Year-over-year revenues increase 32.7% Adjusted EPS of 83 cents per
diluted share JACKSONVILLE, Fla., Oct. 22 /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 $619.4 million
for the third quarter of 2009, an increase of 32.7% compared to the
third quarter of 2008, and net earnings of $75.5 million or 78
cents per diluted share. Adjusted net earnings for the third
quarter of 2009 were $80.2 million, or 83 cents per diluted share,
compared to $57.8 million, or 61 cents per diluted share, in the
third quarter of 2008. Adjusted net earnings in the current quarter
include an adjustment for purchase amortization of 5 cents per
diluted share while the prior year quarter included a similar
adjustment of 7 cents per diluted share. "LPS delivered strong
results in the third quarter despite an ongoing difficult business
environment. LPS with its broad-based, technology-driven end-to-end
solutions for the mortgage and real estate industries, remains well
positioned for the fourth quarter and to continue to grow
profitably in the years ahead," said Lee A. Kennedy, Executive
Chairman of LPS. "All our business segments continued to gain
market share in the third quarter. Our Mortgage Processing and
other technology businesses posted solid earnings while our Default
Services business continued to deliver very strong results. Also,
our Loan Facilitation business benefited from a stronger
year-over-year origination market," added Jeff Carbiener, President
and CEO of LPS. Operating income of $143.6 million in the quarter
improved 32.6% compared to the third quarter of 2008. Year-to-date
pro forma adjusted free cash flow (net cash provided by operating
activities including pro forma interest expense for the first six
months of 2008, minus additions to property and equipment and
capitalized software) for 2009 of $231.6 million compared to $184.1
million for the first nine months of 2008. Technology, Data and
Analytics (TD&A) Revenues for the segment were $186.3 million
compared to $139.0 million in the third quarter of 2008 while
operating income of $62.4 million compared to $49.2 million in the
prior year quarter. Mortgage Processing revenues of $103.0 million
were 23.2% above the third quarter of 2008, primarily due to the
conversion of the JPMorgan Chase portfolio on to our mortgage
servicing platform. Other TD&A revenues increased by 50.5% to
$83.3 million compared to the prior year quarter, mainly 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 32.4%. Overall operating income
for TD&A was higher primarily due to higher contributions from
Mortgage Processing and Data & Analytics. Loan Transaction
Services (LTS) Revenues for the segment increased by 33.7% to
$440.5 million compared to the third quarter of 2008 while
operating income of $101.6 million compared to $74.7 million in the
prior year period. Loan Facilitation Services revenues of $136.7
million were up 55.9% compared to the same period last year, mainly
due to higher settlement services and increased appraisal volumes.
Default Services revenues of $303.8 million increased 25.6% over
the third quarter of 2008, primarily due to ongoing strength in the
default market and our ability to continue to gain market share.
Overall operating income for LTS grew due to higher income in loan
origination related offerings, such as settlement services and
appraisal, as well as in Default Services. Corporate and Other Net
corporate expenses were $20.3 million compared to $15.6 million in
the third quarter of 2008 and were higher primarily due to higher
incentive compensation expenses in the current quarter driven by
the strong operating results. Outlook "Third quarter and
year-to-date 2009 results were very strong and while the broader
macro-economic environment and some of our markets continue to
present challenges, LPS with its solid market presence remains well
positioned for a strong finish in 2009 and to continue to grow
revenue and earnings in 2010," said Jeff Carbiener. "Building on
the robust year-to-date results, we expect fourth quarter adjusted
earnings to be in the range of 77-79 cents per diluted share. For
full year 2009, we now expect revenues to grow 26%-28% compared to
