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8-K - FORM 8-K - Black Knight InfoServ, LLCg22037e8vk.htm
EX-99.2 - EX-99.2 - Black Knight InfoServ, LLCg22037exv99w2.htm
Exhibit 99.1
(LPS LOGO)
Press Release
     
Investors:
  Media:
 
   
Parag Bhansali
  Michelle Kersch
(904) 854-8640
  (904) 854-5043
Lender Processing Services, Inc. Reports Strong Fourth Quarter Earnings
Year-over-year revenues increase 28.3%
Adjusted EPS of 82 cents per diluted share
     JACKSONVILLE, Fla. — February 8, 2010 — Lender Processing Services, Inc. (NYSE:LPS), a leading provider of integrated technology and services to the mortgage and real estate industries, today reported consolidated revenues of $608.1 million for the fourth quarter of 2009, an increase of 28.3% compared to the fourth quarter of 2008, and net earnings of $74.9 million or 77 cents per diluted share.
     Adjusted net earnings for the fourth quarter of 2009 were $79.6 million, or 82 cents per diluted share, compared to $60.9 million, or 64 cents per diluted share in the fourth quarter of 2008. Adjusted net earnings in the current quarter include an adjustment for purchase price amortization of 5 cents per diluted share while the prior year quarter included a similar adjustment of 7 cents per diluted share.
     “LPS had a strong fourth quarter despite challenging market conditions and a fragile macro-economic environment. LPS with its market-leading presence and its unique technology-driven solutions for the mortgage and real estate industries, remains well positioned to achieve its growth objectives in 2010 and beyond,” said Lee A. Kennedy, Executive Chairman of LPS. “Our Loan Facilitation business posted record growth as it benefitted from a better year-over-

 


 

year origination market while our Default Services business continued to deliver very strong results. Also, our Mortgage Processing and other technology businesses had another outstanding quarter. During 2009, we continued to strengthen our balance sheet and increase our financial flexibility by paying down $262 million in debt,” added Jeff Carbiener, President and CEO of LPS.
     Operating income of $140.9 million in the quarter compared to $121.6 million in the fourth quarter of 2008. Operating margins were below fourth quarter 2008 primarily due to certain one-time benefits in last year’s quarter. Operating margins were however consistent with third quarter of 2009.
     Full year 2009 revenues of $2.4 billion were a solid 29.0% above 2008 while net earnings of $275.7 million in 2009 compared to $230.9 million in the prior year. Adjusted net earnings for full year 2009 of $300.3 million were a record 30.2% higher than pro forma adjusted net earnings in 2008.
     Adjusted free cash flow (net cash provided by operating activities minus certain non-recurring expenses and additions to property, equipment and computer software) for full year 2009 of $349.2 million was well above the $276.5 million for 2008 (which also reflects the impact of pro forma interest expense for the first six months of 2008) primarily due to strong operating results combined with greater efficiency in working capital management.
Technology, Data and Analytics (TD&A)
     Revenues for the segment were $189.4 million compared to $149.1 million in the fourth quarter of 2008 while operating income of $63.5 million compared to $53.5 million in the prior year period. Mortgage Processing revenues of $104.2 million were 17.9% above the fourth quarter of 2008, primarily due to the addition of the JPMorgan Chase portfolio onto our mortgage servicing platform. Other TD&A revenues increased by 40.3% to $85.2 million compared to the same period last year, primarily due to strong growth in Data and Analytics services, our Desktop application, and the impact of the FNRES acquisition completed in the

 


 

first quarter of 2009. Excluding the impact of FNRES, Other TD&A revenues were up a strong 23.6%. Overall operating income for TD&A grew mainly due to higher contributions from Mortgage Processing and Data & Analytics.
Loan Transaction Services (LTS)
     Revenues for the segment increased by 28.7% to $421.6 million compared to the fourth quarter of 2008 while operating income of $97.2 million compared to $84.1 million in the prior year quarter. Loan Facilitation Services revenues of $142.9 million were up 70.3% compared to the prior year quarter, primarily due to higher settlement services and increased appraisal volumes. Default Services revenues of $278.6 million increased 14.3% over the fourth quarter of 2008, primarily due to growth in the default market and our ability to continue to gain market share. Overall operating income for LTS was higher mainly due to higher income in loan origination related offerings, such as settlement services and appraisal.
Corporate and Other
     Net corporate expenses were $19.8 million compared to $16.1 million in the fourth quarter of 2008 and were higher primarily due to higher incentive compensation expenses in the current quarter driven by the strong operating results.
     The company announced that its Board of Directors had authorized a share repurchase program of $150 million that replaced the previous authorization of $75 million. The company noted that it had repurchased 1.024 million shares for $39.2 million and $8.0 million of its public bonds under the previous authorization.
Outlook
     “We had an exceptional year in 2009 and while the broader economy and the real estate market in particular remain challenging, LPS has a strong presence in each of its businesses and is well positioned to grow revenue and earnings in 2010,” said Jeff Carbiener. “Building on the

