JACKSONVILLE, Fla. – Lender Processing Services, Inc. (NYSE: LPS), a leading provider of integrated technology and services to the mortgage industry, today reported consolidated and combined revenues of $460.4 million for second quarter 2008, an increase of 8.3% compared to second quarter 2007, and net earnings of $63.5 million compared to $60.5 million in the prior year quarter.
On a pro forma basis, adjusted net income for second quarter 2008 was $57.8 million or 61 cents per share, compared to $51.5 million or 53 cents per share in the second quarter of 2007, up 15.1% on a per share basis. Second quarter 2008 adjustments included: a non-recurring charge of 3 cents per share, pro forma interest expense of 15 cents per share and purchase amortization of 6 cents per share. Second quarter 2007 adjustments included: pro forma interest expense of 16 cents per share and purchase amortization of 6 cents per share.
"Second quarter results were very strong despite difficult market conditions and overall weakness in the economy. LPS, with its solid market position and unique capabilities, remains well-positioned as a stand-alone public company to grow in the second half of 2008 and beyond," said William P. Foley, Chairman of LPS. "Overall, earnings were in line with our expectations. Strong results in our Default Services business more than offset a decline in our Loan Facilitation business," added Jeff Carbiener, President and CEO of LPS.
Adjusted operating income (excluding the non-recurring charge noted earlier) of $109.1 million in the quarter grew 8.7% compared to second quarter 2007. Subsequent references to operating income later in this release are on a similar basis.
Pro forma adjusted free cash flow (net cash provided by operating activities excluding the non-recurring charges and including the pro forma interest expense noted earlier, minus additions to property and equipment and capitalized software) for the six months ended June 30, 2008, was $86.7 million compared to $78.1 million for the same period in 2007.
Technology Data and Analytics
Revenue for the segment of $141.7 million was essentially flat compared to second quarter 2007 while adjusted operating income of $45.1 million was $1.8 million below the prior year. Mortgage Processing revenue was $82.0 million compared to $83.2 million in the prior year quarter primarily due to the deconversion of ABN's 1.5 million loan portfolio in the fourth quarter of 2007. Other TD&A revenues were $59.7 million compared to $58.8 million in second quarter 2007 mainly due to strong growth in our Desktop application partially offset by declines in loan origination software offerings. Overall adjusted operating income declined primarily due to fewer sales of higher margin loan origination software and lower income in some of our data and analytics offerings, somewhat offset by higher contributions from mortgage processing and Desktop.
Loan Transaction Services
For the quarter, revenues of $322.3 million and adjusted operating income of $75.8 million were 14.4% and 22.7% above second quarter 2007, respectively. Loan Facilitation Services revenues of $125.1 million declined 29.6% compared to the same period last year primarily due to lower appraisal volumes and, tax and other loan origination related revenues. Default Services, on the other hand, more than offset this decline with revenues of $197.2 million which grew 89.7% over second quarter 2007 mainly due to strong market growth and our ability to continue to gain market share. Overall adjusted operating income grew due to higher income in Default Services partially offset by lower contributions from some of our loan origination related services like tax and our property exchange business.
Other Items
Net corporate expenses, excluding the non-recurring charges noted earlier, totaled $11.8 million compared to $8.3 million in second quarter 2007. Expenses increased primarily due to higher incentive and stock related compensation charges.
Outlook
"We're off to a strong start as an independent public company and while the broader economic environment and the real estate market in particular, remain challenging, LPS with its unique mix of businesses is well-positioned for the future" said Carbiener. "Accordingly, our outlook for full year adjusted earnings remains unchanged, which, based on lower shares outstanding, now translates to $2.36 to $2.48 per diluted share compared to our earlier guidance of $2.34 to $2.46 per diluted share."
Use of Non-GAAP Financial Information
LPS reports several non-GAAP measures, including adjusted operating income (EBIT) and adjusted net earnings. The adjusted results exclude non-recurring and acquisition related amortization costs and include pro forma debt related interest expenses. 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 joint conference call with Fidelity National Information Services (NYSE: FIS) to discuss these results on Tuesday, August 5, 2008, at 5:00 pm Eastern time. Interested parties are invited to listen to the live webcast by logging on 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 800-762-4832 (USA) or 480-248-5088 (International). 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 August 12, 2008 by dialing 800-475-6701 (USA) or 320-365-3844 (International). The access code will be 953904.
