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(Mark One)
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R
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Fiscal Year Ended December 31, 2015
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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16-1725106
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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601 Riverside Avenue
Jacksonville, Florida 32204
(Address of principal executive offices, including zip code)
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(904) 854-8100
(Registrant’s telephone number,
including area code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.0001 par value
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New York Stock Exchange
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Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Page
Number
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Item 1.
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Business
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•
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Increased regulation
. Most U.S. mortgage market participants have become subject to increasing regulatory oversight and regulatory requirements as federal and state governments have enacted various new laws, rules and regulations. One example of such legislation is the Dodd-Frank Act, which contains broad changes for many sectors of the financial services and lending industries and established the CFPB, a new federal regulatory agency responsible for regulating consumer financial protection within the United States. It is our experience that mortgage lenders have become more focused on minimizing the risk of non-compliance with these evolving regulations and are looking toward technologies and solutions that help them to comply with the increased regulatory oversight and burdens. The CFPB final rules became effective October 2015, amending Regulation Z (the Truth in Lending Act) ("TILA") and Regulation X (Real Estate Settlement Procedures Act) ("RESPA") (the “TILA-RESPA Rule”) to consolidate existing loan disclosures under TILA and RESPA for closed-end credit transactions secured by real property. The TILA-RESPA Rule requires (i) timely delivery of a loan estimate upon receipt of a consumer’s application and (ii) timely delivery of a closing disclosure prior to consummation of a transaction. The TILA-RESPA Rule also imposes certain restrictions, including the prohibition of imposing fees prior to provision of an estimate and the prohibition of providing estimates prior to a consumer’s submission of verifying documents.
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Lenders increasingly focused on core operations
. As a result of greater regulatory scrutiny and the higher cost of doing business, we believe lenders have become more focused on their core operations and customers. We believe lenders are increasingly shifting from in-house technologies to solutions with third-party providers who can provide better technology and services more efficiently. Lenders require these vendors to provide best-in-class technology and deep domain expertise and to assist them in maintaining regulatory compliance.
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Growing role of technology in the U.S. mortgage industry
. Banks and other lenders and servicers have become increasingly focused on technology automation and workflow management to operate more efficiently and meet their regulatory guidelines. We believe that vendors must be able to support the complexity of the market, display extensive industry knowledge and possess the financial resources to make the necessary investments in technology to support lenders.
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Increased demand for enhanced transparency and analytic insight
. As U.S. mortgage market participants work to minimize the risk in lending, servicing and capital markets, they rely on the integration of data and analytics with technologies that enhance the decision making process. These industry participants rely on large comprehensive third party databases coupled with enhanced analytics to achieve these goals.
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Servicing Technology.
Our mortgage servicing platform ("MSP") is a software as a service ("SaaS") application that automates loan servicing, including loan setup and ongoing processing, customer service, accounting and reporting to the secondary mortgage market and investor reporting. MSP serves as a core application and database of record for non-delinquent first and second lien mortgages.
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Origination Technology.
We offer two solutions that automate and facilitate the origination of mortgage loans in the United States: Empower, which supports retail and wholesale loan originations, and LendingSpace, which supports correspondent loan originations, which are originations that are funded by one lender, who sells the loan to another lender who services the loan or sells it on the secondary market. Our loan origination technologies are continuously enhanced to meet changing regulatory requirements and are used to improve loan quality and store documents and images.
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Property, Mortgage Performance Data and MLS
. We make our real estate database available to our clients in a standard, normalized format. We provide a rich and diverse data set for title production activities. We also provide tax status data on properties and offer a number of value-added analytic services designed to enable our clients to utilize our data to assess and mitigate risk, determine property values, track market performance and generate leads. We also provide an MLS system to large MLS groups in the U.S. and Canada.
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Mortgage and Real Estate Analytics
. We offer a broad range of property valuation services that allow our clients to analyze the value of underlying properties. These include, among others, automated valuation models, collateral risk scores, appraisal review services and valuation reconciliation services. To deliver these services, we utilize proprietary algorithms, detailed real estate statistical analysis and modified physical property inspections. These offerings are designed to reduce risk in origination, servicing and default transactions as well as aid investors in analysis of property and real estate assets. The offering can be tailored to meet client needs and any regulatory requirements.
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Market leadership with comprehensive and integrated solutions
. We are a leading provider of comprehensive and integrated solutions to the mortgage industry. Our solutions are utilized to service approximately 59% of all U.S. first lien mortgages as of December 31, 2015, according to the Black Knight Mortgage Monitor Report, and to operate one of the industry’s largest exchanges connecting originators, agents, settlement services providers and investors. We believe our leadership position is, in part, the result of our unique expertise and insight developed from over 50 years serving the needs of customers in the mortgage industry. We have used this insight to develop an integrated and comprehensive suite of proprietary technology, data and analytics solutions to automate many of the mission-critical business processes across the entire mortgage loan life cycle. These integrated solutions are designed to reduce manual
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Broad and deep client relationships with significant recurring revenues
. We have long-standing sticky relationships with our largest clients. We frequently enter into long-term contracts with our mortgage servicing and loan origination clients that contain volume minimums and provide for annual increases. Our products are typically embedded within our clients’ mission-critical workflow and decision making processes across various parts of their organizations.
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Extensive data assets and analytics capabilities
. We develop and maintain large, accurate and comprehensive data sets on the mortgage and housing industry that we believe are competitively differentiated. Our data sets represent metropolitan statistical areas that cover 99.99% of the U.S. population and 96% of all mortgage transactions according to 2012 U.S. census data. Our unique data sets provide a combination of public and proprietary data in real-time and each of our data records features a large number of attributes. Our data scientists utilize our data sets, subject to any applicable use
restrictions, and comprehensive analytical capabilities to create highly customized reports, including models of customer behavior for originators and servicers, portfolio analytics for capital markets and government agencies and proprietary market insights for real estate agencies. Our data and analytics capabilities are also embedded into our technology platform and workflow products, providing our clients with integrated and comprehensive solutions.
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Scalable and cost-effective operating model
. We believe we have a highly attractive and scalable operating model derived from our market leadership, hosted technology platforms and the large number of clients we serve across the mortgage industry. Our scalable operating model provides us with significant benefits. Our scale and operating leverage allows us to add incremental clients to our existing platforms with limited incremental cost. As a result, our operating model drives attractive margins and generates significant cash flow. Also, by leveraging our scale and leading market position, we are able to make cost-effective investments in our technology platform to meet evolving regulatory and compliance requirements, further increasing our value proposition to clients.
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World class management team with depth of experience and track record of success
. Our management team has an average of over 20 years of experience in the banking technology and mortgage processing industries and a proven track record of strong execution capabilities. Following the Acquisition, we have significantly improved our operations and enhanced our go-to-market strategy, further integrated our technology platforms, expanded our data and analytics capabilities and introduced several new innovative products. We executed all of these projects while delivering attractive revenues growth and strong profitability.
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Further penetration of our solutions with existing clients
. We believe our established client base presents a substantial opportunity for growth. We seek to capitalize on the trend of standardization and increased adoption of leading third party solutions and increase the number of solutions provided to our existing client base. We intend to broaden and deepen our client relationships by cross-selling our suite of end-to-end technology solutions, as well as our robust data and analytics. By helping our clients understand the full extent of our comprehensive solutions and the value of leveraging the multiple solutions we offer, we believe we can expand our existing relationships by allowing our clients to focus on their core businesses and their customers.
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Win new clients in existing markets
. We intend to attract new clients by leveraging the value proposition provided by our technology platform and comprehensive solutions offering. In particular, we believe there is a significant opportunity to penetrate the mid-tier mortgage originators and servicers market. We believe these institutions can benefit from our proven solutions suite in order to address complex regulatory requirements and compete more effectively in the evolving mortgage market. We intend to continue to pursue this channel and benefit from the low incremental cost of adding new customers to our scaled technology infrastructure.
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Continue to innovate and introduce new solutions
. Our long-term vision is to be the industry-leading provider for participants of the mortgage industry for their platform, data and analytic needs. We
intend to enhance what we believe is a leadership position in the industry by continuing to innovate our solutions and refine the insight we provide to our clients. We have a strong track record of introducing and developing new solutions that span the mortgage loan life cycle, are tailored to specific industry trends and enhance our clients’ core operating functions. By working in partnership with key clients, we have been able to develop and market new and advanced solutions to our client base that meet the evolving demands of the mortgage industry. In addition, we will continue to develop and leverage insights from our large public and proprietary data assets to further improve our customer value proposition.
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Powerful focus and dedication to staying up-to-date with regulatory requirements
. We have dedicated significant technological and management resources to build and maintain a regulatory infrastructure and human capital base to
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Selectively pursue strategic acquisitions
. The core focus of our strategy is to grow organically. However, we may selectively evaluate strategic acquisition opportunities that would allow us to expand our footprint, broaden our client base and deepen our product and service offerings. We believe that
there are meaningful synergies that result from acquiring small companies that provide best-of-breed single point solutions. Integrating and cross-selling these point solutions into our broader client base and integrating acquisitions into our efficient operating environment would potentially result in revenue and cost synergies.
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security breaches against our information systems;
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changes to our relationships with our top clients, whom we rely on for a significant portion of our revenues and profit;
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limitation of our growth due to the time and expense associated with switching from competitors’ software and services;
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providing credits or refunds for prepaid amounts or contract terminations in connection with our service level commitments;
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failure to offer high-quality technical support services;
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failure to comply with or changes in government regulations;
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consolidation in our end client market;
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regulatory developments with respect to use of consumer data and public records;
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efforts by the government to reform or address the mortgage market and current economic environment;
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our clients’ relationships with government-sponsored enterprises;
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failure to adapt our solutions to technological changes or evolving industry standards;
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failure to compete effectively;
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increase in the availability of free or relatively inexpensive information;
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our inability to protect our proprietary technology and information rights;
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infringement on the proprietary rights of others by our applications or services;
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our inability to successfully consummate and integrate acquisitions;
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our reliance on third parties;
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our dependence on our ability to access data from external sources;
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our international operations and third-party service providers;
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failure to develop widespread brand awareness cost-effectively;
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system failures, damage or interruption with respect to our technology solutions;
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delays or difficulty in developing or implementing new or enhanced mortgage processing or technology solutions;
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change in the strength of the economy and housing market generally;
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our substantial indebtedness and any additional significant debt we incur;
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inadequacy of our risk management policies and procedures;
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failure to achieve our growth strategies;
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litigation, investigations or other actions against us;
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our dependency on distributions from BKFS LLC to pay taxes and other expenses;
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cash payments in exchange for units may reduce our overall cash flow;
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our status as a “controlled company” within the meaning of the NYSE; and
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conflicts of interest that may arise due to FNF’s control over us.
