. If a client loss occurs due to merger or acquisition, we receive a contract termination fee based on the size of the client and how early in the contract term the contract is terminated. These fees can vary from period to ~~period.~~period with the variance depending on the quantum of financial institution merger activity in a given period and whether or not our clients are involved in the activity. Our focus on long-term client relationships and recurring, transaction-oriented products and services has also reduced the impact that consolidation in the financial services industry has had on us. We believe that the integration of our products and services creates a compelling value proposition for our clients by providing, among other things, new sources of revenue and opportunities to reduce their costs. Furthermore, we believe that our sizable and diverse client base, combined with our position as a leading provider of non-discretionary, recurring revenue-based products and services, gives us a solid foundation for growth.

~~Merchants~~

~~The rapid growth in and globalization~~

Table of mobile and e-commerce, driven by consumers’ desire for more simple and efficient shopping experiences, has created an opportunity for merchants to reach consumers in high-growth online and mobile settings, which often requires a merchant acquiring provider to enable and optimize the acceptance of payments. Merchants are demanding simpler, integrated, and modern POS systems to help manage their everyday business operations. When combined with the ever-increasing ways a consumer can pay for goods and services, merchants have sought modern POS systems to streamline this complexity. Furthermore, merchants can now search, discover, compare, purchase and even install a new POS system through direct, digital-only experiences. This direct, digital-only channel is quickly becoming a source of new merchant acquisition opportunities, especially with respect to smaller merchants. We believe that our digital merchant acquisition solution is designed to meet this need.Contents

Additionally, there are numerous software-as-a-service (“SaaS”) solutions in the industry, many of which have chosen to integrate merchant acquiring within their software in a way to further monetize their client relationships. SaaS solutions that integrate payments are often referred to as Independent Software Vendors, or ISVs, and we believe there are thousands of these potential distribution partnership opportunities available to us.

Recent Market Conditions

~~In December 2019, a~~Since early 2020, the world has been, and continues to be, impacted by the novel strain of the coronavirus (“COVID-19”) ~~was identified~~pandemic. The COVID-19 pandemic, and has since continued to spread and negatively impact the economy of the United States and other countries around the world. In March 2020, the World Health Organization recognized the COVID-19 outbreak as a pandemic. In response to the COVID-19 pandemic,various measures imposed by the governments of many countries, states, cities and other geographic regions ~~have taken actions~~ to prevent ~~the~~its spread, of COVID-19, such as imposing travel restrictions and bans, quarantines, social distancing guidelines, shelter-in-place or lock-down orders and other similar limitations. Accordingly, the COVID-19 pandemic has adverselyhave negatively impacted ~~global economic activity and has contributed to significant volatility in financial markets during 2020.~~

~~Table of Contents~~

~~Our operating performance is subject to~~ global economic and market conditions, ~~as well as their impacts on~~including levels of consumer and business spending. ~~As a result of the COVID-19 pandemic and the related decline in global economic activity, we have experienced a significant decrease in payments volume and transactions that has negatively impacted~~Consequently, our operating performance, primarily within our merchant acquiring and payment-related businesses, which earn transaction-based fees, ~~as well as modest declines in other businesses. Merchant acquiring~~has been adversely affected, and ~~payment volumes began~~may continue to ~~recover in May 2020 and continued to improve into July 2020, with stabilized growth rates thereafter. While these recent business trends demonstrated positive momentum, the uncertainty caused~~be adversely affected, by the ~~pandemic creates an~~ economic ~~environment where our future financial results remain difficult to anticipate.~~

~~In response to~~impact of the COVID-19 ~~pandemic, we~~pandemic. Such uncertainty remains despite improving trends in global economic activity and market conditions.

We have taken several actions since the onset of the pandemic to protect the health, safety and well-being of our employees while maintaining business continuity. These actions include, among others, requiring a majority of our employees to work remotely, ~~limiting or suspending~~eliminating non-essential travel, ~~suspending all non-essential~~limiting visitors to our facilities, disinfecting facilities and workspaces extensively and frequently, providing personal protective equipment to associates and requiring employees who ~~must be~~are present at our facilities to adhere to a variety of safety protocols. In addition, we have expanded paid time-off for employees impacted by COVID-19, provided increased pay for certain employees involved in critical infrastructure who could not work remotely, and expanded our Fiserv Cares program to benefit employees in need around the world. We recently began a limited reopening of our offices and expect to continue ~~such~~to gradually reopen additional facilities during the second half of 2021 while observing appropriate safety ~~measures for the foreseeable future~~measures.

Our operating performance is subject to global economic and ~~may take further actions, or adapt these existing policies, as government authorities may require or recommend or as we may determine to be in the best interest of our employees, clients and vendors.~~

We have also taken several actions to manage discretionary costs including, among others, limiting third-party spending and the temporary suspension of certain employee-related benefits, including company matching contributions to the Fiserv 401(k) Savings Planmarket conditions, as well as their impacts on levels of consumer and business spending. As a result of the ~~discount on shares purchased under~~COVID-19 pandemic and the ~~Fiserv, Inc. Amended~~related decline in global economic activity, we experienced a significant decrease in payments volume and ~~Restated Employee Stock Purchase Plan for~~transactions beginning in late March 2020 that negatively impacted our merchant acquiring and payment-related businesses, which earn transaction-based fees, as well as modest declines in other businesses. Merchant acquiring transaction and payment volumes began to partially recover throughout the remainder of 2020 with continued transaction and payment volume growth through the second quarter of 2021. Accordingly, our merchant acquiring and payment-related businesses were less impacted by the COVID-19 pandemic during the first six months of 2021 than they were throughout most of fiscal 2020. ~~In addition, we are reassessing~~While this recent business trend is positive, the uncertainty caused by the pandemic continues to create an economic environment where our future financial results remain difficult to anticipate. We currently expect payments volume and ~~deferring certain capital expenditures that were originally planned for 2020. We will~~transactions to continue to ~~monitor~~improve throughout 2021, consistent with consumer and ~~assess developments related~~business spending experienced to ~~COVID-19 and implement appropriate actions to minimize the risk to our operations of any material adverse developments. Ultimately, the~~date.

The extent of the impact of the ~~COVID-19~~ pandemic on our future operational and financial performance will depend on, among other matters, the duration and intensity of the ~~COVID-19~~ pandemic; governmental and private sector responses to the pandemic and the impact of such responses on us; the level of success of global vaccination efforts; and the impact of the pandemic on our employees, clients, ~~vendors,~~supply chain, operations and sales, all of which are uncertain and cannot be predicted.

Changes in Critical Accounting Policies and Estimates

Our consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States, which require management to make estimates, judgments and assumptions that affect the reported amount of assets, liabilities, revenue and expenses. In our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, we identified our critical accounting policies and estimates. We continually evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements, including for recently adopted accounting pronouncements, and base our estimates on historical experience and assumptions that we believe are reasonable in light of current circumstances. Actual amounts and results could differ materially from these estimates. There have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Results of Operations

The following table presents certain amounts included in our consolidated statements of income, the relative percentage that those amounts represent to revenue and the change in those amounts from year-to-year. This information should be read together with the unaudited consolidated financial statements and accompanying notes. The unaudited financial results presented below have been affected by ~~the First Data and other~~ acquisitions, dispositions, ~~debt financing activities~~ and foreign currency fluctuations.

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		Three Months Ended September 30,													Three Months Ended June 30,
		2020		2019		Percentage of Revenue (1)				Increase (Decrease)					2021		2020		Percentage of Revenue (1)				Increase (Decrease)
(In millions)	(In millions)					2020		2019		$		%		(In millions)					2021		2020		$		%
Revenue:	Revenue:													Revenue:
Processing and services	Processing and services	$	3,153	$	2,608	83.3	%	83.4	%	$	545	21	%	Processing and services	$	3,361	$	2,890	83.0	%	83.4	%	$	471	16	%
Product	Product	633		520		16.7	%	16.6	%	113		22	%	Product	690		575		17.0	%	16.6	%	115		20	%
Total revenue	Total revenue	3,786		3,128		100.0	%	100.0	%	658		21	%	Total revenue	4,051		3,465		100.0	%	100.0	%	586		17	%
Expenses:	Expenses:													Expenses:
Cost of processing and services	Cost of processing and services	1,387		1,204		44.0	%	46.2	%	183		15	%	Cost of processing and services	1,498		1,466		44.6	%	50.7	%	32		2	%
Cost of product	Cost of product	481		413		76.0	%	79.4	%	68		16	%	Cost of product	469		454		68.0	%	79.0	%	15		3	%
Sub-total	Sub-total	1,868		1,617		49.3	%	51.7	%	251		16	%	Sub-total	1,967		1,920		48.6	%	55.4	%	47		2	%
Selling, general and administrative	Selling, general and administrative	1,412		1,137		37.3	%	36.3	%	275		24	%	Selling, general and administrative	1,440		1,377		35.5	%	39.7	%	63		5	%
Gain on sale of business		(36)		—		(1.0)	%	—		(36)		n/m
Loss on sale of business														Loss on sale of business	—		3		—	%	0.1	%	(3)		n/m
Total expenses	Total expenses	3,244		2,754		85.7	%	88.0	%	490		18	%	Total expenses	3,407		3,300		84.1	%	95.2	%	107		3	%
Operating income	Operating income	542		374		14.3	%	12.0	%	168		45	%	Operating income	644		165		15.9	%	4.7	%	479		290	%
Interest expense, net	Interest expense, net	(174)		(164)		(4.6)	%	(5.2)	%	(10)		(6)	%	Interest expense, net	(175)		(174)		(4.3)	%	(5.0)	%	1		1	%
Debt financing activities		—		49		—		1.6	%	(49)		(100)	%
Other income (expense)		13		(3)		0.3	%	(0.1)	%	16		n/m
Income before income taxes and income from investments in unconsolidated affiliates		381		256		10.1	%	8.2	%	125		49	%
Income tax provision		(124)		(53)		(3.3)	%	(1.7)	%	(71)		(134)	%
Income from investments in unconsolidated affiliates		19		22		0.5	%	0.7	%	(3)		n/m

Other income														Other income	1		1		—	%	—	%	—		—	%
Income (loss) before income taxes and income (loss) from investments in unconsolidated affiliates														Income (loss) before income taxes and income (loss) from investments in unconsolidated affiliates	470		(8)		11.6	%	(0.2)	%	478		n/m
Income tax (provision) benefit														Income tax (provision) benefit	(228)		27		(5.6)	%	0.8	%	255		n/m
Income (loss) from investments in unconsolidated affiliates														Income (loss) from investments in unconsolidated affiliates	42		(10)		1.0	%	(0.3)	%	52		n/m
Net income	Net income	276		225		7.3	%	7.2	%	51		23	%	Net income	284		9		7.0	%	0.3	%	275		n/m
Less: net income attributable to noncontrolling interests	Less: net income attributable to noncontrolling interests	12		27		0.3	%	0.9	%	(15)		n/m		Less: net income attributable to noncontrolling interests	15		7		0.4	%	0.2	%	8		114	%
Net income attributable to Fiserv, Inc.	Net income attributable to Fiserv, Inc.	$	264	$	198	7.0	%	6.3	%	$	66	33	%	Net income attributable to Fiserv, Inc.	$	269	$	2	6.6	%	0.1	%	$	267	n/m

(1)Percentage of revenue is calculated as the relevant revenue, expense, income or loss amount divided by total revenue, except for cost of processing and services and cost of product amounts, which are divided by the related component of revenue.

