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" or words of similar meaning. Statements that describe our 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, could cause actual results to differ materially from our current expectations. The factors that may affect our results include, among others: the impact on our business of the current state of the economy, including the risk of reduction in revenue resulting from the elimination of existing or potential clients due to consolidation or financial failures in the financial services industry or from decreased spending on the products and services we offer; our ability to complete, and the timing of and the proceeds from, the sale of the remainder of the Fiserv ISS business, including the risk that the conditions to the completion of the transaction may not be satisfied or the required regulatory approvals may not be obtained timely or at all; our ability to successfully integrate CheckFree's operations; changes in client demand for our products or services; pricing or other actions by competitors; the potential impact of our Fiserv 2.0 initiatives; our ability to comply with government regulations, including privacy regulations; and other factors identified in our Annual Report on Form 10-K for the year ended December 31, 2008 and in other documents that we file with the Securities and Exchange Commission. We urge you to consider these factors carefully in evaluating forward-looking statements and caution you not to place undue reliance upon forward-looking 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.

Overview

We provide integrated information management and electronic commerce systems and services, including transaction processing, electronic bill payment and presentment, business process outsourcing, document distribution services, and software and systems solutions. Our operations are primarily in the United States and are comprised of our Financial Institution Services ("Financial") segment, Payments and Industry Products ("Payments") segment and Corporate and Other segment. The Financial segment provides banks, thrifts and credit unions with account processing services, item processing services, loan origination and servicing products, cash management and consulting services, and other products and services that support numerous types of financial transactions. The Payments segment provides products and services that address a range of technology needs for the financial services industry, including: Internet banking, electronic bill payment, electronic funds transfer and debit processing, fraud and risk management capabilities, card and print personalization services, check imaging and investment account processing services for separately managed accounts. The Corporate and Other segment primarily consists of unallocated corporate overhead expenses, amortization of acquisition-related intangible assets and intercompany eliminations. In July 2008, we completed the sale of a 51% interest in substantially all of the businesses in the Insurance Services segment ("Fiserv Insurance"). As a result of this transaction, the revenues and expenses of Fiserv Insurance are no longer included in our consolidated revenues, expenses and operating income beginning July 15, 2008, but they are included for all prior periods.

Management's discussion and analysis of financial condition and results of operations is provided as a supplement to our accompanying unaudited condensed consolidated financial statements and accompanying footnotes 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:

• Recent accounting pronouncements. This section provides a discussion of recent accounting pronouncements that may impact our results of operations and financial condition in the future.

• Results of operations. This section contains an analysis of our results of operations presented in the accompanying unaudited condensed consolidated statements of income by comparing the results for the three and six-month periods ended June 30, 2009 to the comparable periods in 2008.

Recent Accounting Pronouncements

See Note 2 to the accompanying unaudited condensed consolidated financial statements for a description of recent accounting pronouncements, including the anticipated adoption dates, which is incorporated herein by reference.

Results of Operations

The following table presents, for the periods indicated, certain amounts
included in our condensed consolidated statements of income, the relative
percentage that those amounts represent to revenues, and the change in those
amounts from year to year. This information should be read together with the
condensed consolidated financial statements and accompanying notes.



                                                                  Three Months Ended June 30,
                                                                      Percentage of
                                                                       Revenue (1)             Increase (Decrease)
(In millions)                              2009         2008        2009        2008            $                %
Revenues:
Processing and services                   $   860      $   947       83.3 %      73.3 %     $      (87 )           (9 )%
Product                                       172          345       16.7 %      26.7 %           (173 )          (50 )%

Total revenues                              1,032        1,292      100.0 %     100.0 %           (260 )          (20 )%

Expenses:
Cost of processing and services               494          553       57.4 %      58.4 %            (59 )          (11 )%
Cost of product                               125          296       72.7 %      85.8 %           (171 )          (58 )%

Sub-total                                     619          849       60.0 %      65.7 %           (230 )          (27 )%
Selling, general and administrative           181          216       17.5 %      16.7 %            (35 )          (16 )%

Total expenses                                800        1,065       77.5 %      82.4 %           (265 )          (25 )%

Operating income                              232          227       22.5 %      17.6 %              5              2 %
Interest expense, net                         (55 )        (61 )     (5.3 )%     (4.7 )%            (6 )          (10 )%

Income from continuing operations
before income taxes and income from
investment in unconsolidated affiliate    $   177      $   166       17.2 %      12.8 %     $       11              7 %

                                                                   Six Months Ended June 30,
                                                                      Percentage of
                                                                       Revenue (1)             Increase (Decrease)
(In millions)                              2009         2008        2009        2008            $                %
Revenues:
Processing and services                   $ 1,712      $ 1,890       82.5 %      72.7 %     $     (178 )           (9 )%
Product                                       364          708       17.5 %      27.3 %           (344 )          (49 )%

