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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

OR

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

For the Quarter Ended June 30, 2002

Commission File Number 0-20312

FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)

(805) 696-7000

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     [X]          NO     [   ]

As of July 31, 2002, 38,283,839 shares of the Registrant’s Common Stock were outstanding.

Table of Contents

FORM 10-Q
QUARTERLY REPORT
Quarter Ended June 30, 2002

INDEX

						Page
Part I: FINANCIAL INFORMATION
Item 1.				Consolidated Financial Statements
A.				Consolidated Balance Sheets as of June 30, 2002 and December 31, 2001			3
B.				Consolidated Statements of Earnings for the three months and six months ended June 30, 2002 and 2001			4
C.				Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2002			5
D.				Consolidated Statements of Cash Flows for the six months ended June 30, 2002 and 2001			6
E.				Notes to Consolidated Financial Statements			7
Item 2.				Management’s Discussion and Analysis of Financial Condition and Results of Operations			13
Item 3.				Quantitative and Qualitative Disclosure About Market Risk			17
Part II: OTHER INFORMATION
Item 1.				Legal Proceedings			17
Item 2.				Changes in Securities and Use of Proceeds			18
Item 4.				Submission of Matters to Vote of Security Holders			18
Item 6.				Exhibits and Reports on Form 8-K			18

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Part I: FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

FIDELITY NATIONAL INFORMATION SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

						June 30,				December 31,
						2002				2001
						(Unaudited)
Assets
	Cash and cash equivalents					$	6,882			$	2,007
	Accounts receivable, net						33,336				33,147
	Notes receivable						476				1,552
	Deferred taxes, current portion						7,713				7,713
	Prepaids and other current assets						3,865				2,956
				Total current assets			52,272				47,375
	Property, equipment, and software, net						24,349				20,181
	Deferred taxes, long term portion						13,751				18,376
	Related party receivable						1,234				—
	Cost in excess of net assets acquired, net						91,579				91,983
	Intangible and other assets, net						23,450				21,581
Total assets						$	206,635			$	199,496
Liabilities and Stockholders’ equity
	Accounts payable					$	7,595			$	6,417
	Current maturities of capital lease obligations						1,024				1,293
	Deferred revenue, current portion						16,995				16,649
	Related party payables						633				948
	Income taxes payable						10,929				7,819
	Other current liabilities						9,635				11,676
			Total current liabilities				46,811				44,802
	Secured, revolving credit facility with parent						—				18,653
	Capital lease obligations, less current maturities						710				1,061
	Convertible note payable						4,125				—
	Deferred revenue, long-term portion						5,230				3,577
	Other liabilities						3,575				2,597
Total Liabilities							60,451				70,690
	Minority interests						722				—
Stockholders’ equity:
	Common stock, par value $.001; 200,000,000 shares authorized; issued 24,818,525 and outstanding 24,764,725 as of June 30, 2002; and issued 24,188,251 and outstanding 24,134,451 as of December 31, 2001						25				24
	Additional paid-in capital						133,331				126,669
	Accumulated earnings						12,697				2,470
	Accumulated other comprehensive loss						(252	)			(18	)
	Treasury Stock, 53,800 shares as of June 30, 2002 and December 31, 2001						(339	)			(339	)
Total stockholders’ equity							145,462				128,806
Total liabilities and stockholders’ equity						$	206,635			$	199,496

See Notes to Consolidated Financial Statements

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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)

