Year-over-year revenues increase 28.3% Adjusted EPS of 82 cents per
diluted share JACKSONVILLE, Fla., Feb. 8, 2010
/PRNewswire-FirstCall/ -- 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
http://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 http://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 Year ended December 31, 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 affiliates - 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 10 9 and 95.3 million
shares issued at December 31, 2009 and 2008, respectively
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, ----------------------- 2009
2008 ---- ---- 1. Revenues - Continuing Operations Technology, Data
and Analytics (TD&A): Mortgage Processing $387,874 $334,184
Other TD&A 319,611 231,466 --------- --------- Total 707,485
565,650 --------- --------- Loan Transaction Services: Loan
Facilitation Services 547,300 431,673 Default Services 1,137,313
851,828 ---------- --------- Total 1,684,613 1,283,501 ----------
--------- Corporate and Other (21,550) (11,561) ----------
---------- Total Revenue $2,370,548 $1,837,590 ==========
========== Revenue Growth from Prior Year Period Technology, Data
and Analytics: Mortgage Processing 16.1% -1.6% Other TD&A 38.1%
0.4% ---- ---- Total 25.1% -0.8% ---- ---- Loan Transaction
Services: Loan Facilitation Services 26.8% -28.2% Default Services
33.5% 80.1% ---- ---- Total 31.3% 19.5% ---- ---- Corporate and
Other n/m n/m ---- ---- Total Revenue 29.0% 12.1% ==== ==== 2.
Depreciation and Amortization - Continuing Operations Depreciation
and Amortization $61,331 $51,075 Purchase Price Amortization 30,749
40,018 Other Amortization 5,837 2,244 ------- ------- Total
Depreciation and Amortization $97,917 $93,337 ======= ======= 3.
Stock Compensation Expense (1) Stock Compensation Expense,
Excluding Acceleration Charges $27,243 $21,375 Stock Acceleration
Expense 799 138 ------ ------ Total Stock Compensation Expense
$28,042 $21,513 ======= ======= 4. EBIT - Discontinued Operations
(2) Revenue $296 $24,319 Cost of Sales 503 6,379 Selling, General
and Administrative Expenses 499 8,982 ------ ------- Operating
Income (706) 8,958 Less Non-recurring Charges: Restructuring Costs
- - LPS Spin Related Costs - - Acceleration of Performance-Based
Shares - - ----- ------ EBIT, as adjusted $(706) $8,958 -----
------ Depreciation and Amortization $5 $79 ===== ====== Quarter
ended ------------- 12/31/2009 9/30/2009 6/30/2009 3/31/2009
---------- --------- --------- --------- 1. Revenues - Continuing
Operations Technology, Data and Analytics (TD&A): Mortgage
Processing $104,184 $102,973 $89,567 $91,150 Other TD&A 85,247
83,313 82,322 68,729 ------- ------- ------ ------ Total 189,431
186,286 171,889 159,879 ------- ------- ------- ------- Loan
Transaction Services: Loan Facilitation Services 142,919 136,657
148,510 119,214 Default Services 278,647 303,823 299,534 255,309
------- ------- ------- ------- Total 421,566 440,480 448,044
374,523 ------- ------- ------- ------- Corporate and Other (2,864)
(7,339) (6,762) (4,585) ------ ------ ------ ------ Total Revenue
$608,133 $619,427 $613,171 $529,817 ======== ======== ========
======== Revenue Growth from Prior Year Period Technology, Data and
Analytics: Mortgage Processing 17.9% 23.2% 9.1% 13.7% Other
TD&A 40.3% 50.5% 37.9% 23.5% ---- ---- ---- ---- Total 27.0%
34.1% 21.3% 17.7% ---- ---- ---- ---- Loan Transaction Services:
Loan Facilitation Services 70.3% 55.9% 25.8% -16.1% Default
