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

Attached files

file	filename
8-K - 8-K - Black Knight InfoServ, LLC	d576413d8k.htm
EX-99.1 - EX-99.1 - Black Knight InfoServ, LLC	d576413dex991.htm

Exhibit 99.2

Exhibit A

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)


	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
	(In thousands, except per share data)
Revenues	$	468,880		$	513,377		$	940,541		$	999,171
Expenses:
Operating expenses		343,841			369,513			690,000			738,187
Depreciation and amortization		26,652			23,453			52,726			47,367
Legal and regulatory charges		47,641			144,476			51,566			144,476
Exit costs, impairments and other charges		5,626			—			1,701			—

Total expenses		423,760			537,442			795,993			930,030

Operating income (loss)		45,120			(24,065	)		144,548			69,141

Other income (expense):
Interest income		565			454			1,144			902
Interest expense		(13,083	)		(16,455	)		(26,597	)		(32,857	)
Other income, net		282			74			291			159

Total other income (expense)		(12,236	)		(15,927	)		(25,162	)		(31,796	)
Earnings (loss) from continuing operations before income taxes		32,884			(39,992	)		119,386			37,345
Provision (benefit) for income taxes		12,162			(4,878	)		44,168			23,968

Earnings (loss) from continuing operations		20,722			(35,114	)		75,218			13,377
Loss from discontinued operations, net of tax		(1,638	)		(2,766	)		(2,204	)		(4,136	)

Net earnings (loss)	$	19,084		$	(37,880	)	$	73,014		$	9,241

Net earnings (loss) per share - diluted from continuing operations	$	0.24		$	(0.42	)	$	0.88		$	0.16
Net loss per share - diluted from discontinued operations		(0.02	)		(0.03	)		(0.02	)		(0.05	)

Net earnings (loss) per share - diluted	$	0.22		$	(0.45	)	$	0.86		$	0.11

Weighted average shares outstanding - diluted		85,560			84,578			85,359			84,680

Exhibit B

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)


	June 30,			December 31,
	2013			2012
	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	142,490		$	236,241
Trade receivables, net of allowance for doubtful accounts		248,210			274,783
Other receivables		5,806			3,800
Income tax receivable		17,503			—
Prepaid expenses and other current assets		42,739			41,541
Deferred income taxes		88,213			127,742

Total current assets		544,961			684,107

Property and equipment, net		122,398			126,633
Computer software, net		262,431			245,271
Other intangible assets, net		20,161			23,670
Goodwill		1,109,304			1,109,304
Other non-current assets		279,322			256,849

Total assets	$	2,338,577		$	2,445,834

Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	26,750		$	—
Trade accounts payable		45,373			38,901
Accrued salaries and benefits		77,175			107,984
Legal and regulatory accrual		88,578			223,149
Other accrued liabilities		140,137			169,458
Deferred revenues		58,144			58,868

Total current liabilities		436,157			598,360

Deferred revenues		23,325			24,987
Deferred income taxes, net		194,314			174,303
Long-term debt, net of current portion		1,041,375			1,068,125
Other non-current liabilities		32,862			37,163

Total liabilities		1,728,033			1,902,938

Stockholders’ equity:
Preferred stock $0.0001 par value; 50 million shares authorized, none issued at June 30, 2013 and December 31, 2012		—			—
Common stock $0.0001 par value; 500 million shares authorized, 97.4 million shares issued at June 30, 2013 and December 31, 2012		10			10
Additional paid-in capital		245,297			250,016
Retained earnings		749,876			694,148
Accumulated other comprehensive loss		(2,983	)		(3,079	)
Treasury stock at cost; 12.1 million and 12.5 million shares at June 30, 2013 and December 31, 2012, respectively		(381,656	)		(398,199	)

Total stockholders’ equity		610,544			542,896

Total liabilities and stockholders’ equity	$	2,338,577		$	2,445,834

Exhibit C

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six months ended June 30,
	2013			2012
	(In thousands)
Cash flows from operating activities:
Net earnings	$	73,014		$	9,241
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		52,710			48,889
Amortization of debt issuance costs		2,091			2,231
Asset impairment charges		785			3,688
Gain on sale of discontinued operations		—			(8,321	)
Deferred income taxes, net		59,086			(15,415	)
Stock-based compensation cost		13,653			12,348
Income tax effect of equity compensation		(533	)		1,034
Changes in assets and liabilities, net of effects of acquisitions:
Trade receivables		26,484			26,911
Other receivables		(2,006	)		(2,296	)
Income tax receivable		(17,503	)		—
Prepaid expenses and other assets		(10,847	)		(14,053	)
Deferred revenues		(2,385	)		7,752
Accounts payable, accrued liabilities and other liabilities		(188,073	)		145,877

