Fidelity National Financial, Inc. - FORM 10-Q - EX-99.1 - EXHIBIT 99.1 - May 6, 2015

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10-Q - 10-Q - Fidelity National Financial, Inc.fnf03311510-q.htm
EX-10.1 - EXHIBIT 10.1 - Fidelity National Financial, Inc.exhibit1011q2015.htm
EX-10.2 - EXHIBIT 10.2 - Fidelity National Financial, Inc.exhibit1021q2015b.htm
EXCEL - IDEA: XBRL DOCUMENT - Fidelity National Financial, Inc.Financial_Report.xls
EX-31.2 - EXHIBIT 31.2 - Fidelity National Financial, Inc.exhibit3121q2015.htm
EX-32.1 - EXHIBIT 32.1 - Fidelity National Financial, Inc.exhibit3211q2015.htm
EX-31.1 - EXHIBIT 31.1 - Fidelity National Financial, Inc.exhibit3111q2015.htm
EX-32.2 - EXHIBIT 32.2 - Fidelity National Financial, Inc.exhibit3221q2015.htm
EX-10.3 - EXHIBIT 10.3 - Fidelity National Financial, Inc.exhibit1031q2015b.htm
EX-99.2 - EXHIBIT 99.2 - Fidelity National Financial, Inc.exhibit992fnfv.htm
EXHIBIT 99.1

Unaudited Attributed Financial Information for Fidelity National Financial Group Tracking Stock

The following tables present our assets, liabilities, revenue, expenses and cash flows that are attributed to our FNF core business, known as FNF Core Operations (“we,” “our,” or "FNF Group"). The financial information in this Exhibit should be read in conjunction with our unaudited condensed consolidated financial statements for the period ended March 31, 2015 included in this Quarterly Report on Form 10-Q.
FNF Core Operations is comprised of three operating segments as follows:
Title
This segment consists of the operations of our title insurance underwriters and related businesses. This segment provides core title insurance and escrow and other title related services including collection and trust activities, trustee sales guarantees, recordings and reconveyances, and home warranty insurance. This segment also includes the transaction services business acquired from LPS, now combined with our ServiceLink business. Transaction services include other title related services used in production and management of mortgage loans, including mortgage loans that go into default.
BKFS
This segment consists of the operations of BKFS. This segment provides core technology and data and analytics services through leading software systems and information solutions that facilitate and automate many of the business processes across the life cycle of a mortgage.
FNF Core Corporate and Other
The FNF Core Corporate and Other segment consists of the operations of the parent holding company, certain other unallocated corporate overhead expenses, and other smaller real estate and insurance related operations.
We have adopted certain expense allocation policies, each of which will be reflected in the attributed financial information of the FNF Core Operations and the FNFV Group (see Exhibit 99.2). In general, corporate overhead will be allocated to each group based upon the use of services by that group where practicable. Corporate overhead primarily includes costs of personnel and employee benefits, legal, accounting and auditing, insurance, investor relations and stockholder services and services related to FNF’s board of directors. We will allocate in a similar manner a portion of costs of administrative shared services, such as information technology services. Where determinations based on use alone are not practical, we will use other methods and criteria that we believe are equitable and that provide a reasonable estimate of the cost attributable to each group.

1

FIDELITY NATIONAL FINANCIAL GROUP OPERATIONS
Balance Sheet Information
(In millions)
 
March 31,
2015
 
December 31,
2014
 
(Unaudited)
ASSETS
 
 
Investments:
 

 
 
Fixed maturity securities available for sale, at fair value, at March 31, 2015 and December 31, 2014 includes pledged fixed maturity securities of $355 and $499, respectively, related to secured trust deposits
$
3,005

 
$
3,025

Preferred stock available for sale, at fair value
272

 
223

Equity securities available for sale, at fair value
208

 
145

Investments in unconsolidated affiliates
17

 
15

Other long-term investments
132

 
120

Short-term investments
106

 
170

Total investments
3,740

 
3,698

Cash and cash equivalents, at March 31, 2015 and December 31, 2014 includes $265 and $136, respectively, of pledged cash related to secured trust deposits
584

 
661

Trade and notes receivables, net of allowance of $31 and $32 at March 31, 2015 and December 31, 2014, respectively
493