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		Nine Months Ended September 30,													Six Months Ended June 30,
		2020		2019		Percentage of Revenue (1)				Increase (Decrease)					2021		2020		Percentage of Revenue (1)				Increase (Decrease)
(In millions)	(In millions)					2020		2019		$		%		(In millions)					2021		2020		$		%
Revenue:	Revenue:													Revenue:
Processing and services	Processing and services	$	9,118	$	5,229	82.7	%	85.1	%	$	3,889	74	%	Processing and services	$	6,415	$	5,965	82.2	%	82.5	%	$	450	8	%
Product	Product	1,902		913		17.3	%	14.9	%	989		108	%	Product	1,391		1,269		17.8	%	17.5	%	122		10	%
Total revenue	Total revenue	11,020		6,142		100.0	%	100.0	%	4,878		79	%	Total revenue	7,806		7,234		100.0	%	100.0	%	572		8	%
Expenses:	Expenses:													Expenses:
Cost of processing and services	Cost of processing and services	4,488		2,445		49.2	%	46.8	%	2,043		84	%	Cost of processing and services	2,895		3,101		45.1	%	52.0	%	(206)		(7)	%
Cost of product	Cost of product	1,467		755		77.1	%	82.7	%	712		94	%	Cost of product	979		986		70.4	%	77.7	%	(7)		(1)	%
Sub-total	Sub-total	5,955		3,200		54.0	%	52.1	%	2,755		86	%	Sub-total	3,874		4,087		49.6	%	56.5	%	(213)		(5)	%
Selling, general and administrative	Selling, general and administrative	4,193		1,821		38.0	%	29.6	%	2,372		130	%	Selling, general and administrative	2,813		2,781		36.0	%	38.4	%	32		1	%
Gain on sale of businesses		(464)		(10)		(4.2)	%	(0.2)	%	(454)		n/m
Gain on sale of business														Gain on sale of business	—		(428)		—	%	(5.9)	%	428		n/m
Total expenses	Total expenses	9,684		5,011		87.9	%	81.6	%	4,673		93	%	Total expenses	6,687		6,440		85.7	%	89.0	%	247		4	%
Operating income	Operating income	1,336		1,131		12.1	%	18.4	%	205		18	%	Operating income	1,119		794		14.3	%	11.0	%	325		41	%
Interest expense, net	Interest expense, net	(535)		(279)		(4.9)	%	(4.5)	%	(256)		(92)	%	Interest expense, net	(351)		(361)		(4.5)	%	(5.0)	%	10		3	%
Debt financing activities		—		(47)		—		(0.8)	%	47		100	%

Other income	Other income	34		—		0.3	%	—		34		n/m		Other income	22		21		0.3	%	0.3	%	1		5	%
Income before income taxes and income from investments in unconsolidated affiliates		835		805		7.6	%	13.1	%	30		4	%
Income before income taxes and income (loss) from investments in unconsolidated affiliates														Income before income taxes and income (loss) from investments in unconsolidated affiliates	790		454		10.1	%	6.3	%	336		74	%
Income tax provision	Income tax provision	(176)		(144)		(1.6)	%	(2.3)	%	(32)		(22)	%	Income tax provision	(246)		(52)		(3.2)	%	(0.7)	%	(194)		373	%
Income from investments in unconsolidated affiliates		3		12		—		0.2	%	(9)		(75)	%
Income (loss) from investments in unconsolidated affiliates														Income (loss) from investments in unconsolidated affiliates	58		(16)		0.7	%	(0.2)	%	74		n/m
Net income	Net income	662		673		6.0	%	11.0	%	(11)		(2)	%	Net income	602		386		7.7	%	5.3	%	216		56	%
Less: net income attributable to noncontrolling interests		4		27		—		0.4	%	(23)		n/m
Less: net income (loss) attributable to noncontrolling interests														Less: net income (loss) attributable to noncontrolling interests	29		(8)		0.4	%	(0.1)	%	37		n/m
Net income attributable to Fiserv, Inc.	Net income attributable to Fiserv, Inc.	$	658	$	646	6.0	%	10.5	%	$	12	2	%	Net income attributable to Fiserv, Inc.	$	573	$	394	7.3	%	5.4	%	$	179	45	%

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Three Months Ended September 30,
(In millions) Acceptance Fintech Payments Corporate
and Other Total
Total revenue:
2020 $ 1,454 $ 727 $ 1,387 $ 218 $ 3,786
2019 1,012 735 1,153 228 3,128
Revenue growth $ 442 $ (8) $ 234 $ (10) $ 658
Revenue growth percentage 44 % (1) % 20 % 21 %
Operating income (loss):
2020 $ 423 $ 265 $ 599 $ (745) $ 542
2019 296 223 476 (621) 374
Operating income growth $ 127 $ 42 $ 123 $ (124) $ 168
Operating income growth percentage 43 % 19 % 26 % 45 %
Operating margin:
2020 29.1 % 36.4 % 43.2 % 14.3 %
2019 29.2 % 30.4 % 41.3 % 12.0 %
Operating margin growth (1)
(10) bps 600 bps 190 bps 230 bps


	Three Months Ended June 30,
(In millions)	Acceptance				Fintech				Payments				Corporate and Other		Total
Total revenue:
2021	$	1,666			$	754			$	1,421			$	210	$	4,051
2020	1,223				714				1,320				208		3,465
Revenue growth	$	443			$	40			$	101			$	2	$	586
Revenue growth percentage	36		%		6		%		8		%				17		%
Operating income (loss):
2021	$	524			$	273			$	629			$	(782)	$	644
2020	245				252				548				(880)		165
Operating income growth	$	279			$	21			$	81			$	98	$	479
Operating income growth percentage	114		%		8		%		15		%				290		%
Operating margin:
2021	31.4		%		36.2		%		44.3		%				15.9		%
2020	20.0		%		35.4		%		41.5		%				4.7		%
Operating margin growth (1)	1,140			bps	80			bps	280			bps			1,120			bps


		Nine Months Ended September 30,																		Six Months Ended June 30,
(In millions)	(In millions)	Acceptance			Fintech				Payments				Corporate and Other		Total				(In millions)	Acceptance				Fintech				Payments				Corporate and Other		Total
Total revenue:	Total revenue:																		Total revenue:
2021																			2021	$	3,063			$	1,490			$	2,826			$	427	$	7,806
2020	2020	$	4,078		$	2,159			$	4,093			$	690	$	11,020			2020	2,624				1,432				2,706				472		7,234
2019		1,012			2,191				2,466				473		6,142
Revenue growth	Revenue growth	$	3,066		$	(32)			$	1,627			$	217	$	4,878			Revenue growth	$	439			$	58			$	120			$	(45)	$	572
Revenue growth percentage	Revenue growth percentage	303		%	(1)		%		66		%				79		%		Revenue growth percentage	17		%		4		%		4		%				8		%
Operating income (loss):	Operating income (loss):																		Operating income (loss):
2021																			2021	$	911			$	519			$	1,207			$	(1,518)	$	1,119
2020	2020	$	985		$	721			$	1,712			$	(2,082)	$	1,336			2020	562				456				1,113				(1,337)		794
2019		296			647				1,038				(850)		1,131
Operating income growth	Operating income growth	$	689		$	74			$	674			$	(1,232)	$	205			Operating income growth	$	349			$	63			$	94			$	(181)	$	325
Operating income growth percentage	Operating income growth percentage	233		%	11		%		65		%				18		%		Operating income growth percentage	62		%		14		%		8		%				41		%
Operating margin:	Operating margin:																		Operating margin:
2021																			2021	29.7		%		34.9		%		42.7		%				14.3		%
2020	2020	24.1		%	33.4		%		41.8		%				12.1		%		2020	21.4		%		31.9		%		41.2		%				11.0		%
2019		29.2		%	29.5		%		42.1		%				18.4		%
Operating margin growth (1)	Operating margin growth (1)	(510)			390			bps	(30)			bps			(630)			bps	Operating margin growth (1)	830			bps	300			bps	150			bps			330			bps

(1)Represents the basis point growth or decline in operating margin.

Operating margin percentages are calculated using actual, unrounded amounts.

