Black Knight InfoServ, LLC - FORM 8-K - EX-99.2

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EX-99.1 - EX-99.1 - Black Knight InfoServ, LLC	d614959dex991.htm
8-K - 8-K - Black Knight InfoServ, LLC	d614959d8k.htm

Exhibit 99.2

Exhibit A

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(Unaudited)


	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
	(In thousands, except per share data)
Revenues	$	418,981		$	497,451		$	1,359,522		$	1,496,622
Expenses:
Operating expenses		316,923			361,351			1,006,923			1,099,538
Depreciation and amortization		25,870			24,241			78,596			71,608
Legal and regulatory charges		2,445			—			54,011			144,476
Exit costs, impairments and other charges		10,334			—			12,035			—

Total expenses		355,572			385,592			1,151,565			1,315,622

Operating income		63,409			111,859			207,957			181,000

Other income (expense):
Interest income		554			463			1,698			1,365
Interest expense		(13,014	)		(16,112	)		(39,611	)		(48,969	)
Other income (expense), net		(79	)		14			212			173

Total other income (expense)		(12,539	)		(15,635	)		(37,701	)		(47,431	)
Earnings from continuing operations before income taxes		50,870			96,224			170,256			133,569
Provision for income taxes		15,421			35,892			59,589			59,860

Net earnings from continuing operations		35,449			60,332			110,667			73,709
Earnings (loss) from discontinued operations, net of tax		31			(2,028	)		(2,173	)		(6,164	)

Net earnings	$	35,480		$	58,304		$	108,494		$	67,545

Net earnings per share—diluted from continuing operations	$	0.41		$	0.71		$	1.29		$	0.87
Net loss per share—diluted from discontinued operations		—			(0.02	)		(0.02	)		(0.07	)

Net earnings per share—diluted	$	0.41		$	0.69		$	1.27		$	0.80

Weighted average shares outstanding—diluted		85,984			84,948			85,569			84,774

Exhibit B

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)


	September 30,			December 31,
	2013			2012
	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	203,207		$	236,241
Trade receivables, net of allowance for doubtful accounts		233,322			274,783
Other receivables		6,344			3,800
Prepaid expenses and other current assets		37,216			41,541
Deferred income taxes		88,090			127,742

Total current assets		568,179			684,107

Property and equipment, net		121,542			126,633
Computer software, net		272,714			245,271
Other intangible assets, net		18,978			23,670
Goodwill		1,109,304			1,109,304
Other non-current assets		281,808			256,849

Total assets	$	2,372,525		$	2,445,834

Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	40,125		$	—
Trade accounts payable		39,658			38,901
Accrued salaries and benefits		72,848			107,984
Legal and regulatory accrual		86,563			223,149
Other accrued liabilities		152,766			169,458
Deferred revenues		58,270			58,868

Total current liabilities		450,230			598,360

Deferred revenues		27,382			24,987
Deferred income taxes, net		189,825			174,303
Long-term debt, net of current portion		1,028,000			1,068,125
Other non-current liabilities		32,909			37,163

Total liabilities		1,728,346			1,902,938

Stockholders’ equity:
Preferred stock $0.0001 par value; 50 million shares authorized, none issued at September 30, 2013 and December 31, 2012		—			—
Common stock $0.0001 par value; 500 million shares authorized, 97.4 million shares issued at September 30, 2013 and December 31, 2012		10			10
Additional paid-in capital		249,145			250,016
Retained earnings		776,654			694,148
Accumulated other comprehensive loss		(3,106	)		(3,079	)
Treasury stock at cost; 12.1 million and 12.5 million shares at September 30, 2013 and December 31, 2012, respectively		(378,524	)		(398,199	)

Total stockholders’ equity		644,179			542,896

Total liabilities and stockholders’ equity	$	2,372,525		$	2,445,834

Exhibit C

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine months ended September 30,
	2013			2012
	(In thousands)
Cash flows from operating activities:
Net earnings	$	108,494		$	67,545
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		78,580			73,407
Amortization of debt issuance costs		3,141			3,317
Asset impairment charges		785			3,812
Gain on sale of discontinued operations		—			(6,688	)
Deferred income taxes, net		54,630			776
Stock-based compensation cost		20,777			19,520
Income tax effect of equity compensation		(917	)		(494	)
Changes in assets and liabilities, net of effects of acquisitions:
Trade receivables		41,304			27,543
Other receivables		(2,544	)		(1,748	)
Prepaid expenses and other assets		(11,162	)		(18,512	)
Deferred revenues		1,798			10,605
Accounts payable, accrued liabilities and other liabilities		(187,281	)		124,487