2008 and adjusted earnings to be in the $3.07-$3.09 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 pro forma adjusted net earnings, pro forma adjusted net
earnings per share and pro forma adjusted free cash flow. 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., and to better understand our financial performance,
competitive position and future prospects. The adjusted results
exclude 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 conference
call to discuss these results on Friday, October 23, 2009, 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 October 30, 2009 by dialing 888-203-1112 (access
code: 6402161). 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
elimination of existing and potential customers as a result of
failures and consolidations in the banking and financial services
industries; the impact of adverse changes in the level of real
estate activity on demand for certain of our services; 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 those relating to
our new stand-alone public company status and 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 Nine Months Ended Ended September 30,
September 30, ---------------- ----------------- 2009 2008 2009
2008 ---- ---- ---- ---- (In thousands, except per share data)
Processing and services revenues $619,427 $466,762 $1,762,415
$1,363,669 Cost of revenues 409,113 300,560 1,167,829 882,410
------- ------- --------- ------- Gross profit 210,314 166,202
594,586 481,259 Selling, general and administrative expenses 66,671
57,909 203,280 171,577 ------ ------ ------- ------- Operating
income 143,643 108,293 391,306 309,682 Other income (expense):
Interest income 283 476 1,249 1,039 Interest expense (21,195)
(24,565) (64,734) (24,621) Other expense, net (203) (5) (217) 277
---- -- ---- --- Total other income (expense) (21,115) (24,094)
(63,702) (23,305) ------- ------- ------- ------- Earnings from
continuing operations before income taxes and equity in losses of
unconsolidated entity 122,528 84,199 327,604 286,377 Provision for
income taxes 46,867 32,669 125,308 111,114 ------ ------ -------
------- Earnings from continuing operations before equity in losses
of unconsolidated entity 75,661 51,530 202,296 175,263 Equity in
losses of unconsolidated entity -- (1,484) (37) (3,854) -----
------ --- ------ Earnings from continuing operations 75,661 50,046
202,259 171,409 Discontinued operation, net of tax -- 1,565 (504)
6,203 ----- ----- ---- ----- Net earnings 75,661 51,611 201,755
177,612 Noncontrolling minority interest (119) (330) (927) (1,053)
---- ---- ---- ------ Net earnings attributable to Lender
Processing Services, Inc. $75,542 $51,281 $200,828 $176,559 =======
======= ======== ======== Exhibit B LENDER PROCESSING SERVICES,
INC. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited)
September 30, December 31, 2009 2008 ------------- ------------ (In
thousands) Assets Current assets: Cash and cash equivalents $64,847
$125,966 Trade receivables, net of allowance for doubtful accounts
428,373 344,848 Other receivables 4,086 17,393 Due from affiliates
-- 2,713 Prepaid expenses and other current assets 24,939 22,030
Deferred income taxes 40,757 40,757 ------- ------- Total current
assets 563,002 553,707 ------- ------- Property and equipment, net
of accumulated depreciation 103,711 95,542 Computer software, net
of accumulated amortization 180,064 157,539 Other intangible
assets, net of accumulated amortization 78,656 83,489 Goodwill
1,135,153 1,091,056 Other non-current assets 109,105 122,300
------- ------- Total assets $2,169,691 $2,103,633 ==========
========== Liabilities and Equity Current liabilities: Current
portion of long- term debt $77,362 $145,101 Trade accounts payable
40,857 31,720 Accrued salaries and benefits 51,593 36,492 Recording
and transfer tax liabilities 17,446 14,639 Due to affiliates 1,492
1,573 Other accrued liabilities 154,878 101,612 Deferred revenues
49,572 51,628 ------ ------ Total current liabilities 393,200
382,765 ------- ------- Deferred revenues 40,474 40,343 Deferred
income taxes, net 30,504 36,557 Long-term debt, net of current
portion 1,286,030 1,402,350 Other non-current liabilities 27,926
39,217 --------- --------- Total liabilities 1,778,134 1,901,232
--------- --------- Equity: Lender Processing Services, Inc.