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 industry. 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 are serviced using LPS' Mortgage Servicing Package (MSP). In fact, many of the nation's top servicers rely on MSP, including seven of the top 10 and 16 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, please visit www.lpsvcs.com.
Forward Looking Statements
This press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. 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 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 which forward-looking statements are subject to include, but are not limited to changes in general economic, business and political conditions and other risks detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of the Company's Form 10 and other filings with the Securities and Exchange Commission.
Exhibit A
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES AND AFFILIATES
Consolidated and Combined Statements of Earnings
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
(Unaudited) (Unaudited)
Processing and services revenues $460,380 $425,010 $913,106 $826,438
Cost of revenues 294,963 269,042 585,137 526,823
Selling, general and
administrative expenses 60,782 55,603 118,999 109,072
Operating income 104,635 100,365 208,970 190,543
Other income (expense):
Interest income 303 395 563 745
Interest expense (40) (35) (58) (77)
Other income, net 282 - 282 -
Total other income (expense) 545 360 787 668
Earnings before income taxes,
equity in losses of
unconsolidated entity and
minority interest 105,180 100,725 209,757 191,211
Provision for income taxes 40,810 38,987 81,386 74,010
Earnings before equity in losses
of unconsolidated entity and
minority interest 64,370 61,738 128,371 117,201
Equity in losses of unconsolidated
entity (413) (958) (2,370) (1,720)
Minority interest (411) (274) (723) (436)
Net earnings $63,546 $60,506 $125,278 $115,045
Exhibit B
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES AND AFFILIATES
Condensed Consolidated and Combined Balance Sheets
(In thousands)
June 30, 2008 December 31,
(Unaudited) 2007
Assets
Current assets:
Cash and cash equivalents $18,628 $39,566
Trade receivables, net of allowance
for doubtful accounts 350,565 286,236
Other current assets 71,725 81,734
Total current assets 440,918 407,536
Property and equipment, net of
accumulated depreciation and
amortization 92,487 95,620
Goodwill 1,086,606 1,078,154
Intangible assets, net of accumulated
amortization 103,347 118,129
Computer software, net of accumulated
amortization 149,562 150,372
Other non-current assets 112,820 112,232
Total assets $1,985,740 $1,962,043
Liabilities and Stockholder's Equity
Total current liabilities $192,533 $168,193
Total non-current liabilities 107,933 112,761
Total liabilities 300,466 280,954
Minority interest 10,773 10,050
Stockholder's equity 1,674,501 1,671,039
Total liabilities and
stockholder's equity $1,985,740 $1,962,043
Exhibit C
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES AND AFFILIATES
Consolidated and Combined Statements of Cash Flows
(In thousands)
Six months ended
June 30,
2008 2007
(Unaudited)
Cash flows from operating activities:
Net earnings $125,278 $115,045
Adjustment to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 44,576 52,373
Deferred income taxes 3,968 13,634
Stock-based compensation cost 9,120 7,215
Equity in losses of
unconsolidated entity 2,370 1,720
Minority interest 723 436
Changes in assets and liabilities, net