 


 

strong 2009 results, we expect first quarter 2010 adjusted earnings to be in the range of 78-80 cents per diluted share. For full year 2010, we expect revenues to grow 8%-10% compared to 2009 and adjusted earnings to be in the $3.49-$3.56 per diluted share range.”
Use of Non-GAAP Financial Information
     Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, LPS reports several non-GAAP measures, including “adjusted net earnings” (GAAP net earnings adjusted for the impact of certain non-recurring adjustments, if applicable, plus the after-tax purchase price amortization of intangible assets added through acquisitions), “adjusted net earnings per diluted share” (adjusted net earnings divided by diluted weighted average shares), “pro forma adjusted net earnings” (adjusted net earnings less pro forma interest expense on our debt facilities for the first six months of 2008 as if such facilities had been outstanding as of January 1, 2008), “pro forma adjusted net earnings per diluted share” (pro forma adjusted net earnings divided by diluted weighted average shares), “adjusted free cash flow” (net cash provided by operating activities less additions to property, equipment and computer software, as well as non-recurring adjustments, if applicable), and “pro forma adjusted free cash flow” (adjusted free cash flow less pro forma interest expense on our debt facilities for the first six months of 2008 as if such facilities had been outstanding as of January 1, 2008). LPS provides these measures because it believes that they are helpful to investors in comparing year-over-year performance in light of our 2008 spin-off from Fidelity National Information Services, Inc. (FIS), and to better understand our financial performance, competitive position and future prospects. Non-GAAP measures should be considered in conjunction with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP net earnings. A reconciliation of these non-GAAP measures to related GAAP measures is included in the attachments to this release.

 


 

Conference Call and Webcast
     LPS will host a conference call to discuss these results on Tuesday, February 9, 2010, at 8:00 a.m. Eastern time. Interested parties are invited to listen to the live webcast by logging on to the Investor Relations section at www.lpsvcs.com. Supplemental materials will be available on the website. Those wishing to participate via the conference call may do so by calling 866-823-5035. A replay of the webcast will be available on the website shortly after the call where it will be archived for one month. A replay of the conference call will be available through February 16, 2010 by dialing 888-203-1112 (access code: 6799466).
     To access a printer friendly version of this release and accompanying exhibits, go to http://www.lpsvcs.com/investor.
About Lender Processing Services
     Lender Processing Services, Inc. (LPS) is a leading provider of integrated technology and services to the mortgage and real estate industries. LPS offers solutions that span the mortgage continuum, including lead generation, origination, workflow automation (Desktop), servicing, portfolio retention and default, augmented by the company’s award-winning customer support and professional services. Approximately 50 percent of all U.S. mortgages by dollar volume are serviced using LPS’ Mortgage Servicing Package (MSP). In fact, many of the nation’s top servicers rely on MSP, including eight of the top 10 and 14 of the top 20. LPS also offers proprietary mortgage and real estate data and analytics for the mortgage and capital markets industries. For more information about LPS, visit www.lpsvcs.com.
Forward-Looking Statements
     This press release contains forward-looking statements that involve a number of risks and uncertainties. Those forward-looking statements include all statements that are not historical facts, including statements about our beliefs and expectations. Forward-looking statements are based on management’s beliefs, as well as assumptions made by and information currently

 


 

available to management. Because such statements are based on expectations as to future economic performance and are not statements of historical fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to: our ability to adapt our services to changes in technology or the marketplace; the impact of adverse changes in the level of real estate activity on demand for certain of our services; the elimination of existing and potential customers as a result of failures and consolidations in the banking and financial services industries; the effects of our substantial leverage on our ability to make acquisitions and invest in our business; changes to the laws, rules and regulations that regulate our businesses as a result of the current economic and financial environment; changes in general economic, business and political conditions, including changes in the financial markets; the impact of any potential defects, development delays, installation difficulties or system failures on our business and reputation; risks associated with protecting information security and privacy; risks associated with our spin-off from Fidelity National Information Services, Inc., including limitations on our strategic and operating flexibility as a result of the tax-free nature of the spin-off; and other risks and uncertainties detailed in the “Statement Regarding Forward-Looking Information,” “Risk Factors” and other sections of the Company’s Form 10-K, the Company’s subsequent reports on Form 10-Q and other filings with the Securities and Exchange Commission.
###