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Item 1A.
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Risk Factors
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be expensive and time-consuming to defend;
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cause us to cease providing solutions that incorporate the challenged intellectual property;
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require us to redesign our solutions, if feasible;
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divert management’s attention and resources; and
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require us to enter into royalty or licensing agreements in order to obtain the right to use necessary technologies.
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interruption of business operations;
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delay in market acceptance;
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us, or our clients, missing a regulatory deadline;
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additional development and remediation costs;
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diversion of technical and other resources;
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loss of clients;
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negative publicity; or
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exposure to liability claims.
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making us more vulnerable to economic downturns and adverse developments in our business, which may cause us to have difficulty borrowing money in the future for working capital, capital expenditures, acquisitions or other purposes and may limit our ability to pursue other business opportunities and implement certain business strategies;
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requiring us to use a large portion of the money we earn to pay principal and interest on our debt, which could reduce the amount of money available to finance operations, acquisitions and other business activities;
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exposing us to the risk of increased interest rates as $1.3 billion in principal amount of our debt bears interest at a floating rate as of
December 31, 2015
(an increase of one percentage point in the applicable interest rate could cause an increase in interest expense of approximately
$11.5 million
on an annual basis based on the principal outstanding as of
December 31, 2015
, which may make it more difficult for us to service our debt);
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exposing us to costs and risks associated with agreements limiting our exposure to higher interest rates that we may enter into in the future, as such agreements may not offer complete protection from these risks, and we are subject to the risk that one or more of the counterparties to these agreements may fail to satisfy their obligations under such agreements; and
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causing a competitive disadvantage if we have higher levels of debt than our competitors by reducing our flexibility in responding to changing business and economic conditions, including increased competition.
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create, incur or assume any additional debt and issue preferred stock;
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create, incur or assume certain liens;
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redeem and/or prepay certain subordinated debt we might issue in the future;
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pay dividends on our stock or repurchase stock;
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make certain investments and acquisitions;
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enter into or permit to exit contractual limits on the ability of our subsidiaries to pay dividends to us;
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enter new lines of business;
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engage in mergers and acquisitions;
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engage in specified sales of assets; and
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enter into transactions with affiliates.
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divide our Board of Directors into three classes with staggered three-year terms, which may delay or prevent a change of our management or a change of control;
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authorize the issuance of “blank check” preferred stock that could be issued by us upon approval of our Board of Directors to increase the number of outstanding shares of capital stock, making a takeover more difficult and expensive;
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provide that directors may be removed from office only for cause and that any vacancy on our Board of Directors may only be filled by a majority of our directors then in office, which may make it difficult for other shareholders to reconstitute our Board of Directors;
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provide that special meetings of the shareholders may be called only upon the request of a majority of our Board of Directors or by the chairman of the Board of Directors or our chief executive officer; and
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require advance notice to be given by shareholders for any shareholder proposals or director nominees.
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our operating performance and the performance of our competitors and fluctuations in our operating results;
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the public’s reaction to our press releases, our other public announcements and our filings with the SEC;
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changes in earnings estimates or recommendations by research analysts who follow us or other companies in our industry;
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global, national or local economic, legal and regulatory factors unrelated to our performance;
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announcements by us or our competitors of new products, services, strategic investments or acquisitions;
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actual or anticipated variations in our or our competitors’ operating results, and our and our competitors’ growth rates;
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failure by us or our competitors to meet analysts’ projections or guidance we or our competitors may give the market;
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changes in laws or regulations, or new interpretations or applications of laws and regulations, that are applicable to our business;
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changes in accounting standards, policies, guidance, interpretations or principles;
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the arrival or departure of key personnel;
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the number of shares publicly traded;
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future sales or issuances of our Class A common stock, including sales or issuances by us, our officers or directors and our significant shareholders, including BKHI, THL and certain of their respective affiliates; and
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other developments affecting us, our industry or our competitors.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Location
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Number of Locations
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California
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6
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Florida
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3
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Illinois
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2
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Maryland
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5
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Texas
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4
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Other states(1)
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8
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Hyderabad, India
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1
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosure
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Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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BKFS
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Stock Price High
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Stock Price Low
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Year ended December 31, 2015
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Second quarter (since May 20, 2015)
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$
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30.87
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$
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27.11
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Third quarter
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35.35
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28.54
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Fourth quarter
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36.25
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32.07
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Item 6.
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Selected Financial Data
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Year ended December 31,
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Period from October 16, 2013 through December 31, 2013
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2015
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2014
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(In millions, except per share data)
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Revenues
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$
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930.7
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$
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852.1
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$
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15.0
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Expenses:
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Operating expenses
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538.2
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514.9
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16.9
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Depreciation and amortization
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194.3
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188.8
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1.1
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Transition and integration costs
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8.0
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119.3
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—
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Total expenses
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740.5
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823.0
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18.0
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Operating income (loss)
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190.2
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29.1
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(3.0
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)
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Other income and expense:
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Interest expense, net
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(89.8
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)
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(128.7
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)
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—
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Other expense, net
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(4.6
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)
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(12.0
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)
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—
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Total other expense, net
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(94.4
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)
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(140.7
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)
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—
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||||||
Earnings (loss) from continuing operations before income taxes
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95.8
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(111.6
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)
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(3.0
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)
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Income tax expense (benefit)
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13.4
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(5.3
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)
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—
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Net earnings (loss) from continuing operations
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82.4
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(106.3
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)
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(3.0
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)
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Loss from discontinued operations, net of tax
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—
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(0.8
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)
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—
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Net earnings (loss)
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82.4
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(107.1
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)
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(3.0
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)
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Less: Net earnings (loss) attributable to noncontrolling interests
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62.4
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(107.1
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)
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(3.0
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)
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Net earnings attributable to Black Knight Financial Services, Inc.
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$
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20.0
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$
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—
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$
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—
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||||||
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May 26, 2015 through December 31, 2015
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||||||
Net earnings per share attributable to Black Knight Financial Services, Inc., Class A common shareholders:
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||||||
Basic
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$
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0.31
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Diluted
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$
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0.29
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||||
Weighted average shares of Class A common stock outstanding:
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||||||
Basic
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64.4
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|||||
Diluted
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67.9
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|
|
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|
|
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Balance Sheet Data:
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December 31,
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|
|
December 31, 2013
|
||||||||
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2015
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|
2014
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|||||||
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(In millions)
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|||||||||||
Cash and cash equivalents
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$
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186.0
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$
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61.9
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|
|
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$
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7.4
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Total assets
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$
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3,703.7
|
|
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$
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3,598.3
|
|
|
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$
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88.1
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Total debt (current and long-term)
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$
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1,661.5
|
|
|
$
|
2,135.1
|
|
|
|
$
|
—
|
|
|
January 1, 2013 through October 15, 2013
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|
Year ended December 31,
|
||||||||
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|
2012
|
|
2011
|
|||||||
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(In millions)
|
||||||||||
Statements of Operations Data:
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|
|
|
|
|
||||||
Revenues
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$
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58.2
|
|
|
$
|
73.5
|
|
|
$
|
64.5
|
|
Net (loss) earnings
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$
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(7.2
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)
|
|
$
|
4.1
|
|
|
$
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4.6
|
|
Balance Sheet Data:
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|
|
|
|
|
||||||
Total assets
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$
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79.1
|
|
|
$
|
90.4
|
|
|
$
|
79.6
|
|
|
Day Ended January 1, 2014
|
|
Year ended December 31,
|
||||||||||||
|
|
2013 (1)
|
|
2012 (1)
|
|
2011
|
|||||||||
|
(In millions, except per share data)
|
||||||||||||||
Statements of Operations Data:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
—
|
|
|
$
|
1,716.2
|
|
|
$
|
1,991.3
|
|
|
$
|
1,980.0
|
|
Net (loss) earnings from continuing operations
|
$
|
(39.0
|
)
|
|
$
|
104.2
|
|
|
$
|
79.6
|
|
|
$
|
135.3
|
|
Net (loss) earnings
|
$
|
(39.0
|
)
|
|
$
|
102.7
|
|
|
$
|
70.4
|
|
|
$
|
96.5
|
|
Net earnings per share - basic from continuing operations
|
|
|
$
|
1.22
|
|
|
$
|
0.94
|
|
|
$
|
1.58
|
|
||
Net earnings per share - basic
|
|
|
$
|
1.20
|
|
|
$
|
0.83
|
|
|
$
|
1.13
|
|
||
Weighted average shares - basic
|
|
|
85.4
|
|
|
84.6
|
|
|
85.6
|
|
|||||
Net earnings per share - diluted from continuing operations
|
|
|
$
|
1.21
|
|
|
$
|
0.94
|
|
|
$
|
1.58
|
|
||
Net earnings per share - diluted
|
|
|
$
|
1.19
|
|
|
$
|
0.83
|
|
|
$
|
1.13
|
|
||
Weighted average shares - diluted
|
|
|
85.9
|
|
|
84.9
|
|
|
85.7
|
|
|||||
|
|
|
|
|
|
|
|
||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
278.4
|
|
|
$
|
329.6
|
|
|
$
|
236.2
|
|
|
$
|
77.4
|
|
Total assets
|
$
|
2,446.6
|
|
|
$
|
2,486.7
|
|
|
$
|
2,445.8
|
|
|
$
|
2,245.4
|
|
Total debt (current and long-term)
|
$
|
1,068.1
|
|
|
$
|
1,068.1
|
|
|
$
|
1,068.1
|
|
|
$
|
1,149.2
|
|
Cash dividends per share
|
$
|
—
|
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
Quarter Ended
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
|
(In millions, except per share data)
|
||||||||||||||
2015
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
227.2
|
|
|
$
|
232.1
|
|
|
$
|
233.6
|
|
|
$
|
237.8
|
|
Earnings from continuing operations before income taxes and noncontrolling interests
|
$
|
14.7
|
|
|
$
|
8.2
|
|
|
$
|
36.4
|
|
|
$
|
36.5
|
|
Net earnings attributable to Black Knight Financial Services, Inc.
|
|
|
$
|
0.3
|
|
|
$
|
9.9
|
|
|
$
|
9.8
|
|
||
Basic earnings per shares attributable to Black Knight Financial Services, Inc.
|
|
|
$
|
0.01
|
|
|
$
|
0.15
|
|
|
$
|
0.15
|
|
||
Diluted earnings per share attributable to Black Knight Financial Services, Inc.