Net cash provided by operating activities		107,605			303,570

Cash flows from investing activities:
Additions to property and equipment		(20,208	)		(16,109	)
Additions to capitalized software		(65,909	)		(56,088	)
Purchases of investments, net of proceeds from sales		(8,094	)		(17,604	)
Acquisition of title plants and property records data		(18,484	)		(33,600	)
Acquisitions, net of cash acquired		—			(12,250	)
Proceeds from sales of discontinued operations, net of cash distributed		—			16,206

Net cash used in investing activities		(112,695	)		(119,445	)

Cash flows from financing activities:
Debt service payments		—			(72,082	)
Exercise of stock options and restricted stock vesting		(2,186	)		(1,792	)
Income tax effect of equity compensation		917			494
Dividends paid		(25,723	)		(25,384	)
Payment of contingent consideration related to acquisitions		(952	)		(2,000	)

Net cash used in financing activities		(27,944	)		(100,764	)

Net (decrease) increase in cash and cash equivalents		(33,034	)		83,361
Cash and cash equivalents, beginning of period		236,241			77,355

Cash and cash equivalents, end of period	$	203,207		$	160,716

Supplemental disclosures of cash flow information:
Cash paid for interest	$	30,398		$	54,774

Cash paid for taxes	$	6,956		$	46,853

Exhibit D

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

SUPPLEMENTAL FINANCIAL INFORMATION—UNAUDITED

(In thousands)


	YEAR-TO-DATE						QUARTER																					YEAR ENDED
	Q3-2013			Q3-2012			Q3-2013			Q2-2013			Q1-2013			Q4-2012			Q3-2012			Q2-2012			Q1-2012			12/31/2012
1. Revenues—Continuing Operations
Technology, Data and Analytics:
Technology	$	523,286		$	503,790		$	168,596		$	177,265		$	177,425		$	174,110		$	173,985		$	168,515		$	161,290		$	677,900

Servicing Technology		346,552			331,207			113,621			117,264			115,667			114,818			111,572			111,284			108,351			446,025
Default Technology		100,959			101,790			30,911			33,425			36,623			34,762			36,163			34,051			31,576			136,552
Origination Technology		75,775			70,793			24,064			26,576			25,135			24,530			26,250			23,180			21,363			95,323
Data and Analytics		47,735			43,803			14,795			16,735			16,205			15,202			15,009			14,767			14,027			59,005

Total		571,021			547,593			183,391			194,000			193,630			189,312			188,994			183,282			175,317			736,905

Transaction Services:
Origination Services		442,785			451,548			120,927			157,433			164,425			173,934			154,057			150,741			146,750			625,482
Default Services		345,585			499,473			114,597			117,427			113,561			137,783			154,394			179,618			165,461			637,256

Total		788,370			951,021			235,524			274,860			277,986			311,717			308,451			330,359			312,211			1,262,738

Corporate		131			(1,992	)		66			20			45			—			6			(264	)		(1,734	)		(1,992	)

Total Revenue	$	1,359,522		$	1,496,622		$	418,981		$	468,880		$	471,661		$	501,029		$	497,451		$	513,377		$	485,794		$	1,997,651

Revenue Growth from Prior Year Period
Technology, Data and Analytics:
Technology		3.9	%		9.4	%		-3.1	%		5.2	%		10.0	%		8.0	%		11.2	%		10.4	%		6.6	%		9.1	%

Servicing Technology		4.6	%		5.4	%		1.8	%		5.4	%		6.8	%		7.2	%		4.0	%		7.3	%		4.9	%		5.9	%
Default Technology		-0.8	%		17.6	%		-14.5	%		-1.8	%		16.0	%		3.0	%		28.3	%		16.6	%		8.3	%		13.5	%
Origination Technology		7.0	%		18.9	%		-8.3	%		14.7	%		17.7	%		20.3	%		25.3	%		17.1	%		13.7	%		19.2	%
Data and Analytics		9.0	%		0.2	%		-1.4	%		13.3	%		15.5	%		6.3	%		7.8	%		-2.6	%		-4.2	%		1.7	%