Total revenues                              2,076        2,598      100.0 %     100.0 %           (522 )          (20 )%

Expenses:
Cost of processing and services               977        1,111       57.1 %      58.8 %           (134 )          (12 )%
Cost of product                               267          603       73.4 %      85.2 %           (336 )          (56 )%

Sub-total                                   1,244        1,714       59.9 %      66.0 %           (470 )          (27 )%
Selling, general and administrative           382          427       18.4 %      16.4 %            (45 )          (11 )%

Total expenses                              1,626        2,141       78.3 %      82.4 %           (515 )          (24 )%

Operating income                              450          457       21.7 %      17.6 %             (7 )           (2 )%
Interest expense, net                        (109 )       (130 )     (5.3 )%     (5.0 )%           (21 )          (16 )%

Income from continuing operations
before income taxes and income from
investment in unconsolidated affiliate    $   341      $   327       16.4 %      12.6 %     $       14              4 %

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

Total Revenues



                                                                 Three Months Ended June 30,
                                                                                               Corporate
(In millions)                           Financial          Payments         Insurance          and Other         Total
Total revenues:
2009                                   $       514        $      525       $        -         $        (7 )     $ 1,032
2008                                           558               514               235                (15 )       1,292

Revenue growth (decline)               $       (44 )      $       11       $      (235 )      $         8       $  (260 )
Revenue growth (decline) percentage             (8 )%              2 %            (100 )%                           (20 )%

                                                                  Six Months Ended June 30,
                                                                                               Corporate
(In millions)                           Financial          Payments         Insurance          and Other         Total
Total revenues:
2009                                   $     1,023        $    1,069       $        -         $       (16 )     $ 2,076
2008                                         1,107             1,043               480                (32 )       2,598

Revenue growth (decline)               $       (84 )      $       26       $      (480 )      $        16       $  (522 )
Revenue growth (decline) percentage             (8 )%              2 %            (100 )%                           (20 )%

Total revenues decreased $260 million, or 20%, in the second quarter of 2009 and $522 million, or 20%, in the first six months of 2009 compared to 2008. These decreases were primarily due to our sale of a 51% interest in Fiserv Insurance in July 2008, which resulted in decreases in total revenues of $235 million, or 18%, in the second quarter and $480 million, or 18%, in the first six months of 2009. As a result of this transaction, the revenues of Fiserv Insurance are no longer included in our consolidated revenues beginning July 15, 2008, but they are included for all prior periods. Revenues from acquired companies contributed approximately $6 million and $13 million to revenues in the second quarter and first six months of 2009, respectively.

Revenues in our Financial segment decreased $44 million, or 8%, and $84 million, or 8%, in the second quarter and first six months of 2009, respectively, compared to 2008. Revenues in the segment declined by 3 percentage points in both the second quarter and first six months of 2009 due primarily to the significant downturn in the U.S. mortgage markets which resulted in declines in home equity loan processing revenues of $16 million and $35 million in the second quarter and first six months of 2009, respectively, to $34 million and $57 million, respectively. Segment revenues decreased by another 2 percentage points in the second quarter, and 3 percentage points in the first six months of 2009, due to contract termination fee revenues which declined by $14 million and $28 million in the second quarter and first six months of 2009, respectively, to $3 million and $4 million, respectively. Businesses in our Financial segment generally enter into three to five year contracts with clients that contain early contract termination fees. These fees are primarily generated when an existing client is acquired by another financial institution and can vary significantly from period to period based on the number and size of clients that are acquired and how early in the contract term a contract is terminated. In addition, revenues in our Financial segment were negatively impacted by declines in software license revenues and related professional services.

Revenues in our Payments segment increased $11 million, or 2%, in the second quarter of 2009 and $26 million, or 2%, in the first six months of 2009 compared to 2008. These increases were primarily driven by new clients and increased transaction volumes from existing clients in our electronic payments businesses, including our bill payment and electronic funds transfer businesses, along with strong growth in our output solutions business, including pass-through postage revenue. These increases were partially offset by a decline in our investment services business due to a reduction in the number of accounts processed as a result of the volatility in the U.S. equity markets.

Total Expenses

Total expenses decreased $265 million, or 25%, in the second quarter of 2009 and $515 million, or 24%, in the first six months of 2009 compared to 2008. These decreases were primarily due to our sale of a 51% interest in Fiserv Insurance in July 2008 which resulted in decreases in total expenses of $212 million, or 20%, in the second quarter and $439 million, or 21%, in the first six months of 2009.