|
|
|
$
|
—
|
|
|
$
|
0.15
|
|
|
$
|
0.14
|
|
||
2014
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
202.5
|
|
|
$
|
214.3
|
|
|
$
|
215.0
|
|
|
$
|
220.3
|
|
Net (loss) earnings from continuing operations
|
$
|
(89.7
|
)
|
|
$
|
(24.6
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
8.2
|
|
Net (loss) earnings
|
$
|
(89.9
|
)
|
|
$
|
(24.4
|
)
|
|
$
|
(1.0
|
)
|
|
$
|
8.2
|
|
Item 7.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
Year ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In millions)
|
||||||
Technology
|
$
|
756.2
|
|
|
$
|
695.5
|
|
Data and Analytics
|
174.3
|
|
|
156.5
|
|
||
Corporate and Other
|
0.2
|
|
|
0.1
|
|
||
Total
|
$
|
930.7
|
|
|
$
|
852.1
|
|
•
|
the consolidated financial position, results of operations and cash flows of Black Knight for all periods following the completion of our IPO on May 26, 2015;
|
•
|
the consolidated financial position, results of operations and cash flows of BKFS LLC, including the results of operations and cash flows of the businesses of Commerce Velocity and Property Insight for the time period beginning on January 1, 2014 through May 25, 2015, the day prior to the completion of our IPO; and
|
•
|
the consolidated financial position, results of operations and cash flows of LPS for all periods prior to January 2, 2014.
|
•
|
Increased regulation
. Most U.S. mortgage market participants have become subject to increasing regulatory oversight and regulatory requirements as federal and state governments have enacted various new laws, rules and regulations. One example of such legislation is the Dodd-Frank Act, which contains broad changes for many sectors of the financial services and lending industries and established the CFPB, a new federal regulatory agency responsible for regulating consumer financial protection within the United States. It is our experience that mortgage lenders have become more focused on minimizing the risk of non-compliance with these evolving regulations and are looking toward technologies and solutions that help them to comply with the increased regulatory oversight and burdens. The CFPB final rules became effective October 2015, amending Regulation Z (the Truth in Lending Act) ("TILA") and Regulation X (Real Estate Settlement Procedures Act) ("RESPA") (the “TILA-RESPA Rule”) to consolidate existing loan disclosures under TILA and RESPA for closed-end credit transactions secured by real property. The TILA-RESPA Rule requires (i) timely delivery of a loan estimate upon receipt of a consumer’s application and (ii) timely delivery of a closing disclosure prior to consummation of a transaction. The TILA-RESPA Rule also imposes certain restrictions, including the prohibition of imposing fees prior to provision of an estimate and the prohibition of providing estimates prior to a consumer’s submission of verifying documents.
|
•
|
Lenders increasingly focused on core operations.
As a result of greater regulatory scrutiny and the higher cost of doing business, we believe lenders have become more focused on their core operations and customers. We believe lenders are increasingly shifting from in-house technologies to solutions with third-party providers who can provide better technology
|
•
|
Growing role of technology in the U.S. mortgage industry.
Banks and other lenders and servicers have become increasingly focused on technology automation and workflow management to operate more efficiently and meet their regulatory guidelines. We believe that vendors must be able to support the complexity of the market, display extensive industry knowledge and possess the financial resources to make the necessary investments in technology to support lenders.
|
•
|
Increased demand for enhanced transparency and analytic insight
. As U.S. mortgage market participants work to minimize the risk in lending, servicing and capital markets, they rely on the integration of data and analytics with technologies that enhance the decision making process. These industry participants rely on large comprehensive third party databases coupled with enhanced analytics to achieve these goals.
|
•
|
Operating expenses
include payroll, employee benefits, occupancy costs, data processing costs, program design and development costs and professional services.
|
•
|
Depreciation and amortization
expense consists of our depreciation related to investments in property and equipment, including information technology hardware, as well as amortization of purchased and developed software and other intangible assets, principally client relationships recorded in connection with the Acquisition. It also includes the amortization of previously deferred implementation-related expenses. Depreciation and amortization expense increased significantly in 2014 compared to 2013 as a result of fair value adjustments recorded in connection with the Acquisition. In 2015, depreciation and amortization has remained relatively consistent with the 2014 amounts.
|
•
|
Legal and regulatory charges
consist of either actual or estimated costs of settlement, damages and associated legal and professional fees with respect to legal and regulatory matters. For periods prior to the Acquisition, the legal and regulatory charges primarily related to the former Transaction Services businesses that are now part of ServiceLink and another FNF subsidiary.
|
•
|
Exit costs, impairments and other charges
consist of certain lease exit charges, employee severance, stock compensation acceleration charges, impairments of long-lived assets and other non-recurring charges. In 2014, costs incurred of this nature were directly the result of the Acquisition and are included in transition and integration costs. We did not incur any material costs of this nature during the year ended
December 31, 2015
.
|
•
|
Transition and integration costs
for 2014 consisted of incremental costs associated with executing the Acquisition, as well as the related transitioning costs including employee severance, expenses associated with our Synergy Incentive Program, certain other non-recurring professional and other costs as well as member management fees paid to FNF and THL Managers VI, LLC. In 2015, these consist of costs related to our IPO, as well as member management fees through May 25, 2015.
|
•
|
Interest expense, net
for 2014 and 2015 through May 26, 2015 consisted of interest on the Senior Notes and interest on the former intercompany notes and the former mirror note that were payable to FNF. Subsequent to May 26, 2015, Interest expense, net consists of interest on our senior notes, interest on our new facilities, commitment fees on our revolving credit facility, administrative agent fees, rating agency fees and a guarantee fee that we pay FNF for its ongoing guarantee of the Senior Notes. See Note 10 in the Notes to Consolidated and Combined Financial Statements for a more detailed discussion of our interest expense.
|
•
|
Other (expense) income
for 2014 consisted of costs associated with the Merion Capital legal matter that resulted from the Acquisition, including interest and estimated costs to defend ourselves in this matter. On September 18, 2014, we reached an agreement with Merion Capital to resolve an interest motion and FNF paid Merion Capital the merger consideration (cash and stock). As of December 31, 2014, Black Knight had incurred expenses of $11.9 million in connection with this matter, including $9.0 million for interest accrued through the settlement date and a $2.9 million accrual for legal defense expenses. To date, we have paid $9.0 million for the interest as well as $0.9 million of the
|
•
|
Income tax expense (benefit)
represents federal, state and local taxes based on income attributable to Black Knight in multiple jurisdictions.
|
|
Black Knight and BKFS LLC
|
|
|
LPS
|
||||||||||||
|
Year ended December 31,
|
|
|
Day ended January 1, 2014(2)
|
|
Year ended December 31, 2013(3)
|
||||||||||
|
2015
|
|
2014
|
|
|
|
||||||||||
|
(Dollars in millions)
|
|||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Technology, Data and Analytics
|
$
|
930.7
|
|
|
$
|
852.1
|
|
|
|
$
|
—
|
|
|
$
|
744.8
|
|
Transaction Services(1)
|
—
|
|
|
—
|
|
|
|
—
|
|
|
971.4
|
|
||||
Total revenues
|
930.7
|
|
|
852.1
|
|
|
|
—
|
|
|
1,716.2
|
|
||||
Operating expenses
|
538.2
|
|
|
514.9
|
|
|
|
—
|
|
|
1,280.5
|
|
||||
Depreciation and amortization
|
194.3
|
|
|
188.8
|
|
|
|
—
|
|
|
104.0
|
|
||||
Legal and regulatory charges
|
—
|
|
|
—
|
|
|
|
—
|
|
|
74.4
|
|
||||
Exit costs, impairment and other charges
|
—
|
|
|
—
|
|
|
|
—
|
|
|
49.4
|
|
||||
Transition and integration costs
|
8.0
|
|
|
119.3
|
|
|
|
50.1
|
|
|
—
|
|
||||
Total expenses
|
740.5
|
|
|
823.0
|
|
|
|
50.1
|
|
|
1,508.3
|
|
||||
Operating income (loss)
|
190.2
|
|
|
29.1
|
|
|
|
(50.1
|
)
|
|
207.9
|
|
||||
Operating margin
|
20.4
|
%
|
|
3.4
|
%
|
|
|
N/A
|
|
|
12.1
|
%
|
||||
Interest expense
|
(89.8
|
)
|
|
(128.7
|
)
|
|
|
—
|
|
|
(50.2
|
)
|
||||
Other (expense) income, net
|
(4.6
|
)
|
|
(12.0
|
)
|
|
|
—
|
|
|
0.1
|
|
||||
Earnings (loss) from continuing operations before income taxes
|
95.8
|
|
|
(111.6
|
)
|
|
|
(50.1
|
)
|
|
157.8
|
|
||||
Income tax expense (benefit)
|
13.4
|
|
|
(5.3
|
)
|
|
|
(11.1
|
)
|
|
53.6
|
|
||||
Net earnings (loss) from continuing operations
|
82.4
|
|
|
(106.3
|
)
|
|
|
(39.0
|
)
|
|
104.2
|
|
||||
Loss from discontinued operations, net of tax
|
—
|
|
|
(0.8
|
)
|
|
|
—
|
|
|
(1.5
|
)
|
||||
Net earnings (loss)
|
$
|
82.4
|
|
|
$
|
(107.1
|
)
|
|
|
$
|
(39.0
|
)
|
|
$
|
102.7
|
|
(1)
|
The former Transaction Services segment of LPS was transferred to ServiceLink in January 2014 and, as a result, there are no revenues or expenses of the former Transaction Services segment following the Acquisition and Internal Reorganization.
|
(2)
|
The day ended January 1, 2014 includes $50.1 million of transaction costs related to the Acquisition.
|
(3)
|
The results of operations have been restated to reflect PCLender.com Inc., a former wholly-owned, consolidated subsidiary ("PCLender") as a discontinued operation. PCLender was sold during 2014.