 
464

Income taxes receivable
32

 
60

Goodwill
4,518

 
4,515

Prepaid expenses and other assets
459

 
408

Capitalized software, net
554

 
557

Other intangible assets, net
950

 
934

Title plant
393

 
393

Property and equipment, net
252

 
254

Total assets
$
11,975

 
$
11,944

 
 
 
 
LIABILITIES AND EQUITY
 
 
Liabilities:
 

 
 
Accounts payable and other accrued liabilities
$
822

 
$
917

Deferred revenue
163

 
136

Reserve for title claim losses
1,612

 
1,621

Secured trust deposits
667

 
622

Notes payable
2,703

 
2,702

Due to affiliates
3

 
1

Deferred tax liability
676

 
673

Total liabilities
6,646

 
6,672

Commitments and Contingencies:
 
 
 
Redeemable non-controlling interest by 33% minority holder of Black Knight Financial Services, LLC and 35% minority holder of ServiceLink Holdings, LLC
724

 
715

Equity:
 

 
 
FNF Group common stock, $0.0001 par value; authorized 487,000,000 shares as of March 31, 2015 and December 31, 2014; issued 280,334,456 and 279,443,239 as of March 31, 2015 and December 31, 2014, respectively
—

 
—

Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, none
—

 
—

Additional paid-in capital
3,534

 
3,514

Retained earnings
1,093

 
1,060

Accumulated other comprehensive earnings
59

 
53

Less: treasury stock, 375,662 shares as of March 31, 2015 and December 31, 2014
(12
)
 
(12
)
Total Fidelity National Financial shareholders’ equity
4,674

 
4,615

Noncontrolling interests
(69
)
 
(58
)
Total equity
4,605

 
4,557

Total liabilities, redeemable noncontrolling interest and equity
$
11,975

 
$
11,944

 

See Notes to Unaudited Attributed Financial Information for FNF Core Operations

2

FIDELITY NATIONAL FINANCIAL GROUP OPERATIONS
Statements of Operations Information
(In millions)
 
 
 
 
 
Three months ending March 31,
 
 
2015
 
2014
 
(Unaudited)
Revenues:
 
 
 
Direct title insurance premiums
$
417

 
$
351

Agency title insurance premiums
441

 
404

Escrow, title related and other fees
695

 
618

Interest and investment income
30

 
28

Realized gains and losses
—

 
2

Total revenues
1,583

 
1,403

Expenses:
 
 
 
Personnel costs
585

 
613

Agent commissions
333

 
307

Other operating expenses
372

 
399

Depreciation and amortization
83

 
101

Claim loss expense
51

 
53

Interest expense
29

 
30

Total expenses
1,453

 
1,503

Earnings (loss) from continuing operations before income taxes and equity in losses of unconsolidated affiliates
130

 
(100
)
Income tax expense (benefit)
47

 
(37
)
Earnings (loss) from continuing operations before equity in losses of unconsolidated affiliates
83

 
(63
)
Equity in earnings of unconsolidated affiliates
2

 
—

Net earnings (loss)
85

 
(63
)
Less: Net loss attributable to non-controlling interests
(1
)
 
(57
)
Net earnings (loss) attributable to FNF Group common shareholders
$
86

 
$
(6
)
 
 
 
 
Earnings Per Share
 
 
 
Basic
 
 
 
Net loss per share attributable to Old FNF common shareholders
$
—

 
$
(0.02
)
 
 
 
 
Net earnings per share attributable to FNF Group common shareholders
$
0.31

 
$
—

 
 
 
 
Diluted
 
 
 
Net loss per share attributable to Old FNF common shareholders
$
—

 
$
(0.02
)
 
 
 
 
Net earnings per share attributable to FNF Group common shareholders
$
0.30

 
$
—

 
 
 
 
Weighted average shares outstanding Old FNF common stock, basic basis
 
 
274

Weighted average shares outstanding Old FNF common stock, diluted basis
 
 
282

 
 
 
 
Weighted average shares outstanding FNF Group common stock, basic basis
278

 
 
Weighted average shares outstanding FNF Group common stock, diluted basis
288

 
 

See Notes to Unaudited Attributed Financial Information for FNF Core Operations


3

FIDELITY NATIONAL FINANCIAL GROUP OPERATIONS
Statement of Cash Flows Information
(In millions)
 
For the three months ended March 31,
 
 
2015
 
2014
 
(Unaudited)
Cash flows from operating activities:
 