					Three months ended								Six months ended
					June 30,								June 30,
					2002				2001				2002				2001
Revenue:
	Data				$	36,230			$	28,138			$	73,229			$	54,694
	Solutions					10,971				259				23,375				447
	Services					15,354				7,867				29,168				13,929
		Total revenue				62,555				36,264				125,772				69,070
Costs and expenses:
	Cost of data revenue					11,680				11,759				23,707				19,686
	Cost of solutions revenue					1,994				33				4,848				44
	Cost of services revenue					7,977				3,700				15,656				6,901
	Operating expenses					31,237				18,714				64,275				35,655
			Total costs and expenses			52,888				34,206				108,486				62,286
Operating income						9,667				2,058				17,286				6,784
Interest expense						79				—				338				—
Other (income) expense, net						100				—				(344	)			—
Earnings before amortization of cost in excess of net assets acquired						9,488				2,058				17,292				6,784
Amortization of cost in excess of net assets acquired						—				837				—				1,528
Earnings before income taxes and minority interests						9,488				1,221				17,292				5,256
Income taxes						3,795				292				6,916				2,601
Minority interests						149				—				149				—
Net earnings					$	5,544			$	929			$	10,227			$	2,655
Net earnings per share — basic					$	0.22			$	0.05			$	0.42			$	0.15
Net earnings per share — diluted					$	0.21			$	0.05			$	0.39			$	0.15
Weighted average shares — basic						24,683				17,211				24,563				17,211
Weighted average shares — diluted						26,266				17,211				25,891				17,211

See Notes to Consolidated Financial Statements

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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)

																		Accumulated
		Common Stock								Additional								Other								Total
										Paid-in				Accumulated				Comprehensive				Treasury				Stockholders'
		Shares				Amount				Capital				Earnings				Loss				Stock				Equity
Balance at December 31, 2001			24,134			$	24			$	126,669			$	2,470			$	(18)			$	(339	)		$	128,806
Shares issued to acquire ISDI			275				—				1,922				—				—				—				1,922
Exercise of stock options			312				1				2,797				—				—				—				2,798
Tax benefit associated with exercise of stock options			—				—				1,143				—				—				—				1,143
Shares issued for employee benefit plan			44				—				800				—				—				—				800
Translation adjustment			—				—				—				—				(234	)			—				(234	)
Net earnings			—				—				—				10,227				—				—				10,227
Balance at June 30, 2002			24,765			$	25			$	133,331			$	12,697			$	(252	)		$	(339	)		$	145,462

See Notes to Consolidated Financial Statements

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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

				Six months ended
				June 30,
				2002				2001
Cash flows from operating activities:
	Net earnings			$	10,227			$	2,655
	Adjustments to reconcile net earnings to net cash provided by operating activities:
		Depreciation and amortization			5,433				2,276
		Changes in assets and liabilities, net of effects of business acquisitions:
		Gain on sale of divisional assets			(344	)			203
		Accounts receivable			1,705				(9,308	)
		Prepaid and other assets			(1,924	)			192
		Accounts payable			(1,355	)			2,482
		Deferred revenue			1,999				1,757
		Tax benefit associated with the exercise of stock options			1,143				—
		Income taxes			3,210				1,383
		Related party receivables (payables)			(1,549	)			340
		Minority interests			149				(34	)
		Other liabilities			(2,795	)			147
Net cash provided by operating activities					15,899				2,093
Cash flows from investing activities:
	Purchase of property, equipment and software				(5,243	)			(1,023	)
	Proceeds from sale of divisional assets				15,500
	Business acquisitions, net				(5,348	)
Net cash (used in) provided by investing activities					4,909				(1,023	)
Cash flows from financing activities:
	Repayment of debt, net				(18,653	)			—
	Principal payments of lease obligations				(644	)			—
	Proceeds from stock options and employee benefit plans				3,598				—
	Net change in cumulative translation adjustment				(234	)			—
Net cash used in financing activities					(15,933	)			—
Net increase in cash					4,875				1,070
Cash and cash equivalents at beginning of period					2,007				2,213
Cash and cash equivalents at end of period				$	6,882			$	3,283
Supplemental cash flow information:
	Income taxes paid			$	2,464			$	—
	Interest paid			$	667			$	1

See Notes to Consolidated Financial Statements

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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note A — Basis of Financial Statements

The financial information included in this report includes the accounts of Fidelity National Information Solutions, Inc. and its subsidiaries (collectively, the “Company” or “FNIS”) and has been prepared in accordance with accounting principles generally accepted in the United States of America and the instructions to Form 10-Q and Article 10 of Regulation S-X. All adjustments considered necessary for a fair presentation have been included. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.