stockholders' equity: Preferred stock $0.0001 par value; 50 million
shares authorized, none -- -- issued at September 30, 2009 or
December 31, 2008 Common stock $0.0001 par value; 500 million
shares authorized, 96.8 million 10 9 and 95.3 million shares issued
at September 30, 2009 and December 31, 2008 Additional paid-in
capital 157,103 111,849 Retained earnings 265,645 93,540
Accumulated other comprehensive loss (9,617) (13,667) Treasury
stock $0.0001 par value; 884,734 and 19,870 shares at September 30,
2009 and December 31, 2008 (27,712) (582) ------- ---- Total Lender
Processing Services, Inc. stockholders' equity 385,429 191,149
Noncontrolling minority interest 6,128 11,252 ----- ------ Total
equity 391,557 202,401 ------- ------- Total liabilities and equity
$2,169,691 $2,103,633 ========== ========== Exhibit C LENDER
PROCESSING SERVICES, INC. AND SUBSIDIARIES Consolidated Statements
of Cash Flows (Unaudited) Nine Months Ended September 30,
----------------- 2009 2008 ---- ---- (In thousands) Cash flows
from operating activities: Net earnings attributable to Lender
Processing Services, Inc. $200,828 $176,559 Adjustments to
reconcile net earnings to net cash provided by operating
activities: Depreciation and amortization 72,623 68,395
Amortization of debt issuance costs 3,968 1,509 Gain on sale of
discontinued operation (2,574) -- Deferred income taxes, net (651)
3,968 Stock-based compensation cost 20,364 14,910 Tax benefit
associated with equity compensation (2,625) (512) Equity in losses
of unconsolidated entity 37 3,854 Noncontrolling minority interest
927 1,053 Changes in assets and liabilities, net of effects of
acquisitions: Trade receivables (76,642) (84,167) Other receivables
13,321 (7,612) Prepaid expenses and other assets (7,798) 4,676
Deferred revenues (2,922) 5,342 Accounts payable and other
liabilities 76,281 59,317 ------ ------ Net cash provided by
operating activities 295,137 247,292 ------- ------- Cash flows
from investing activities: Additions to property and equipment
(24,896) (14,657) Additions to capitalized software (42,966)
(23,685) Acquisition of title plants (14,319) -- Acquisitions, net
of cash acquired (16,403) (15,488) Proceeds from sale of
discontinued operation, net of cash distributed (32,638) -- -------
------ Net cash used in investing activities (131,222) (53,830)
-------- ------- Cash flows from financing activities: Borrowings
-- 25,700 Debt service payments (180,455) (61,993) Stock options
exercised 2,002 1,433 Tax benefit associated with equity
compensation 2,625 512 Cash dividends paid (28,723) (9,526)
Capitalized debt issuance costs -- (24,882) Acquisition of
noncontrolling minority interest (2,600) -- Net distributions to
FIS -- (114,855) Treasury stock purchases (9,883) -- Bond
repurchases (8,000) -- ------ ------ Net cash used in financing
activities (225,034) (183,611) Net (decrease) increase in cash and
cash equivalents (61,119) 9,851 Cash and cash equivalents,
beginning of period 125,966 39,566 ------- ------ Cash and cash
equivalents, end of period $64,847 $49,417 ======= =======
Supplemental disclosures of cash flow information: Cash paid for
interest $69,882 $15,543 ======= ======= Cash paid for taxes
$107,709 $720 ======== ==== Non-cash contribution of stock
compensation by FIS $-- $9,120 == ====== Non-cash redistribution of
assets to FIS $434 $(4,537) ==== ======= 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) ==
=========== LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
Exhibit D SUPPLEMENTAL FINANCIAL INFORMATION - UNAUDITED (In
thousands) Nine Months Ended September 30, ----------------- 2009
2008 ---- ---- 1. Revenues - Continuing Operations Technology, Data