Cost of processing and services as a percentage of processing and services revenue decreased to 57.4% in the second quarter of 2009 and 57.1% in the first six months of 2009 from 58.4% and 58.8%, respectively, in the comparable periods in 2008. These decreases were primarily due to overall improvements in operating efficiencies as a result of improved business mix, reductions of variable expenses in businesses, such as the home equity loan processing business, that have been negatively impacted by market conditions, and the implementation of strategic initiatives that continue to lower our overall cost structure.

Cost of product as a percentage of product revenue decreased to 72.7% in the second quarter of 2009 and 73.4% in the first six months of 2009 from 85.8% and 85.2%, respectively, in the comparable periods in 2008. These decreases were primarily due to our sale of a 51% interest in Fiserv Insurance, which generated historical overall operating margins of less than 10 percent primarily due to the inclusion of prescription product costs in both product revenues and cost of product. Prescription product costs totaled $140 million and $292 million in the second quarter and the first six months of 2008, respectively, compared to no such costs in 2009.

Selling, general and administrative expenses decreased $35 million, or 16%, in the second quarter of 2009 and $45 million, or 11%, in the first six months of 2009 compared to 2008. These decreases were primarily due to our sale of a 51% interest in Fiserv Insurance, which resulted in decreases of $16 million and $34 million in the second quarter and first six months of 2009, respectively, the implementation of initiatives to reduce expenses and lower merger costs associated with our acquisition of CheckFree Corporation ("CheckFree"). Partially offsetting the decrease in the first six months of 2009 were $15 million of employee severance and related expenses associated with a reduction in force that we recorded in the first quarter of 2009.

Operating Income and Operating Margin



                                                                Three Months Ended June 30,
                                                                                              Corporate
(In millions)                           Financial         Payments         Insurance          and Other        Total
Operating income:
2009                                   $       145       $      147       $        -         $       (60 )     $  232
2008                                           143              134                23                (73 )        227

Operating income growth (decline)      $         2       $       13       $       (23 )      $        13       $    5
Operating income growth (decline)
percentage                                       1 %             10 %            (100 )%                            2 %

Operating margin:
2009                                          28.1 %           28.0 %              -                             22.5 %
2008                                          25.6 %           25.9 %             9.5 %                          17.6 %
Operating margin growth (1)                    2.5 %            2.1 %                                             4.9 %

                                                                 Six Months Ended June 30,
                                                                                              Corporate
(In millions)                           Financial         Payments         Insurance          and Other        Total
Operating income:
2009                                   $       282       $      302       $        -         $      (134 )     $  450
2008                                           281              274                41               (139 )        457

Operating income growth (decline)      $         1       $       28       $       (41 )      $         5       $   (7 )
Operating income growth (decline)
percentage                                       0 %             10 %            (100 )%                           (2 )%

Operating margin:
2009                                          27.5 %           28.3 %              -                             21.7 %
2008                                          25.4 %           26.2 %             8.7 %                          17.6 %
Operating margin growth (1)                    2.1 %            2.1 %                                             4.1 %

(1) Represents the percentage point improvement in operating margin.

Total operating income increased $5 million, or 2%, in the second quarter of 2009 and decreased $7 million, or 2%, in the first six months of 2009 compared to 2008. The sale of a 51% interest in Fiserv Insurance negatively impacted operating income and resulted in decreases of $23 million, or 10% of total operating income, in the second quarter and $41 million, or 9% of total operating income, in the first six months of 2009. Operating margin increased 490 basis points to 22.5% in the second quarter and increased 410 basis points to 21.7% in the first six months of 2009 compared to 2008. The operating margin growth was due to strong operating margin expansion in both of our operating segments, implementation of strategic initiatives that continue to lower our overall cost structure, and our sale of a 51% interest in Fiserv Insurance, which historically generated lower operating margins.

Operating income in our Financial segment increased $2 million in the second quarter of 2009 and $1 million in the first six months of 2009 compared to 2008. Operating margin increased 250 basis points to 28.1% in the second quarter and increased 210 basis points to 27.5% in the first six months of 2009 compared to 2008. The improvements in operating margin were primarily due to overall improvements in operating efficiencies and improved business mix. In addition, operating margins were favorably impacted by revenue growth and scale efficiencies in our bank and credit union account processing businesses and significant decreases in expenses in our home equity loan processing business, partially offset by the negative impact of decreases in higher-margin contract termination fees.

Operating income in our Payments segment increased $13 million, or 10%, in the second quarter of 2009 and $28 million, or 10%, in the first six months of 2009 compared to 2008. Operating margin improved 210 basis points to 28.0% in the second quarter and 210 basis points to 28.3% in the first six months of 2009 compared to 2008. These increases in operating income and operating margin resulted primarily from cost savings associated with our acquisition of CheckFree, growth in higher-margin revenues resulting in improved operating leverage and scale efficiencies in our transaction processing electronic payments businesses, and strong operating leverage in our output solutions business.