Certain reclassifications have been made in the 2001 Consolidated Financial Statements to conform to classifications used in 2002.

Note B — Acquisitions and Dispositions

On March 20, 2000, Fidelity National Financial, Inc. (“Fidelity”) consummated a merger with Chicago Title Corporation, as a result of which Fidelity acquired Chicago Title and Trust Company (“Chicago Title”). Subsequent to the merger, Fidelity combined its flood services (“Fidelity Flood”) and credit services (“Fidelity Credit”) with the flood services (“Chicago Flood”) and credit services (“Chicago Credit”) of Chicago Title. The merged flood services business (“Fidelity National Flood, Inc.” or “Flood”) and the merged credit services business (“Fidelity National Credit Services, Inc.” or “Credit”) became wholly owned subsidiaries of Chicago Title. Fidelity also acquired Market Intelligence, Inc. (“MI,” — together with Chicago Flood and Chicago Credit, the “Chicago Companies”). The acquisition was accounted for as a purchase, and, accordingly, the purchase price of $43.5 million was allocated to the tangible assets acquired, cost in excess of net assets acquired and liabilities assumed, at fair value, in the amounts of $26.9 million, $26.1 million, and $9.5 million, respectively.

Fidelity acquired 100% of the outstanding stock of IDM on January 3, 2001. The acquisition was accounted for as a purchase and, accordingly, the purchase price of $20.8 million was allocated to assets acquired, cost in excess of net assets acquired and liabilities assumed, at fair values, in the amounts of $1.9 million, $19.3 million, and $0.4 million, respectively.

On August 1, 2001, the Company, pursuant to an Agreement and Plan of Reorganization and Merger dated April 12, 2001, acquired IDM from Fidelity and MI, Credit, and Flood (collectively, the “Chicago Subsidiaries”) from Chicago Title , by merging the four subsidiaries with and into four previously-formed merger subsidiaries of the Company in simultaneous reverse triangular mergers (collectively, the “Mergers”). Concurrent with the Mergers, Fidelity transferred eighty percent (80%) of the issued and outstanding shares of capital stock of Fidelity National Tax Service, Inc. (“Tax” and together with IDM, the “Fidelity Subsidiaries”) to the Company (the “Share Exchange”). As a result of the Mergers and the Share Exchange, MI, Credit, Flood and IDM became wholly-owned subsidiaries of the Company, and Tax became a majority-owned subsidiary of the Company.

In consideration for the Mergers and the Share Exchange, the Company transferred to Chicago Title and Fidelity 11,703,801 shares and 5,507,671 shares of the Company’s common stock, respectively. Collectively, these shares of common stock then constituted approximately 77% of the outstanding capital stock of the Company. This transaction was a reverse merger, following which the Company became a majority-owned subsidiary of Fidelity. The Consolidated Financial Statements of the Company as of and for the six-month period ended June 30, 2001 reflect only the balance sheet, operations and cash flows of the Fidelity Subsidiaries and the Chicago Subsidiaries and reflect the Fidelity Subsidiaries and the Chicago Subsidiaries as the acquiror for accounting purposes.

The total purchase price of $34.8 million was allocated to the tangible assets acquired, cost in excess of net assets acquired, and liabilities assumed, at fair value, in the amounts of $43.3 million, $31.9 million, and $40.4 million, respectively. The allocation of the purchase price is preliminary. However, the Company does not believe the difference between the recorded book value and

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the fair value ultimately assigned will be material.