and Analytics (TD&A): Mortgage Processing $283,690 $245,820
Other TD&A 234,364 170,712 ------- ------- Total 518,054
416,532 ------- ------- Loan Transaction Services: Loan
Facilitation Services 404,381 347,759 Default Services 858,666
608,092 ------- ------- Total 1,263,047 955,851 --------- -------
Corporate and Other (18,686) (8,714) ------- ------ Total Revenue
$1,762,415 $1,363,669 ========== ========== Revenue Growth from
Prior Year Period Technology, Data and Analytics: Mortgage
Processing 15.4% -0.4% Other TD&A 37.3% -3.8% ---- ---- Total
24.4% -1.8% ---- ---- Loan Transaction Services: Loan Facilitation
Services 16.3% -24.7% Default Services 41.2% 85.3% ---- ---- Total
32.1% 21.0% ---- ---- Corporate and Other n/m n/m --- --- Total
Revenue 29.2% 12.5% ==== ==== 2. Depreciation and Amortization -
Continuing Operations Depreciation and Amortization $45,399 $37,378
Purchase Price Amortization 23,095 29,307 Other Amortization 4,124
1,648 ----- ----- Total Depreciation and Amortization $72,618
$68,333 ======= ======= 3. Stock Compensation Expense (1) Stock
Compensation Expense, Excluding Acceleration Charges $19,565
$14,772 Stock Acceleration Expense 799 138 --- --- Total Stock
Compensation Expense $20,364 $14,910 ======= ======= 4. EBIT -
Discontinued Operations (2) Revenue $296 $22,115 Cost of Sales 503
$4,808 Selling, General and Administrative Expenses 499 7,168 ---
----- Operating Income (706) 10,139 Less Non-recurring Charges:
Restructuring Costs -- -- LPS Spin Related Costs -- -- Acceleration
of Performance-Based Shares -- -- ----- ------- EBIT, as adjusted
$(706) $10,139 ----- ------- Depreciation and Amortization $5 $62
== === Quarter Ended ------------- 9/30/2009 6/30/2009 3/31/2009
12/31/2008 --------- --------- --------- ---------- 1. Revenues -
Continuing Operations Technology, Data and Analytics (TD&A):
Mortgage Processing $102,973 $89,567 $91,150 $88,364 Other TD&A
83,313 82,322 68,729 60,754 ------ ------ ------ ------ Total
186,286 171,889 159,879 149,118 ------- ------- ------- -------
Loan Transaction Services: Loan Facilitation Services 136,657
148,510 119,214 83,914 Default Services 303,823 299,534 255,309
243,736 ------- ------- ------- ------- Total 440,480 448,044
374,523 327,650 ------- ------- ------- ------- Corporate and Other
(7,339) (6,762) (4,585) (2,847) ------ ------ ------ ------ Total
Revenue $619,427 $613,171 $529,817 $473,921 ======== ========
======== ======== Revenue Growth from Prior Year Period Technology,
Data and Analytics: Mortgage Processing 23.2% 9.1% 13.7% -4.9%
Other TD&A 50.5% 37.9% 23.5% 14.6% ---- ---- ---- ---- Total
34.1% 21.3% 17.7% 2.2% ---- ---- ---- --- Loan Transaction
Services: Loan Facilitation Services 55.9% 25.8% -16.1% -39.6%
Default Services 25.6% 51.9% 51.0% 68.3% ---- ---- ---- ---- Total
33.7% 42.1% 20.4% 15.4% ---- ---- ---- ---- Corporate and Other
338.1% n/m n/m n/m ----- --- --- --- Total Revenue 32.7% 35.3%
19.4% 11.0% ==== ==== ==== ==== 2. Depreciation and Amortization -
Continuing Operations Depreciation and Amortization $15,894 $15,431
$14,074 $13,697 Purchase Price Amortization 7,608 7,404 8,083
10,711 Other Amortization 1,542 753 1,829 596 ----- --- ----- ---
Total Depreciation and Amortization $25,044 $23,588 $23,986 $25,004
======= ======= ======= ======= 3. Stock Compensation Expense (1)
Stock Compensation Expense, Excluding Acceleration Charges $7,062
$6,459 $6,044 $6,603 Stock Acceleration Expense -- -- 799 -- -- --
--- --- Total Stock Compensation Expense $7,062 $6,459 $6,843
$6,603 ====== ====== ====== ====== 4. EBIT - Discontinued
Operations (2) Revenue $-- $-- $296 $2,204 Cost of Sales -- -- 503
1,571 Selling, General and Administrative Expenses -- -- 499 1,814
---- ---- --- ----- Operating Income -- -- (706) (1,181) Less