of effects from acquisitions
Net increase in trade receivables (63,750) (55,628)
Net (increase) decrease in other
receivables (4,348) 22,286
Net decrease (increase) in prepaid
expenses and other assets 7,931 (13,444)
Net increase in deferred contract
costs (3,420) (18,674)
Net decrease (increase) in deferred
revenue 8,235 (18,249)
Net decrease in accounts payable,
accrued liabilities and other
liabilities 6,000 26,675
Net cash provided by operating
activities 136,683 133,389
Cash flows from investing activities:
Additions to property and equipment (9,376) (6,099)
Additions to capitalized software (15,761) (18,937)
Acquisitions, net of cash acquired (15,488) (37,420)
Net cash used in investing
activities (40,625) (62,456)
Cash flows from financing activities:
Net distributions to Parent (116,996) (69,639)
Net cash used in financing
activities (116,996) (69,639)
Net (decrease) increase in
cash and cash equivalents (20,938) 1,294
Cash and cash equivalents, at
beginning of period 39,566 47,783
Cash and cash equivalents, at end of
period $18,628 $49,077
Non-cash contribution relating to
stock compensation $9,120 $7,215
Non-cash contribution for Espiel
acquisition $- $6,000
Non-cash redistribution of assets to
Parent $(13,801) $-
Exhibit D
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES AND AFFILIATES SUPPLEMENTAL FINANCIAL INFORMATION - UNAUDITED
(In thousands, except per share amounts)
Six Months Ended
June 30, Quarter Ended
2008 2007 06/30/2008 03/31/2008
1. Revenues
Technology, Data and Analytics
(TD&A):
Mortgage Processing $162,228 $165,531 $82,062 $80,166
Other TD&A 115,340 118,854 59,682 55,658
Total 277,568 284,385 141,744 135,824
Loan Transaction Services:
Loan Facilitation Services 276,329 335,423 125,124 151,205
Default Services 366,248 205,506 197,223 169,025
Total 642,577 540,929 322,347 320,230
Corporate and Other (7,039) 1,124 (3,711) (3,328)
Total Revenue $913,106 $826,438 $460,380 $452,726
Revenue Growth from Prior Year
Period
Technology, Data and Analytics:
Mortgage Processing -2.0% 3.4% -1.4% -2.6%
Other TD&A -3.0% 9.4% 1.5% -7.4%
Total -2.4% 5.8% -0.2% -4.6%
Loan Transaction Services:
Loan Facilitation Services -17.6% 12.7% -29.6% -4.1%
Default Services 78.2% 69.9% 89.7% 66.5%
Total 18.8% 29.2% 14.4% 23.5%
Corporate and Other -726.2% -94.6% -380.3% N/M
Total Revenue 10.5% 16.7% 8.3% 12.8%
2. Depreciation and Amortization
Depreciation and Amortization $24,827 $30,230 $11,306 $13,521
Purchase Price Amortization 18,680 21,291 8,980 9,700
Other Amortization 1,069 852 594 475
Total Depreciation and
Amortization $44,576 $52,373 $20,880 $23,696
3. Stock Compensation Expense
Stock Compensation Expense,
Excluding Acceleration Charges $8,982 $7,215 $4,295 $4,687
Stock Acceleration Expense 138 - 138 -
Total Stock Compensation
Expense $9,120 $7,215 $4,433 $4,687
Exhibit D
(CONTINUED)
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES AND AFFILIATES SUPPLEMENTAL FINANCIAL INFORMATION - UNAUDITED
(In thousands, except per share amounts)
Quarter Ended Full
12/31/ 09/30/ 06/30/ 03/31/ Year
2007 2007 2007 2007 2007
1. Revenues
Technology, Data and
Analytics (TD&A):
Mortgage
Processing $92,883 $81,256 $83,233 $82,298 $339,670
Other TD&A 53,029 58,593 58,776 60,078 230,476
Total 145,912 139,849 142,009 142,376 570,146
Loan Transaction
Services:
Loan Facilitation
Services 150,889 166,546 177,710 157,713 652,858
Default Services 144,805 122,710 103,967 101,539 473,021
Total 295,694 289,256 281,677 259,252 1,125,879