The following selected unaudited pro forma results of operations for the six months ended June 30, 2001 has been prepared to illustrate the effects of the purchase of the Company by the Fidelity Subsidiaries and Chicago Subsidiaries as the accounting acquiror, as if this transaction had been completed January 1, 2001. The information provided for the Fidelity Subsidiaries and Chicago Subsidiaries has been derived from the Fidelity Subsidiaries’ historical financial statements. The information provided for the Company has been derived from the historical financial statements of the Company.

On August 2, 2001, the Company acquired 100 percent of the outstanding common shares of Risco, Inc. (“Risco”). The results of Risco’s operations have been included in the Consolidated Financial Statements since that date. Risco was the third largest multiple listing service vendor in the United States. In connection with this acquisition, the Company issued 1,614,286 of its common stock at $7.34 per share. The total purchase price was $11.9 million and the Company recorded cost in excess of net assets acquired of $3.4 million.

On August 2, 2001, the Company purchased the assets and liabilities of Reez.com (“Reez”). The results of Reez’s operations have been included in the Consolidated Financial Statements since that date. Reez’s software provides the realtor, consumer and settlement service provider with an on-line platform to schedule, track and close real estate transactions. As a result of this acquisition, the Company issued 135,971 of its common stock at $7.34 per share. The total purchase price was $1.0 million and the cost in excess of net assets acquired in connection with the acquisition was immaterial.

On October 10, 2001, the Company purchased the 40,000 shares in Tax representing the residual 20% minority interest for $5.4 million in cash that resulted in cost in excess of net assets acquired of $4.5 million. The purchase price was in accordance with the terms of the original purchase agreement.

On December 3, 2001, the Company purchased all the assets of HomeSeeker’s XMLSweb division in exchange for $2.0 million in cash. As a result of this acquisition, the Company recorded cost in excess of net assets acquired of $1.0 million.

On January 2, 2002, the Company acquired ISDI.NET, LLC (“ISDI”), a technology, systems integration and consulting firm, in exchange for 275,000 shares of the Company’s Common Stock and $1.1 million in cash. Prior to the acquisition, the Company advanced to ISDI $1.1 million, which was included in Other Assets as of December 31, 2001. As a result of this acquisition, the Company recorded cost in excess of net assets acquired of $1.3 million.

On March 25, 2002, the Company sold its Environmental Risk Management Solutions business for $15.5 million in cash, resulting in a gain of $0.3 million. Proceeds from the sale were used to pay down the $12.6 million balance then outstanding under our revolving credit agreement with Fidelity. The remaining proceeds of $2.9 million were added to general working capital.

On May 28, 2002 the Company acquired a 55% interest in Hansen Quality Loan Services, LLC, a provider of collateral risk assessment and valuation services, for $4.125 million in cash and a convertible note. The note is in the amount of $4.125 million, bears interest at 4.5%, matures in May 2005, and is convertible into shares of the Company’s stock at $28.00 per share. The total purchase price was $8.25 million and the Company recorded cost in excess of net assets acquired of $7.5 million.

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Note C — Recent Developments

On July 1, 2002 the Company acquired Comstock Net Services, Inc., a technology provider to real estate professionals, in exchange for $1.75 million in cash and 213,323 shares of the Company’s stock.

On July 9, 2002 the Company completed its previously announced tender for all of the outstanding shares of Micro General Corporation, (“MGEN”) whereby each share of MGEN common stock was exchanged for shares of FNIS common stock. Concurrently with the closing of the tender offer FNIS and MGEN consummated a short-form merger and MGEN became a wholly-owned subsidiary of FNIS.

The tender offer and merger were based on a fixed exchange ratio of .696 shares of FNIS common stock for each share of MGEN common stock. As a result, the Company issued 12,895,721 new shares of its common stock to acquire MGEN. Prior to the merger, Fidelity held a controlling interest in both MGEN and FNIS. The non-controlling equity interest of MGEN (48.4%) will be accounted for under the purchase method of accounting in accordance with Financial Accounting Standards Board Statement No. 141, Business Combinations (“SFAS 141”). Under the purchase method of accounting, assets acquired and liabilities assumed are recorded at their fair values. Goodwill is created to the extent that the offer and merger consideration including certain acquisition and closing costs exceeds the fair value of the net assets acquired.