 


 

Exhibit A
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(Unaudited)
                                 
    Three months ended December 31,     Year ended December 31,  
    2009     2008     2009     2008  
    (In thousands)  
Processing and services revenues
  $ 608,133     $ 473,921     $ 2,370,548     $ 1,837,590  
Cost of revenues
    403,174       294,069       1,571,003       1,176,479  
 
                       
Gross profit
    204,959       179,852       799,545       661,111  
Selling, general and administrative expenses
    64,059       58,298       267,339       229,875  
 
                       
Operating income
    140,900       121,554       532,206       431,236  
Other income (expense):
                               
Interest income
    405       566       1,654       1,605  
Interest expense
    (19,896 )     (25,306 )     (84,630 )     (49,927 )
Other expense, net
    (31 )     (4 )     (248 )     273  
 
                       
Total other income (expense)
    (19,522 )     (24,744 )     (83,224 )     (48,049 )
 
                       
Earnings from continuing operations before income taxes and equity in losses of unconsolidated entity
    121,378       96,810       448,982       383,187  
Provision for income taxes
    46,427       35,455       171,735       146,569  
 
                       
Earnings from continuing operations before equity in losses of unconsolidated entity
    74,951       61,355       277,247       236,618  
Equity in losses of unconsolidated entity
          (833 )     (37 )     (4,687 )
 
                       
Earnings from continuing operations
    74,951       60,522       277,210       231,931  
Discontinued operation, net of tax
          (6,045 )     (504 )     158  
 
                       
Net earnings
    74,951       54,477       276,706       232,089  
Noncontrolling minority interest
    (50 )     (148 )     (977 )     (1,201 )
 
                       
Net earnings attributable to Lender Processing Services, Inc.
  $ 74,901     $ 54,329     $ 275,729     $ 230,888  
 
                       

 


 

Exhibit B
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
                 
    December 31,     December 31,  
    2009     2008  
    (In thousands)  
Assets
               
Current assets:
               
Cash and cash equivalents
  $ 70,528     $ 125,966  
Trade receivables, net of allowance for doubtful accounts
    401,333       344,848  
Other receivables
    3,770       17,393  
Due from afflilates
          2,713  
Prepaid expenses and other current assets
    26,985       22,030  
Deferred income taxes
    47,528       40,757  
 
           
Total current assets
    550,144       553,707  
 
           
 
               
Property and equipment, net of accumulated depreciation
    113,108       95,542  
Computer software, net of accumulated amortization
    185,376       157,539  
Other intangible assets, net of accumulated amortization
    72,796       83,489  
Goodwill
    1,166,142       1,091,056  
Other non-current assets
    109,738       122,300  
 
           
Total assets
  $ 2,197,304     $ 2,103,633  
 
           
 
               
Liabilities and Equity
               
Current liabilities:
               
Current portion of long-term debt
  $ 40,100     $ 145,101  
Trade accounts payable
    38,166       31,720  
Accrued salaries and benefits
    54,376       36,492  
Recording and transfer tax liabilities
    15,208       14,639  
Due to affiliates
    3,321       1,573  
Other accrued liabilities
    151,601       101,612  
Deferred revenues
    66,602       51,628  
 
           
Total current liabilities
    369,374       382,765  
 
           
 
               
Deferred revenues
    37,681       40,343  
Deferred income taxes, net
    65,215       36,557  
Long-term debt, net of current portion
    1,249,250       1,402,350  
Other non-current liabilities
    19,926       39,217  
 
           
Total liabilities
    1,741,446       1,901,232  
 
           
 
               
Equity:
               
Lender Processing Services, Inc. stockholders’ equity:
               
Preferred stock $0.0001 par value; 50 million shares authorized, none issued at December 31, 2009 or 2008, respectively
           
Common stock $0.0001 par value; 500 million shares authorized, 97.0 million and 95.3 million shares issued at December 31, 2009 and 2008, respectively
    10       9  
Additional paid-in capital
    173,424       111,849  
Retained earnings
    330,963       93,540  
Accumulated other comprehensive loss
    (7,630 )     (13,667 )
Treasury stock $0.0001 par value; 1,209,920 and 19,870 shares at December 31, 2009 and 2008, respectively
    (40,909 )     (582 )
 
           
Total Lender Processing Services, Inc. stockholders’ equity
    455,858       191,149  
Noncontrolling minority interest
          11,252  
 
           
Total equity
    455,858       202,401  
 
           
Total liabilities and equity
  $ 2,197,304     $ 2,103,633  
 
           