Corporate and Other (2,940) (3,641) 1,324 (200) (5,457)
Total Revenue $438,666 $425,464 $425,010 $401,428 $1,690,568
Revenue Growth from
Prior Year Period
Technology, Data and
Analytics:
Mortgage Processing 13.9% -1.9% 5.8% 1.0% 4.7%
Other TD&A -9.0% 5.6% 2.8% 16.8% 3.6%
Total 4.4% 1.1% 4.5% 7.1% 4.2%
Loan Transaction
Services:
Loan Facilitation
Services -6.2% 1.2% 20.8% 4.8% 4.8%
Default Services 72.1% 68.8% 69.2% 70.6% 70.3%
Total 20.7% 21.9% 35.0% 23.4% 25.0%
Corporate and Other -140.4% -140.3% -89.4% -102.4% -114.7%
Total Revenue 11.9% 10.6% 19.0% 14.3% 13.8%
2. Depreciation and Amortization
Depreciation and
Amortization $12,831 $14,207 $15,484 $14,746 $57,268
Purchase Price
Amortization 11,428 10,670 10,316 10,975 43,389
Other Amortization 496 602 452 400 1,950
Total Depreciation
and Amortization $24,755 $25,479 $26,252 $26,121 $102,607
3. Stock Compensation Expense
Stock Compensation
Expense, Excluding
Acceleration
Charges $3,235 $3,607 $3,645 $3,570 $14,057
Stock Acceleration
Expense - - - - -
Total Stock
Compensation
Expense $3,235 $3,607 $3,645 $3,570 $14,057
Exhibit E
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES AND AFFILIATES NON-GAAP FINANCIAL INFORMATION - UNAUDITED
(In thousands, except per share data)
Six Months
Ended June 30, Quarter Ended
2008 2007 06/30/2008 03/31/2008
1. EBIT - Consolidated
Revenue $913,106 $826,438 $460,380 $452,726
Cost of Sales 585,137 526,823 294,963 290,174
Selling, General and
Administrative Expenses 118,999 109,072 60,782 58,217
Operating Income 208,970 190,543 104,635 104,335
Less Non-recurring Charges:
Restructuring Costs 2,353 - 2,353 -
LPS Spin Related Costs 2,963 - 1,960 1,003
Acceleration of Performance-
Based Shares 138 - 138 -
EBIT, as adjusted $214,424 $190,543 $109,086 $105,338
EBIT Margin, as adjusted 23.5% 23.1% 23.7% 23.3%
Depreciation and Amortization $44,576 $52,373 $20,880 $23,696
2. EBIT - Technology, Data and Analytics
Revenue $277,568 $284,385 $141,744 $135,824
Cost of Sales 155,507 160,308 81,397 74,110
Selling, General and
Administrative Expenses 33,729 32,776 17,471 16,258
Operating Income 88,332 91,301 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 $90,510 $91,301 $45,054 $45,456
EBIT Margin, as adjusted 32.6% 32.1% 31.8% 33.5%
Depreciation and Amortization $29,986 $35,619 $13,971 $16,015
3. EBIT - Loan Transaction Services
Revenue $642,577 $540,929 $322,347 $320,230
Cost of Sales 436,793 369,167 217,337 219,456
Selling, General and
Administrative Expenses 57,829 54,753 29,366 28,463
Operating Income 147,955 117,009 75,644 72,311
Less Non-recurring Charges:
Restructuring Costs 163 - 163 -
LPS Spin Related Costs - - - -
Acceleration of Performance-
Based Shares - - - -
EBIT, as adjusted $148,118 $117,009 $75,807 $72,311
EBIT Margin, as adjusted 23.1% 21.6% 23.5% 22.6%
Depreciation and Amortization $11,496 $14,219 $5,310 $6,186
4. EBIT - Corporate and Other
Revenue $(7,039) $1,124 $(3,711) $(3,328)
Cost of Sales (7,163) (2,652) (3,771) (3,392)
Selling, General and
Administrative Expenses 27,441 21,543 13,945 13,496
Operating Income (27,317) (17,767) (13,885) (13,432)
Less Non-recurring Charges:
Restructuring Costs 12 - 12 -
LPS Spin Related Costs 2,963 - 1,960 1,003
Acceleration of Performance-
Based Shares 138 - 138 -
EBIT, as adjusted $(24,204) $(17,767) $(11,775) $(12,429)
Depreciation and Amortization $3,094 $2,535 $1,599 $1,495
5. Net Earnings - Reconciliation
Net Earnings $125,278 $115,045 $63,546 $61,732
Less Non-recurring Charges:
Restructuring Costs, net of