The acquisition of the equity interest controlled by Fidelity (51.6%) is not considered a business combination because FNIS and MGEN were under common control by Fidelity. Therefore in accordance with SFAS 141, FNIS will recognize the assets and liabilities transferred at the historical carrying value, or book value, of MGEN in a manner similar to a pooling-of-interests, and not at fair value.

The following selected unaudited pro forma results of operations for the six months ended June 30, 2002 and 2001 has been prepared to illustrate the effects of the acquisition of MGEN by the Company as if this transaction had been completed January 1, 2001.

The pro forma results of operations for the six months ended June 30, 2002 and 2001, include compensation charges associated with unvested stock options of $1.0 million, net of income tax.

Also, subsequent to the merger of MGEN into FNIS, Fidelity exercised its option to convert a $5.3 million convertible note from MGEN into 403,120 shares of FNIS common stock.

As a result of the above three transactions, Fidelity’s ownership of the outstanding stock of FNIS decreased from approximately 77% as of June 30, 2002 to approximately 68% as of July 31, 2002.

On July 23, 2002 the Company entered into a merger agreement to acquire Factual Data Corp., (“FDCC”) a provider of customized information to businesses, primarily in the mortgage and consumer lending industries.

Under the terms of the merger agreement, FDCC will become a wholly owned subsidiary of FNIS and the stockholders of FDCC will receive the equivalent of $13.75 per FDCC common share for a total consideration of $84.2 million. Each share of FDCC common stock will be exchanged for a maximum of $10.31 in FNIS common stock and a minimum of $3.44 in cash. At its option, FNIS can elect to increase the cash consideration up to 100% of the purchase price.

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Closing of the transaction is subject to several conditions, including the completion of due diligence by both parties, FDCC stockholder approval, certain third party consents and other customary closing conditions. FNIS retains the right to terminate the merger agreement if its average stock price is below $25 during a determination period immediately preceding the closing of the transaction. Principal stockholders that beneficially own in the aggregate more than 50 percent of the outstanding FDCC shares have entered into agreements to vote in favor of the merger. The parties expect the transaction to close in the fourth quarter of 2002.

Note D — Adoption of Statement of Financial Accounting Standards No. 142, “Goodwill and Intangible Assets”

SFAS No. 142 requires that an intangible asset that is acquired shall be initially recognized and measured based on its fair value. The statement also provides that goodwill should not be amortized, but shall be tested for impairment annually, or more frequently if circumstances indicate potential impairment, through a comparison of fair value to its carrying amount.

The Company has performed a transitional goodwill impairment test on its reporting units and has determined that each of its reporting units has a fair value in excess of its carrying value. Accordingly, no goodwill impairment has been recorded.

Beginning on January 1, 2002, the Company ceased recording goodwill amortization in accordance with SFAS No. 142. The following table reconciles reported and adjusted net earnings and net earnings per share:

			Three months ended								Six months ended
			June 30,								June 30,
			2002				2001				2002				2001
			(In thousands, except per share data)								(In thousands, except per share data)
Net earnings			$	5,544			$	929			$	10,227			$	2,655
Add back: Amortization of cost in excess of net assets acquired				—				837				—				1,528
Adjusted net earnings			$	5,544			$	1,766			$	10,227			$	4,183
Basic Earnings Per Share:
	Net earnings		$	0.22			$	0.05			$	0.42			$	0.15
	Amortization of cost in excess of net assets acquired			—				0.05				—				0.09
	Adjusted net earnings per share — basic		$	0.22			$	0.10			$	0.42			$	0.24
Diluted Earnings Per Share:
	Net earnings		$	0.21			$	0.05			$	0.39			$	0.15
	Amortization of cost in excess of net assets acquired			—				0.05				—				0.09
	Adjusted net earnings per share — diluted		$	0.21			$	0.10			$	0.39			$	0.24

Note E — Secured, Revolving Credit Facility and Convertible Note Payable

On September 24, 2001, the Company entered into a revolving credit agreement with Fidelity. The credit agreement provides for a maximum credit line of $25 million that expires and is due in September 2006. The credit facility bears interest at a rate of prime plus 2%. As of June 30, 2002, there were no amounts outstanding under the agreement.