 


 

Exhibit C
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
                 
    Year ended December 31,  
    2009     2008  
    (In thousands)  
Cash flows from operating activities:
               
Net earnings attributable to Lender Processing Services, Inc.
  $ 275,729     $ 230,888  
 
               
Adjustments to reconcile net earnings to net cash provided by operating activities:
               
Depreciation and amortization
    97,922       93,416  
Amortization of debt issuance costs
    5,404       3,002  
Gain on sale of discontinued operation
    (2,574 )      
Deferred income taxes, net
    25,463       (28 )
Stock-based compensation cost
    28,042       21,513  
Tax benefit associated with equity compensation
    (2,921 )     (533 )
Equity in losses of unconsolidated entity
    37       4,687  
Noncontrolling minority interest
    977       1,201  
 
               
Changes in assets and liabilities, net of effects of acquisitions:
               
Trade receivables
    (49,602 )     (57,918 )
Other receivables
    13,637       (9,423 )
Prepaid expenses and other assets
    (11,578 )     11,666  
Deferred revenues
    11,316       10,501  
Accounts payable and other liabilities
    51,836       54,888  
 
           
Net cash provided by operating activities
    443,688       363,860  
 
           
 
               
Cash flows from investing activities:
               
Additions to property and equipment
    (40,890 )     (23,012 )
Additions to capitalized software
    (57,885 )     (39,276 )
Acquisition of title plants
    (17,219 )      
Acquisitions, net of cash acquired
    (31,103 )     (19,938 )
Proceeds from sale of discontinued operation, net of cash distributed
    (32,638 )      
 
           
Net cash used in investing activities
    (179,735 )     (82,226 )
 
           
 
               
Cash flows from financing activities:
               
Borrowings
          25,700  
Debt service payments
    (254,497 )     (63,272 )
Stock options exercised
    8,098       1,448  
Tax benefit associated with equity compensation
    2,921       533  
Cash dividends paid
    (38,306 )     (19,053 )
Capitalized debt issuance costs
          (25,735 )
Repurchase of minority interests in subsidiary
    (6,850 )      
Net distributions to FIS
          (114,855 )
Treasury stock purchases
    (22,757 )      
Bond repurchases
    (8,000 )      
 
           
Net cash used in financing activities
    (319,391 )     (195,234 )
Net (decrease) increase in cash and cash equivalents
    (55,438 )     86,400  
Cash and cash equivalents, beginning of period
    125,966       39,566  
 
           
Cash and cash equivalents, end of period
  $ 70,528     $ 125,966  
 
           
 
               
Supplemental disclosures of cash flow information:
               
Cash paid for interest
  $ 81,698     $ 32,330  
 
           
Cash paid for taxes
  $ 154,595     $ 62,229  
 
           
Non-cash contribution of stock compensation by FIS
  $     $ 9,120  
 
           
Non-cash redistribution of assets to FIS
  $ 434     $ (1,308 )
 
           
Non-cash consideration received from sale of discontinued operation
  $ 40,310     $  
 
           
Non-cash consideration issued in acquisition of business
  $ (5,162 )   $  
 
           
Non-cash exchange of FIS note
  $     $ (1,585,000 )
 
           

 


 

Exhibit D
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION — UNAUDITED
(In thousands)
                                                                                 
    Year ended December 31,     Quarter ended  
    2009     2008     12/31/2009     9/30/2009     6/30/2009     3/31/2009     12/31/2008     9/30/2008     6/30/2008     3/31/2008  
1. Revenues — Continuing Operations
                                                                               
 
                                                                               
Technology, Data and Analytics (TD&A):
                                                                               
Mortgage Processing
  $ 387,874     $ 334,184     $ 104,184     $ 102,973     $ 89,567     $ 91,150     $ 88,364     $ 83,592     $ 82,062     $ 80,166  
Other TD&A
    319,611       231,466       85,247       83,313       82,322       68,729       60,754       55,372       59,682       55,658  
 
                                                           
Total
    707,485       565,650       189,431       186,286       171,889       159,879       149,118       138,964       141,744       135,824  
 
                                                           
 
                                                                               
Loan Transaction Services:
                                                                               
Loan Facilitation Services
    547,300       431,673       142,919       136,657       148,510       119,214       83,914       87,629       118,091       142,039  
Default Services
    1,137,313       851,828       278,647       303,823       299,534       255,309       243,736       241,844       197,223       169,025  
 
                                                           
Total
    1,684,613       1,283,501       421,566       440,480       448,044       374,523       327,650       329,473       315,314       311,064  
 