Non-recurring Charges: Restructuring Costs -- -- -- -- LPS Spin
Related Costs -- -- -- -- Acceleration of Performance-Based Shares
-- -- -- -- ---- ---- ---- ---- EBIT, as adjusted $-- $-- $(706)
$(1,181) --- --- --- --- Depreciation and Amortization $-- $-- $5
$17 == == == === Quarter Ended ------------- 9/30/2008 6/30/2008
3/31/2008 --------- --------- --------- 1. Revenues - Continuing
Operations Technology, Data and Analytics (TD&A): Mortgage
Processing $83,592 $82,062 $80,166 Other TD&A 55,372 59,682
55,658 ------ ------ ------ Total 138,964 141,744 135,824 -------
------- ------- Loan Transaction Services: Loan Facilitation
Services 87,629 118,091 142,039 Default Services 241,844 197,223
169,025 ------- ------- ------- Total 329,473 315,314 311,064
------- ------- ------- Corporate and Other (1,675) (3,711) (3,328)
------ ------ ------ Total Revenue $466,762 $453,347 $443,560
======== ======== ======== Revenue Growth from Prior Year Period
Technology, Data and Analytics: Mortgage Processing 2.9% -1.4%
-2.6% Other TD&A -5.5% 1.5% -7.4% ---- --- ---- Total -0.6%
-0.2% -4.6% ---- ---- ---- Loan Transaction Services: Loan
Facilitation Services -42.8% -28.3% -1.3% Default Services 97.1%
89.7% 66.5% ---- ---- ---- Total 19.4% 17.3% 26.7% ---- ---- ----
Corporate and Other n/m n/m n/m --- --- --- Total Revenue 13.3%
10.0% 14.4% ==== ==== ==== 2. Depreciation and Amortization -
Continuing Operations Depreciation and Amortization $12,594 $11,286
$13,498 Purchase Price Amortization 10,627 8,980 9,700 Other
Amortization 579 594 475 --- --- --- Total Depreciation and
Amortization $23,800 $20,860 $23,673 ======= ======= ======= 3.
Stock Compensation Expense (1) Stock Compensation Expense,
Excluding Acceleration Charges $5,790 $4,295 $4,687 Stock
Acceleration Expense -- 138 -- ---- --- ---- Total Stock
Compensation Expense $5,790 $4,433 $4,687 ====== ====== ====== 4.
EBIT - Discontinued Operations (2) Revenue $5,916 $7,033 $9,166
Cost of Sales 1,521 1,499 1,788 Selling, General and Administrative
Expenses 1,837 2,212 3,119 ----- ----- ----- Operating Income 2,558
3,322 4,259 Less Non-recurring Charges: Restructuring Costs -- --
-- LPS Spin Related Costs -- -- -- Acceleration of
Performance-Based Shares -- -- -- ------ ------ ------ EBIT, as
adjusted $2,558 $3,322 $4,259 ------ ------ ------ Depreciation and
Amortization $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. LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES Exhibit
E NON-GAAP FINANCIAL INFORMATION - UNAUDITED (In thousands, except
per share data) Nine Months Ended September 30,
------------------------------ 2009 2008 ---- ---- 1. EBIT -
Continuing Operations Consolidated Revenue $1,762,415 $1,363,669
Cost of Sales 1,167,829 882,410 Selling, General and Administrative
Expenses 203,280 171,577 ------- ------- Operating Income 391,306
309,682 Less Non-recurring Charges (1): Restructuring Costs 8,186
2,353 LPS Spin Related Costs -- 2,963 Acceleration of
Performance-Based Shares 799 138 ------- ------- EBIT, as adjusted
$400,291 $315,136 EBIT Margin, as adjusted 22.7% 23.1% =======
======= Depreciation and Amortization $72,618 $68,333 =======
======= Technology, Data and Analytics Revenue $518,054 $416,532
Cost of Sales 295,043 229,487 Selling, General and Administrative
Expenses 52,146 49,519 ------- ------- Operating Income 170,865
137,526 Less Non-recurring Charges: Restructuring Costs -- 2,178
LPS Spin Related Costs -- -- Acceleration of Performance-Based
Shares -- -- EBIT, as adjusted $170,865 $139,704 ------- -------
EBIT Margin, as adjusted 33.0% 33.5% ======= ======= Depreciation
and Amortization $51,411 $45,215 ======= ======= Loan Transaction