Net cash provided by operating activities		6,476			217,886

Cash flows from investing activities:
Additions to property and equipment		(12,619	)		(11,989	)
Additions to capitalized software		(42,819	)		(37,988	)
Purchases of investments, net of proceeds from sales		(10,039	)		(8,728	)
Acquisition of title plants and property records data		(15,482	)		(22,613	)
Proceeds from sales of discontinued operations, net of cash distributed		—			18,706

Net cash used in investing activities		(80,959	)		(62,612	)

Cash flows from financing activities:
Debt service payments		—			(71,457	)
Exercise of stock options and restricted stock vesting		(1,829	)		(2,734	)
Income tax effect of equity compensation		533			(1,034	)
Dividends paid		(17,020	)		(16,913	)
Payment of contingent consideration related to acquisitions		(952	)		(2,000	)

Net cash used in financing activities		(19,268	)		(94,138	)

Net (decrease) increase in cash and cash equivalents		(93,751	)		61,136
Cash and cash equivalents, beginning of period		236,241			77,355

Cash and cash equivalents, end of period	$	142,490		$	138,491

Supplemental disclosures of cash flow information:
Cash paid for interest	$	26,087		$	29,378

Cash paid for taxes	$	6,483		$	21,589

Exhibit D

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

SUPPLEMENTAL FINANCIAL INFORMATION - UNAUDITED

(In thousands)


		YEAR-TO-DATE						QUARTER																		YEAR ENDED
		Q2-2013			Q2-2012			Q2-2013			Q1-2013			Q4-2012			Q3-2012			Q2-2012			Q1-2012			12/31/2012
1.	Revenues - Continuing Operations
	Technology, Data and Analytics:
	Technology	$	354,690		$	329,805		$	177,265		$	177,425		$	174,110		$	173,985		$	168,515		$	161,290		$	677,900

	Servicing Technology		232,931			219,635			117,264			115,667			114,818			111,572			111,284			108,351			446,025
	Default Technology		70,048			65,627			33,425			36,623			34,762			36,163			34,051			31,576			136,552
	Origination Technology		51,711			44,543			26,576			25,135			24,530			26,250			23,180			21,363			95,323
	Data and Analytics		32,940			28,794			16,735			16,205			15,202			15,009			14,767			14,027			59,005

	Total		387,630			358,599			194,000			193,630			189,312			188,994			183,282			175,317			736,905

	Transaction Services:
	Origination Services		321,858			297,491			157,433			164,425			173,934			154,057			150,741			146,750			625,482
	Default Services		230,988			345,079			117,427			113,561			137,783			154,394			179,618			165,461			637,256

	Total		552,846			642,570			274,860			277,986			311,717			308,451			330,359			312,211			1,262,738

	Corporate		65			(1,998	)		20			45			—			6			(264	)		(1,734	)		(1,992	)

	Total Revenue	$	940,541		$	999,171		$	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		7.5	%		8.5	%		5.2	%		10.0	%		8.0	%		11.2	%		10.4	%		6.6	%		9.1	%

	Servicing Technology		6.1	%		6.1	%		5.4	%		6.8	%		7.2	%		4.0	%		7.3	%		4.9	%		5.9	%
	Default Technology		6.7	%		12.5	%		-1.8	%		16.0	%		3.0	%		28.3	%		16.6	%		8.3	%		13.5	%
	Origination Technology		16.1	%		15.4	%		14.7	%		17.7	%		20.3	%		25.3	%		17.1	%		13.7	%		19.2	%
	Data and Analytics		14.4	%		-3.4	%		13.3	%		15.5	%		6.3	%		7.8	%		-2.6	%		-4.2	%		1.7	%

	Total		8.1	%		7.5	%		5.8	%		10.4	%		7.8	%		11.0	%		9.2	%		5.7	%		8.4	%

	Transaction Services:
	Origination Services		8.2	%		26.7	%		4.4	%		12.0	%		14.8	%		15.7	%		42.4	%		13.8	%		20.4	%
	Default Services		-33.1	%		-16.1	%		-34.6	%		-31.4	%		-26.0	%		-19.9	%		-9.4	%		-22.4	%		-19.4	%

	Total		-14.0	%		-0.6	%		-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

	Total Revenue		-5.9	%		2.3	%		-8.7	%		-2.9	%		-2.1	%		0.6	%		9.1	%		-4.1	%		0.7	%

	Revenue Growth from Sequential Period
	Technology, Data and Analytics:
	Technology		7.5	%		8.5	%		-0.1	%		1.9	%		0.1	%		3.2	%		4.5	%		0.0	%		9.1	%