In connection with the purchase of a 55% interest in Hansen Quality Loan Services, LLC on May 28, 2002, the Company issued a convertible note in the amount of $4.125 million. The Note bears interest at 4.5%, matures in May 2005 and is convertible at any time into shares of the Company’s common stock at $28.00 per share.

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Note F — Earnings Per Share

The Company presents “basic” earnings per share, representing net earnings divided by the weighted average shares outstanding (excluding all common stock equivalents), and “diluted” earnings per share, representing the dilutive effect of all common stock equivalents. The following table illustrates the computation of basic and diluted earnings per share:

		Three months ended								Six months ended
		June 30,								June 30,
		2002				2001				2002				2001
		(In thousands, except per share amounts)								(In thousands, except per share amounts)
Net earnings, basic and diluted basis		$	5,544			$	929			$	10,227			$	2,655
Weighted average shares outstanding during the period, basic basis			24,683				17,211				24,563				17,211
Plus: Common stock equivalent shares assumed from       conversion of options and warrants			1,583				—				1,328				—
Weighted average shares outstanding during the period, diluted basis			26,266				17,211				25,891				17,211
Basic earnings per share		$	0.22			$	0.05			$	0.42			$	0.15
Diluted earnings per share		$	0.21			$	0.05			$	0.39			$	0.15

Note G — Segment Information

For the Company’s last annual report, for the year ended December 31, 2001, the Company was organized into three segments for management reporting purposes: Lender Services, Professional Services and Corporate and Other. Effective January 1, 2002, the Company reorganized into four segments for management and reporting purposes: Data, Solutions, Services and Corporate.

The activities of the reportable segments include the following:

Data — data includes information regarding real estate and consumers that can be aggregated, rendered, repurposed or repackaged for other purposes in order to meet customers’ specific business needs.

Solutions — solutions involve developing and supplying business processes and technology that allows customers to improve efficiency, lower costs, reduce risks and better manage and operate their businesses to serve their customers’ needs.

Services — services add value by combining manual intervention, outsourcing or process improvement with one or more of our data and/or solutions components. They can range considerably in scope, from improving a single process to providing complete outsourcing capabilities all of which can help to drive more revenue to the customer’s bottom line.

Corporate — corporate operations include certain financing and other general corporate expenses.

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Six Months Ended:
June 30, 2002		Data				Solutions				Services				Corporate				Total
		(Dollars in thousands)
Total revenue		$	73,229			$	23,375			$	29,168			$	—			$	125,772
Earnings (loss) before income taxes and minority interests		$	17,292			$	(411	)		$	5,028			$	(4,919	)		$	17,292
Income tax expense (benefit)			7,037				(164	)			2,011				(1,968	)			6,916
Minority interests											149								149
Net earnings (loss)		$	10,557			$	(247	)		$	2,868			$	(2,951	)		$	10,227
Assets		$	84,519			$	62,628			$	35,826			$	23,662			$	206,635

Six Months Ended:
June 30, 2001		Data				Solutions				Services				Corporate				Total
		(Dollars in thousands)
Total revenue		$	54,694			$	447			$	13,929			$	—			$	69,070
Earnings (loss) before income taxes		$	3,852			$	(185	)		$	1,589			$	—			$	5,256
Income tax expense (benefit)			1,906				(91	)			786				—				2,601
Net earnings (loss)		$	1,946			$	(94	)		$	803			$	—			$	2,655
Assets		$	84,569			$	72			$	13,341			$	—			$	97,982