 
 

Net earnings (loss)
$
85

 
$
(63
)
Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
            Depreciation and amortization
83

 
102

            Equity in losses of unconsolidated affiliates
(2
)
 
—

Gain (loss) on sales of investments and other assets, net
—

 
(2
)
Stock-based compensation cost
11

 
11

Tax benefit associated with the exercise of stock options
(7
)
 
(2
)
Changes in assets and liabilities, net of effects from acquisitions:
 
 
 
Net (increase) decrease in pledged cash, pledged investments, and secured trust deposits
(3
)
 
(4
)
Net increase in trade receivables
(26
)
 
(23
)
Net increase in prepaid expenses and other assets
(38
)
 
(23
)
Net decrease in accounts payable, accrued liabilities, deferred revenue and other
(105
)
 
(192
)
Net decrease in reserve for title claim losses
(9
)
 
(10
)
Net change in amount due to affiliates
(8
)
 
(7
)
Net change in income taxes
46

 
19

Net cash provided by (used in) operating activities
27

 
(194
)
Cash flows from investing activities:
 
 
 
Proceeds from sales of investment securities available for sale
173

 
257

Proceeds from calls and maturities of investment securities available for sale
75

 
72

Proceeds from sale of other assets
8

 
2

Additions to property and equipment and capitalized software
(33
)
 
(27
)
Purchases of investment securities available for sale
(326
)
 
(284
)
Net purchases of short-term investment securities
(3
)
 
(233
)
Net purchases of other long-term investments
(20
)
 
(3
)
(Contributions to) distributions from investments in unconsolidated affiliates
(2
)
 
—

Net other investing activities
(9
)
 
(3
)
Acquisition of Lender Processing Services, Inc., net of cash acquired
—

 
(2,248
)
Acquisition of BPG Holdings, LLC, net of cash acquired
(43
)
 
—

Other acquisitions/disposals of businesses, net of cash acquired
(11
)
 
—

Net cash used in investing activities
(191
)
 
(2,467
)
Cash flows from financing activities:
 
 
 
Borrowings
—

 
1,404

Debt service payments
—

 
(478
)
Additional investment in non-controlling interest
(6
)
 
—

Proceeds from sale of 35% of Black Knight Financial Services, LLC and ServiceLink, LLC to minority interest holder
—

 
687

Dividends paid
(53
)
 
(50
)
Subsidiary dividends paid to non-controlling interest shareholders
(1
)
 
(1
)
Exercise of stock options
11

 
9

Tax benefit associated with the exercise of stock options
7

 
2

Contributions from Parent
—

 
(56
)
Net cash (used in) provided by financing activities
(42
)
 
1,517

Net (decrease) in cash and cash equivalents, excluding pledged cash related to secured trust deposits
(206
)
 
(1,144
)
Cash and cash equivalents, excluding pledged cash related to secured trust deposits at beginning of period
525

 
1,475

Cash and cash equivalents, excluding pledged cash related to secured trust deposits at end of period
$
319

 
$
331

See Notes to Unaudited Attributed Financial Information for FNF Core Operations

4

Notes to Unaudited Attributed Financial Information for Fidelity National Financial Group Operations
Period Ended March 31, 2015
(unaudited)
Note A.    Basis of Presentation
Description of the Business
FNF Group is a leading provider of title insurance, technology and transaction services to the real estate and mortgage industries. FNF Group is the nation’s largest title insurance company through its title insurance underwriters - Fidelity National Title, Chicago Title, Commonwealth Land Title, Alamo Title and National Title of New York Inc. - that collectively issue more title insurance policies than any other title company in the United States. FNF Group also provides industry-leading mortgage technology solutions and transaction services, including MSP®, the leading residential mortgage servicing technology platform in the U.S., through its majority-owned subsidiaries, Black Knight Financial Services, LLC ("BKFS") and ServiceLink Holdings, LLC ("ServiceLink").
Recent Developments
On December 23, 2014, we filed a registration statement with the Securities and Exchange Commission (“SEC”) relating to a proposed initial public offering of Black Knight Financial Services, Inc. ("BKFSI") common stock. BKFSI is currently presented as the BKFS segment. On May 4, 2015, we filed amendment number 4 to the initial registration statement with the SEC.








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Fidelity National Financial, Inc. Reports