Services 14.3% 25.6% 51.9% 51.0% ---- ---- ---- ---- Total 28.7%
33.7% 42.1% 20.4% ---- ---- ---- ---- Corporate and Other 0.6%
338.1% n/m n/m ---- ----- ---- ---- Total Revenue 28.3% 32.7% 35.3%
19.4% ==== ==== ==== ==== 2. Depreciation and Amortization -
Continuing Operations Depreciation and Amortization $15,932 $15,894
$15,431 $14,074 Purchase Price Amortization 7,654 7,608 7,404 8,083
Other Amortization 1,713 1,542 753 1,829 ------ ------ ------
------ Total Depreciation and Amortization $25,299 $25,044 $23,588
$23,986 ======= ======= ======= ======= 3. Stock Compensation
Expense (1) Stock Compensation Expense, Excluding Acceleration
Charges $7,678 $7,062 $6,459 $6,044 Stock Acceleration Expense - -
- 799 ----- ----- ----- ----- Total Stock Compensation Expense
$7,678 $7,062 $6,459 $6,843 ====== ====== ====== ====== 4. EBIT -
Discontinued Operations (2) Revenue $- $- $- $296 Cost of Sales - -
- 503 Selling, General and Administrative Expenses - - - 499 -----
----- ----- ----- Operating Income - - - (706) ----- ----- -----
----- Less Non-recurring Charges: Restructuring Costs - - - - LPS
Spin Related Costs - - - - Acceleration of Performance-Based Shares
- - - - ----- ----- ----- ----- EBIT, as adjusted $- $- $- $(706)
----- ----- ----- ----- Depreciation and Amortization $- $- $- $5
===== ===== ===== ===== Quarter ended ------------- 12/31/2008
9/30/2008 6/30/2008 3/31/2008 ---------- --------- ---------
--------- 1. Revenues - Continuing Operations Technology, Data and
Analytics (TD&A): Mortgage Processing $88,364 $83,592 $82,062
$80,166 Other TD&A 60,754 55,372 59,682 55,658 --------
-------- -------- -------- Total 149,118 138,964 141,744 135,824
-------- -------- ------- -------- Loan Transaction Services: Loan
Facilitation Services 83,914 87,629 118,091 142,039 Default
Services 243,736 241,844 197,223 169,025 -------- -------- --------
-------- Total 327,650 329,473 315,314 311,064 -------- --------
-------- -------- Corporate and Other (2,847) (1,675) (3,711)
(3,328) -------- -------- -------- -------- Total Revenue $473,921
$466,762 $453,347 $443,560 ======== ======== ======== ========
Revenue Growth from Prior Year Period Technology, Data and
Analytics: Mortgage Processing -4.9% 2.9% -1.4% -2.6% Other
TD&A 14.6% -5.5% 1.5% -7.4% ---- ---- ---- ---- Total 2.2%
-0.6% -0.2% -4.6% ---- ---- ---- ---- Loan Transaction Services:
Loan Facilitation Services -39.6% -42.8% -28.3% -1.3% Default
Services 68.3% 97.1% 89.7% 66.5% ---- ---- ---- ---- Total 15.4%
19.4% 17.3% 26.7% ---- ---- ---- ---- Corporate and Other n/m n/m
n/m n/m --- --- --- --- Total Revenue 11.0% 13.3% 10.0% 14.4% ====
==== ==== ==== 2. Depreciation and Amortization - Continuing
Operations Depreciation and Amortization $13,697 $12,594 $11,286
$13,498 Purchase Price Amortization 10,711 10,627 8,980 9,700 Other
Amortization 596 579 594 475 ------- ------- ------- ------- Total
Depreciation and Amortization $25,004 $23,800 $20,860 $23,673
======= ======= ======= ======= 3. Stock Compensation Expense (1)
Stock Compensation Expense, Excluding Acceleration Charges $6,603
$5,790 $4,295 $4,687 Stock Acceleration Expense - - 138 - -----
------ ------ ------ Total Stock Compensation Expense $6,603 $5,790
$4,433 $4,687 ====== ====== ====== ====== 4. EBIT - Discontinued
Operations (2) Revenue $2,204 $5,916 $7,033 $9,166 Cost of Sales
1,571 1,521 1,499 1,788 Selling, General and Administrative
Expenses 1,814 1,837 2,212 3,119 ------ ------ ------ ------