Services Revenue $1,263,047 $955,851 Cost of Sales 891,515 661,789
Selling, General and Administrative Expenses 82,088 78,985 -------
------- Operating Income 289,444 215,077 Less Non-recurring
Charges: Restructuring Costs -- 163 LPS Spin Related Costs -- --
Acceleration of Performance-Based Shares -- -- ------- -------
EBIT, as adjusted $289,444 $215,240 ------- ------- EBIT Margin, as
adjusted 22.9% 22.5% ======= ======= Depreciation and Amortization
$15,029 $18,104 ======= ======= Corporate and Other Revenue
$(18,686) $(8,714) Cost of Sales (18,729) (8,866) Selling, General
and Administrative Expenses 69,046 43,073 ------- ------- Operating
Income (69,003) (42,921) 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
$(60,018) $(39,808) ------- ------- Depreciation and Amortization
$6,178 $5,014 ======= ======= Quarter Ended ------------- 9/30/2009
6/30/2009 3/31/2009 12/31/2008 --------- --------- ---------
---------- 1. EBIT - Continuing Operations Consolidated Revenue
$619,427 $613,171 $529,817 $473,921 Cost of Sales 409,113 404,014
354,702 294,069 Selling, General and Administrative Expenses 66,671
65,431 71,178 58,298 ------- ------ ------ ------ Operating Income
143,643 143,726 103,937 121,554 -- -- -- -- Less Non-recurring
Charges (1): Restructuring Costs -- -- 8,186 -- LPS Spin Related
Costs -- -- -- -- Acceleration of Performance-Based Shares -- --
799 -- EBIT, as adjusted $143,643 $143,726 $112,922 $121,554
------- ------ ------ ------ EBIT Margin, as adjusted 23.2% 23.4%
21.3% 25.6% ====== ====== ====== ====== Depreciation and
Amortization $25,044 $23,588 $23,986 $25,004 ====== ====== ======
====== Technology, Data and Analytics Revenue $186,286 $171,889
$159,879 $149,118 Cost of Sales 105,651 98,929 90,463 80,482
Selling, General and Administrative Expenses 18,256 17,824 16,066
15,121 ------- ------ ------ ------ Operating Income 62,379 55,136
53,350 53,515 ------- ------ ------ ------ Less Non-recurring
Charges: Restructuring Costs -- -- -- -- LPS Spin Related Costs --
-- -- -- Acceleration of Performance-Based Shares -- -- -- --
------- ------ ------ ------ EBIT, as adjusted $62,379 $55,136
$53,350 $53,515 ------- ------ ------ ------ EBIT Margin, as
adjusted 33.5% 32.1% 33.4% 35.9% Depreciation and Amortization
$17,595 $16,441 $17,375 $15,990 ====== ====== ====== ====== Loan
Transaction Services Revenue $440,480 $448,044 $374,523 $327,650
Cost of Sales 311,230 311,349 268,936 217,242 Selling, General and
Administrative Expenses 27,665 27,064 27,359 26,314 ------- ------
------ ------ Operating Income 101,585 109,631 78,228 84,094 Less
Non-recurring Charges: Restructuring Costs -- -- -- -- LPS Spin
Related Costs -- -- -- -- Acceleration of Performance-Based Shares
-- -- -- -- ------- ------ ------ ------ EBIT, as adjusted $101,585
$109,631 $78,228 $84,094 ------- ------ ------ ------ EBIT Margin,
as adjusted 23.1% 24.5% 20.9% 25.7% ====== ====== ====== ======
Depreciation and Amortization $5,295 $5,126 $4,608 $7,028 ======
====== ====== ====== Corporate and Other Revenue $(7,339) $(6,762)
$(4,585) $(2,847) Cost of Sales (7,768) (6,264) (4,697) (3,655)
Selling, General and Administrative Expenses 20,750 20,543 27,753
16,863 ------- ------ ------ ------ Operating Income (20,321)
(21,041) (27,641) (16,055) Less Non-recurring Charges:
Restructuring Costs -- -- 8,186 -- LPS Spin Related Costs -- -- --
-- Acceleration of Performance-Based Shares -- -- 799 -- -------
------ ------ ------ EBIT, as adjusted $(20,321) $(21,041)
$(18,656)$(16,055) Depreciation and Amortization $2,154 $2,021
$2,003 $1,986 ====== ====== ====== ====== Quarter Ended
------------- 9/30/2008 6/30/2008 3/31/2008 --------- ---------
--------- 1. EBIT - Continuing Operations Consolidated Revenue