	Servicing Technology		6.1	%		6.1	%		1.4	%		0.7	%		2.9	%		0.3	%		2.7	%		1.2	%		5.9	%
	Default Technology		6.7	%		12.5	%		-8.7	%		5.4	%		-3.9	%		6.2	%		7.8	%		-6.4	%		13.5	%
	Origination Technology		16.1	%		15.4	%		5.7	%		2.5	%		-6.6	%		13.2	%		8.5	%		4.7	%		19.2	%
	Data and Analytics		14.4	%		-3.4	%		3.3	%		6.6	%		1.3	%		1.6	%		5.3	%		-1.9	%		1.7	%

	Total		8.1	%		7.5	%		0.2	%		2.3	%		0.2	%		3.1	%		4.5	%		-0.1	%		8.4	%

	Transaction Services:
	Origination Services		8.2	%		26.7	%		-4.3	%		-5.5	%		12.9	%		2.2	%		2.7	%		-3.2	%		20.4	%
	Default Services		-33.1	%		-16.1	%		3.4	%		-17.6	%		-10.8	%		-14.0	%		8.6	%		-11.2	%		-19.4	%

	Total		-14.0	%		-0.6	%		-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

	Total Revenue		-5.9	%		2.3	%		-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
		Q2-2013			Q2-2012			Q2-2013			Q1-2013			Q4-2012			Q3-2012			Q2-2012			Q1-2012			12/31/2012
1.	Operating Results - Continuing Operations
	Consolidated
	Revenues	$	940,541		$	999,171		$	468,880		$	471,661		$	501,029		$	497,451		$	513,377		$	485,794		$	1,997,651

	Operating Income (Loss), as reported		144,548			69,141			45,120			99,428			51,935			111,859			(24,065	)		93,206			232,935
	Adjustments:
	Legal, Regulatory and Other Charges (1)		53,267			144,476			53,267			—			58,401			—			144,476			—			202,877

	Operating Income, as adjusted		197,815			213,617			98,387			99,428			110,336			111,859			120,411			93,206			435,812
	Depreciation and Amortization		52,726			47,367			26,652			26,074			25,136			24,241			23,453			23,914			96,744

	EBITDA, as adjusted	$	250,541		$	260,984		$	125,039		$	125,502		$	135,472		$	136,100		$	143,864		$	117,120		$	532,556

	Operating Margin, as adjusted		21.0	%		21.4	%		21.0	%		21.1	%		22.0	%		22.5	%		23.5	%		19.2	%		21.8	%
	EBITDA Margin, as adjusted		26.6	%		26.1	%		26.7	%		26.6	%		27.0	%		27.4	%		28.0	%		24.1	%		26.7	%

	Technology, Data and Analytics
	Revenues	$	387,630		$	358,599		$	194,000		$	193,630		$	189,312		$	188,994		$	183,282		$	175,317		$	736,905

	Operating Income, as reported		119,710			108,078			59,506			60,204			51,971			58,318			56,003			52,075			218,367
	Adjustments:
	Legal, Regulatory and Other Charges (1)		115			—			115			—			2,827			—			—			—			2,827

	Operating Income, as adjusted		119,825			108,078			59,621			60,204			54,798			58,318			56,003			52,075			221,194
	Depreciation and Amortization		41,212			36,543			20,880			20,332			19,730			18,726			17,997			18,546			74,999

	EBITDA, as adjusted	$	161,037		$	144,621		$	80,501		$	80,536		$	74,528		$	77,044		$	74,000		$	70,621		$	296,193

	Operating Margin, as adjusted		30.9	%		30.1	%		30.7	%		31.1	%		28.9	%		30.9	%		30.6	%		29.7	%		30.0	%
	EBITDA Margin, as adjusted		41.5	%		40.3	%		41.5	%		41.6	%		39.4	%		40.8	%		40.4	%		40.3	%		40.2	%

	Transaction Services
	Revenues	$	552,846		$	642,570		$	274,860		$	277,986		$	311,717		$	308,451		$	330,359		$	312,211		$	1,262,738

	Operating Income, as reported		101,033			128,853			50,516			50,517			65,892			65,651			76,603			52,250			260,396
	Adjustments:
	Legal, Regulatory and Other Charges (1)		575			—			575			—			1,531			—			—			—			1,531

	Operating Income, as adjusted		101,608			128,853			51,091			50,517			67,423			65,651			76,603			52,250			261,927
	Depreciation and Amortization		9,702			8,808			4,842			4,860			4,498			4,531			4,408			4,400			17,837

	EBITDA, as adjusted	$	111,310		$	137,661		$	55,933		$	55,377		$	71,921		$	70,182		$	81,011		$	56,650		$	279,764