Operating Income (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 $(1,181)
$2,558 $3,322 $4,259 ------- ------ ------ ------ Depreciation and
Amortization $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,
----------------------- 2009 2008 ---- ---- 1. EBIT - Continuing
Operations Consolidated Revenue $2,370,548 $1,837,590 Cost of Sales
1,571,003 1,176,479 Selling, General and Administrative Expenses
267,339 229,875 ------- ------- Operating Income 532,206 431,236
Less Non-recurring Charges: Restructuring Costs 8,186 2,353 LPS
Spin Related Costs - 2,963 Acceleration of Performance-Based Shares
799 138 -------- -------- EBIT, as adjusted $541,191 $436,690
-------- -------- EBIT Margin, as adjusted 22.8% 23.8% ==== ====
Depreciation and Amortization $97,917 $93,337 ======= =======
Technology, Data and Analytics Revenue $707,485 $565,650 Cost of
Sales 402,411 309,969 Selling, General and Administrative Expenses
70,717 64,640 ------ ------ Operating Income 234,357 191,041 Less
Non-recurring Charges: Restructuring Costs - 2,178 LPS Spin Related
Costs - - Acceleration of Performance-Based Shares - - --------
-------- EBIT, as adjusted $234,357 $193,219 -------- -------- EBIT
Margin, as adjusted 33.1% 34.2% ==== ==== Depreciation and
Amortization $69,477 $61,205 ======= ======= Loan Transaction
Services Revenue $1,684,613 $1,283,501 Cost of Sales 1,190,238
879,031 Selling, General and Administrative Expenses 107,769
105,299 ------- ------- Operating Income 386,606 299,171 Less
Non-recurring Charges: Restructuring Costs - 163 LPS Spin Related
Costs - - Acceleration of Performance-Based Shares - - --------
-------- EBIT, as adjusted $386,606 $299,334 -------- -------- EBIT
Margin, as adjusted 22.9% 23.3% ==== ==== Depreciation and
Amortization $20,310 $25,132 ======= ======= Corporate and Other
Revenue $(21,550) $(11,561) Cost of Sales (21,646) (12,521)
Selling, General and Administrative Expenses 88,853 59,936 ------
------ Operating Income (88,757) (58,976) Less Non-recurring
Charges: Restructuring Costs 8,186 12 LPS Spin Related Costs -
2,963 Acceleration of Performance-Based Shares 799 138 --------
-------- EBIT, as adjusted $(79,772) $(55,863) -------- --------
Depreciation and Amortization $8,130 $7,000 ====== ====== 2. Net
Earnings - Reconciliation Net Earnings $275,729 230,888 Less
Non-recurring Charges: Restructuring Costs, net of tax 5,055 1,440
LPS Spin Related Costs, net of tax - 1,814 Acceleration of
Performance-Based Shares, net of tax 493 84 Impact of change in tax
rate on non-recurring items - (223) --- ---- Net Earnings,
excluding non-recurring items 281,277 234,003 Pro Forma Interest
Expense, net of tax (1) - 28,131 --- ------ Pro Forma Net Earnings
281,277 205,872 Purchase Price Amortization, net of tax (2) 18,987
24,751 -------- -------- Pro Forma Adjusted Net Earnings $300,264
$230,623 ======== ======== Pro Forma Net Earnings Per Share $2.93
$2.15 ===== ===== Pro Forma Adjusted Net Earnings Per Share (3)
$3.12 $2.41 ===== ===== Pro Forma Diluted Weighted Average Shares
(3) 96,152 95,754 ====== ====== 3. Cashflow - Reconciliation Cash
Flows from Operating Activities: Net Earnings $275,729 $230,888
Less Non-recurring Charges: Restructuring Costs, net of tax 4,304
1,440 LPS Spin Related Costs, net of tax - 1,814 Impact of change
in tax rate on non-recurring items - (223) --- ---- Net Earnings,
excluding non-recurring items 280,033 233,919 Pro Forma Interest
Expense, net of tax - 28,131 --- ------ Pro Forma Adjusted Net