                                                           
 
                                                                               
Corporate and Other
    (21,550 )     (11,561 )     (2,864 )     (7,339 )     (6,762 )     (4,585 )     (2,847 )     (1,675 )     (3,711 )     (3,328 )
 
                                                           
Total Revenue
  $ 2,370,548     $ 1,837,590     $ 608,133     $ 619,427     $ 613,171     $ 529,817     $ 473,921     $ 466,762     $ 453,347     $ 443,560  
 
                                                           
 
                                                                               
Revenue Growth from Prior Year Period
                                                                               
 
                                                                               
Technology, Data and Analytics:
                                                                               
Mortgage Processing
    16.1 %     -1.6 %     17.9 %     23.2 %     9.1 %     13.7 %     -4.9 %     2.9 %     -1.4 %     -2.6 %
Other TD&A
    38.1 %     0.4 %     40.3 %     50.5 %     37.9 %     23.5 %     14.6 %     -5.5 %     1.5 %     -7.4 %
 
                                                           
Total
    25.1 %     -0.8 %     27.0 %     34.1 %     21.3 %     17.7 %     2.2 %     -0.6 %     -0.2 %     -4.6 %
 
                                                           
 
                                                                               
Loan Transaction Services:
                                                                               
Loan Facilitation Services
    26.8 %     -28.2 %     70.3 %     55.9 %     25.8 %     -16.1 %     -39.6 %     -42.8 %     -28.3 %     -1.3 %
Default Services
    33.5 %     80.1 %     14.3 %     25.6 %     51.9 %     51.0 %     68.3 %     97.1 %     89.7 %     66.5 %
 
                                                           
Total
    31.3 %     19.5 %     28.7 %     33.7 %     42.1 %     20.4 %     15.4 %     19.4 %     17.3 %     26.7 %
 
                                                           
 
                                                                               
Corporate and Other
    n/m       n/m       0.6 %     338.1 %     n/m       n/m       n/m       n/m       n/m       n/m  
 
                                                           
Total Revenue
    29.0 %     12.1 %     28.3 %     32.7 %     35.3 %     19.4 %     11.0 %     13.3 %     10.0 %     14.4 %
 
                                                           
 
                                                                               
2. Depreciation and Amortization — Continuing Operations
                                                                               
 
                                                                               
Depreciation and Amortization
  $ 61,331     $ 51,075     $ 15,932     $ 15,894     $ 15,431     $ 14,074     $ 13,697     $ 12,594     $ 11,286     $ 13,498  
Purchase Price Amortization
    30,749       40,018       7,654       7,608       7,404       8,083       10,711       10,627       8,980       9,700  
Other Amortization
    5,837       2,244       1,713       1,542       753       1,829       596       579       594       475  
 
                                                           
Total Depreciation and Amortization
  $ 97,917     $ 93,337     $ 25,299     $ 25,044     $ 23,588     $ 23,986     $ 25,004     $ 23,800     $ 20,860     $ 23,673  
 
                                                           
 
                                                                               
3. Stock Compensation Expense (1)
                                                                               
 
                                                                               
Stock Compensation Expense, Excluding Acceleration Charges
  $ 27,243     $ 21,375     $ 7,678     $ 7,062     $ 6,459     $ 6,044     $ 6,603     $ 5,790     $ 4,295     $ 4,687  
Stock Acceleration Expense
    799       138                         799                   138        
 
                                                           
Total Stock Compensation Expense
  $ 28,042     $ 21,513     $ 7,678     $ 7,062     $ 6,459     $ 6,843     $ 6,603     $ 5,790     $ 4,433     $ 4,687  
 
                                                           
 
                                                                               
4. EBIT — Discontinued Operations (2)
                                                                               
 
                                                                               
Revenue
  $ 296     $ 24,319     $     $     $     $ 296     $ 2,204     $ 5,916     $ 7,033     $ 9,166  
Cost of Sales
    503       6,379                         503       1,571       1,521       1,499       1,788  
Selling, General and Administrative Expenses
    499       8,982                         499       1,814       1,837       2,212       3,119  
 
                                                           
Operating Income
    (706 )     8,958                         (706 )     (1,181 )     2,558       3,322       4,259  
Less Non-recurring Charges:
                                                                               
Restructuring Costs
                                                           
LPS Spin Related Costs
                                                           
Acceleration of Performance-Based Shares
                                                           
 
                                                           
EBIT, as adjusted
  $ (706 )   $ 8,958     $     $     $     $ (706 )   $ (1,181 )   $ 2,558     $ 3,322     $ 4,259  
 
                                                           
Depreciation and Amortization
  $ 5     $ 79     $     $     $     $ 5     $ 17     $ 19     $ 20     $ 23  
 
                                                           
 
(1)   As the Company does not allocate stock compensation expense to the individual business units, there is no related expense associated with the discontinued operation.
 