Total Revenue

Total revenue increased ~~$658~~$586 million, or ~~21%~~17%, in the ~~third~~second quarter of ~~2020~~2021 and increased ~~$4,878~~$572 million, or ~~79%~~8%, in the first ~~nine~~six months of ~~2020~~2021 compared to ~~2019,~~2020. The revenue increase was primarily ~~driven~~due to improved payment and transaction volumes in our merchant acquiring and payment-related businesses, which were adversely affected by the ~~incremental~~economic impact of the COVID-19 pandemic during the last two weeks of March and throughout the second quarter of 2020. This growth was partially offset by the loss of revenue ~~from the First Data acquisition. The First Data acquisition, which was completed on July 29, 2019, contributed $771~~attributable to dispositions that had revenue of $68 million and ~~$5,067~~$153 million ~~of incremental revenue during~~in the ~~third~~second quarter and first ~~nine~~six months of 2020, respectively, with $490 million and $3,114 million to the Acceptance segment, $236 million and $1,616 million to the Payments segment, and $45 million and $337 million to Corporate and Other, during the third quarter and first nine months of 2020,2021, respectively. ~~Conversely, dispositions reduced revenue by $59 million and $146 million in the third quarter and first nine months of 2020, respectively, compared to 2019.~~

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Revenue in our Acceptance segment increased ~~$442~~$443 million, or ~~44%~~36%, in the ~~third~~second quarter of ~~2020~~2021 and increased ~~$3,066~~$439 million, or ~~303%~~17%, in the first ~~nine~~six months of ~~2020, respectively, driven by our acquisition of First Data. Incremental~~2021 compared to 2020. The revenue ~~from the First Data acquisition contributed 48%~~increase was primarily due to improved merchant acquiring payment and ~~308% to Acceptance growth in the third quarter and first nine months of 2020, respectively. Revenue in our Acceptance segment,~~transaction volumes, which ~~earns transaction-based fees, was~~were adversely affected in the ~~last two weeks of March and throughout the~~ second ~~and third quarters~~quarter of 2020 ~~due to~~by the economic impact of the COVID-19 pandemic. ~~Merchant acquiring payment volumes began to recover~~Revenue increases from volume growth were partially offset by revenue reductions from the dissolution of the BAMS joint venture of 5% in ~~May 2020~~each of the second quarter and ~~continued to improve into July 2020, with stabilized growth rates thereafter.~~first six months of 2021.

Revenue in our Fintech segment ~~decreased $8~~increased $40 million, ~~and $32 million,~~or 6%, in the ~~third~~second quarter of 2021 and increased $58 million, or 4%, in the first ~~nine~~six months of ~~2020, respectively, or 1% in each period of 2020~~2021 compared to ~~2019. The disposition of~~2020, driven by recurring revenue growth from higher processing revenue across our ~~remittance solutions business in December 2019 reduced~~ Fintech ~~segment~~businesses. Fintech revenue growth was partially offset by 1% in both the ~~third~~second quarter and first ~~nine~~six months of ~~2020. Recurring revenue growth~~2021 from ~~higher processing volumes was offset by~~ a ~~reduction~~decline in termination fee ~~revenue of 2.5% and 1.5% in the third quarter and first nine months of 2020, respectively.~~revenue.

Revenue in our Payments segment increased ~~$234~~$101 million, or ~~20%~~8%, in the ~~third~~second quarter of ~~2020~~2021 and increased ~~$1,627~~$120 million, or ~~66%~~4%, ~~during~~in the first ~~nine~~six months of ~~2020~~2021 compared to ~~2019. The First Data acquisition contributed $236 million and $1,616 million to the~~2020. Increased transaction volumes drove revenue contributions across multiple Payments segment ~~while dispositions reduced~~businesses in 2021, including revenue ~~by $9 million~~contributions of 4% and ~~$11 million~~3% from our debit processing business in the ~~third~~second quarter and first ~~nine~~six months of ~~2020,~~2021, respectively, and 1% from our Zelle® business in each period. In addition, our prepaid solutions business contributed 1% to Payments segment revenue growth in both the second quarter and first six months of 2021, attributable to increased card fulfillment. These increases were partially offset by revenue reductions of 1% and 2% from our bill payment business in the second quarter and first six months of 2021, respectively.

Revenue at Corporate and Other ~~decreased $10~~increased $2 million, or 4%1%, in the ~~third~~second quarter of ~~2020~~2021 and ~~increased $217~~decreased $45 million, or ~~46%~~10%, ~~during~~in the first ~~nine~~six months of ~~2020~~2021 compared to ~~2019.~~2020. Postage revenue ~~from the First Data acquisition contributed 20%~~declines and ~~71% to the Corporate and Other growth in the third quarter and first nine months of 2020, respectively, while~~ the disposition of a 60% controlling interest of our Investment Services business reduced ~~revenue by 18%~~Corporate and ~~22%~~Other revenue in the ~~third quarter and~~ first ~~nine~~six months of ~~2020,~~2021 by 6% and 4%, respectively.

Total Expenses

Total expenses increased ~~$490~~$107 million, or ~~18%~~3%, in the ~~third~~second quarter of ~~2020~~2021 and increased ~~$4,673~~$247 million, or ~~93%~~4%, in the first ~~nine~~six months of ~~2020~~2021 compared to ~~2019.~~2020. Total expenses as a percentage of total revenue decreased 1,110 basis points to 84.1% in the second quarter and decreased 330 basis points to 85.7% in the ~~third~~first six months of 2021 compared to 2020. Total expenses as a percentage of total revenue were favorably impacted in 2021 by operating leverage accompanying revenue growth, along with lower acquisition and integration related expenses of $77 million in the second quarter and $181 million in the first six months of 2021, respectively, and lower severance costs of $28 million in the second quarter and $65 million in the first six months of 2021, respectively.

Cost of processing and services as a percentage of processing and services revenue decreased to 44.6% in the second quarter of 2021 compared to 50.7% in the second quarter of 2020 and ~~increased~~decreased to ~~87.9%~~45.1% in the first ~~nine~~six months of 2021 compared to 52.0% in the first six months of 2020. ~~Total expenses in 2020 include the expenses~~Cost of ~~First Data, which include acquired intangible asset amortization, resulting~~processing and services as a percentage of processing and services revenue was favorably impacted in the ~~overall significant increase in~~second quarter and first six months of 2021 primarily due to strong operating leverage across our businesses, along with approximately 90 basis points and 110 basis points from decreased acquisition and integration related expenses and approximately 30 basis points and 50 basis points from decreased severance costs compared to ~~2019.~~ the second quarter and first six months of 2020, respectively.

Cost of product as a percentage of product revenue decreased to 68.0% in the second quarter of 2021 compared to 79.0% in the second quarter of 2020 and decreased to 70.4% in first six months of 2021 compared to 77.7% in the first six months of 2020. The cost of product as a percentage of product revenue improved in the second quarter and first six months of 2021 as a result of revenue mix, including lower postage pass-through revenue.

Selling, general and administrative expenses as a percentage of total revenue decreased to 35.5% in the second quarter of 2021 compared to 39.7% in the second quarter of 2020 and decreased to 36.0% in the first six months of 2021 compared to 38.4% in the first six months of 2020. The decrease in selling, general and administrative expenses as a percentage of total revenue was primarily due to strong operating leverage across our businesses, along with approximately 170 basis points from decreased acquisition and integration related expenses and approximately 40 basis points from decreased severance costs compared to both the second quarter and first six months of 2020.

The gain on sale of business of $428 million in the first quarter of 2020 resulted from the sale of a 60% interest of our Investment Services business in February 2020.

Operating Income and Operating Margin

Total ~~expenses~~operating income increased $479 million, or 290%, in the second quarter of 2021 and increased $325 million, or 41%, in the first six months of 2021 compared to 2020. Total operating margin increased 1,120 basis points to 15.9% in the second

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quarter of 2021 and increased 330 basis points to 14.3% in the first six months of 2021 compared to 2020. Total operating income and total operating margin benefited from improved operating leverage accompanying scalable revenue growth in the second quarter and first six months of 2021 and were ~~reduced~~also impacted by a $428 million gain on sale of a 60% interest of our Investment Services business in ~~February 2020 and a $36 million gain on~~ the ~~dissolution of BAMS in July 2020.~~

~~Cost of processing and services as a percentage of processing and services revenue decreased to 44.0% in the third~~first quarter of 2020 compared to 46.2% in the third quarter of 2019 and increased to 49.2% in the first nine months of 2020 compared to 46.8% in the first nine months of 2019. Expense management in our recurring revenue businesses favorably impacted cost of processing and services as a percentage of processing and services revenue in 2020. Conversely, cost of processing and services as a percentage of processing and services revenue increased in the third quarter and the first nine months by approximately 200 basis points and 270 basis points, respectively, from integration-related expenses associated with the First Data acquisition, including $35 million and $115 million of accelerated depreciation and amortization associated with the termination of certain vendor contracts in the respective periods, and by approximately 200 basis points in the first nine months of 2020 from incremental First Data acquisition intangible amortization.

Cost of product as a percentage of product revenue decreased to 76.0% in the third quarter of 2020 compared to 79.4% in the third quarter of 2019 and decreased to 77.1% in the first nine months of 2020 compared to 82.7% in the first nine months of 2019 due to the First Data acquisition.

Selling, general and administrative expenses as a percentage of total revenue increased to 37.3% in the third quarter of 2020 compared to 36.3% in the third quarter of 2019 and increased to 38.0% in the first nine months of 2020 compared to 29.6% in the first nine months of 2019. Incremental acquired intangible asset amortization from the First Data acquisition increased selling, general and administrative expenses as a percentage of total revenue by approximately 350 basis points and 800 basis points in the third quarter and first nine months of 2020, respectively. For the third quarter of 2020, this increase was partially offset by synergy related cost reductions. For the first nine months of 2020, the remaining increase in selling, general and administrative expenses as a percentage of total revenue was due to increased costs associated with the First Data acquisition, including integration related expenses.

The gains on sale of businesses in 2020 resulted from a gain of $428 million on the sale of a 60% interest of our Investment Services business in February 2020 and a $36 million gain on the dissolution of BAMS in July 2020. The gain on sale of business of $10 million in the first nine months of 2019 resulted from contingent consideration received related to the sale of a 55% interest of our Lending Solutions business.

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~~Operating Income and Operating Margin~~

Total operating income increased $168 million, or 45%, in the third quarter of 2020 and increased $205 million, or 18%, in the first nine months of 2020 compared to 2019. Total operating margin increased to 14.3% in the third quarter of 2020 and decreased to 12.1% in the first nine months of 2020 compared to 2019.

Operating income in our Acceptance segment increased ~~$127~~$279 million, or ~~43%~~114%, in the ~~third~~second quarter of ~~2020~~2021 and increased ~~$689~~$349 million, or ~~233%~~62%, in the first ~~nine~~six months of ~~2020~~2021 compared to ~~2019, driven by our acquisition of First Data.~~2020. Operating margin ~~was relatively consistent with the third quarter of 2019 at 29.1% and decreased 510~~increased 1,140 basis points to ~~24.1%~~31.4% in the second quarter of 2021 and increased 830 basis points to 29.7% in the first ~~nine~~six months of ~~2020~~2021 compared to ~~2019. Operating income~~2020. Acceptance operating margin growth in ~~our Acceptance segment, which earns transaction-based fees, was adversely affected in the last two weeks of March and throughout~~both the second quarter and ~~third quarters~~first six months of 2021 was primarily due to ~~the economic impact of the COVID-19 pandemic. Merchant acquiring payment volumes and related operating income began to recover in May 2020 and continued to improve into July 2020, with stabilized~~scalable revenue growth ~~rates thereafter.~~as discussed above.