Earnings 280,033 205,788 Adjustments to reconcile net earnings to
net cash provided by operating activities: Non-cash adjustments
152,350 123,258 Working capital adjustments 15,609 9,714 ------
------ Net cash provided by operating activities 447,992 338,760
------- ------- Capital expenditures included in investing
activities (98,775) (62,288) ------- ------- Pro Forma Adjusted Net
Free Cash Flow $349,217 $276,472 ======== ======== Quarter ended
------------- 12/31/2009 9/30/2009 6/30/2009 3/31/2009 ----------
--------- --------- --------- 1. EBIT - Continuing Operations
Consolidated Revenue $608,133 $619,427 $613,171 $529,817 Cost of
Sales 403,174 409,113 404,014 354,702 Selling, General and
Administrative Expenses 64,059 66,671 65,431 71,178 ------ ------
------ ------ Operating Income 140,900 143,643 143,726 103,937 Less
Non-recurring Charges: Restructuring Costs - - - 8,186 LPS Spin
Related Costs - - - - Acceleration of Performance- Based Shares - -
- 799 -------- -------- -------- -------- EBIT, as adjusted
$140,900 $143,643 $143,726 $112,922 -------- -------- --------
-------- EBIT Margin, as adjusted 23.2% 23.2% 23.4% 21.3% ==== ====
==== ==== Depreciation and Amortization $25,299 $25,044 $23,588
$23,986 ======= ======= ======= ======= Technology, Data and
Analytics Revenue $189,431 $186,286 $171,889 $159,879 Cost of Sales
107,368 105,651 98,929 90,463 Selling, General and Administrative
Expenses 18,571 18,256 17,824 16,066 ------ ------ ------ ------
Operating Income 63,492 62,379 55,136 53,350 Less Non-recurring
Charges: Restructuring Costs - - - - LPS Spin Related Costs - - - -
Acceleration of Performance- Based Shares - - - - ------- -------
------- ------- EBIT, as adjusted $63,492 $62,379 $55,136 $53,350
------- ------- ------- ------- EBIT Margin, as adjusted 33.5%
33.5% 32.1% 33.4% ======= ======= ======= ======= Depreciation and
Amortization $18,066 $17,595 $16,441 $17,375 ======= =======
======= ======= Loan Transaction Services Revenue $421,566 $440,480
$448,044 $374,523 Cost of Sales 298,723 311,230 311,349 268,936
Selling, General and Administrative Expenses 25,681 27,665 27,064
27,359 ------- ------- ------- ------- Operating Income 97,162
101,585 109,631 78,228 Less Non-recurring Charges: Restructuring
Costs - - - - LPS Spin Related Costs - - - - Acceleration of
Performance-Based Shares - - - - ------ ------- ------- -------
EBIT, as adjusted $97,162 $101,585 $109,631 $78,228 -------
-------- -------- ------- EBIT Margin, as adjusted 23.0% 23.1%
24.5% 20.9% ======= ======== ======== ======= Depreciation and
Amortization $5,281 $5,295 $5,126 $4,608 ====== ====== ======
====== Corporate and Other Revenue $(2,864) $(7,339) $(6,762)
$(4,585) Cost of Sales (2,917) (7,768) (6,264) (4,697) Selling,
General and Administrative Expenses 19,807 20,750 20,543 27,753
------ ------ ------ ------ Operating Income (19,754) (20,321)
(21,041) (27,641) Less Non-recurring Charges: Restructuring Costs -
- - 8,186 LPS Spin Related Costs - - - - Acceleration of
Performance-Based Shares - - - 799 ----- ------ ------ ------ EBIT,
as adjusted $(19,754) $(20,321) $(21,041) $(18,656) --------
-------- -------- -------- Depreciation and Amortization $1,952
$2,154 $2,021 $2,003 ====== ====== ====== ====== 2. Net Earnings -
Reconciliation Net Earnings $74,901 $75,542 $75,240 $50,046 Less
Non-recurring Charges: Restructuring Costs, net of tax - - - 5,055
LPS Spin Related Costs, net of tax - - - - Acceleration of