Total		4.3	%		8.6	%		-3.0	%		5.8	%		10.4	%		7.8	%		11.0	%		9.2	%		5.7	%		8.4	%

Transaction Services:
Origination Services		-1.9	%		22.7	%		-21.5	%		4.4	%		12.0	%		14.8	%		15.7	%		42.4	%		13.8	%		20.4	%
Default Services		-30.8	%		-17.3	%		-25.8	%		-34.6	%		-31.4	%		-26.0	%		-19.9	%		-9.4	%		-22.4	%		-19.4	%

Total		-17.1	%		-2.2	%		-23.6	%		-16.8	%		-11.0	%		-7.7	%		-5.3	%		8.6	%		-8.8	%		-3.6	%

Corporate		n/m			n/m			n/m			n/m			n/m			n/m			n/m			n/m			n/m			n/m

Total Revenue		-9.2	%		1.7	%		-15.8	%		-8.7	%		-2.9	%		-2.1	%		0.6	%		9.1	%		-4.1	%		0.7	%

Revenue Growth from Sequential Period
Technology, Data and Analytics:
Technology		3.9	%		9.4	%		-4.9	%		-0.1	%		1.9	%		0.1	%		3.2	%		4.5	%		0.0	%		9.1	%

Servicing Technology		4.6	%		5.4	%		-3.1	%		1.4	%		0.7	%		2.9	%		0.3	%		2.7	%		1.2	%		5.9	%
Default Technology		-0.8	%		17.6	%		-7.5	%		-8.7	%		5.4	%		-3.9	%		6.2	%		7.8	%		-6.4	%		13.5	%
Origination Technology		7.0	%		18.9	%		-9.5	%		5.7	%		2.5	%		-6.6	%		13.2	%		8.5	%		4.7	%		19.2	%
Data and Analytics		9.0	%		0.2	%		-11.6	%		3.3	%		6.6	%		1.3	%		1.6	%		5.3	%		-1.9	%		1.7	%

Total		4.3	%		8.6	%		-5.5	%		0.2	%		2.3	%		0.2	%		3.1	%		4.5	%		-0.1	%		8.4	%

Transaction Services:
Origination Services		-1.9	%		22.7	%		-23.2	%		-4.3	%		-5.5	%		12.9	%		2.2	%		2.7	%		-3.2	%		20.4	%
Default Services		-30.8	%		-17.3	%		-2.4	%		3.4	%		-17.6	%		-10.8	%		-14.0	%		8.6	%		-11.2	%		-19.4	%

Total		-17.1	%		-2.2	%		-14.3	%		-1.1	%		-10.8	%		1.1	%		-6.6	%		5.8	%		-7.6	%		-3.6	%

Corporate		n/m			n/m			n/m			n/m			n/m			n/m			n/m			n/m			n/m			n/m

Total Revenue		-9.2	%		1.7	%		-10.6	%		-0.6	%		-5.9	%		0.7	%		-3.1	%		5.7	%		-5.1	%		0.7	%

Exhibit E

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

NON-GAAP FINANCIAL INFORMATION—UNAUDITED

(In thousands, except per share data)


	YEAR-TO-DATE						QUARTER																					YEAR ENDED
	Q3-2013			Q3-2012			Q3-2013			Q2-2013			Q1-2013			Q4-2012			Q3-2012			Q2-2012			Q1-2012			12/31/2012
1. Operating Results—Continuing Operations
Consolidated
Revenues	$	1,359,522		$	1,496,622		$	418,981		$	468,880		$	471,661		$	501,029		$	497,451		$	513,377		$	485,794		$	1,997,651

Operating Income (Loss), as reported		207,957			181,000			63,409			45,120			99,428			51,935			111,859			(24,065	)		93,206			232,935
Adjustments:
Legal, Regulatory and Other Charges (1)		66,046			144,476			12,779			53,267			—			58,401			—			144,476			—			202,877

Operating Income, as adjusted		274,003			325,476			76,188			98,387			99,428			110,336			111,859			120,411			93,206			435,812
Depreciation and Amortization		78,596			71,608			25,870			26,652			26,074			25,136			24,241			23,453			23,914			96,744

EBITDA, as adjusted	$	352,599		$	397,084		$	102,058		$	125,039		$	125,502		$	135,472		$	136,100		$	143,864		$	117,120		$	532,556

Operating Margin, as adjusted		20.2	%		21.7	%		18.2	%		21.0	%		21.1	%		22.0	%		22.5	%		23.5	%		19.2	%		21.8	%
EBITDA Margin, as adjusted		25.9	%		26.5	%		24.4	%		26.7	%		26.6	%		27.0	%		27.4	%		28.0	%		24.1	%		26.7	%
Technology, Data and Analytics
Revenues	$	571,021		$	547,593		$	183,391		$	194,000		$	193,630		$	189,312		$	188,994		$	183,282		$	175,317		$	736,905