tax 1,440 - 1,440 -
LPS Spin Related Costs, net
of tax 1,814 - 1,200 614
Acceleration of Performance-
Based Shares, net of tax 84 - 84 -
Net Earnings, excluding
non-recurring items 128,616 115,045 66,270 62,346
Pro Forma Interest Expense, net
of tax (1) 28,131 30,230 13,951 14,180
Pro Forma Net Earnings 100,485 84,815 52,319 48,166
Purchase Price Amortization,
net of tax 11,432 13,050 5,496 5,936
Pro Forma Adjusted Net Earnings $111,917 $97,865 $57,815 $54,102
Pro Forma Net Earnings Per
Share $1.04 $0.87 $0.55 $0.49
Pro Forma Adjusted Net Earnings
Per Share (2) $1.16 $1.00 $0.61 $0.55
Pro Forma Diluted Weighted
Average Shares (2) 96,334 97,697 95,070 97,597
6. Cashflow - Reconciliation
Cash Flows from Operating
Activities:
Net Earnings $125,278 $115,045 $63,546 $61,732
Less Non-recurring Charges:
Restructuring Costs, net of
tax 1,440 - 1,440 -
LPS Spin Related Costs, net
of tax 1,814 - 1,200 614
Net Earnings, excluding
non-recurring items 128,532 115,045 66,186 62,346
Pro Forma Interest Expense,
net of tax 28,131 30,230 13,951 14,180
Pro Forma Adjusted Net
Earnings 100,401 84,815 52,235 48,166
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Non-cash adjustments 60,757 75,378 18,262 42,495
Working capital
adjustments (49,352) (57,034) (91,474) 42,122
Net cash provided by
(used in) operating
activities 111,806 103,159 (20,977) 132,783
Capital expenditures included
in investing activities (25,137) (25,036) (14,344) (10,793)
Pro Forma Adjusted Net Free
Cashflow $86,669 $78,123 $(35,321) $121,990
Exhibit E
(CONTINUED)
LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES AND AFFILIATES NON-GAAP FINANCIAL INFORMATION - UNAUDITED
(In thousands, except per share data)
Quarter Ended Full
12/31/ 09/30/ 06/30/ 03/31/ Year
2007 2007 2007 2007 2007
1. EBIT - Consolidated
Revenue $438,666 $425,464 $425,010 $401,428 $1,690,568
Cost of Sales 270,169 261,655 269,042 257,781 1,058,647
Selling, General and
Administrative
Expenses 47,259 51,528 55,603 53,469 207,859
Operating Income 121,238 112,281 100,365 90,178 424,062
Less Non-recurring
Charges:
Restructuring
Costs (4,235) - - - (4,235)
LPS Spin Related
Costs - - - - -
Acceleration of
Performance-Based
Shares - - - - -
EBIT, as adjusted $117,003 $112,281 $100,365 $90,178 $419,827
EBIT Margin, as
adjusted 26.7% 26.4% 23.6% 22.5% 24.8%
Depreciation and
Amortization $24,755 $25,479 $26,252 $26,121 $102,607
2. EBIT - Technology, Data and Analytics
Revenue $145,912 $139,849 $142,009 $142,376 $570,146
Cost of Sales 75,048 78,391 78,187 82,121 313,747
Selling, General and
Administrative
Expenses 15,675 16,319 16,954 15,822 64,770
Operating Income 55,189 45,139 46,868 44,433 191,629
Less Non-recurring
Charges:
Restructuring
Costs - - - - -
LPS Spin Related
Costs - - - - -
Acceleration of
Performance-Based
Shares - - - - -
EBIT, as adjusted $55,189 $45,139 $46,868 $44,433 $191,629
EBIT Margin, as
adjusted 37.8% 32.3% 33.0% 31.2% 33.6%
Depreciation and
Amortization $16,143 $16,958 $17,437 $18,182 $68,720
3. EBIT - Loan Transaction Services
Revenue $295,694 $289,256 $281,677 $259,252 $1,125,879
Cost of Sales 196,412 184,595 192,174 176,993 750,174
Selling, General and
Administrative
Expenses 27,028 28,351 27,711 27,042 110,132
Operating Income 72,254 76,310 61,792 55,217 265,573
Less Non-recurring
Charges:
Restructuring
Costs - - - - -
LPS Spin Related
Costs - - - - -
Acceleration of
Performance-Based
Shares - - - - -
EBIT, as adjusted $72,254 $76,310 $61,792 $55,217 $265,573
EBIT Margin, as