Operating income in our Fintech segment increased ~~$42~~$21 million, or ~~19%~~8%, in the ~~third~~second quarter of ~~2020~~2021 and increased ~~$74~~$63 million, or ~~11%,~~14% in the first ~~nine~~six months of ~~2020~~2021 compared to ~~2019.~~2020. Operating margin increased ~~600~~80 basis points to ~~36.4%~~36.2% in the ~~third~~second quarter of ~~2020~~2021 and increased ~~390~~300 basis points to ~~33.4%~~34.9% in the first ~~nine~~six months of ~~2020~~2021 compared to ~~2019. The improvement in the~~2020. Fintech segment operating margin improvement in the second quarter of 2021 was driven by revenue growth as discussed above. Operating margin improvement in the first six months of 2021 also reflects the impact of expense management initiatives across the segment, including ~~technology and vendor synergy savings~~lower personnel costs of ~~370 basis points and 210~~approximately 100 basis points and additional expense reductions attributable to ~~COVID-19~~lower travel and marketing expenses of ~~150~~approximately 60 basis ~~points and 130 basis points in the third quarter and first nine months of 2020, respectively.~~points.

Operating income in our Payments segment increased ~~$123~~$81 million, or ~~26%~~15%, in the ~~third~~second quarter of ~~2020~~2021 and increased ~~$674~~$94 million, or ~~65%~~8%, in the first ~~nine~~six months of ~~2020~~2021 compared to ~~2019.~~2020. Operating margin increased ~~190~~280 basis points to ~~43.2%~~44.3% in the ~~third~~second quarter of ~~2020~~2021 and ~~decreased 30~~increased 150 basis points to ~~41.8%~~42.7% in the first ~~nine~~six months of ~~2020~~2021 compared to ~~2019. The increase in operating income and decrease in~~2020. Payments segment operating margin growth in both the second quarter and first ~~nine~~six months of ~~2020~~2021 was driven by the integration of First Data results into this combined operating segment in 2020. In addition, the operating margin in the third quarter of 2020 benefited from synergy related cost reductions.primarily attributable to scalable revenue growth as discussed above.

The operating loss in Corporate and Other ~~increased $124~~decreased $98 million in the ~~third~~second quarter of ~~2020~~2021 and increased ~~$1,232~~$181 million in the first ~~nine~~six months of ~~2020~~2021 compared to 2019. The increase in Corporate and Other operating loss was primarily due to the acquisition of First Data, including incremental amortization of acquired intangible assets of $108 million and $1,065 million in the third quarter and first nine months of 2020, respectively, incremental acquisition and related integration costs of $42 million and $449 million in the third quarter and first nine months of 2020, respectively, and other First Data related corporate expenses.2020. Corporate and Other was favorably impacted in 2021 by a reduction of acquisition and integration related costs of $77 million in the second quarter and $181 million in the first six months of 2021 and lower severance costs of $28 million in the second quarter and $65 million in the first six months of 2021 compared to 2020. Corporate and Other was favorably impacted in the first six months of 2021 by a $428 million gain on the sale of a 60% interest of our Investment Services ~~business in the first nine months of 2020 and a $36 million gain on the dissolution of BAMS in both the third quarter and first nine months of 2020.~~business.

Interest Expense, Net

Interest expense, net ~~increased~~was relatively consistent in the second quarter of 2021 compared to 2020, and decreased $10 million, or ~~6%, in the third quarter of 2020 and increased $256 million, or 92%~~3%, in the first ~~nine~~six months of ~~2020~~2021 compared to ~~2019~~2020 primarily due to the June 2019 issuance of $9.0 billion of fixed-rate senior notes, the July 2019 issuance of €1.5 billion and £1.05 billion of fixed-rate senior notes and the term loan borrowings that were incurred for the purpose of funding the repayment of certain indebtedness of First Data and its subsidiaries on the closing date of the acquisition.

~~Debt Financing Activities~~

In connection with the definitive merger agreement entered into on January 16, 2019 to acquire First Data, we entered into a bridge facility commitment letter providing for a 364-day senior unsecured bridge term loan facility in an aggregate principal amount of $17.0 billion for the purpose of refinancing certain indebtedness of First Data on the closing date of the acquisition. We recorded $2 million and $98 million of expense during the third quarter and first nine months of 2019, respectively, associated with such bridge term loan facility and other refinancing and related activities in connection with the acquisition of First Data. In addition, during the three and nine months ended September 30, 2019, we recorded $50 million of net foreign currency transaction gains related to our foreign currency-denominated debt.lower outstanding borrowings.

Other Income ~~(Expense)~~

Other income ~~increased $16 million in the third quarter of 2020 and increased $34 million in~~was relatively consistent through the first ~~nine~~six months of ~~2020~~2021 compared to ~~2019.~~2020. Other income ~~includes $19 million in both the third quarter and first nine months of 2020 related to a pre-tax gain on the sale of certain lease receivables. In addition, other income (expense)~~ includes net foreign currency transaction gains and losses, ~~as well as~~gains or losses from a change in fair value of investments in certain equity securities, amounts related to the release of risk under our non-contingent guarantee arrangements and changes in the provision of estimated credit losses associated with ~~certain~~ indebtedness of certain joint ventures. Other income includes net foreign currency transaction gains of $1 million and $11 million in the ~~Lending Joint Ventures.~~first six months of 2021 and 2020, respectively, as well as $12 million in the first six months of 2021 related to a pre-tax gain on the remeasurement of a previously held investment in Ondot to fair value upon acquiring the remaining ownership interest in that entity.

Income Tax Provision

Income tax (provision) benefit as a percentage of income (loss) before income taxes and income (loss) from investments in unconsolidated affiliates was 48.5% and 337.5% for the three months ended June 30, 2021 and 2020, respectively, and was 31.1% and 11.5% for the first six months of 2021 and 2020, respectively. The effective income tax rate for the three months ended June 30, 2021 includes $134 million of income tax expense attributed to the revaluation of certain net deferred tax liabilities, primarily related to intangible assets and investments in joint ventures recognized at fair value in connection with the acquisition of First Data, reflecting the effect of enacted corporate income tax rate changes in the United Kingdom (tax rate increase from 19% to 25% starting in 2023) and Argentina (tax rate increase from 25% to 35%), partially offset by decreases in uncertain tax positions. For the three months ended June 30, 2020, the income tax benefit of $27 million on an $8 million loss before income taxes and loss from investments in unconsolidated affiliates included equity compensation related tax benefits, changes in uncertain tax positions and other discrete tax items. The effective income tax rate for the six months ended June 30, 2021 includes $134 million of income tax expense noted above, partially offset by discrete tax benefits from subsidiary restructurings and equity compensation related tax benefits. The effective income tax rate for the six months ended June 30,

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~~Income Tax Provision~~

~~Income tax provision as a percentage of income before income from investments in unconsolidated affiliates was 32.5% and 20.7% in the third quarter of~~ 2020, and 2019, respectively, and was 21.1% and 17.9% in the first nine months of 2020 and 2019, respectively. The effective rate in the third quarter of 2020 includes a $32 million revaluation of certain net deferred tax liabilities as a result of an increase in the United Kingdom corporate income tax rate from 17% to 19% in the quarter. The effective rate in the first nine months of 2020 also includesincluded $112 million of income tax expense associated with the $428 million gain on the sale of a 60% interest of our Investment Services ~~business. The effective rate~~business, partially offset by the impact of equity compensation related tax benefits on a lower level of pre-tax income and changes in ~~the first nine months of 2019 includes discrete benefits due to a loss from subsidiary restructuring.~~uncertain tax positions.

Income (Loss) from Investments in Unconsolidated Affiliates

Our share of net income or loss from affiliates accounted for using the equity method of accounting ~~including merchant bank alliance affiliates from the acquisition of First Data,~~ is reported as income (loss) from investments in unconsolidated affiliates and the related tax expense or benefit is reported within the income tax ~~provision~~(provision) benefit in the consolidated statements of income. Income (loss) from investments in unconsolidated affiliates, including acquired intangible asset amortization from valuations in purchase accounting, was ~~$19~~$42 million and ~~$22~~$(10) million in the ~~third~~second quarter of ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~was $3~~$58 million and ~~$12~~$(16) million in the first ~~nine~~six months of ~~2020~~2021 and ~~2019,~~2020, respectively. Income from investments in unconsolidated affiliates for the three months ended June 30, 2021 included a $33 million pre-tax gain resulting from the sale of our remaining ownership interest in InvestCloud. Income from investments in unconsolidated affiliates for the first six months of 2021 also included a $28 million pre-tax gain resulting from the dilution of our ownership interest in connection with the Tegra118 merger with a third party.

Net Income (Loss) Attributable to Noncontrolling Interests

Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests relates to the ownership interest of our consolidated alliance partners in our consolidated results. Net income (loss) attributable to noncontrolling interests, including acquired intangible asset amortization from valuations in purchase accounting, ~~of $12~~was $15 million and $4$7 million in the ~~third~~second quarter of 2021 and ~~first nine months of~~ 2020, respectively, and ~~$27~~$29 million ~~for both~~and $(8) million in the ~~third quarter and~~ first ~~nine~~six months of ~~2019, relates to our consolidated alliance partners obtained through the acquisition of First Data.~~2021 and 2020, respectively.