Operating Income, as reported		168,768			166,396			49,058			59,506			60,204			51,971			58,318			56,003			52,075			218,367
Adjustments:
Legal, Regulatory and Other Charges (1)		501			—			386			115			—			2,827			—			—			—			2,827

Operating Income, as adjusted		169,269			166,396			49,444			59,621			60,204			54,798			58,318			56,003			52,075			221,194
Depreciation and Amortization		61,665			55,269			20,453			20,880			20,332			19,730			18,726			17,997			18,546			74,999

EBITDA, as adjusted	$	230,934		$	221,665		$	69,897		$	80,501		$	80,536		$	74,528		$	77,044		$	74,000		$	70,621		$	296,193

Operating Margin, as adjusted		29.6	%		30.4	%		27.0	%		30.7	%		31.1	%		28.9	%		30.9	%		30.6	%		29.7	%		30.0	%
EBITDA Margin, as adjusted		40.4	%		40.5	%		38.1	%		41.5	%		41.6	%		39.4	%		40.8	%		40.4	%		40.3	%		40.2	%
Transaction Services
Revenues	$	788,370		$	951,021		$	235,524		$	274,860		$	277,986		$	311,717		$	308,451		$	330,359		$	312,211		$	1,262,738

Operating Income, as reported		132,598			194,504			31,565			50,516			50,517			65,892			65,651			76,603			52,250			260,396
Adjustments:
Legal, Regulatory and Other Charges (1)		6,061			—			5,486			575			—			1,531			—			—			—			1,531

Operating Income, as adjusted		138,659			194,504			37,051			51,091			50,517			67,423			65,651			76,603			52,250			261,927
Depreciation and Amortization		14,243			13,339			4,541			4,842			4,860			4,498			4,531			4,408			4,400			17,837

EBITDA, as adjusted	$	152,902		$	207,843		$	41,592		$	55,933		$	55,377		$	71,921		$	70,182		$	81,011		$	56,650		$	279,764

Operating Margin, as adjusted		17.6	%		20.5	%		15.7	%		18.6	%		18.2	%		21.6	%		21.3	%		23.2	%		16.7	%		20.7	%
EBITDA Margin, as adjusted		19.4	%		21.9	%		17.7	%		20.3	%		19.9	%		23.1	%		22.8	%		24.5	%		18.1	%		22.2	%
Corporate and Other
Revenues	$	131		$	(1,992	)	$	66		$	20		$	45		$	—		$	6		$	(264	)	$	(1,734	)	$	(1,992	)

Operating Loss, as reported		(93,409	)		(179,900	)		(17,214	)		(64,902	)		(11,293	)		(65,928	)		(12,110	)		(156,671	)		(11,119	)		(245,828	)
Adjustments:
Legal, Regulatory and Other Charges (1)		59,484			144,476			6,907			52,577			—			54,043			—			144,476			—			198,519

Operating Loss, as adjusted		(33,925	)		(35,424	)		(10,307	)		(12,325	)		(11,293	)		(11,885	)		(12,110	)		(12,195	)		(11,119	)		(47,309	)
Depreciation and Amortization		2,688			3,000			876			930			882			908			984			1,048			968			3,908

EBITDA, as adjusted	$	(31,237	)	$	(32,424	)	$	(9,431	)	$	(11,395	)	$	(10,411	)	$	(10,977	)	$	(11,126	)	$	(11,147	)	$	(10,151	)	$	(43,401	)

Exhibit E—Continued

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

NON-GAAP FINANCIAL INFORMATION—UNAUDITED

(In thousands, except per share data)


	YEAR-TO-DATE						QUARTER																					YEAR ENDED
	Q3-2013			Q3-2012			Q3-2013			Q2-2013			Q1-2013			Q4-2012			Q3-2012			Q2-2012			Q1-2012			12/31/2012
2. Net Earnings—Reconciliation
Net Earnings (Loss)	$	108,494		$	67,545		$	35,480		$	19,084		$	53,930		$	2,814		$	58,304		$	(37,880	)	$	47,121		$	70,359
Adjustments—Continuing Operations:
Legal, Regulatory and Other Charges, net (1)		41,158			100,624			7,599			33,559			—			34,676			—			100,624			—			135,300