|
|
Year ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In millions)
|
||||||
Technology
|
$
|
756.2
|
|
|
$
|
695.5
|
|
Data and Analytics
|
174.3
|
|
|
156.5
|
|
||
Corporate and Other
|
0.2
|
|
|
0.1
|
|
||
Total
|
$
|
930.7
|
|
|
$
|
852.1
|
|
|
Year ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In millions)
|
||||||
Technology
|
$
|
341.4
|
|
|
$
|
338.2
|
|
Data and Analytics
|
145.5
|
|
|
140.2
|
|
||
Corporate and Other
|
51.3
|
|
|
36.5
|
|
||
Total
|
$
|
538.2
|
|
|
$
|
514.9
|
|
|
Year ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In millions)
|
||||||
Technology
|
$
|
176.4
|
|
|
$
|
171.3
|
|
Data and Analytics
|
13.9
|
|
|
13.7
|
|
||
Corporate and Other
|
4.0
|
|
|
3.8
|
|
||
Total
|
$
|
194.3
|
|
|
$
|
188.8
|
|
|
Year ended December 31,
|
|||||||
|
2014
|
|
|
2013
|
||||
|
(In millions)
|
|||||||
Technology
|
$
|
695.5
|
|
|
|
$
|
663.6
|
|
Data and Analytics
|
156.5
|
|
|
|
80.8
|
|
||
Corporate and Other
|
0.1
|
|
|
|
0.4
|
|
||
Black Knight Subtotal
|
852.1
|
|
|
|
744.8
|
|
||
Transaction Services
|
—
|
|
|
|
971.4
|
|
||
Total
|
$
|
852.1
|
|
|
|
$
|
1,716.2
|
|
|
Year ended December 31,
|
|||||||
|
2014
|
|
|
2013
|
||||
|
(In millions)
|
|||||||
Technology
|
$
|
338.2
|
|
|
|
$
|
340.5
|
|
Data and Analytics
|
140.2
|
|
|
|
80.4
|
|
||
Corporate and Other
|
36.5
|
|
|
|
45.5
|
|
||
Black Knight Subtotal
|
514.9
|
|
|
|
466.4
|
|
||
Transaction Services
|
—
|
|
|
|
814.1
|
|
||
Total
|
$
|
514.9
|
|
|
|
$
|
1,280.5
|
|
|
Year ended December 31,
|
|||||||
|
2014
|
|
|
2013
|
||||
|
(In millions)
|
|||||||
Technology
|
$
|
171.3
|
|
|
|
$
|
75.8
|
|
Data and Analytics
|
13.7
|
|
|
|
4.6
|
|
||
Corporate and Other
|
3.8
|
|
|
|
3.2
|
|
||
Black Knight Subtotal
|
188.8
|
|
|
|
83.6
|
|
||
Transaction Services
|
—
|
|
|
|
20.4
|
|
||
Total
|
$
|
188.8
|
|
|
|
$
|
104.0
|
|
|
Year ended December 31,
|
|||||||
|
2014
|
|
|
2013
|
||||
|
(In millions)
|
|||||||
Technology
|
$
|
—
|
|
|
|
$
|
0.4
|
|
Data and Analytics
|
—
|
|
|
|
0.3
|
|
||
Corporate and Other
|
—
|
|
|
|
7.4
|
|
||
Black Knight Subtotal
|
—
|
|
|
|
8.1
|
|
||
Transaction Services
|
—
|
|
|
|
41.3
|
|
||
Total
|
$
|
—
|
|
|
|
$
|
49.4
|
|
|
Year ended December 31,
|
|||||||
|
2014
|
|
|
2013
|
||||
|
(In millions)
|
|||||||
Technology
|
$
|
182.3
|
|
|
|
$
|
246.9
|
|
Data and Analytics
|
1.7
|
|
|
|
(4.5
|
)
|
||
Corporate and Other
|
(154.9
|
)
|
|
|
(58.2
|
)
|
||
Black Knight Subtotal
|
29.1
|
|
|
|
184.2
|
|
||
Transaction Services
|
—
|
|
|
|
23.7
|
|
||
Total
|
$
|
29.1
|
|
|
|
$
|
207.9
|
|
|
Black Knight and BKFS LLC
|
|
|
LPS
|
||||||||||||
|
Year ended December 31,
|
|
|
Day ended January 1, 2014
|
|
Year ended December 31, 2013
|
||||||||||
|
2015
|
|
2014
|
|
|
|
||||||||||
|
(In millions)
|
|||||||||||||||
Cash flows from operating activities
|
$
|
248.2
|
|
|
$
|
19.4
|
|
|
|
$
|
(51.2
|
)
|
|
$
|
201.0
|
|
Cash flows from investing activities
|
(102.5
|
)
|
|
(65.4
|
)
|
|
|
—
|
|
|
(140.8
|
)
|
||||
Cash flows from financing activities
|
(21.6
|
)
|
|
107.9
|
|
|
|
—
|
|
|
33.2
|
|
||||
Net increase in cash and cash equivalents
|
$
|
124.1
|
|
|
$
|
61.9
|
|
|
|
$
|
(51.2
|
)
|
|
$
|
93.4
|
|
|
|
|
|
Payments due by period
|
||||||||||||||||
|
|
Total
|
|
2016
|
|
2017-2018
|
|
2019-2020
|
|
Thereafter
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Long-term debt
|
|
$
|
1,668.0
|
|
|
$
|
44.0
|
|
|
$
|
148.0
|
|
|
$
|
708.0
|
|
|
$
|
768.0
|
|
Interest on long-term debt(1)
|
|
340.4
|
|
|
59.0
|
|
|
113.5
|
|
|
96.5
|
|
|
71.4
|
|
|||||
Data processing and maintenance commitments
|
|
84.1
|
|
|
31.5
|
|
|
52.3
|
|
|
0.3
|
|
|
—
|
|
|||||
Operating lease payments
|
|
28.3
|
|
|
9.3
|
|
|
12.0
|
|
|
6.5
|
|
|
0.5
|
|
|||||
Other(2)
|
|
56.6
|
|
|
5.1
|
|
|
14.1
|
|
|
17.5
|
|
|
19.9
|
|
|||||
Total
|
|
$
|
2,177.4
|
|
|
$
|
148.9
|
|
|
$
|
339.9
|
|
|
$
|
828.8
|
|
|
$
|
859.8
|
|
(1)
|
These calculations assume that (a) applicable margins remain constant; (b) the Term A Loan variable rate debt is priced at the one-month LIBOR rate in effect as of December 31, 2015; (c) the Term B Loan variable rate debt is priced at the floor per the agreement (3.75%); (d) the Revolving Credit Facility is priced at the one-month LIBOR rate in effect as of December 31, 2015; (e) only mandatory debt repayments are made; and (f) no refinancing occurs at debt maturity.
|
(2)
|
Other includes the guarantee fee paid to FNF for their ongoing guarantee of our Senior Notes, commitment fees on our
|
Item 7A.
|
Quantitative and Qualitative Disclosure about Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
Page
Number
|
|
Successor
|
||||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
186.0
|
|
|
$
|
61.9
|
|
Trade receivables, net
|
134.9
|
|
|
132.5
|
|
||
Prepaid expenses and other current assets (inclusive of $0.2 and $0.6 of related party prepaid fees as of December 31, 2015 and 2014, respectively)
|
28.2
|
|
|
28.6
|
|
||
Receivables from related parties
|
7.6
|
|
|
7.7
|
|
||
Total current assets
|
356.7
|
|
|
230.7
|
|
||
Property and equipment, net
|
152.0
|
|
|
142.4
|
|
||
Computer software, net
|
466.5
|
|
|
487.8
|
|
||
Other intangible assets, net
|
330.2
|
|
|
416.6
|
|
||
Deferred income taxes, net
|
—
|
|
|
0.2
|
|
||
Goodwill
|
2,223.9
|
|
|
2,223.9
|
|
||
Other non-current assets
|
174.4
|
|
|
96.7
|
|
||
Total assets
|
$
|
3,703.7
|
|
|
$
|
3,598.3
|
|
LIABILITIES, REDEEMABLE MEMBERS' INTEREST AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
|
||
Trade accounts payable and other accrued liabilities
|
$
|
29.3
|
|
|
$
|
41.8
|
|
Accrued salaries and benefits
|
52.2
|
|
|
49.5
|
|
||
Legal and regulatory accrual
|
8.0
|
|
|
11.7
|
|
||
Current portion of long-term debt (all amounts due to related party as of December 31, 2014)
|
43.5
|
|
|
64.4
|
|
||
Accrued interest (inclusive of $0.1 due to related party as of December 31, 2014)
|
4.8
|
|
|
7.3
|
|
||
Deferred revenues
|
40.4
|
|
|
28.1
|
|
||
Total current liabilities
|
178.2
|
|
|
202.8
|
|
||
Deferred revenues
|
56.2
|
|
|
35.9
|
|
||
Deferred income taxes, net
|
4.7
|
|
|
—
|
|
||
Long-term debt, net of current portion (inclusive of $1,454.6 due to related party as of December 31, 2014)
|
1,618.0
|
|
|
2,070.7
|
|
||
Other non-current liabilities
|
1.6
|
|
|
1.2
|
|
||
Total liabilities
|
1,858.7
|
|
|
2,310.6
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
|
|
||
Redeemable members' interest
|
—
|
|
|
370.7
|
|
||
Equity:
|
|
|
|
|
|||
Class A common stock; $0.0001 par value; 350,000,000 shares authorized, 68,303,680 shares issued and outstanding as of December 31, 2015 and none as of December 31, 2014
|
—
|
|
|
—
|
|
||
Class B common stock; $0.0001 par value; 200,000,000 shares authorized, 84,826,282 shares issued and outstanding as of December 31, 2015 and none as of December 31, 2014
|
—
|
|
|
—
|
|
||
Preferred stock; $0.0001 par value; 25,000,000 shares authorized; none issued and outstanding
|
—
|
|
|
—
|
|
||
Contributed member capital
|
—
|
|
|
1,063.8
|
|
||
Additional paid-in capital
|
798.9
|
|
|
—
|
|
||
Accumulated deficit
|
—
|
|
|
(146.7
|
)
|
||
Retained earnings
|
19.9
|
|
|
—
|
|
||
Accumulated other comprehensive loss
|
(0.1
|
)
|
|
(0.1
|
)
|
||
Total shareholders' and members' equity
|
818.7
|
|
|
917.0
|
|
||
Noncontrolling interests
|
1,026.3
|
|
|
—
|
|
||
Total equity
|
1,845.0
|
|
|
917.0
|
|
||
Total liabilities, redeemable members' interest and equity
|
$
|
3,703.7
|
|
|
$
|
3,598.3
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
Year ended December 31,
|
|
|
Period from October 16, 2013 through December 31, 2013
|
||||||||
|
2015
|
|
2014
|
|
|
|||||||
|
|
|
|
|
|
|
||||||
Revenues (see Note 5 for related party transactions)
|
$
|
930.7
|
|
|
$
|
852.1
|
|
|
|
$
|
15.0
|
|
|
|
|
|
|
|
|
||||||
Expenses:
|
|
|
|
|
|
|
||||||
Operating expenses (see Note 5 for related party transactions)
|
538.2
|
|
|
514.9
|
|
|
|
16.9
|
|
|||
Depreciation and amortization
|
194.3
|
|
|
188.8
|
|
|
|
1.1
|
|
|||
Transition and integration costs (see Note 5 for related party transactions)
|
8.0
|
|
|
119.3
|
|
|
|
—
|
|
|||
Total expenses
|
740.5
|
|
|
823.0
|
|
|
|
18.0
|
|
|||
Operating income (loss)
|
190.2
|
|
|
29.1
|
|
|
|
(3.0
|
)
|
|||
|
|
|
|
|
|
|
||||||
Other income and expense:
|
|
|
|
|
|
|
||||||
Interest expense (see Note 5 for related party transactions)
|
(89.8
|
)
|
|
(128.7
|
)
|
|
|
—
|
|
|||
Other expense, net
|
(4.6
|
)
|
|
(12.0
|
)
|
|
|
—
|
|
|||
Total other expense, net
|
(94.4
|
)
|
|
(140.7
|
)
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Earnings (loss) from continuing operations before income taxes
|
95.8
|
|
|
(111.6
|
)
|
|
|
(3.0
|
)
|
|||
Income tax expense (benefit)
|
13.4
|
|
|
(5.3
|
)
|
|
|
—
|
|
|||
Net earnings (loss) from continuing operations
|
82.4
|
|
|
(106.3
|
)
|
|
|
(3.0
|
)
|
|||
Loss from discontinued operations, net of tax
|
—
|
|
|
(0.8
|
)
|
|
|
—
|
|
|||
Net earnings (loss)
|
82.4
|
|
|
(107.1
|
)
|
|
|
(3.0
|
)
|
|||
Less: Net earnings (loss) attributable to noncontrolling interests
|
62.4
|
|
|
(107.1
|
)
|
|
|
(3.0
|
)
|
|||
Net earnings attributable to Black Knight Financial Services, Inc.