Net Income Per Share – Diluted

Net income attributable to Fiserv, Inc. per share-diluted was ~~$0.39~~$0.40 and ~~$0.33~~$0.00 in the ~~third~~second quarter of ~~2020~~2021 and ~~2019,~~2020, respectively, and was ~~$0.96~~$0.85 and ~~$1.39~~$0.57 in the first ~~nine~~six months of ~~2020~~2021 and ~~2019,~~2020, respectively. Net income attributable to Fiserv, Inc. per share-diluted in the first ~~nine~~six months of 2021 included discrete tax items related to the revaluation of deferred taxes due to a change in the respective statutory tax rates in the United Kingdom and Argentina. Net income attributable to Fiserv, Inc. per share-diluted in the first six months of 2020 included ~~integration costs and acquired intangible asset amortization from the application of purchase accounting associated with the acquisition of First Data, as well as gains~~a gain from the sale of a 60% interest of our Investment Services business, ~~in February 2020~~along with higher merger and ~~the dissolution of BAMS in July 2020. Net income attributable to Fiserv, Inc. per share-diluted in the third quarter and first nine months of 2019 included transaction~~integration costs ~~and financing activities~~ associated with the acquisition of First Data.

Liquidity and Capital Resources

General

Our primary liquidity needs in the ordinary course of business are to: (i) fund normal operating expenses; (ii) meet the interest and principal requirements of our outstanding indebtedness, including finance leases; and (iii) fund capital expenditures and operating lease payments. We believe these needs will be satisfied using cash flow generated by our operations, along with our cash and cash equivalents of ~~$937~~$841 million, proceeds from the issuance of U.S. commercial paper notes, and available ~~borrowings~~capacity under our revolving credit facility of ~~$3.2~~$2.4 billion (net of $1.1 billion of capacity designated for outstanding borrowings under our commercial paper notes program) at ~~September~~June 30, ~~2020.~~2021.

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The following table summarizes our operating cash flow and capital expenditure amounts for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019, respectively.~~respectively:

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		Nine Months Ended September 30,				Increase (Decrease)					Six Months Ended June 30,				Increase (Decrease)
(In millions)	(In millions)	2020		2019		$		%		(In millions)	2021		2020		$		%
Net income	Net income	$	662	$	673	$	(11)			Net income	$	602	$	386	$	216
Depreciation and amortization	Depreciation and amortization	2,472		978		1,494				Depreciation and amortization	1,635		1,673		(38)
Net foreign currency gain on financing activities		—		(50)		50

Share-based compensation	Share-based compensation	286		121		165				Share-based compensation	127		202		(75)

Deferred income taxes	Deferred income taxes	(125)		26		(151)				Deferred income taxes	(69)		(94)		25
Gain on sale of businesses		(464)		(10)		(454)
Gain on sale of business										Gain on sale of business	—		(428)		428

Income from investments in unconsolidated affiliates		(3)		(12)		9
Settlement of interest rate hedge contracts		—		(183)		183
(Income) loss from investments in unconsolidated affiliates										(Income) loss from investments in unconsolidated affiliates	(58)		16		(74)

Distributions from unconsolidated affiliates	Distributions from unconsolidated affiliates	12		6		6				Distributions from unconsolidated affiliates	13		12		1
Non-cash impairment charges	Non-cash impairment charges	44		—		44				Non-cash impairment charges	5		40		(35)
Net changes in working capital and other	Net changes in working capital and other	77		68		9				Net changes in working capital and other	(242)		112		(354)
Operating cash flow	Operating cash flow	$	2,961	$	1,617	$	1,344	83	%	Operating cash flow	$	2,013	$	1,919	$	94	5	%
Capital expenditures		$	689	$	431	$	258	60	%
Capital expenditures, including capitalized software and other intangibles										Capital expenditures, including capitalized software and other intangibles	$	494	$	488	$	6	1	%

Our net cash provided by operating activities, or operating cash flow, was ~~$3.0~~$2.0 billion in the first ~~nine~~six months of ~~2020,~~2021, an increase of ~~83%~~5% compared with ~~$1.6~~$1.9 billion in the first ~~nine~~six months of ~~2019.~~2020. This increase was primarily attributable to improved operating results compared to the ~~acquisition of First Data. Net cash provided~~prior period, partially offset by ~~operating activities~~unfavorable fluctuations in ~~the first nine months of 2019 included a payment of $183 million associated with the settlement of treasury lock agreements related~~working capital, including increased accounts receivable corresponding to ~~refinancing certain indebtedness assumed as part of the First Data acquisition.~~revenue growth.

Our current policy is to use our operating cash flow primarily to fund capital expenditures, share repurchases, acquisitions and to repay debt rather than to pay dividends. Our capital expenditures were approximately 6% and 7% of our total revenue for ~~both~~ the first ~~nine~~six months of 2021 and 2020, ~~and 2019.~~respectively.

Share Repurchases

In May 2021, New Omaha Holdings L.P. (“New Omaha”), a shareholder of ours, completed an underwritten secondary public offering of 23.0 million shares of our common stock (the “offering”). We repurchased from the underwriters 5.0 million shares of our common stock that were subject to the offering. The share repurchase totaled $588 million and was funded with cash on hand. The repurchased shares were cancelled and no longer outstanding following the completion of the share repurchase.

Including the repurchase described above, we purchased $1.2 billion and $1.4 billion ~~and $156 million~~ of our common stock during the first ~~nine~~six months of 2021 and 2020, ~~and 2019,~~ respectively. ~~In 2019, we deferred share repurchases as of January 16, 2019 until the close of the First Data acquisition.~~ As of ~~September~~June 30, ~~2020,~~2021, we had approximately ~~7.5~~55.5 million shares remaining under our current repurchase ~~authorizations.~~authorization. Shares repurchased are generally held for issuance in connection with our equity plans.

~~Repurchase of Indebtedness~~

We may, at any time and from time to time, seek to repurchase our outstanding senior notes for cash in open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will be upon such terms and at such prices, including discounts to the face value of the senior notes, as we may determine, may involve amounts that are material and will depend on prevailing market conditions, our liquidity requirements and other factors.

Acquisitions and Dispositions

Acquisitions

~~On July 29, 2019,~~In June 2021 we ~~completed the acquisition of First Data~~acquired SpendLabs, in May 2021 we acquired Pineapple Payments, and in March 2021 we acquired Radius8. Additionally, in January 2021, we acquired a remaining ownership interest in Ondot, in which we previously held a noncontrolling equity interest. We acquired these businesses for ~~a total~~an aggregate purchase price of ~~$46.5 billion by acquiring 100%~~approximately $526 million, net of ~~the First Data stock that was issued~~$19 million of acquired cash, and ~~outstanding as of the date of acquisition. As a result of the acquisition, First Data stockholders received 286 million shares of common stock of Fiserv, Inc.,~~including earn-out provisions estimated at an ~~exchange ratio~~aggregate fair value of 0.303 shares of Fiserv, Inc. for each share of First Data common stock, with cash paid in lieu of fractional shares. We also converted 15 million outstanding First Data equity awards into corresponding equity awards relating to common stock of Fiserv, Inc. in accordance with the exchange ratio. In addition, concurrent with the closing of the acquisition, we made a cash payment of $16.4 billion to repay existing First Data debt.$33 million. We funded ~~the transaction-related expenses and the repayment of First Data debt through~~these acquisitions by utilizing a combination of available cash ~~on-hand, proceeds~~and existing availability under our revolving credit facility. The results of operations for these acquired businesses are included in our consolidated results from the ~~issuance~~respective dates of ~~senior notes~~acquisition.

In May 2020, we acquired Inlet and, ~~term loan and revolving credit facility borrowings.~~

Onin March 2, 2020, we acquired MerchantPro ~~an independent sales organization that provides processing services, point-of-sale equipment~~ and ~~merchant cash advances to businesses across the United States. MerchantPro is included within the Acceptance~~

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segment and further expands our merchant services business. On March 18, 2020, we acquired Bypass, an independent software vendor and innovator in enterprise point-of-sale systems for sports and entertainment venues, food service management providers and national restaurant chains. Bypass is included within the Acceptance segment and further enhances our omni-commerce capabilities, enabling enterprise businesses to deliver a seamless customer experience that spans physical and digital channels. On May 11, 2020, we acquired Inlet, a provider of secure digital delivery solutions for enterprise and middle-market billers’ invoices and statements. Inlet is included within the Payments segment and further enhances our digital bill payment strategy.Bypass. We acquired these businesses for an aggregate purchase price of $167 million, net of $2 million of acquired cash, and including earn-out provisions estimated at a fair value of $45 million. We funded these acquisitions by utilizing a combination of available cash and existing availability under our revolving credit facility. The results of operations for these acquired businesses are included in our consolidated results from the respective dates of acquisition.

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Dispositions

Effective July 1, 2020, we and ~~Bank of America (“BANA”)~~BANA dissolved the ~~Banc of America Merchant Services~~BAMS joint venture, ~~(“BAMS” or the “joint venture”),~~ of which we maintained a 51% controlling ownership interest. Upon ~~the~~ dissolution of the joint venture’s operations, the joint venture transferred a proportionate share of value, primarily the client contracts, to each party via an agreed upon contractual separation. The remaining activities of the joint venture ~~will~~ consist of supporting the transition of the business to each party and an orderly wind down of remaining BAMS assets and liabilities. The revenues and expenses of the BAMS joint venture were consolidated into our financial results through the date of ~~consolidation.~~

dissolution. The business transferred to us is included within our Acceptance segment.

OnIn February ~~18,~~ 2020, we ~~completed the sale of~~sold a 60% controlling interest of our Investment Services ~~business.~~business, subsequently renamed as Tegra118. We received pre-tax proceeds of ~~$578~~$584 million, net of related expenses, resulting in a pre-tax gain on the sale of $428 million, with athe related tax expense of $112 million. The revenues, expenses and cash flows of the Investment Services business were consolidated into our financial results through the date of the sale transaction. The net proceeds from the sale were primarily used to repurchase shares of our common stock. In February 2021, Tegra118 completed a merger with a third party, resulting in a dilution of our ownership interest in the combined new entity, Wealthtech Holdings, LLC, which was subsequently renamed as InvestCloud. In connection with the transaction, we made an additional capital contribution, funded under our revolving credit facility, of $200 million into the combined entity and recognized a pre-tax gain of $28 million, with a related tax expense of $6 million. In June 2021, we sold our entire ownership interest in InvestCloud for $466 million, resulting in a pre-tax gain of $33 million, with a related tax expense of $8 million. The net proceeds from the sale were primarily used to pay down the outstanding borrowings on our term loan facility.