The operating loss in our Corporate and Other segment decreased $13 million in the second quarter of 2009 and $5 million in the first six months of 2009 compared to 2008. These decreases were primarily due to a decline in merger and integration items associated with our acquisition of CheckFree, partially offset by $15 million of employee severance and related expenses recorded in the first quarter of 2009.

Interest Expense, Net

Interest expense decreased $6 million, or 10%, in the second quarter of 2009 and $21 million, or 16%, in the first six months of 2009 compared to 2008. These decreases were primarily due to decreases in total outstanding borrowings and interest rates during the second quarter and first six months of 2009 compared to the same periods in 2008.

Income Tax Provision

The effective income tax rate for continuing operations was 38.2% in the second quarter and first six months of 2009 compared to 38.7% and 38.6% in the second quarter and first six months of 2008, respectively.

Income from Investment in Unconsolidated Affiliate

Due to our sale of a 51% interest in Fiserv Insurance in July 2008, we record our share of Fiserv Insurance's net income, $4 million in the second quarter of 2009 and $5 million in the first six months of 2009, as income from investment in unconsolidated affiliate.

Discontinued Operations

Income (loss) from discontinued operations was $26 million and $(2) million in the second quarter of 2009 and 2008, respectively, and $27 million and $228 million in the first six months of 2009 and 2008, respectively. Income from discontinued operations in the second quarter and first six months of 2009 included an after-tax gain of $25 million related to the final contingent purchase price payment we received in connection with the sale of a portion of Fiserv ISS. Income from discontinued operations in the first six months of 2008 included after-tax gains of $232 million primarily related to the sales of Fiserv Health and a portion of Fiserv ISS.

Net Income Per Share - Diluted

Net income per share-diluted was $0.90 and $0.60 in the second quarter of 2009 and 2008, respectively, and $1.56 and $2.60 in the first six months of 2009 and 2008, respectively. Net income per share-diluted from continuing operations was $0.73 and $0.62 in the second quarter of 2009 and 2008, respectively, and $1.39 and $1.22 in the first six months of 2009 and 2008, respectively. Net income
(loss) per share-diluted from discontinued operations increased from a loss of $0.01 per share in the second quarter of 2008 to income of $0.17 per share in the second quarter of 2009 primarily due to a $0.16 per share gain from the final contingent purchase price payment we received in connection with the sale of a portion of Fiserv ISS. Net income per share-diluted from discontinued operations decreased from $1.38 in the first six months of 2008 to $0.17 in the first six months of 2009 due primarily to gains on the sale of businesses in 2008.

Liquidity and Capital Resources

General

Our primary liquidity needs are: (i) to fund normal operating expenses; (ii) to meet the principal and interest requirements of our outstanding indebtedness; and (iii) to fund capital expenditures and operating lease payments. We believe these needs will be satisfied using cash flows generated by operations, our cash and cash equivalents at June 30, 2009 of $309 million and available borrowings under our revolving credit facility of $900 million.

                                                    Six Months Ended
                                                        June 30,               Increase (Decrease)
(In millions)                                       2009          2008            $                %
Income from continuing operations                 $    216        $ 201      $        15
Depreciation and amortization                          169          186              (17 )
Share-based compensation                                20           18                2
Net changes in working capital and other               (27 )        (10 )            (17 )

Operating cash flow                               $    378        $ 395      $       (17 )         (4 )%

Capital expenditures                              $     98        $  92      $         6            7 %

Our net cash provided by operating activities from continuing operations, or operating cash flow, was $378 million in the first six months of 2009, a decrease of 4% compared with $395 million in 2008. The $17 million decrease in operating cash flow in the first six months of 2009 compared to 2008 was due primarily to changes in working capital, including the timing of estimated income tax payments, and the significant decline in contract termination fee revenues. Our current policy is to use our operating cash flow primarily to repay debt and fund capital expenditures, rather than to pay dividends. Our capital expenditures increased $6 million to $98 million in the first six months of 2009 compared to same period in 2008. Our capital expenditures were less than 5% of total revenues in the first six months of 2009 and 2008.

In the second quarter of 2009, we received a contingent purchase price payment of $40 million related to our 2008 sale of a portion of Fiserv ISS. In the second half of 2009, we anticipate receiving approximately $70 million in connection with the sale of the remainder of Fiserv ISS. During the third quarter of 2009, Fiserv Insurance, of which we own 49%, refinanced outstanding debt associated with its bridge financing from July 2008. In conjunction with the refinancing, we loaned Fiserv Insurance approximately $65 million, with . . .