|
$
|
20.0
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
Foreign currency translation adjustment
|
(0.1
|
)
|
|
(0.1
|
)
|
|
|
—
|
|
|||
Comprehensive earnings (loss) attributable to noncontrolling interests
|
62.4
|
|
|
(107.1
|
)
|
|
|
(3.0
|
)
|
|||
Comprehensive earnings (loss)
|
$
|
82.3
|
|
|
$
|
(107.2
|
)
|
|
|
$
|
(3.0
|
)
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
|
May 26, 2015 through December 31, 2015
|
|
|
|
|
|
||||||
Net earnings per share attributable to Black Knight Financial Services, Inc., Class A common shareholders:
|
|
|
|
|
|
|
||||||
Basic
|
$
|
0.31
|
|
|
|
|
|
|
||||
Diluted
|
$
|
0.29
|
|
|
|
|
|
|
||||
Weighted average shares of Class A common stock outstanding (see Note 4):
|
|
|
|
|
|
|
||||||
Basic
|
64.4
|
|
|
|
|
|
|
|||||
Diluted
|
67.9
|
|
|
|
|
|
|
|
Predecessor
|
||||||||||||||||||
|
Black Knight Financial Services, LLC
|
||||||||||||||||||
|
Contributed member capital
|
|
Accumulated deficit
|
|
Accumulated
other
comprehensive
loss
|
|
Total equity
|
|
Redeemable members' interest
|
||||||||||
Balance, October 16, 2013
|
$
|
118.4
|
|
|
$
|
(47.6
|
)
|
|
$
|
—
|
|
|
$
|
70.8
|
|
|
$
|
—
|
|
Net loss
|
—
|
|
|
(3.0
|
)
|
|
—
|
|
|
(3.0
|
)
|
|
—
|
|
|||||
Balance, December 31, 2013 and January 1, 2014
|
$
|
118.4
|
|
|
$
|
(50.6
|
)
|
|
$
|
—
|
|
|
$
|
67.8
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Successor
|
||||||||||||||||||
Balance, December 31, 2013 and January 1, 2014
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Contribution of Black Knight InfoServ, LLC from Fidelity National Financial, Inc.
|
2,792.9
|
|
|
—
|
|
|
—
|
|
|
2,792.9
|
|
|
—
|
|
|||||
Assumption of debt from Fidelity National Financial, Inc.
|
(1,858.0
|
)
|
|
—
|
|
|
—
|
|
|
(1,858.0
|
)
|
|
—
|
|
|||||
Contribution of Fidelity National Commerce Velocity, LLC from Fidelity National Financial, Inc.
|
62.2
|
|
|
(28.4
|
)
|
|
—
|
|
|
33.8
|
|
|
—
|
|
|||||
Contribution from Member (Thomas H. Lee Partners, L.P.)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
350.0
|
|
|||||
Return of Capital to Members
|
(9.5
|
)
|
|
—
|
|
|
—
|
|
|
(9.5
|
)
|
|
(7.4
|
)
|
|||||
Contribution of Property Insight, LLC from Fidelity National Financial, Inc.
|
95.0
|
|
|
1.8
|
|
|
—
|
|
|
96.8
|
|
|
—
|
|
|||||
Dividend of Property Insight, LLC assets to Fidelity National Financial, Inc.
|
—
|
|
|
(9.8
|
)
|
|
—
|
|
|
(9.8
|
)
|
|
—
|
|
|||||
Profits interest expense
|
6.1
|
|
|
—
|
|
|
—
|
|
|
6.1
|
|
|
—
|
|
|||||
Dividend profits interest to Fidelity National Financial, Inc. for awards granted to non-employees
|
3.2
|
|
|
(3.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Redemption values of profits interest grants
|
(28.1
|
)
|
|
—
|
|
|
—
|
|
|
(28.1
|
)
|
|
28.1
|
|
|||||
Net earnings (loss)
|
—
|
|
|
(107.1
|
)
|
|
—
|
|
|
(107.1
|
)
|
|
—
|
|
|||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
—
|
|
|||||
Balance, December 31, 2014
|
$
|
1,063.8
|
|
|
$
|
(146.7
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
917.0
|
|
|
$
|
370.7
|
|
|
Successor
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Black Knight Financial Services, LLC
|
|
Black Knight Financial Services, Inc.
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
Class A common stock
|
|
Class B common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
Contributed member capital
|
|
Accumulated deficit
|
|
Accumulated
other
comprehensive
loss
|
|
Shares
|
|
$
|
|
Shares
|
|
$
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated
other comprehensive loss |
|
Noncontrolling interests
|
|
Total equity
|
|
Redeemable members' interest
|
||||||||||||||||||||||||
Balance, December 31, 2014
|
$
|
1,063.8
|
|
|
$
|
(146.7
|
)
|
|
$
|
(0.1
|
)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
917.0
|
|
|
$
|
370.7
|
|
Profits interests expense
|
2.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|
—
|
|
|||||||||||
Redemption value of profits interests
|
(59.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(59.5
|
)
|
|
59.5
|
|
|||||||||||
Net earnings
|
—
|
|
|
21.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21.4
|
|
|
—
|
|
|||||||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|||||||||||
Balance, May 25, 2015, prior to organizational transactions and IPO
|
1,006.9
|
|
|
(125.3
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
881.4
|
|
|
430.2
|
|
|||||||||||
Issuance of Class A common stock, net of underwriters' discount and issuance costs
|
—
|
|
|
—
|
|
|
—
|
|
|
20.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
475.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
475.1
|
|
|
—
|
|
|||||||||||
Conversion of THL member interest into shares of Class A common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
39.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
319.4
|
|
|
—
|
|
|
—
|
|
|
12.7
|
|
|
332.1
|
|
|
(342.6
|
)
|
|||||||||||
Conversion of profits interests into restricted shares of Class A common stock
|
75.7
|
|
|
—
|
|
|
—
|
|
|
8.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
87.6
|
|
|
(87.6
|
)
|
|||||||||||
Issuance of Class B common stock to FNF and THL
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
84.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||||
Reclassification of FNF member capital to noncontrolling interests
|
(1,082.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,082.6
|
|
|
—
|
|
|
—
|
|
|||||||||||
Reclassification of accumulated deficit and accumulated other comprehensive loss
|
—
|
|
|
125.3
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15.5
|
)
|
|
—
|
|
|
—
|
|
|
(110.0
|
)
|
|
—
|
|
|
—
|
|
|||||||||||
Issuance of restricted shares of Class A common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.0
|
|
|
—
|
|
|||||||||||
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20.0
|
|
|
—
|
|
|
41.0
|
|
|
61.0
|
|
|
—
|
|
|||||||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|||||||||||
Tax distributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|||||||||||
Balance, December 31, 2015
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
68.3
|
|
|
$
|
—
|
|
|
84.8
|
|
|
$
|
—
|
|
|
$
|
798.9
|
|
|
$
|
19.9
|
|
|
$
|
(0.1
|
)
|
|
$
|
1,026.3
|
|
|
$
|
1,845.0
|
|
|
$
|
—
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
Year ended December 31,
|
|
|
Period from October 16, 2013 through December 31, 2013
|
||||||||
|
2015
|
|
2014
|
|
|
|||||||
|
|
|
|
|
||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|||||
Net earnings (loss)
|
$
|
82.4
|
|
|
$
|
(107.1
|
)
|
|
|
$
|
(3.0
|
)
|
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
194.3
|
|
|
188.8
|
|
|
|
1.1
|
|
|||
Amortization of debt issuance costs, bond premium and original issue discount
|
0.8
|
|
|
(2.1
|
)
|
|
|
—
|
|
|||
Loss on extinguishment of debt, net
|
4.8
|
|
|
—
|
|
|
|
—
|
|
|||
Deferred income taxes, net
|
11.8
|
|
|
0.1
|
|
|
|
—
|
|
|||
Equity-based compensation
|
11.4
|
|
|
6.4
|
|
|
|
—
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
|
||||||
Trade and other receivables, including receivables from related parties
|
(20.9
|
)
|
|
0.2
|
|
|
|
0.7
|
|
|||
Prepaid expenses and other assets
|
(6.4
|
)
|
|
(9.5
|
)
|
|
|
(0.7
|
)
|
|||
Deferred contract costs
|
(54.9
|
)
|
|
(42.5
|
)
|
|
|
—
|
|
|||
Deferred revenues
|
32.6
|
|
|
27.8
|
|
|
|
—
|
|
|||
Trade accounts payable and other accrued liabilities
|
(7.7
|
)
|
|
(42.7
|
)
|
|
|
—
|
|
|||
Net cash provided by (used in) operating activities
|
248.2
|
|
|
19.4
|
|
|
|
(1.9
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|||||
Additions to property and equipment
|
(45.6
|
)
|
|
(21.4
|
)
|
|
|
(0.2
|
)
|
|||
Additions to computer software
|
(50.1
|
)
|
|
(45.5
|
)
|
|
|
—
|
|
|||
Investment in property records database
|
(6.8
|
)
|
|
—
|
|
|
|
—
|
|
|||
Proceeds from sale of PCLender
|
—
|
|
|
1.5
|
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(102.5
|
)
|
|
(65.4
|
)
|
|
|
(0.2
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|||||
Borrowings, net of original issue discount
|
1,299.0
|
|
|
88.0
|
|
|
|
—
|
|
|||
Debt service payments
|
(1,745.9
|
)
|
|
(432.2
|
)
|
|
|
—
|
|
|||
Proceeds from issuance of Class A common stock, before offering expenses
|
479.3
|
|
|
—
|
|
|
|
—
|
|
|||
Costs directly associated with issuance of Class A common stock
|
(4.2
|
)
|
|
—
|
|
|
|
—
|
|
|||
Debt issuance costs
|
(20.6
|
)
|
|
—
|
|
|
|
—
|
|
|||
Senior notes call premium
|
(11.8
|
)
|
|
—
|
|
|
|
—
|
|
|||
Contribution from Thomas H. Lee Partners, LP
|
—
|
|
|
350.0
|
|
|
|
—
|
|
|||
Cash from contribution of Black Knight InfoServ, LLC
|
—
|
|
|
61.4
|
|
|
|
|
||||
Net proceeds from sale of National Title Insurance of New York, Inc. to Fidelity National Financial, Inc.