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Indebtedness

(In millions) September 30, 2020 December 31, 2019
Short-term and current maturities of long-term debt:
   Lines of credit $ 121 $ 150
   Finance lease and other financing obligations 244 137
Total short-term and current maturities of long-term debt $ 365 $ 287
Long-term debt:
   2.7% senior notes due 2020 $ — $ 850
   4.75% senior notes due 2021 400 400
   3.5% senior notes due 2022 700 700
   3.8% senior notes due 2023 1,000 1,000
   0.375% senior notes due 2023 584 559
   2.75% senior notes due 2024 2,000 2,000
   3.85% senior notes due 2025 900 900
   2.25% senior notes due 2025 676 687
   3.2% senior notes due 2026 2,000 2,000
   1.125% senior notes due 2027 584 559
   2.25% senior notes due 2027 1,000 —
   4.2% senior notes due 2028 1,000 1,000
   3.5% senior notes due 2029 3,000 3,000
   1.625% senior notes due 2030 584 559
   2.65% senior notes due 2030 1,000 —
   3.0% senior notes due 2031 676 687
   4.4% senior notes due 2049 2,000 2,000
   Receivable securitized loan 500 500
   Term loan facility 1,750 3,950
   Unamortized discount and deferred financing costs (161) (160)
   Revolving credit facility 219 174
   Finance lease and other financing obligations 482 247
Total long-term debt $ 20,894 $ 21,612


(In millions)	June 30, 2021		December 31, 2020
Short-term and current maturities of long-term debt:
Foreign lines of credit	$	131	$	144
Finance lease and other financing obligations	287		240
Total short-term and current maturities of long-term debt	$	418	$	384

Long-term debt:
4.750% senior notes due June 2021	$	—	$	400
3.500% senior notes due October 2022	700		700
0.375% senior notes due July 2023 (Euro-denominated)	596		612
3.800% senior notes due October 2023	1,000		1,000
2.750% senior notes due July 2024	2,000		2,000
3.850% senior notes due June 2025	900		900
2.250% senior notes due July 2025 (British Pound-denominated)	729		709
3.200% senior notes due July 2026	2,000		2,000
2.250% senior notes due June 2027	1,000		1,000
1.125% senior notes due July 2027 (Euro-denominated)	596		612
4.200% senior notes due October 2028	1,000		1,000
3.500% senior notes due July 2029	3,000		3,000
2.650% senior notes due June 2030	1,000		1,000
1.625% senior notes due July 2030 (Euro-denominated)	596		612
3.000% senior notes due July 2031 (British Pound-denominated)	729		709
4.400% senior notes due July 2049	2,000		2,000
Receivable securitized loan	425		425
Term loan facility	755		1,250
Unamortized discount and deferred financing costs	(141)		(155)
U.S. commercial paper notes	1,060		—
Revolving credit facility	—		22
Finance lease and other financing obligations	480		504
Total long-term debt	$	20,425	$	20,300

At ~~September~~June 30, ~~2020,~~2021, our debt consisted primarily of ~~$18.1~~$17.8 billion of fixed-rate senior notes, ~~$219~~$1.1 billion of outstanding borrowings under our U.S. commercial paper notes program, and $755 million~~of borrowings on our revolving credit facility and $1.8 billion~~ of variable rate term ~~loans.~~loan. Interest on our U.S. dollar-denominated senior notes is paid semi-annually, while interest on our ~~foreign currency-denominated~~Euro and British Pound-denominated senior notes is paid annually. Interest on our revolving credit facility and commercial paper notes is generally paid weekly, or more frequently on occasion, and interest on our term ~~loans~~loan is paid monthly. ~~Our 4.75% senior~~Outstanding borrowings under the commercial paper notes ~~due in June 2021 were~~program are classified in the consolidated balance sheet as long-term, as we have the intent to refinance ~~this debt~~these notes on a long-term basis through the continued issuance of new commercial paper notes upon maturity, and we also have the ability to ~~do so~~refinance such notes under our revolving credit facility. We used the net proceeds from the issuance of commercial paper notes to repay outstanding borrowings under our revolving credit facility, ~~which expires in September 2023.~~

~~During the first nine months of September 30, 2020, we were in compliance with all financial debt covenants. Our ability~~ to ~~meet future debt covenant requirements will depend on~~repay our continued ability to generate earnings and cash flows. As described below, the COVID-19 pandemic has created significant uncertainty as to general economic and market conditions for the remainder of 2020 and beyond. We expect to remain in compliance with all terms and conditions associated with our outstanding debt, including financial debt covenants.

~~Senior Notes~~

~~On May 13, 2020, we completed an offering of $2.0 billion of~~4.750% senior notes ~~comprised of $1.0 billion aggregate principal amount of 2.25% senior notes due~~that matured in June ~~2027~~2021, and ~~$1.0 billion aggregate principal amount of 2.65% senior notes due in June 2030. The senior notes pay interest semi-annually on June 1 and December 1, commencing on December 1, 2020.~~ for other general corporate purposes.

The indentures governing ~~the~~our senior notes contain covenants that, among other matters, limit (i) our ability to consolidate or merge

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with or into, or convey, transfer or lease all or substantially all of our properties and assets to, another person, (ii) our and certain of our subsidiaries’ ability to create or assume liens, and (iii) our and certain of our subsidiaries’ ability to engage in sale and leaseback transactions. We may, at our option, redeem the senior notes, in whole or from time to time in part, at any time prior to the applicable maturity date. ~~We used the net proceeds from the offerings described above to repay the outstanding principal balance~~

Table of ~~$850 million under our 2.7% senior notes due in June 2020 and outstanding borrowings under our revolving credit facility totaling $1.1 billion.~~Contents

~~Variable Rate Debt~~

At September 30, 2020, we had $2.5 billion of variable rate debt, which included $1.8 billion of outstanding term loan borrowings and $500 million under our accounts receivable securitization facility, as described below, and certain foreign and other lines of credit. In addition, we maintain a $3.5 billion revolving credit facility with a syndicate of banks. There were $219 million of outstanding borrowings on the revolving credit facility at September 30, 2020. Outstanding borrowings under the term loan and revolving credit facility bear interest at a variable rate based on LIBOR or on a base rate, plus a specified margin based on our long-term debt rating in effect from time to time. There are no significant commitment fees and no compensating balance requirements on the revolving credit facility, which matures in September 2023. The outstanding principal balance on the term loan of $1.8 billion is due at maturity in July 2024. The variable interest rate was 1.18% on the revolving credit facility borrowings and 1.40% on the term loan borrowings at September 30, 2020. The revolving credit facility and ~~the~~ term loan facility contain various ~~substantially similar,~~ restrictions and covenants that require us, among other things, ~~to:~~to (i) limit our consolidated indebtedness as of the end of each fiscal quarter to ~~either four times or four~~no more than three and one-half times our consolidated net earnings before interest, taxes, depreciation, amortization, non-cash charges and expenses and certain other adjustments (“EBITDA”) ~~for a specified~~during the period ~~following~~of four fiscal quarters then ended, subject to certain ~~acquisitions~~exceptions, and (ii) maintain ~~consolidated~~ EBITDA of at least three times our consolidated interest expense as of the end of each fiscal quarter for the period of four fiscal quarters then ended. ~~In November 2019,~~

During the first six months of 2021, we ~~elected~~were in compliance with all financial debt covenants. Our ability to ~~increase~~meet future debt covenant requirements will depend on our continued ability to generate earnings and cash flows. We expect to remain in compliance with all terms and conditions associated with our outstanding debt, including financial debt covenants.

Variable Rate Debt

Our variable rate debt consisted of the ~~permitted leverage ratio to four times our consolidated EBITDA through~~following at June 30, ~~2020, with the leverage ratio decreasing to three and one-half times consolidated EBITDA thereafter.~~2021:

~~Foreign Lines of Credit~~



(In millions)	Maturity	Weighted-Average Interest Rate	Outstanding Borrowings
Foreign lines of credit	n/a	30.27%	131
Receivable securitized loan	July 2022	0.95%	425
Term loan facility	July 2024	1.33%	$	755
U.S. commercial paper program	various	0.18%	1,060
Revolving credit facility	September 2023	—%	—
Total variable rate debt			$	2,371

~~In connection with the acquisition of First Data, we assumed~~We maintain certain short-term lines of credit with foreign banks and alliance partners primarily to fund settlement activity. These arrangements are primarily associated with our international operations and are in various functional currencies, the most significant of which ~~are~~is the ~~Australian dollar, Polish zloty and~~ Argentine peso.

We ~~had amounts outstanding on these lines of credit totaling $121 million at a weighted-average interest rate of 15.8% at September 30, 2020.~~

~~Receivable Securitized Loan~~

~~In connection with the acquisition of First Data, we acquired~~maintain a consolidated wholly-owned subsidiary, First Data Receivables, LLC (“FDR”). FDR is a party to certain receivables financing arrangements, including an agreement (“Receivables Financing Agreement”) with certain financial institutions and other persons from time to time party thereto as lenders and group agents, pursuant to which certain of our wholly-owned subsidiaries have agreed to transfer and contribute receivables to FDR, and FDR in turn may obtain borrowings from the financial institutions and other lender parties to the Receivables Financing Agreement secured by liens on those receivables. FDR’s assets are not available to satisfy the obligations of any other of our entities or affiliates, and FDR’s creditors would be entitled, upon its liquidation, to be satisfied out of FDR’s assets prior to any assets or value in FDR becoming available to us. ~~The receivables held by FDR are recorded within trade accounts receivable, net in our consolidated balance sheets. At September 30, 2020,~~ FDR held ~~$799 million~~$1.1 billion in receivables as part of the securitization ~~program. The maximum borrowing capacity, subject to collateral availability, under the Receivables Financing Agreement at September 30, 2020 was $646 million. FDR~~program, and utilized the receivables as collateral in borrowings of ~~$500~~$425 million at ~~an average interest rate of 1.00%, at September~~June 30, ~~2020. The term of~~2021. At June 30, 2021, the collateral capacity under the Receivables Financing Agreement ~~is through July 2022.~~was $840 million, and the maximum borrowing capacity was $500 million.

Beginning in May 2021, we have maintained a U.S. unsecured commercial paper notes program with various maturities ranging from one to three weeks. Outstanding borrowings under the commercial paper notes bear interest based on the prevailing rates at the time of issuance.