Performance-Based Shares, net of tax - - - 493 Impact of change in
tax rate on non-recurring items - - - - ---- ---- ---- ---- Net
Earnings, excluding non-recurring items 74,901 75,542 75,240 55,594
Pro Forma Interest Expense, net of tax (1) - - - - ------ ------
------ ------ Pro Forma Net Earnings 74,901 75,542 75,240 55,594
Purchase Price Amortization, net of tax (2) 4,726 4,698 4,572 4,991
------- ------- ------- ------- Pro Forma Adjusted Net Earnings
$79,627 $80,240 $79,812 $60,585 ======= ======= ======= ======= Pro
Forma Net Earnings Per Share $0.77 $0.78 $0.78 $0.58 ===== =====
===== ===== Pro Forma Adjusted Net Earnings Per Share (3) $0.82
$0.83 $0.83 $0.64 ===== ===== ===== ===== Pro Forma Diluted
Weighted Average Shares (3) 96,781 96,399 96,133 95,284 ======
====== ====== ====== 3. Cashflow - Reconciliation Cash Flows from
Operating Activities: Net Earnings $74,901 $75,542 $75,240 $50,046
Less Non-recurring Charges: Restructuring Costs, net of tax - - -
4,304 LPS Spin Related Costs, net of tax - - - - Impact of change
in tax rate on non-recurring items - - - - - - - - Net Earnings,
excluding non-recurring items 74,901 75,542 75,240 54,350 Pro Forma
Interest Expense, net of tax - - - - ------ ------ ------ ------
Pro Forma Adjusted Net Earnings 74,901 75,542 75,240 54,350
Adjustments to reconcile net earnings to net cash provided by
operating activities: Non-cash adjustments 60,281 32,279 31,700
28,090 Working capital adjustments 13,369 (16,954) 21,957 (2,763)
------ ------- ------ ------ Net cash provided by operating
activities 148,551 90,867 128,897 79,677 ------- ------ -------
------ Capital expenditures included in investing activities
(30,913) (19,455) (25,836) (22,571) ------- ------- ------- -------
Pro Forma Adjusted Net Free Cash Flow $117,638 $71,412 $103,061
$57,106 ======== ======= ======== ======= Quarter ended
------------- 12/31/2008 9/30/2008 6/30/2008 3/31/2008 ----------
--------- --------- --------- 1. EBIT - Continuing Operations
Consolidated Revenue $473,921 $466,762 $453,347 $443,560 Cost of
Sales 294,069 300,560 293,464 288,386 Selling, General and
Administrative Expenses 58,298 57,909 58,570 55,098 ------ ------
------ ------ Operating Income 121,554 108,293 101,313 100,076 Less
Non-recurring Charges: Restructuring Costs - - 2,353 - LPS Spin
Related Costs - - 1,960 1,003 Acceleration of Performance-Based
Shares - - 138 - ------ ------- ------- ------- EBIT, as adjusted
$121,554 $108,293 $105,764 $101,079 -------- -------- --------
-------- EBIT Margin, as adjusted 25.6% 23.2% 23.3% 22.8% ========
======== ======== ======== Depreciation and Amortization $25,004
$23,800 $20,860 $23,673 ======= ======= ======= ======= Technology,
Data and Analytics Revenue $149,118 $138,964 $141,744 $135,824 Cost
of Sales 80,482 73,980 81,397 74,110 Selling, General and
Administrative Expenses 15,121 15,790 17,471 16,258 ------ ------
------ ------ Operating Income 53,515 49,194 42,876 45,456 Less
Non-recurring Charges: Restructuring Costs - - 2,178 - LPS Spin
Related Costs - - - - Acceleration of Performance-Based Shares - -
- - ------ ------- ------- ------- EBIT, as adjusted $53,515
$49,194 $45,054 $45,456 ------- ------- ------- ------- EBIT
Margin, as adjusted 35.9% 35.4% 31.8% 33.5% ======= ======= =======
======= Depreciation and Amortization $15,990 $15,229 $13,971
$16,015 ======= ======= ======= ======= Loan Transaction Services
Revenue $327,650 $329,473 $315,314 $311,064 Cost of Sales 217,242