(2)   The business unit included in discontinued operations has historically been reported as a component of Loan Facilitation Services in the Loan Transaction Services reporting segment.

 


 

Exhibit E
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL INFORMATION — UNAUDITED
(In thousands, except per share data)
                                                                                 
    Year ended December 31,     Quarter ended  
    2009     2008     12/31/2009     9/30/2009     6/30/2009     3/31/2009     12/31/2008     9/30/2008     6/30/2008     3/31/2008  
1. EBIT — Continuing Operations
                                                                               
 
                                                                               
Consolidated
                                                                               
Revenue
  $ 2,370,548     $ 1,837,590     $ 608,133     $ 619,427     $ 613,171     $ 529,817     $ 473,921     $ 466,762     $ 453,347     $ 443,560  
Cost of Sales
    1,571,003       1,176,479       403,174       409,113       404,014       354,702       294,069       300,560       293,464       288,386  
Selling, General and Administrative Expenses
    267,339       229,875       64,059       66,671       65,431       71,178       58,298       57,909       58,570       55,098  
 
                                                           
Operating Income
    532,206       431,236       140,900       143,643       143,726       103,937       121,554       108,293       101,313       100,076  
 
                                                                               
Less Non-recurring Charges:
                                                                               
Restructuring Costs
    8,186       2,353                         8,186                   2,353        
LPS Spin Related Costs
          2,963                                           1,960       1,003  
Acceleration of Performance-Based Shares
    799       138                         799                   138        
 
                                                           
EBIT, as adjusted
  $ 541,191     $ 436,690     $ 140,900     $ 143,643     $ 143,726     $ 112,922     $ 121,554     $ 108,293     $ 105,764     $ 101,079  
 
                                                           
EBIT Margin, as adjusted
    22.8 %     23.8 %     23.2 %     23.2 %     23.4 %     21.3 %     25.6 %     23.2 %     23.3 %     22.8 %
 
                                                           
Depreciation and Amortization
  $ 97,917     $ 93,337     $ 25,299     $ 25,044     $ 23,588     $ 23,986     $ 25,004     $ 23,800     $ 20,860     $ 23,673  
 
                                                           
 
                                                                               
Technology, Data and Analytics
                                                                               
 
                                                                               
Revenue
  $ 707,485     $ 565,650     $ 189,431     $ 186,286     $ 171,889     $ 159,879     $ 149,118     $ 138,964     $ 141,744     $ 135,824  
Cost of Sales
    402,411       309,969       107,368       105,651       98,929       90,463       80,482       73,980       81,397       74,110  
Selling, General and Administrative Expenses
    70,717       64,640       18,571       18,256       17,824       16,066       15,121       15,790       17,471       16,258  
 
                                                           
Operating Income
    234,357       191,041       63,492       62,379       55,136       53,350       53,515       49,194       42,876       45,456  
 
                                                                               
Less Non-recurring Charges:
                                                                               
Restructuring Costs
          2,178                                           2,178        
LPS Spin Related Costs
                                                           
Acceleration of Performance-Based Shares
                                                           
 
                                                           
EBIT, as adjusted
  $ 234,357     $ 193,219     $ 63,492     $ 62,379     $ 55,136     $ 53,350     $ 53,515     $ 49,194     $ 45,054     $ 45,456  
 
                                                           
EBIT Margin, as adjusted
    33.1 %     34.2 %     33.5 %     33.5 %     32.1 %     33.4 %     35.9 %     35.4 %     31.8 %     33.5 %
 
                                                           
Depreciation and Amortization
  $ 69,477     $ 61,205     $ 18,066     $ 17,595     $ 16,441     $ 17,375     $ 15,990     $ 15,229     $ 13,971     $ 16,015  
 
                                                           
 
                                                                               
Loan Transaction Services
                                                                               
 
                                                                               
Revenue
  $ 1,684,613     $ 1,283,501     $ 421,566     $ 440,480     $ 448,044     $ 374,523     $ 327,650     $ 329,473     $ 315,314     $ 311,064  
Cost of Sales
    1,190,238       879,031       298,723       311,230       311,349       268,936       217,242       228,283       215,838       217,668  
Selling, General and Administrative Expenses
    107,769       105,299       25,681       27,665       27,064       27,359       26,314       26,487       27,154       25,344  
 