We maintain an amended and restated revolving credit facility with aggregate commitments available for $3.5 billion of total capacity. Outstanding borrowings under the revolving credit facility and term loan bear interest at a variable rate based on LIBOR or a base rate, plus, in each case, a specified margin based on our long-term debt rating in effect from time to time. There are no significant commitment fees and no compensating balance requirements on the revolving credit facility.

Cash and Cash Equivalents

Investments (other than those included in settlement assets) with original maturities of three months or less that are readily convertible to cash are considered to be cash equivalents. At ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we held ~~$937~~$841 million and ~~$893~~$906 million in cash and cash equivalents, respectively.

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The table below details the cash and cash equivalents at:

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		September 30, 2020						December 31, 2019							June 30, 2021						December 31, 2020
(In millions)	(In millions)	Domestic		International		Total		Domestic		International		Total		(In millions)	Domestic		International		Total		Domestic		International		Total
Available	Available	$	335	$	184	$	519	$	383	$	208	$	591	Available	$	261	$	188	$	449	$	337	$	177	$	514
Unavailable (1)	Unavailable (1)	151		267		418		130		172		302		Unavailable (1)	52		340		392		57		335		392
Total	Total	$	486	$	451	$	937	$	513	$	380	$	893	Total	$	313	$	528	$	841	$	394	$	512	$	906

(1)Represents cash held primarily by our joint ventures that is not available to fund operations outside of those entities unless the ~~Board~~board of ~~Directors~~directors for said entities declares a dividend, as well as cash held by certain other entities that are subject to foreign exchange controls in certain countries or regulatory capital requirements.

~~Employee Termination Costs~~

In connection with the acquisition of First Data, we continue to implement certain integration plans focused on reducing our overall cost structure, including reducing vendor spend and eliminating duplicate costs. We recorded $28 million and $105 million of employee termination costs related to severance and other separation costs for terminated employees in connection with the acquisition of First Data during the three and nine months ended September 30, 2020, respectively. Accrued employee severance and other separation costs of $25 million at September 30, 2020 are expected to be paid within the next twelve months. We continue to evaluate operating efficiencies and anticipate incurring additional costs in connection with these activities but are unable to estimate those amounts at this time as such plans are not yet finalized.

Impact of COVID-19 Pandemic

The COVID-19 pandemic has created significant uncertainty as to general global economic and market ~~conditions for the remainder of 2020 and beyond.~~conditions. We believe we have adequate capital resources and sufficient access to external financing sources to satisfy our current and reasonably anticipated requirements for funds to conduct our operations and meet other needs in the ordinary course of our business. However, as the impact of the ~~COVID-19~~ pandemic on the economy and our operations further evolves, we will continue to assess our liquidity needs. The ability to continue to service debt and meet lease and other obligations as they come due is dependent on our continued ability to generate earnings and cash flows. A lack of continued recovery or further deterioration in economic and market conditions could materially affect our future access to our sources of liquidity, particularly our cash flows from operations.

We engage in regular communication with the banks that participate in our revolving credit facility. During these communications, none of the banks have indicated that they may be unable to perform on their commitments. We periodically review our banking and financing relationships, considering the stability of the institutions, pricing we receive on services, and other aspects of the relationships. Based on these communications and our monitoring activities, we believe the likelihood of one of our banks not performing on its commitment is remote. We maintain a U.S. commercial paper notes program to access funding for general corporate purposes at favorable rates and to provide a source of liquidity. As ~~evidenced by~~of June 30, 2021, we had a commercial paper credit rating of P-2 from Moody’s Investors Service, Inc. (“Moody’s”) and A-2 from Standard & Poor’s Rating Services (“S&P). Any downgrade to our ~~May 2020 senior~~commercial paper credit ratings or instability in the commercial paper markets may adversely impact our ability to access funding through our commercial paper notes ~~offering described above,~~program and require us to rely more heavily on more expensive financing arrangements, including our revolving credit facility. In addition, the long-term debt markets have historically provided us with a source of liquidity. Although we do not currently anticipate an inability to obtain financing from long-term debt markets in the future, the COVID-19 pandemic could make financing more difficult and/or expensive to obtain. Our ability to access the long-term debt markets on favorable interest ~~rate~~rates and other terms also depends on the ratings assigned by the credit rating agencies to our indebtedness. As of ~~September~~June 30, ~~2020,~~2021, we had a corporate credit rating of Baa2 with a stable outlook from Moody’s ~~Investors Service, Inc.~~ and BBB with a stable outlook from ~~Standard & Poor’s Rating Services.~~S&P. In the event that the ratings of our outstanding long-term debt securities were substantially lowered or withdrawn for any reason, or if the ratings assigned to any new issue of long-term debt securities were significantly lower than those noted above, particularly if we no longer had investment grade ratings, our ability to access the debt markets ~~may~~could be adversely affected and our interest expense ~~would~~could increase under the terms of certain of our long-term debt securities.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk refers to the risk that a change in the level of one or more market prices, interest rates, currency exchange rates, indices, correlations or other market factors, such as liquidity, will result in losses for a certain financial instrument or group of financial instruments. We are exposed to certain market risks, primarily tofrom fluctuations in interest ~~rate risk and market price risk on outstanding debt, investments of subscriber funds~~rates and foreign ~~currency.~~currency exchange rates. Our senior management actively monitors these risks.

~~Interest Rate Risk~~

We manage our debt structure and interest rate risk through the use of fixed- and variable-rate debt. Based on our outstanding debt balances and interest rates at September 30, 2020, a 1% increase in variable interest rates would increase annual interest expense by approximately $26 million.

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~~In connection with processing electronic payments transactions, the funds~~Additional information about market risks to which we receive from subscribers are invested into short-term, highly liquid investments from the time we collect the funds until payments are made to the applicable recipients. A 1% decrease in variable interest rates would decrease annual interest-related income related to settlement assets by approximately $30 million over the next twelve months.

~~Foreign Currency Risk~~

~~We conduct business globally and~~ are exposed, to foreign currency risk from changes in the value of underlying assets and liabilities of our non-U.S. dollar-denominated foreign investments and foreign currency transactions. We manage the exposure to these risks through the use of foreign currency forward exchange contracts and non-derivative net investment hedges.

Our exposure to foreign currency exchange risks generally arises from our non-U.S. operations to the extent they are conducted in local currency. During the three and nine months ended September 30, 2020, approximately 14% and 13%, respectively, of our total revenue was generated outside the U.S. The major currencies to which our revenues are exposed are the Euro, the British Pound, the Indian Rupee and the Argentine Peso. A movement of 10% in foreign currency rates against the U.S. dollar relative to the currencies in which our revenue and profits are denominated at September 30, 2020 would have resulted in an increase or decrease in our reported pre-tax income of approximately $12 million as follows:


~~(In millions)~~	~~Nine Months Ended September 30, 2020~~
~~Euro~~	$	1
~~British Pound~~	3

~~Argentine Peso~~	3
~~Other~~	5
~~Total increase or decrease~~	$	12

We have entered into foreign currency forward exchange contracts, which have been designated as cash flow hedges, to hedge foreign currency exposure to our operating costs in India. At September 30, 2020, the notional amount of these derivatives was approximately $206 million. In addition, we designated our foreign currency-denominated senior notes as net investment hedges to reduce exposure to changes in the value of our net investments in certain foreign subsidiaries due to changes in foreign currency exchange rates.

~~Refer to Item 1A in Part II of this Quarterly Report on Form 10-Q for an additional~~including discussion of risks and potential risks of the COVID-19 pandemic on our ~~business.~~business, is included within Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2020. There were no significant changes to our quantitative and qualitative analyses about market risk during the six months ended June 30, 2021.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), our management, with the participation of our chief executive officer and chief financial officer, evaluated the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of ~~September~~June 30, ~~2020.~~2021.

Changes in Internal Control Over Financial Reporting

There was no change in internal control over financial reporting that occurred during the ~~quarter~~three months ended ~~September~~June 30, ~~2020~~2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the normal course of business, we or our subsidiaries are named as defendants in lawsuits in which claims are asserted against us. 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 our consolidated financial statements.

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~~ITEM 1A. RISK FACTORS~~

In addition to the risk factors included as Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on February 27, 2020, the following additional risk factors have become material to us since the filing of our Form 10-K.

~~Our business has been, and is likely to continue to be, adversely impacted by the coronavirus (COVID-19) pandemic.~~

In December 2019, a novel strain of coronavirus (“COVID-19”) was identified and has since continued to spread and negatively impact the economy of the United States and other countries around the world. In March 2020, the World Health Organization recognized the COVID-19 outbreak as a pandemic. In response to the COVID-19 pandemic, the governments of many countries, states, cities and other geographic regions have taken actions to prevent the spread of COVID-19, such as imposing travel restrictions and bans, quarantines, social distancing guidelines, shelter-in-place or lock-down orders and other similar limitations. Accordingly, the pandemic has adversely impacted global economic activity and has contributed to significant volatility in financial markets during 2020.

Our operating performance is subject to global economic and market conditions, as well as their impacts on levels of consumer spending. As a result of the COVID-19 pandemic and the related decline in global economic activity, our operating performance, primarily within our merchant acquiring and payment-related businesses, which earn transaction-based fees, has been adversely affected. The pandemic may continue to negatively impact transaction volumes, create economic uncertainty, reduce economic activity, i~~ncrease unemployment and cause a decline in consumer and business confidence,~~ and could in the future further negatively impact the demand for our products and services, including merchant acquiring and payment processing and the sales and implementation of information technology projects. Ultimately, the extent of the impact of the COVID-19 pandemic on our future operational and financial performance will depend on, among other matters, the duration and intensity of the pandemic; governmental and private sector responses to the pandemic and the impact of such responses on us; and the impact of the pandemic on our employees, clients, vendors, operations and sales, all of which are uncertain and cannot be predicted.