$466,762 $453,347 $443,560 Cost of Sales 300,560 293,464 288,386
Selling, General and Administrative Expenses 57,909 58,570 55,098
------- ------ ------ Operating Income 108,293 101,313 100,076 --
-- -- Less Non-recurring Charges (1): Restructuring Costs -- 2,353
-- LPS Spin Related Costs -- 1,960 1,003 Acceleration of
Performance- Based Shares -- 138 -- ------- ------ ------ EBIT, as
adjusted $108,293 $105,764 $101,079 ------- ------ ------ EBIT
Margin, as adjusted 23.2% 23.3% 22.8% ====== ====== ======
Depreciation and Amortization $23,800 $20,860 $23,673 ====== ======
====== Technology, Data and Analytics Revenue $138,964 $141,744
$135,824 Cost of Sales 73,980 81,397 74,110 Selling, General and
Administrative Expenses 15,790 17,471 16,258 ------- ------ ------
Operating Income 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 $49,194 $45,054 $45,456 EBIT Margin, as
adjusted 35.4% 31.8% 33.5% ====== ====== ====== Depreciation and
Amortization $15,229 $13,971 $16,015 ====== ====== ====== Loan
Transaction Services Revenue $329,473 $315,314 $311,064 Cost of
Sales 228,283 215,838 217,668 Selling, General and Administrative
Expenses 26,487 27,154 25,344 ------- ------ ------ Operating
Income 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 $74,703 $72,485 $68,052 EBIT Margin, as
adjusted 22.7% 23.0% 21.9% ====== ====== ====== Depreciation and
Amortization $6,651 $5,290 $6,163 ====== ====== ====== Corporate
and Other Revenue $(1,675) $(3,711) $(3,328) Cost of Sales (1,703)
(3,771) (3,392) Selling, General and Administrative Expenses 15,632
13,945 13,496 ------- ------ ------ Operating Income (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 $(15,604) $(11,775) $(12,429) ====== ====== ======
Depreciation and Amortization $1,920 $1,599 $1,495 ====== ======
====== Notes: (1) Non-recurring charges reflect the impact of
certain expenses incurred including a charge taken in Q1-2009 ($9.0
million) primarily relating to the retirement of three members of
LPS's Board of Directors, as well as the impact of various spin and
restructuring related charges taken in Q1 and Q2 of 2008. Nine
Months Ended September 30, ------------------------------- 2009
2008 ---- ---- 2. Net Earnings - Reconciliation Net Earnings
$200,828 176,559 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 -- -- ------- -------
Net Earnings, excluding non-recurring items 206,376 179,897 Pro
Forma Interest Expense, net of tax (2) -- 28,131 ------- -------
Pro Forma Net Earnings 206,376 151,766 Purchase Price Amortization,
net of tax (3) 14,261 17,936 ------- ------- Pro Forma Adjusted Net
Earnings $220,637 $169,702 ====== ====== Pro Forma Net Earnings Per
Share $2.15 $1.58 ====== ====== Pro Forma Adjusted Net Earnings Per
Share (4) $2.30 $1.77 ====== ====== Pro Forma Diluted Weighted
Average Shares (4) 95,941 95,963 ====== ====== 3. Cashflow -
Reconciliation Cash Flows from Operating Activities: Net Earnings
$200,828 $176,559 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 -- -- -------
------- Net Earnings, excluding non- recurring items 205,132
179,813 ------- ------- Pro Forma Interest Expense, net of tax --
28,131 Pro Forma Adjusted Net Earnings 205,132 151,682 Adjustments
to reconcile net earnings to net cash provided by operating
activities: Non-cash adjustments 92,069 93,177 Working capital
adjustments 2,240 (22,444) ------- ------- Net cash provided by
(used in) operating activities 299,441 222,415 ------- -------
Capital expenditures included in investing activities (67,862)
(38,342) ------- ------- Pro Forma Adjusted Net Free Cash Flow
$231,579 $184,073 ======= ======= Quarter Ended -------------
9/30/2009 6/30/2009 3/31/2009 12/31/2008 --------- ---------