|
—
|
|
|
50.2
|
|
|
|
—
|
|
|||
Cash from contribution of Fidelity National Commerce Velocity, LLC from Fidelity National Financial, Inc.
|
—
|
|
|
0.7
|
|
|
|
—
|
|
|||
Cash from contribution of Property Insight, LLC from Fidelity National Financial, Inc.
|
—
|
|
|
6.7
|
|
|
|
—
|
|
|||
Distributions to members
|
(17.4
|
)
|
|
(16.9
|
)
|
|
|
—
|
|
|||
Net cash (used in) provided by financing activities
|
(21.6
|
)
|
|
107.9
|
|
|
|
—
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
124.1
|
|
|
61.9
|
|
|
|
(2.1
|
)
|
|||
Cash and cash equivalents, beginning of period
|
61.9
|
|
|
—
|
|
|
|
9.5
|
|
|||
Cash and cash equivalents, end of period
|
$
|
186.0
|
|
|
$
|
61.9
|
|
|
|
$
|
7.4
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|||||
Interest paid
|
$
|
(89.2
|
)
|
|
$
|
(131.8
|
)
|
|
|
$
|
—
|
|
Income taxes refunded, net
|
$
|
0.2
|
|
|
$
|
30.7
|
|
|
|
$
|
—
|
|
(1)
|
Basis of Presentation
|
•
|
Successor - Represents the consolidated financial position, results of operations and cash flows of (1) Black Knight for the period from May 26, 2015, the date we completed our IPO, through December 31, 2015 and (2) BKFS LLC for the period from January 2, 2014 through May 25, 2015, the day prior to the IPO. The 2014 results of the Successor have been defined to be the time period starting on January 2, 2014, the date on which BKIS came under the common control of FNF, through December 31, 2014. Successor-related transactions occurring on January 2, 2014, including transaction costs of
$42.7 million
, are included in the Successor results. Immaterial results of the Predecessor on January 1, 2014 are included in the Successor results for the year ended December 31, 2014.
|
•
|
Predecessor - Represents the combined financial position, results of operations and cash flows of BKFS LLC prior to the Acquisition and related contribution of BKIS. These combined financial statements reflect the activity and operations of BKFS LLC, Commerce Velocity and Property Insight, and are presented using FNF historical basis of accounting.
|
•
|
our mortgage servicing platform ("MSP"), which is a software as a service ("SaaS") application that automates loan servicing, including loan setup and ongoing processing, customer service, accounting and reporting to the secondary mortgage market and investor reporting;
|
•
|
our mortgage origination solutions, Empower and LendingSpace, which automate and facilitate retail, wholesale and correspondent loan originations;
|
•
|
our collaborative electronic vendor network, RealEC Exchange, and our Insight suite of products, which help lenders to meet loan quality and transparency requirements;
|
•
|
our data and analytics businesses, the most significant of which are our alternative property valuations business, which provides a range of valuations other than traditional appraisals, and our aggregated property, loan and tax data services.
|
•
|
the amendment and restatement of our certificate of incorporation to authorize the issuance of
two
classes of common stock, Class A and Class B, which generally vote as a single class on all matters submitted for a vote to shareholders;
|
•
|
the issuance of shares of Class B common stock by us to FNF and certain Thomas H. Lee Partners, L.P. ("THL") affiliates ("THL Affiliates"), former holders of membership interests in BKFS LLC ("Units"). Class B common stock is neither registered nor publicly traded and does not entitle the holders thereof to any of the economic rights, including rights to dividends and distributions upon liquidation, that would be provided to holders of Class A common stock; and the total voting power of the Class B common stock is equal to the percentage of Units not held by us;
|
•
|
the issuance of shares of Class A common stock and a
$17.3 million
cash payment to certain THL Affiliates, in connection with the merger of certain THL affiliated entities (the "THL Intermediaries") with and into us, pursuant to which we acquired the Units held by the THL Intermediaries.
|
•
|
the issuance of shares of Class A common stock by Black Knight to the investors in the IPO;
|
•
|
the contribution by us of the net cash proceeds received in the IPO to BKFS LLC in exchange for
44.5%
of the Units and a managing member’s membership interest in BKFS LLC;
|
•
|
the conversion of all outstanding equity incentive awards in the form of profits interests in BKFS LLC into restricted shares of our Class A common stock; and
|
•
|
the restatement of the limited liability company agreement ("LLC Agreement") to provide for the governance and control of BKFS LLC by Black Knight as its managing member and to establish the terms upon which other holders of Units may exchange their Units, and a corresponding number of shares of Class B common stock for, at our option, shares of Class A common stock on a
one
-for-one basis or a cash payment from BKFS LLC.
|
Gross proceeds
|
|
$
|
507.2
|
|
Less:
|
|
|
||
Underwriters' discount
|
|
27.9
|
|
|
IPO-related expenses
|
|
4.2
|
|
|
Partial redemption of 5.75% Senior Notes due 2023 (Note 10)
|
|
204.8
|
|
|
Call premium on partial redemption of 5.75% Senior Notes due 2023
|
|
11.8
|
|
|
Interest on partial redemption of 5.75% Senior Notes due 2023
|
|
1.4
|
|
|
Cash payment to THL Intermediaries
|
|
17.3
|
|
|
Partial repayment of principal on other outstanding long-term debt
|
|
203.0
|
|
|
Refinancing expenses
|
|
20.6
|
|
|
Cash to balance sheet
|
|
16.2
|
|
|
Unused proceeds
|
|
$
|
—
|
|
(2)
|
Acquisition and Internal Reorganization by FNF and Other Transactions
|
Cash and cash equivalents
|
$
|
61.4
|
|
Trade receivables
|
99.2
|
|
|
Income tax receivable
|
26.9
|
|
|
Prepaid expenses and other assets, including indefinite lived intangible assets
|
187.7
|
|
|
Property and equipment
|
140.4
|
|
|
Computer software
|
490.2
|
|
|
Other intangible assets
|
504.9
|
|
|
Deferred income taxes, net
|
0.3
|
|
|
Goodwill
|
2,152.3
|
|
|
Total assets
|
3,663.3
|
|
|
Long-term debt
|
623.3
|
|
|
Deferred revenues
|
35.8
|
|
|
Legal and regulatory accrual
|
14.0
|
|
|
Other liabilities
|
197.3
|
|
|
Total liabilities
|
870.4
|
|
|
Net assets
|
$
|
2,792.9
|
|
(3)
|
Significant Accounting Policies
|
•
|
Level 1 inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access.