                                                           
Operating Income
    386,606       299,171       97,162       101,585       109,631       78,228       84,094       74,703       72,322       68,052  
 
                                                                               
Less Non-recurring Charges:
                                                                               
Restructuring Costs
          163                                           163        
LPS Spin Related Costs
                                                           
Acceleration of Performance-Based Shares
                                                           
 
                                                           
EBIT, as adjusted
  $ 386,606     $ 299,334     $ 97,162     $ 101,585     $ 109,631     $ 78,228     $ 84,094     $ 74,703     $ 72,485     $ 68,052  
 
                                                           
EBIT Margin, as adjusted
    22.9 %     23.3 %     23.0 %     23.1 %     24.5 %     20.9 %     25.7 %     22.7 %     23.0 %     21.9 %
 
                                                           
Depreciation and Amortization
  $ 20,310     $ 25,132     $ 5,281     $ 5,295     $ 5,126     $ 4,608     $ 7,028     $ 6,651     $ 5,290     $ 6,163  
 
                                                           
 
                                                                               
Corporate and Other
                                                                               
 
                                                                               
Revenue
  $ (21,550 )   $ (11,561 )   $ (2,864 )   $ (7,339 )   $ (6,762 )   $ (4,585 )   $ (2,847 )   $ (1,675 )   $ (3,711 )   $ (3,328 )
Cost of Sales
    (21,646 )     (12,521 )     (2,917 )     (7,768 )     (6,264 )     (4,697 )     (3,655 )     (1,703 )     (3,771 )     (3,392 )
Selling, General and Administrative Expenses
    88,853       59,936       19,807       20,750       20,543       27,753       16,863       15,632       13,945       13,496  
 
                                                           
Operating Income
    (88,757 )     (58,976 )     (19,754 )     (20,321 )     (21,041 )     (27,641 )     (16,055 )     (15,604 )     (13,885 )     (13,432 )
 
                                                                               
Less Non-recurring Charges:
                                                                               
Restructuring Costs
    8,186       12                         8,186                   12        
LPS Spin Related Costs
          2,963                                           1,960       1,003  
Acceleration of Performance-Based Shares
    799       138                         799                   138        
 
                                                           
EBIT, as adjusted
  $ (79,772 )   $ (55,863 )   $ (19,754 )   $ (20,321 )   $ (21,041 )   $ (18,656 )   $ (16,055 )   $ (15,604 )   $ (11,775 )   $ (12,429 )
 
                                                           
Depreciation and Amortization
  $ 8,130     $ 7,000     $ 1,952     $ 2,154     $ 2,021     $ 2,003     $ 1,986     $ 1,920     $ 1,599     $ 1,495  
 
                                                           

 


 

Exhibit E
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL INFORMATION — UNAUDITED
(In thousands, except per share data)
                                                                                 
    Year ended December 31,     Quarter ended  
    2009     2008     12/31/2009     9/30/2009     6/30/2009     3/31/2009     12/31/2008     9/30/2008     6/30/2008     3/31/2008  
2. Net Earnings — Reconciliation
                                                                               
 
                                                                               
Net Earnings
  $ 275,729       230,888     $ 74,901     $ 75,542     $ 75,240     $ 50,046     $ 54,329     $ 51,281     $ 63,546     $ 61,732  
 
                                                                               
Less Non-recurring Charges:
                                                                               
Restructuring Costs, net of tax
    5,055       1,440                         5,055                   1,440        
LPS Spin Related Costs, net of tax
          1,814                                           1,200       614  
Acceleration of Performance-Based Shares, net of tax
    493       84                         493                   84        
Impact of change in tax rate on non-recurring items
          (223 )                             (223 )                  
 
                                                           
Net Earnings, excluding non-recurring items
    281,277       234,003       74,901       75,542       75,240       55,594       54,106       51,281       66,270       62,346  
 
                                                                               
Pro Forma Interest Expense, net of tax (1)
          28,131                                           13,951       14,180  
 
                                                           
 
                                                                               
Pro Forma Net Earnings
    281,277       205,872       74,901       75,542       75,240       55,594       54,106       51,281       52,319       48,166  
 
                                                                               
Purchase Price Amortization, net of tax (2)
    18,987       24,751       4,726       4,698       4,572       4,991       6,815       6,504       5,496       5,936  
 
                                                           
Pro Forma Adjusted Net Earnings
  $ 300,264     $ 230,623     $ 79,627     $ 80,240     $ 79,812     $ 60,585     $ 60,921     $ 57,785     $ 57,815     $ 54,102  
 