	Operating Margin, as adjusted		18.4	%		20.1	%		18.6	%		18.2	%		21.6	%		21.3	%		23.2	%		16.7	%		20.7	%
	EBITDA Margin, as adjusted		20.1	%		21.4	%		20.3	%		19.9	%		23.1	%		22.8	%		24.5	%		18.1	%		22.2	%

	Corporate and Other
	Revenues	$	65		$	(1,998	)	$	20		$	45		$	—		$	6		$	(264	)	$	(1,734	)	$	(1,992	)

	Operating Loss, as reported		(76,195	)		(167,790	)		(64,902	)		(11,293	)		(65,928	)		(12,110	)		(156,671	)		(11,119	)		(245,828	)
	Adjustments:
	Legal, Regulatory and Other Charges (1)		52,577			144,476			52,577			—			54,043			—			144,476			—			198,519

	Operating Loss, as adjusted		(23,618	)		(23,314	)		(12,325	)		(11,293	)		(11,885	)		(12,110	)		(12,195	)		(11,119	)		(47,309	)
	Depreciation and Amortization		1,812			2,016			930			882			908			984			1,048			968			3,908

	EBITDA, as adjusted	$	(21,806	)	$	(21,298	)	$	(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
		Q2-2013			Q2-2012			Q2-2013			Q1-2013			Q4-2012			Q3-2012			Q2-2012			Q1-2012			12/31/2012
2.	Net Earnings - Reconciliation
	Net Earnings (Loss)	$	73,014		$	9,241		$	19,084		$	53,930		$	2,814		$	58,304		$	(37,880	)	$	47,121		$	70,359
	Adjustments - Continuing Operations:
	Legal, Regulatory and Other Charges, net (1)		33,559			100,624			33,559			—			34,676			—			100,624			—			135,300

	Total Adjustments to Continuing Operations		33,559			100,624			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		107,652			109,865			53,722			53,930			61,050			58,304			62,744			47,121			229,219
	Purchase Accounting Amortization, net (4)		2,479			4,154			912			1,567			1,712			1,712			1,733			2,421			7,578

	Adjusted Net Earnings	$	110,131		$	114,019		$	54,634		$	55,497		$	62,762		$	60,016		$	64,477		$	49,542		$	236,797

	Adjusted EPS - Continuing Operations	$	1.31		$	1.39		$	0.65		$	0.66		$	0.74		$	0.72		$	0.79		$	0.60		$	2.85
	Adjusted EPS - Discontinued Operations		(0.02	)		(0.04	)		(0.01	)		(0.01	)		—			(0.01	)		(0.03	)		(0.01	)		(0.05	)

	Adjusted EPS - Consolidated	$	1.29		$	1.35		$	0.64		$	0.65		$	0.74		$	0.71		$	0.76		$	0.59		$	2.80

	Diluted Weighted Average Shares		85,359			84,680			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)	$	73,014		$	9,241		$	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		127,792			44,454			37,379			90,413			24,978			49,196			7,022			37,432			118,628
	Working capital adjustments		(194,330	)		164,191			47,554			(241,884	)		103,100			(21,816	)		158,693			5,498			245,475

	Net cash provided by (used in) operating activities		6,476			217,886			104,017			(97,541	)		130,892			85,684			127,835			90,051			434,462
	Capital expenditures included in investing activities		(55,438	)		(49,977	)		(27,298	)		(28,140	)		(41,131	)		(22,220	)		(26,258	)		(23,719	)		(113,328	)

	Free Cash Flow		(48,962	)		167,909			76,719			(125,681	)		89,761			63,464			101,577			66,332			321,134
	Payment of Legal, Regulatory and Other Charges, net (5)		176,132			15,688			947			175,185			2,491			5,746			13,335			2,353			23,925

	Adjusted Free Cash Flow	$	127,170		$	183,597		$	77,666		$	49,504		$	92,252		$	69,210		$	114,912		$	68,685		$	345,059

	Adjusted Free Cash Flow Per Diluted Share	$	1.49		$	2.17		$	0.91		$	0.58		$	1.08		$	0.82		$	1.36		$	0.81		$	4.07

	Diluted Weighted Average Shares		85,359			84,680			85,560			85,144			85,106			84,948			84,578			84,567			84,857

Notes:

(1)	Reflects the impact of charges taken for various legal and regulatory matters, costs associated with the pending merger with Fidelity National Financial, Inc., and asset and facility lease impairment charges.

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

(3)	Reflects the impact of favorable tax true-ups from fiscal 2011 recognized in 2012 offset by 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 - August 8, 2013

Attached files

Black Knight InfoServ, LLC Reports