|
•
|
Level 2 inputs to the valuation methodology include:
|
◦
|
quoted prices for similar assets or liabilities in active markets;
|
◦
|
quoted prices for identical or similar assets or liabilities in inactive markets;
|
◦
|
inputs other than quoted prices that are observable for the asset or liability; and
|
◦
|
inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
•
|
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Trade receivables — billed
|
$
|
102.7
|
|
|
$
|
86.9
|
|
Trade receivables — unbilled
|
34.7
|
|
|
47.2
|
|
||
Total trade receivables
|
137.4
|
|
|
134.1
|
|
||
Allowance for doubtful accounts
|
(2.5
|
)
|
|
(1.6
|
)
|
||
Total trade receivables, net
|
$
|
134.9
|
|
|
$
|
132.5
|
|
|
|
Beginning balance
|
|
Bad debt expense
|
|
Write-offs, net of recoveries
|
|
Transfers and acquisitions
|
|
Ending balance
|
||||||||||
Period from October 16, 2013 through December 31, 2013 (Predecessor)
|
|
$
|
(0.1
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.2
|
)
|
Year ended December 31, 2014 (Successor)
|
|
$
|
—
|
|
|
$
|
(1.5
|
)
|
|
$
|
0.1
|
|
|
$
|
(0.2
|
)
|
|
$
|
(1.6
|
)
|
Year ended December 31, 2015 (Successor)
|
|
$
|
(1.6
|
)
|
|
$
|
(2.1
|
)
|
|
$
|
1.1
|
|
|
$
|
0.1
|
|
|
$
|
(2.5
|
)
|
|
May 26, 2015 through December 31, 2015
|
||
Basic:
|
|
||
Net earnings attributable to Black Knight
|
$
|
20.0
|
|
Shares used for basic net earnings per share:
|
|
||
Weighted average shares of Class A common stock outstanding
|
64.4
|
|
|
Basic net earnings per share
|
$
|
0.31
|
|
|
|
||
Diluted:
|
|
||
Net earnings attributable to Black Knight
|
$
|
20.0
|
|
Shares used for diluted net earnings per share:
|
|
||
Weighted average shares of Class A common stock outstanding
|
64.4
|
|
|
Dilutive effect of unvested restricted shares of Class A common stock
|
3.5
|
|
|
Weighted average shares of Class A common stock, diluted
|
67.9
|
|
|
Diluted net earnings per share
|
$
|
0.29
|
|
|
Year ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in millions)
|
||||||
Operating expenses
|
$
|
1.6
|
|
|
$
|
1.6
|
|
Management fees(1)
|
1.3
|
|
|
3.2
|
|
||
Software and software-related purchases
|
1.4
|
|
|
2.2
|
|
|
Year ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in millions)
|
||||||
Data and analytics services
|
$
|
48.1
|
|
|
$
|
55.4
|
|
Servicing, origination and default technology services
|
20.4
|
|
|
16.4
|
|
||
Total related party revenues
|
$
|
68.5
|
|
|
$
|
71.8
|
|
|
Year ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in millions)
|
||||||
Data entry, indexing services and other operating expenses
|
$
|
8.7
|
|
|
$
|
11.8
|
|
Corporate services
|
8.8
|
|
|
12.4
|
|
||
Technology and corporate services
|
(7.9
|
)
|
|
(25.9
|
)
|
||
Total related party expenses, net
|
$
|
9.6
|
|
|
$
|
(1.7
|
)
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Land
|
$
|
11.9
|
|
|
$
|
11.9
|
|
Buildings
|
62.3
|
|
|
61.4
|
|
||
Leasehold improvements
|
4.7
|
|
|
3.6
|
|
||
Computer equipment
|
128.8
|
|
|
95.4
|
|
||
Furniture, fixtures and other equipment
|
6.1
|
|
|
4.4
|
|
||
Property and equipment
|
213.8
|
|
|
176.7
|
|
||
Accumulated depreciation and amortization
|
(61.8
|
)
|
|
(34.3
|
)
|
||
Property and equipment, net
|
$
|
152.0
|
|
|
$
|
142.4
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Internally developed software
|
$
|
578.1
|
|
|
$
|
536.3
|
|
Purchased software
|
37.8
|
|
|
30.8
|
|
||
Computer software
|
615.9
|
|
|
567.1
|
|
||
Accumulated amortization
|
(149.4
|
)
|
|
(79.3
|
)
|
||
Computer software, net
|
$
|
466.5
|
|
|
$
|
487.8
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
|
|
Gross Carrying
Amount |
|
Accumulated
Amortization |
|
Net Carrying
Amount |
|
Gross Carrying
Amount |
|
Accumulated
Amortization |
|
Net Carrying
Amount |
||||||||||||
Customer relationships
|
|
$
|
514.8
|
|
|
$
|
(186.3
|
)
|
|
$
|
328.5
|
|
|
$
|
514.8
|
|
|
$
|
(105.3
|
)
|
|
$
|
409.5
|
|
Other
|
|
9.8
|
|
|
(8.1
|
)
|
|
1.7
|
|
|
9.8
|
|
|
(2.7
|
)
|
|
7.1
|
|
||||||
Total intangible assets
|
|
$
|
524.6
|
|
|
$
|
(194.4
|
)
|
|
$
|
330.2
|
|
|
$
|
524.6
|
|
|
$
|
(108.0
|
)
|
|
$
|
416.6
|
|
2016
|
$
|
76.3
|
|
2017
|
65.1
|
|
|
2018
|
54.7
|
|
|
2019
|
44.7
|
|
|
2020
|
34.8
|
|
|
Successor
|
||||||||||||||
|
Technology
|
|
Data and Analytics
|
|
Corporate and Other
|
|
Total
|
||||||||
Balance, January 1, 2014
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Increases to goodwill related to:
|
|
|
|
|
|
|
|
||||||||
Contribution of BKIS from FNF
|
2,045.6
|
|
|
106.7
|
|
|
—
|
|
|
2,152.3
|
|
||||
Contribution of Commerce Velocity from FNF
|
25.8
|
|
|
—
|
|
|
—
|
|
|
25.8
|
|
||||
Contribution of Property Insight from FNF
|
—
|
|
|
66.5
|
|
|
—
|
|
|
66.5
|
|
||||
Decreases to goodwill related to:
|
|
|
|
|
|
|
|
||||||||
Sale of NTNY to Chicago Title Insurance Company
|
(19.4
|
)
|
|
—
|
|
|
—
|
|
|
(19.4
|
)
|
||||
Sale of PCLender
|
(1.3
|
)
|
|
—
|
|
|
—
|
|
|
(1.3
|
)
|
||||
Balance, December 31, 2014
|
$
|
2,050.7
|
|
|
$
|
173.2
|
|
|
$
|
—
|
|
|
$
|
2,223.9
|
|
Activity
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Balance, December 31, 2015
|
$
|
2,050.7
|
|
|
$
|
173.2
|
|
|
$
|
—
|
|
|
$
|
2,223.9
|
|
|
December 31,
|
||||||||||||||||||||||||||
|
2015
|
|
2014
|
||||||||||||||||||||||||
|
Principal
|
|
Debt Issuance Costs
|
|
Premium (Discount)
|
|
Total
|
|
Principal
|
|
Premium
|
|
Total
|
||||||||||||||
Term A Loan
|
$
|
780.0
|
|
|
$
|
(9.4
|
)
|
|
$
|
—
|
|
|
$
|
770.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Term B Loan
|
398.0
|
|
|
(3.9
|
)
|
|
(0.9
|
)
|
|
393.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Revolving Credit Facility
|
100.0
|
|
|
(4.8
|
)
|
|
—
|
|
|
95.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Intercompany Notes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
699.0
|
|
|
—
|
|
|
699.0
|
|
|||||||
Mirror Note Tranche "T"
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
644.0
|
|
|
—
|
|
|
644.0
|
|
|||||||
Mirror Note Tranche "R"
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
176.0
|
|
|
—
|
|
|
176.0
|
|
|||||||
Senior Notes, issued at par
|
390.0
|
|
|
—
|
|
|
12.5
|
|
|
402.5
|
|
|
594.9
|
|
|
21.2
|
|
|
616.1
|
|
|||||||
Total long-term debt
|
1,668.0
|
|
|
(18.1
|
)
|
|
11.6
|
|
|
1,661.5
|
|
|
2,113.9
|
|
|
21.2
|
|
|
2,135.1
|
|
|||||||
Less: Current portion of long-term debt
|
44.0
|
|
|
(0.5
|
)
|
|
—
|
|
|
43.5
|
|
|
64.4
|
|
|
—
|
|
|
64.4
|
|
|||||||
Long-term debt, net of current portion
|
$
|
1,624.0
|
|
|
$
|
(17.6
|
)
|
|
$
|
11.6
|
|
|
$
|
1,618.0
|
|
|
$
|
2,049.5
|
|
|
$
|
21.2
|
|
|
$
|
2,070.7
|
|
Payment Dates
|
|
Percentage
|
September 30, 2015 through and including June 30, 2017
|
|
1.25%
|
Commencing on September 30, 2017 through and including June 30, 2019
|
|
2.50%
|
Commencing on September 30, 2019 through and including March 31, 2020
|
|
3.75%
|
2016
|
$
|
44.0
|
|
2017
|
64.0
|
|
|
2018
|
84.0
|
|
|
2019
|
104.0
|
|
|
2020
|
604.0
|
|
|
Thereafter
|
768.0
|
|
|
Total
|
$
|
1,668.0
|
|
2016
|
$
|
9.3
|
|
2017
|
7.2
|
|
|
2018
|
4.8
|
|
|
2019
|
3.9
|
|
|
2020
|
2.6
|
|
|
Thereafter
|
0.5
|
|
|
Total
|
$
|
28.3
|
|
2016
|
$
|
31.5
|
|
2017
|
29.0
|
|
|
2018
|
23.3
|
|
|
2019
|
0.2
|
|
|
2020
|
0.1
|
|
|
Thereafter
|
—
|
|
|
Total
|
$
|
84.1
|
|
|
Shares
|
|
Weighted Averaged Grant Date Fair Value
|
|||
Balance December 31, 2014
|
—
|
|
|
$
|
—
|
|
Converted
|
7,994,215
|
|
|
*
|
|
|
Granted
|
318,000
|
|
|
$
|
32.37
|
|
Forfeited
|
(16,850
|
)
|
|
*
|
|
|
Vested
|
(4,381,021
|
)
|
|
*
|
|
|
Balance December 31, 2015
|
3,914,344
|
|
|
|
*
|
The converted shares were originally BKFS LLC profits interests units with a weighted average grant date fair value of
$2.10
per unit. The fair value of the restricted shares at the date of conversion, May 20, 2015, was
$24.50
per share. The original grant date fair value of the forfeited and vested restricted shares, which were originally granted as profits interests units, was
$2.01
per unit.
|
|
Year ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
Current:
|
|
|
|
||||
Federal
|
$
|
0.5
|
|
|
$
|
(5.3
|
)
|
State
|
0.7
|
|
|
0.1
|
|
||
Foreign
|
0.4
|
|
|
—
|
|
||
Total current
|
1.6
|
|
|
(5.2
|
)
|
||
|
|
|
|
||||
Deferred:
|
|
|
|
||||
Federal
|
$
|
11.3
|
|
|
$
|
(0.1
|
)
|
State
|
0.5
|
|
|
—
|
|
||
Total deferred
|
11.8
|
|
|
(0.1
|
)
|
||
Total income tax expense (benefit)
|
$
|
13.4
|
|
|
$
|
(5.3
|
)
|
|
Year ended December 31,
|
||||
|
2015
|
|
2014
|
||
Federal statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
1.3
|
%
|
|
—
|
%
|
Noncontrolling interests
|
(14.9
|
)%
|
|
—
|
%
|
Partnership income not subject to tax
|
(7.7
|
)%
|
|
(22.2
|
)%
|
Tax credits
|
(0.3
|
)%
|
|
—
|
%
|
Transaction costs
|
—
|
%
|
|
(8.1
|
)%
|
Other
|
0.6
|
%
|
|
—
|
%
|
Effective tax rate
|
14.0
|
%
|
|
4.7
|
%
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryovers
|
$
|
10.1
|
|
|
$
|
—
|
|
Tax credit carryovers
|
0.7
|
|
|
—
|
|
||
Other
|
0.2
|
|
|
0.2
|
|
||
Total deferred tax asset
|
$
|
11.0
|
|
|
$
|
0.2
|
|
Deferred tax liabilities:
|
|
|
|
||||
Partnership basis
|
$
|
(15.6
|
)
|
|
$
|
—
|
|
Other - Foreign
|
(0.1
|
)
|
|
—
|
|
||
Total deferred tax liabilities
|
$
|
(15.7
|
)
|
|
$
|
—
|
|
Net deferred tax (liability) asset
|
$
|
(4.7
|
)
|
|
$
|
0.2
|
|
•
|
Technology -
offers software and hosting solutions that support loan servicing, which include core mortgage servicing, specialty mortgage servicing, loan origination and settlement services.