--------- ---------- 2. Net Earnings - Reconciliation Net Earnings
$75,542 $75,240 $50,046 $54,329 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 -- -- -- (223) ------ ------ ------ ------ Net
Earnings, excluding non-recurring items 75,542 75,240 55,594 54,106
Pro Forma Interest Expense, net of tax (2) -- -- -- -- ------
------ ------ ------ Pro Forma Net Earnings 75,542 75,240 55,594
54,106 Purchase Price Amortization, net of tax (3) 4,698 4,572
4,991 6,815 ------ ------ ------ ------ Pro Forma Adjusted Net
Earnings $80,240 $79,812 $60,585 $60,921 ====== ====== ======
====== Pro Forma Net Earnings Per Share $0.78 $0.78 $0.58 $0.57
====== ====== ====== ====== Pro Forma Adjusted Net Earnings Per
Share (4) $0.83 $0.83 $0.64 $0.64 ====== ====== ====== ====== Pro
Forma Diluted Weighted Average Shares (4) 96,399 96,133 95,284
95,126 ====== ====== ====== ====== 3. Cashflow - Reconciliation
Cash Flows from Operating Activities: Net Earnings $75,542 $75,240
$50,046 $54,329 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 -- -- --
(223) ------ ------ ------ ------ Net Earnings, excluding
non-recurring items 75,542 75,240 54,350 54,106 Pro Forma Interest
Expense, net of tax -- -- -- -- ------ ------ ------ ------ Pro
Forma Adjusted Net Earnings 75,542 75,240 54,350 54,106 Adjustments
to reconcile net earnings to net cash provided by operating
activities: Non-cash adjustments 32,279 31,700 28,090 30,081
Working capital adjustments (16,954) 21,957 (2,763) 32,158 ------
------ ------ ------ Net cash provided by (used in) operating
activities 90,867 128,897 79,677 116,345 ------ ------ ------
------ Capital expenditures included in investing activities
(19,455) (25,836) (22,571)(23,946) ------ ------ ------ ------ Pro
Forma Adjusted Net Free Cash Flow $71,412 $103,061 $57,106 $92,399
====== ====== ====== ====== Quarter Ended ------------- 9/30/2008
6/30/2008 3/31/2008 --------- --------- --------- 2. Net Earnings -
Reconciliation Net Earnings $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 -- -- -- ------ ------ ------ Net
Earnings, excluding non-recurring items 51,281 66,270 62,346 Pro
Forma Interest Expense, net of tax (2) -- 13,951 14,180 ------
------ ------ Pro Forma Net Earnings 51,281 52,319 48,166 Purchase
Price Amortization, net of tax (3) 6,504 5,496 5,936 ------ ------
------ Pro Forma Adjusted Net Earnings $57,785 $57,815 $54,102
====== ====== ====== Pro Forma Net Earnings Per Share $0.54 $0.55
$0.49 ====== ====== ====== Pro Forma Adjusted Net Earnings Per
Share (4) $0.61 $0.61 $0.55 ====== ====== ====== Pro Forma Diluted
Weighted Average Shares (4) 95,223 95,070 97,597 ====== ======
====== 3. Cashflow - Reconciliation Cash Flows from Operating
Activities: Net Earnings $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 -- -- -- ------ ------ ------ Net Earnings,
excluding non-recurring items 51,281 66,186 62,346 Pro Forma
Interest Expense, net of tax -- 13,951 14,180 ------ ------ ------
Pro Forma Adjusted Net Earnings 51,281 52,235 48,166 Adjustments to
reconcile net earnings to net cash provided by operating
activities: Non-cash adjustments 32,420 18,262 42,495 Working
capital adjustments 26,908 (91,474) 42,122 ------ ------ ------ Net
cash provided by (used in) operating activities 110,609 (20,977)
132,783 ------ ------ ------ Capital expenditures included in
investing activities (13,205) (14,344) (10,793) ------ ------
------ Pro Forma Adjusted Net Free Cash Flow $97,404 $(35,321)
$121,990 ====== ======= ====== Notes: (2) 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. (3) 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. (4) 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/
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