                                                           
Pro Forma Net Earnings Per Share
  $ 2.93     $ 2.15     $ 0.77     $ 0.78     $ 0.78     $ 0.58     $ 0.57     $ 0.54     $ 0.55     $ 0.49  
 
                                                           
Pro Forma Adjusted Net Earnings Per Share (3)
  $ 3.12     $ 2.41     $ 0.82     $ 0.83     $ 0.83     $ 0.64     $ 0.64     $ 0.61     $ 0.61     $ 0.55  
 
                                                           
Pro Forma Diluted Weighted Average Shares (3)
    96,152       95,754       96,781       96,399       96,133       95,284       95,126       95,223       95,070       97,597  
 
                                                           
 
                                                                               
3. Cashflow — Reconciliation
                                                                               
 
                                                                               
Cash Flows from Operating Activities:
                                                                               
 
                                                                               
Net Earnings
  $ 275,729     $ 230,888     $ 74,901     $ 75,542     $ 75,240     $ 50,046     $ 54,329     $ 51,281     $ 63,546     $ 61,732  
Less Non-recurring Charges:
                                                                               
Restructuring Costs, net of tax
    4,304       1,440                         4,304                   1,440        
LPS Spin Related Costs, net of tax
          1,814                                           1,200       614  
Impact of change in tax rate on non-recurring items
          (223 )                             (223 )                  
 
                                                           
Net Earnings, excluding non-recurring items
    280,033       233,919       74,901       75,542       75,240       54,350       54,106       51,281       66,186       62,346  
 
                                                                               
Pro Forma Interest Expense, net of tax
          28,131                                           13,951       14,180  
 
                                                           
Pro Forma Adjusted Net Earnings
    280,033       205,788       74,901       75,542       75,240       54,350       54,106       51,281       52,235       48,166  
 
                                                                               
Adjustments to reconcile net earnings to net cash provided by operating activities:
                                                                               
Non-cash adjustments
    152,350       123,258       60,281       32,279       31,700       28,090       30,081       32,420       18,262       42,495  
Working capital adjustments
    15,609       9,714       13,369       (16,954 )     21,957       (2,763 )     32,158       26,908       (91,474 )     42,122  
 
                                                           
Net cash provided by operating activities
    447,992       338,760       148,551       90,867       128,897       79,677       116,345       110,609       (20,977 )     132,783  
 
                                                           
 
                                                                               
Capital expenditures included in investing activities
    (98,775 )     (62,288 )     (30,913 )     (19,455 )     (25,836 )     (22,571 )     (23,946 )     (13,205 )     (14,344 )     (10,793 )
 
                                                           
 
                                                                               
Pro Forma Adjusted Net Free Cash Flow
  $ 349,217     $ 276,472     $ 117,638     $ 71,412     $ 103,061     $ 57,106     $ 92,399     $ 97,404     $ (35,321 )   $ 121,990  
 
                                                           
 
Notes:    
 
(1)  
Pro forma interest expense for each of the two quarters in the period ended June 30, 2008 represents the interest expense associated with the $1,610.7 million in debt incurred by us in connection with the spin-off assuming the spin-off occurred on January 1, 2007. Our new bank debt bears interest at a floating rate which we estimate would have been 4.96% on the revolving credit agreement, Term Loan A and Term Loan B based on the one month LIBOR rate on June 30, 2008 (2.46%) plus a spread of 2.5%. Our new senior notes bear interest at a fixed rate of 8.125%. Amortization of capitalized debt issuance costs in connection with the borrowings included in pro forma interest expense total approximately $2.7 million for the six months ended June 30, 2008. These projections also reflect principal paydowns of approximately $36.3 million ($35 million of Term Loan A, $1.3 million of Term Loan B) per quarter under the credit agreement (other than in the first quarter after closing, in which only $1.3 million is payable) and the paydown of the revolver of $25.7 million during the first quarter of 2007.
 
(2)  
Purchase price amortization, net of tax represents the periodic amortization of intangible assets acquired through business acquisitions primarily relating to customer lists, trademarks and non-compete agreements.
 
(3)  
Pro forma earnings per share and pro forma diluted weighted average shares for the quarter ended June 30, 2008 are provided based on the 94,611 shares of Lender Processing Services, Inc. common stock issued to FIS shareholders on the July 2, 2008 spin date along with dilutive common stock equivalents calculated under the treasury stock method using the $33 per share closing price of LPS on July 2, 2008 as the average market price and the number of LPS options and awards issued to our employees per the terms of the spin-off. Pro forma earnings per share and pro forma diluted weighted average shares for all other periods presented above are based on the pro forma diluted shares as included in the Company’s Form 10 filed on June 20, 2008.