~~Additional factors that could negatively impact us include:~~

•payment processing risks associated with disruptions to merchant activity and business failures including chargeback risk. As an unprecedented number of merchants have been required to suspend their operations, there may be an increase in consumer chargebacks associated with processed transactions that merchant clients have submitted but have not fulfilled. Merchants may be unable to fund these chargebacks, potentially resulting in losses to us;

•client payment risks. Clients may require additional time to pay us or fail to pay us at all, which could significantly increase the amount of accounts receivable and require us to record additional allowances for doubtful accounts. If clients cease operations or file for bankruptcy protection, we may experience lower revenue and earnings and have greater exposure to future transaction declines;

•~~increased cyber and payment fraud risk, as cybercriminals attempt to profit from the disruption given increased online banking, e-commerce and other online activity;~~

•disruption to our supply chain and third-party delivery service providers if the factories that manufacture our products or facilities that support our operations are disrupted, temporarily closed or experience workforce shortages. We could experience hardware shortages of point-of-sale devices manufactured in China as well as workforce shortages at our and third-party customer support, software development or technology hosting facilities, including those in India where the government has instituted broad stay at home orders;

•increased risk of failing to meet client contractual obligations, including due to government orders or other restrictions that limit or prohibit us from providing client-facing services from regular service locations or the failure of our business continuity plans, which could cause loss of revenue, contractual penalties or potential legal disputes and associated costs;

•challenges to the availability and reliability of our solutions and services due to changes to normal operations, including the possibility of one or more clusters of COVID-19 cases occurring at our data centers, contact centers or operations centers, affecting our employees or affecting the systems or employees of our clients or other third parties on which we depend.

The COVID-19 pandemic has caused us to modify our business practices, including requiring a majority of our employees to work remotely, limiting or suspending non-essential travel, suspending all non-essential visitors to our facilities, disinfecting facilities and workspaces extensively and frequently, providing personal protective equipment to associates and requiring employees who must be present at our facilities to adhere to a variety of safety protocols. We expect to continue such safety

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measures for the foreseeable future and may take further actions, or adapt these existing policies, as government authorities may require or recommend or as we may determine to be in the best interest of our employees, clients and vendors. Such measures may impact our productivity or effectiveness, and there is no certainty that such measures will be sufficient to mitigate the risks posed by the COVID-19 pandemic, including the risks to the health of our employees posed by the pandemic. Further, ~~the~~ ability of our employees to get to work has been disrupted across multiple locations, both with respect to their own offices and client sites, due among other things to government work and travel restrictions, including mandatory shutdowns.

In response to the COVID-19 pandemic, federal, state, local and foreign governments have issued emergency orders and a significant number of new laws and regulations in a short period of time. These actions have impacted our current operations, including with respect to collection and consumer credit reporting activities, and we have experienced an increased volume of client support requests because many of the new laws impact our clients. We could be required to expend additional resources and incur additional costs to address regulatory requirements applicable to us or our clients, and we may not have the capacity to implement necessary changes within the times prescribed by applicable laws. There could be government initiatives to reduce or eliminate payments, costs or fees to merchants or fees or other sources of revenue to financial institutions. Regulations may be unclear, difficult to interpret or in conflict with other applicable regulations. As a result, we may have to make judgments about how to comply with these new laws and regulators may not ultimately agree with how we implement applicable regulations. Failure to comply with any of these laws and regulations, including changing interpretations and the implementation of new, varying or more restrictive laws and regulations by federal, state, local or foreign governments, may result in financial penalties, lawsuits, reputational harm or change the manner in which we currently conduct some aspects of our business. In addition, during times of economic stress, there tends to be greater regulatory and governmental scrutiny of actions taken in response to such stress and an increased risk of both governmental and third party litigation.

A lack of further recovery or deterioration in economic and market conditions resulting from the COVID-19 pandemic could negatively impact our ability to generate earnings and cash flows sufficient to service debt and meet lease and other obligations as they come due or to meet our financial debt covenants. The pandemic could also make obtaining financing more difficult or expensive, and our ability to access the long-term debt markets on favorable interest rate and other terms will depend on market conditions and the ratings assigned by the credit rating agencies to our indebtedness.

The COVID-19 pandemic continues to evolve and we do not yet know the full extent of potential impacts on our business or the global economy as a whole. The extent to which the pandemic or any resulting worsening of the global business and economic environment adversely impacts our business, results of operations, liquidity and financial condition will depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the duration and intensity of the COVID-19 pandemic (including whether there are continued waves of infections), the actions to contain the pandemic or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. These factors may remain prevalent for a significant period of time. Even after the pandemic subsides, we may continue to experience materially adverse impacts to our business as a result of the global economic impact of the COVID-19 pandemic, including due to a continued or prolonged recession in the U.S. or other major economies.

There are no comparable recent events that provide guidance as to the impacts the COVID-19 pandemic may have, and, as a result, the ultimate impacts are highly uncertain and subject to change. We do not yet know the full extent of the impacts on our business, our operations or the global economy as a whole. The impacts of the COVID-19 pandemic could have a material adverse effect on our business, results of operations, liquidity or financial condition and heighten or exacerbate risks described in Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2019.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The table below sets forth information with respect to purchases made by or on behalf of us or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of shares of our common stock during the three months ended ~~September~~June 30, ~~2020:~~2021:

~~Period~~

Total Number of
Shares Purchased

Average Price
Paid per Share

~~Total Number of~~

~~Shares Purchased~~

~~as Part of Publicly~~

~~Announced Plans~~

~~or Programs~~ ~~(1)~~

~~Maximum Number~~

~~of Shares that May~~

~~Yet Be Purchased~~

~~Under the Plans or~~

~~Programs~~ ~~(1)~~

~~July 1-31, 2020~~

—

~~7,486,000~~

~~August 1-31, 2020~~

—

~~7,486,000~~

~~September 1-30, 2020~~

—

~~7,486,000~~

~~Total~~

—


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
April 1-30, 2021	—	$	—	—	60,488,000
May 1-31, 2021	5,000,000	117.70		5,000,000	55,488,000
June 1-30, 2021	—	—		—	55,488,000
Total	5,000,000			5,000,000

(1)On August 8, 2018 and November 19, 2020, our board of directors authorized the purchase of up to 30.0 million and 60.0 million shares of our common ~~stock. This authorization does~~stock, respectively. These authorizations do not expire.

ITEM 6. EXHIBITS

The exhibits listed in the accompanying exhibit index are filed as part of this Quarterly Report on Form 10-Q.

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Exhibit Index


Exhibit Number						Exhibit Description





3.1						Amended and Restated By-laws (1)

31.1						Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2						Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1						Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*						Inline XBRL Instance Document - The XBRL Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL Document

101.SCH*						Inline XBRL Taxonomy Extension Schema Document

101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

_______________________

* Filed with this quarterly report on Form 10-Q are the following documents formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Statements of Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, (ii) the Consolidated Statements of Comprehensive Income (Loss) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, (iii) the Consolidated Balance Sheets at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, (iv) the Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, and (v) Notes to Consolidated Financial Statements.

(1) Previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on November 2, 2020, and included herein solely to provide an updated hyperlink to the appropriate prior filing.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FISERV, INC.

Date:

~~October~~July 28, ~~2020~~2021

By:

/s/ Robert W. Hau

Robert W. Hau

Chief Financial Officer ~~and Treasurer~~

Date:

~~October~~July 28, ~~2020~~2021

By:

/s/ Kenneth F. Best

Kenneth F. Best

Chief Accounting Officer


		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Income	1
	Consolidated Statements of Comprehensive Income (Loss)	2
	Consolidated Balance Sheets	3
	Consolidated Statements of Cash Flows	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3126
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4641
Item 4.	Controls and Procedures	4742

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	4742
~~Item 1A.~~	~~Risk Factors~~	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5042
Item 6.	Exhibits	5042

	Exhibit Index
	Signatures



(In millions)
Year ending December 31,
Remainder of 2020	$	544
2021	1,839
2022	1,442
2023	1,129
Thereafter	2,093



	Fiserv, Inc. Shareholders’ Equity

Three Months Ended September 30, 2020	Number of Shares		Amount
(In millions)	Common Shares	Treasury Shares	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock		Noncontrolling Interests		Total Equity

Balance at June 30, 2020	791	122	$	8	$	23,771	$	(644)	$	12,877	$	(4,429)	$	1,445	$	33,028
Net income (1)									264				1		265



Net adjustment to noncontrolling interests from dissolution (see Note 4)					(36)								(726)		(762)
Other comprehensive income (loss)							(187)						17		(170)

Share-based compensation					84										84
Shares issued under stock plans		(1)			(48)						32				(16)


Balance at September 30, 2020	791	121	$	8	$	23,771	$	(831)	$	13,141	$	(4,397)	$	737	$	32,429



	Fiserv, Inc. Shareholders’ Equity

Three Months Ended September 30, 2019	Number of Shares		Amount
(In millions)	Common Shares	Treasury Shares	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock				Total Equity
													Noncontrolling Interests
Balance at June 30, 2019	791	399	$	8	$	1,056	$	(193)	$	12,083	$	(10,408)	$	0	$	2,546
Shares issued to acquire First Data (see Note 4)		(286)			22,582						7,478		1,119		31,179
Distributions paid to noncontrolling interests													(51)		(51)
Net income (1)									198				23		221

Other comprehensive loss							(186)								(186)

Share-based compensation					87										87
Shares issued under stock plans		(2)			(57)						57				0
Purchases of treasury stock		0									(36)				(36)



Balance at September 30, 2019	791	111	$	8	$	23,668	$	(379)	$	12,281	$	(2,909)	$	1,091	$	33,760



	Fiserv, Inc. Shareholders’ Equity

Nine Months Ended September 30, 2019	Number of Shares		Amount
(In millions)	Common Shares	Treasury Shares	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Retained Earnings		Treasury Stock				Total Equity
									Noncontrolling Interests
Balance at December 31, 2018	791	399	$	8	$	1,057	$	(67)		$	11,635	$	(10,340)	$	0	$	2,293
Shares issued to acquire First Data (See Note 4)		(286)			22,582							7,478		1,119		31,179
Distributions paid to noncontrolling interests														(51)		(51)
Net income (1)										646				23		669

Other comprehensive loss							(312)									(312)

Share-based compensation					121											121
Shares issued under stock plans		(4)			(92)							109				17
Purchases of treasury stock		2										(156)				(156)



Balance at September 30, 2019	791	111	$	8	$	23,668	$	(379)		$	12,281	$	(2,909)	$	1,091	$	33,760


	Restricted Stock Awards
	Shares (In thousands)	Weighted-Average Grant Date Fair Value
Awards - December 31, 2019	48	$	102.30
Granted	0	0
Forfeited	0	0
Vested	0	0
Awards - September 30, 2020	48	$	102.30