228,283 215,838 217,668 Selling, General and Administrative
Expenses 26,314 26,487 27,154 25,344 ------ ------ ------ ------
Operating Income 84,094 74,703 72,322 68,052 Less Non-recurring
Charges: Restructuring Costs - - 163 - LPS Spin Related Costs - - -
- Acceleration of Performance-Based Shares - - - - ------- -------
------- ------- EBIT, as adjusted $84,094 $74,703 $72,485 $68,052
------- ------- ------- ------- EBIT Margin, as adjusted 25.7%
22.7% 23.0% 21.9% ======= ======= ======= ======= Depreciation and
Amortization $7,028 $6,651 $5,290 $6,163 ====== ====== ======
====== Corporate and Other Revenue $(2,847) $(1,675) $(3,711)
$(3,328) Cost of Sales (3,655) (1,703) (3,771) (3,392) Selling,
General and Administrative Expenses 16,863 15,632 13,945 13,496
------ ------ ------ ------ Operating Income (16,055) (15,604)
(13,885) (13,432) Less Non-recurring Charges: Restructuring Costs -
- 12 - LPS Spin Related Costs - - 1,960 1,003 Acceleration of
Performance-Based Shares - - 138 - ------ ------- ------- -------
EBIT, as adjusted $(16,055) $(15,604) $(11,775) $(12,429) --------
-------- -------- -------- Depreciation and Amortization $1,986
$1,920 $1,599 $1,495 ====== ====== ====== ====== 2. Net Earnings -
Reconciliation Net Earnings $54,329 $51,281 $63,546 $61,732 Less
Non-recurring Charges: Restructuring Costs, net of tax - - 1,440 -
LPS Spin Related Costs, net of tax - - 1,200 614 Acceleration of
Performance-Based Shares, net of tax - - 84 - Impact of change in
tax rate on non-recurring items (223) - - - ---- ---- ---- ---- Net
Earnings, excluding non-recurring items 54,106 51,281 66,270 62,346
Pro Forma Interest Expense, net of tax (1) - - 13,951 14,180 ------
------ ------ ------ Pro Forma Net Earnings 54,106 51,281 52,319
48,166 Purchase Price Amortization, net of tax (2) 6,815 6,504
5,496 5,936 ------- ------- ------- ------- Pro Forma Adjusted Net
Earnings $60,921 $57,785 $57,815 $54,102 ======= ======= =======
======= Pro Forma Net Earnings Per Share $0.57 $0.54 $0.55 $0.49
===== ===== ===== ===== Pro Forma Adjusted Net Earnings Per Share
(3) $0.64 $0.61 $0.61 $0.55 ===== ===== ===== ===== Pro Forma
Diluted Weighted Average Shares (3) 95,126 95,223 95,070 97,597
====== ====== ====== ====== 3. Cashflow - Reconciliation Cash Flows
from Operating Activities: Net Earnings $54,329 $51,281 $63,546
$61,732 Less Non-recurring Charges: Restructuring Costs, net of tax
- - 1,440 - LPS Spin Related Costs, net of tax - - 1,200 614 Impact
of change in tax rate on non-recurring items (223) - - - ---- ----
---- ---- Net Earnings, excluding non-recurring items 54,106 51,281
66,186 62,346 Pro Forma Interest Expense, net of tax - - 13,951
14,180 ------ ------ ------ ------ Pro Forma Adjusted Net Earnings
54,106 51,281 52,235 48,166 Adjustments to reconcile net earnings
to net cash provided by operating activities: Non-cash adjustments
30,081 32,420 18,262 42,495 Working capital adjustments 32,158
26,908 (91,474) 42,122 ------ ------ ------- ------ Net cash
provided by operating activities 116,345 110,609 (20,977) 132,783
------- ------- ------- ------- Capital expenditures included in
investing activities (23,946) (13,205) (14,344) (10,793) -------
------- ------- ------- Pro Forma Adjusted Net Free Cash Flow
$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. DATASOURCE: Lender Processing Services, Inc. CONTACT:
Investors: Parag Bhansali, +1-904-854-8640, or Media: Michelle
Kersch, +1-904-854-5043 Web Site: http://www.lpsvcs.com/
Copyright