adjusted 24.4% 26.4% 21.9% 21.3% 23.6%
Depreciation and
Amortization $7,254 $7,279 $7,449 $6,770 $28,752
4. EBIT - Corporate and Other
Revenue $(2,940) $(3,641) $1,324 $(200) $(5,457)
Cost of Sales (1,291) (1,331) (1,319) (1,333) (5,274)
Selling, General and
Administrative
Expenses 4,556 6,858 10,938 10,605 32,957
Operating Income (6,205) (9,168) (8,295) (9,472) (33,140)
Less Non-recurring
Charges:
Restructuring
Costs (4,235) - - - (4,235)
LPS Spin Related
Costs - - - - -
Acceleration of
Performance-Based
Shares - - - - -
EBIT, as adjusted $(10,440) $(9,168) $(8,295) $(9,472) $(37,375)
Depreciation and
Amortization $1,358 $1,242 $1,366 $1,169 $5,135
5. Net Earnings - Reconciliation
Net Earnings $73,769 $67,991 $60,506 $54,539 $256,805
Less Non-recurring
Charges:
Restructuring
Costs, net of tax (2,596) - - - (2,596)
LPS Spin Related
Costs, net of tax - - - - -
Acceleration of
Performance-Based
Shares, net of
tax - - - - -
Net Earnings,
excluding non-
recurring items 71,173 67,991 60,506 54,539 254,209
Pro Forma Interest
Expense, net of tax
(1) 14,588 14,805 15,326 14,904 59,623
Pro Forma Net
Earnings 56,585 53,186 45,180 39,635 194,586
Purchase Price
Amortization, net
of tax 7,005 6,540 6,323 6,727 26,595
Pro Forma Adjusted
Net Earnings $63,590 $59,726 $51,503 $46,362 $221,181
Pro Forma Net
Earnings Per Share $0.58 $0.54 $0.46 $0.41 $1.99
Pro Forma Adjusted
Net Earnings Per
Share (2) $0.65 $0.61 $0.53 $0.47 $2.26
Pro Forma Diluted
Weighted Average
Shares (2) 97,697 97,697 97,697 97,697 97,697
6. Cashflow - Reconciliation
Cash Flows from
Operating
Activities:
Net Earnings $73,769 $67,991 $60,506 $54,539 $256,805
Less Non-recurring
Charges:
Restructuring
Costs, net of
tax (2,596) - - - (2,596)
LPS Spin Related
Costs, net of
tax - - - - -
Net Earnings,
excluding non-
recurring items 71,173 67,991 60,506 54,539 254,209
Pro Forma Interest
Expense, net of
tax 14,588 14,805 15,326 14,904 59,623
Pro Forma Adjusted
Net Earnings 56,585 53,186 45,180 39,635 194,586
Adjustments to
reconcile net
earnings to
net cash provided
by operating
activities:
Non-cash
adjustments 27,980 30,213 31,633 43,745 133,571
Working capital
adjustments (13,903) (36,445) (26,149) (30,885) (107,382)
Net cash
provided by
operating
activities 70,662 46,954 50,664 52,495 220,775
Capital
expenditures
included in
investing
activities (36,068) (9,448) (14,531) (10,505) (70,552)
Pro Forma Adjusted
Net Free Cashflow $34,594 $37,506 $36,133 $41,990 $150,223
Notes:
(1) This amount 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 $5.7 million for the year ended December 31, 2007 and $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. On July 10, 2008, we entered into an amortizing
interest rate swap agreement to fix the one month LIBOR component of our interest expense on a portion of our floating rate debt balances at 3.275%. The notional amount of our floating rate debt fixed under the swap arrangement currently totals $420.0 million and will amortize over the life of the swap in relation to our mandatory principal repayments such that, at a minimum, 50% of the total of our term loans and unsecured senior note debt balances will be fixed. The swap arrangement terminates in July 2010. The impact of the swap is not reflected in the pro forma interest expense above.
(2) 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.
Investor Contact: Parag Bhansali, 904.854.8640, parag.bhansali@fnis.com
Media Contact: Michelle Kersch, 904.854.5043, michelle.kersch@fnis.com