Total Adjustments to Continuing Operations		41,158			100,624			7,599			33,559			—			34,676			—			100,624			—			135,300

Adjustments—Discontinued Operations:
Impairment, Restructuring and Disposal Charges, net		1,079			—			—			1,079			—			2,494			—			—			—			2,494

Total Adjustments to Discontinued Operations		1,079			—			—			1,079			—			2,494			—			—			—			2,494

Adjustments—Non-operating:
Debt Refinancing Charges, net (2)		—			—			—			—			—			15,445			—			—			—			15,445
Income Tax Adjustments (3)		—			—			—			—			—			5,621			—			—			—			5,621

Total Non-operating Adjustments		—			—			—			—			—			21,066			—			—			—			21,066

Net Earnings, as adjusted		150,731			168,169			43,079			53,722			53,930			61,050			58,304			62,744			47,121			229,219
Purchase Accounting Amortization, net (4)		3,430			5,866			951			912			1,567			1,712			1,712			1,733			2,421			7,578

Adjusted Net Earnings	$	154,161		$	174,035		$	44,030		$	54,634		$	55,497		$	62,762		$	60,016		$	64,477		$	49,542		$	236,797

Adjusted EPS—Continuing Operations	$	1.82		$	2.11		$	0.51		$	0.65		$	0.66		$	0.74		$	0.72		$	0.79		$	0.60		$	2.85
Adjusted EPS—Discontined Operations		(0.02	)		(0.05	)		—			(0.01	)		(0.01	)		—			(0.01	)		(0.03	)		(0.01	)		(0.05	)

Adjusted EPS—Consolidated	$	1.80		$	2.06		$	0.51		$	0.64		$	0.65		$	0.74		$	0.71		$	0.76		$	0.59		$	2.80

Diluted Weighted Average Shares		85,569			84,774			85,984			85,560			85,144			85,106			84,948			84,578			84,567			84,857

3. Cash Flow—Reconciliation
Cash Flows from Operating Activities:
Net Earnings (Loss)	$	108,494		$	67,545		$	35,480		$	19,084		$	53,930		$	2,814		$	58,304		$	(37,880	)	$	47,121		$	70,359
Adjustments to reconcile net earnings to net cash provided by operating activities:
Non-cash adjustments		156,996			93,650			29,204			37,379			90,413			24,978			49,196			7,022			37,432			118,628
Working capital adjustments		(157,885	)		142,375			36,445			47,554			(241,884	)		103,100			(21,816	)		158,693			5,498			245,475

Net cash provided by operating activities		107,605			303,570			101,129			104,017			(97,541	)		130,892			85,684			127,835			90,051			434,462
Capital expenditures included in investing activities		(86,117	)		(72,197	)		(30,679	)		(27,298	)		(28,140	)		(41,131	)		(22,220	)		(26,258	)		(23,719	)		(113,328	)

Free Cash Flow		21,488			231,373			70,450			76,719			(125,681	)		89,761			63,464			101,577			66,332			321,134
Payment of Legal, Regulatory and Other Charges, net (5)		161,678			21,434			(14,454	)		947			175,185			2,491			5,746			13,335			2,353			23,925

Adjusted Free Cash Flow	$	183,166		$	252,807		$	55,996		$	77,666		$	49,504		$	92,252		$	69,210		$	114,912		$	68,685		$	345,059

Adjusted Free Cash Flow Per Diluted Share	$	2.14		$	2.99		$	0.65		$	0.91		$	0.58		$	1.08		$	0.82		$	1.36		$	0.81		$	4.07

Diluted Weighted Average Shares		85,569			84,774			85,984			85,560			85,144			85,106			84,948			84,578			84,567			84,857

Notes:

(1)	Reflects the impact of charges taken on various legal and regulatory matters, as well severance, asset impairment and facility lease impairment charges.

(2)	Charge related to the refinancing of our bonds and senior credit facilities during 2012.

(3)	Primarily reflects the impact of non-cash adjustments related to equity forfeitures from severance and restructuring initiatives.

(4)	Purchase accounting amortization, net represents the periodic amortization of intangible assets acquired through business acquisitions primarily relating to customer lists, trademarks and non-compete agreements.

(5)	Reflects the impact of payments, less applicable taxes, for adjustments included in item 2. “Net Earnings—Reconciliation” of the GAAP to non-GAAP reconciliation.

Black Knight InfoServ, LLC - FORM 8-K - EX-99.2 - October 22, 2013

Attached files

Black Knight InfoServ, LLC Reports