|
•
|
Data and Analytics -
offers solutions to enhance and support our technology products in the mortgage, real estate and capital markets industries. These solutions include property ownership data, lien data, servicing data, automated valuation models, collateral risk scores, prepayment and default models, lead generation and other data solutions. Our data sets represent metropolitan statistical areas that cover 99.99% of the U.S. population and 96% of all mortgage transactions according to 2012 U.S. census data.
|
|
Technology
|
|
Data and Analytics
|
|
Corporate and Other
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Revenues
|
$
|
756.2
|
|
|
$
|
174.3
|
|
|
$
|
0.2
|
|
|
$
|
930.7
|
|
Operating expenses (1)
|
341.4
|
|
|
145.5
|
|
|
51.3
|
|
|
538.2
|
|
||||
Depreciation and amortization
|
176.4
|
|
|
13.9
|
|
|
4.0
|
|
|
194.3
|
|
||||
Transition and integration costs
|
—
|
|
|
—
|
|
|
8.0
|
|
|
8.0
|
|
||||
Operating income (loss)
|
238.4
|
|
|
14.9
|
|
|
(63.1
|
)
|
|
190.2
|
|
||||
Interest expense
|
0.7
|
|
|
—
|
|
|
(90.5
|
)
|
|
(89.8
|
)
|
||||
Other income (expense)
|
0.1
|
|
|
—
|
|
|
(4.7
|
)
|
|
(4.6
|
)
|
||||
Earnings (loss) from continuing operations before income taxes
|
239.2
|
|
|
14.9
|
|
|
(158.3
|
)
|
|
95.8
|
|
||||
Income tax expense
|
0.5
|
|
|
—
|
|
|
12.9
|
|
|
13.4
|
|
||||
Earnings (loss) from continuing operations
|
$
|
238.7
|
|
|
$
|
14.9
|
|
|
$
|
(171.2
|
)
|
|
$
|
82.4
|
|
Balance sheet data:
|
|
|
|
|
|
|
|
||||||||
Total assets
|
$
|
3,125.8
|
|
|
$
|
308.4
|
|
|
$
|
269.5
|
|
|
$
|
3,703.7
|
|
Goodwill
|
$
|
2,050.7
|
|
|
$
|
173.2
|
|
|
$
|
—
|
|
|
$
|
2,223.9
|
|
|
Technology
|
|
Data and Analytics
|
|
Corporate and Other
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Revenues
|
$
|
695.5
|
|
|
$
|
156.5
|
|
|
$
|
0.1
|
|
|
$
|
852.1
|
|
Operating expenses (1)
|
338.2
|
|
|
140.2
|
|
|
36.5
|
|
|
514.9
|
|
||||
Depreciation and amortization
|
171.3
|
|
|
13.7
|
|
|
3.8
|
|
|
188.8
|
|
||||
Transition and integration costs
|
3.7
|
|
|
0.9
|
|
|
114.7
|
|
|
119.3
|
|
||||
Operating income (loss)
|
182.3
|
|
|
1.7
|
|
|
(154.9
|
)
|
|
29.1
|
|
||||
Interest expense
|
—
|
|
|
—
|
|
|
(128.7
|
)
|
|
(128.7
|
)
|
||||
Other income (expense)
|
0.8
|
|
|
0.1
|
|
|
(12.9
|
)
|
|
(12.0
|
)
|
||||
Earnings (loss) from continuing operations before income taxes
|
183.1
|
|
|
1.8
|
|
|
(296.5
|
)
|
|
(111.6
|
)
|
||||
Income tax expense (benefit)
|
0.6
|
|
|
—
|
|
|
(5.9
|
)
|
|
(5.3
|
)
|
||||
Earnings (loss) from continuing operations
|
$
|
182.5
|
|
|
$
|
1.8
|
|
|
$
|
(290.6
|
)
|
|
$
|
(106.3
|
)
|
Balance sheet data:
|
|
|
|
|
|
|
|
||||||||
Total assets
|
$
|
3,150.4
|
|
|
$
|
297.4
|
|
|
$
|
150.5
|
|
|
$
|
3,598.3
|
|
Goodwill
|
$
|
2,050.7
|
|
|
$
|
173.2
|
|
|
$
|
—
|
|
|
$
|
2,223.9
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
|
Page
Number
|
|
Black Knight Financial Services, Inc.
|
|
|
|
By:
|
/s/ Thomas J. Sanzone
|
|
|
|
Thomas J. Sanzone
|
|
|
|
President and Chief Executive Officer
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
|
||||
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Thomas J. Sanzone
|
|
President and Chief Executive Officer
|
|
February 26, 2016
|
Thomas J. Sanzone
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Kirk T. Larsen
|
|
Executive Vice President and Chief Financial Officer
|
|
February 26, 2016
|
Kirk T. Larsen
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ William P. Foley, II
|
|
Director and Executive Chairman of the Board
|
|
February 26, 2016
|
William P. Foley, II
|
|
|
|
|
|
|
|
|
|
/s/ Thomas M. Hagerty
|
|
Director
|
|
February 26, 2016
|
Thomas M. Hagerty
|
|
|
|
|
|
|
|
|
|
/s/ David K. Hunt
|
|
Director
|
|
February 26, 2016
|
David K. Hunt
|
|
|
|
|
|
|
|
|
|
/s/ Richard N. Massey
|
|
Director
|
|
February 26, 2016
|
Richard N. Massey
|
|
|
|
|
|
|
|
|
|
/s/ Ganesh B. Rao
|
|
Director
|
|
February 26, 2016
|
Ganesh B. Rao
|
|
|
|
|
|
|
|
|
|
/s/ John D. Rood
|
|
Director
|
|
February 26, 2016
|
John D. Rood
|
|
|
|
|
|
|
|
|
|
Exhibit Number
|
|
|
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Description
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3.1
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Amended and Restated Certificate of Incorporation of Black Knight Financial Services, Inc., as currently in effect (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by Black Knight Financial Services, Inc. on May 28, 2015 (No. 001-37394))
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3.2
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Amended and Restated Bylaws of Black Knight Financial Services, Inc., as currently in effect (incorporated by reference to Exhibit 3.2 to the Form 8-K filed by Black Knight Financial Services, Inc. on May 28, 2015 (No. 001-37394))
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4.1
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Form of Certificate of Class A common stock (incorporated by reference to Exhibit 4.1 to Amendment No. 4 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on May 4, 2015 (No. 333-201241))
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4.2
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Form of Registration Rights Agreement by and among Black Knight Financial Services, Inc., Black Knight Holdings, Inc., the THL Parties, Chicago Title Insurance Company, Fidelity National Title Insurance Company, Holders, Other Stockholders and, solely in respect of Section 4.16 thereof, Black Knight Financial Services, LLC (incorporated by reference to Exhibit 4.2 to Amendment No. 2 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on March 30, 2015 (No. 333-201241))
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4.3
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Indenture between Lender Processing Services, Inc., dated October 12, 2012, the guarantors party thereto and U.S. Bank National Association, as Trustee, relating to the 5.75% Senior Notes due 2023 (incorporated by reference to Exhibit 4.3 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on December 23, 2014 (No. 333-201241))
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4.4
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Supplemental Indenture, dated as of January 2, 2014, by and among Lender Processing Services, Inc., Black Knight Lending Solutions, Inc., Fidelity National Financial Inc. and U.S. Bank National Association, as Trustee, relating to the 5.75% Senior Notes due 2023 (incorporated by reference to Exhibit 4.4 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on December 23, 2014 (No. 333-201241))
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4.5
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Second Supplemental Indenture, dated as of February 7, 2014, by and among Black Knight InfoServ, LLC, Black Knight Lending Solutions, Inc. and U.S. Bank National Association, as Trustee, relating to the 5.75% Senior Notes due 2023 (incorporated by reference to Exhibit 4.5 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on December 23, 2014 (No. 333-201241))
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4.6
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Third Supplemental Indenture, dated as of May 27, 2015, by and among Black Knight InfoServ, LLC, Black Knight Lending Solutions, Inc., the Guarantors Party Thereto and U.S. National Bank Association, as Trustee, relating to the 5.75% Senior Notes due 2023 (incorporated by reference to Exhibit 10.2 to the Form 8-K filed by Black Knight Financial Services, Inc. on May 28, 2015 (No. 001-37394))
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10.1
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Form of Second Amended and Restated Limited Liability Company Agreement of Black Knight Financial Services, LLC, by and among, Black Knight Financial Services, Inc. and the Other Parties Thereto (incorporated by reference to Exhibit 10.1 to Amendment No.6 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on May 11, 2015 (No. 333-201241))
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10.2
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Form of Voting Agreement of Black Knight Financial Services, Inc. by and among Black Knight Financial Services, Inc., Black Knight Financial Services LLC, Chicago Title Insurance Company, Fidelity National Title Insurance Company, Black Knight Holdings, Inc., THL Equity Fund VI Investors (BKFS-LM), LLC, THL Equity Fund VI Investors (BKFS-NB), the THL Blocker I Stockholders, the THL Blocker II Stockholders and THL Equity Fund VI Investors (BKFS) III, L.P. (incorporated by reference to Exhibit 10.1 to Amendment No.4 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on May 4, 2015 (No. 333-201241))
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10.3
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Form of Merger Agreement by and among Black Knight Financial Services, Inc., THL Black Knight I Holding Corp., THL Investors Black Knight I Holding Corp., the THL Blocker I Stockholders and the THL Blocker II Stockholders (incorporated by reference to Exhibit 10.3 to Amendment No.6 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on May 11, 2015 (No. 333-201241))
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10.4
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Form of Advancement Agreement by and between Black Knight Financial Services, Inc. and Black Knight Financial Services, LLC (incorporated by reference to Exhibit 10.1 to Amendment No.2 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on March 30, 2015 (No. 333-201241))
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10.5
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Credit and Guaranty Agreement, dated as of May 27, 2015, among Black Knight Infoserv, LLC, as Borrower, Black Knight Financial Services, LLC, as Holdings, the Subsidiaries of the Borrower from time to time party thereto, the Lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer and Bank of America, N.A., as a Swing Line Lender and L/C Issuer (incorporated by reference to Exhibit 10.1 to Form 8-K filed by Black Knight Financial Services, Inc. on May 28, 2015 (No. 001-37394))
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10.6
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Amended and Restated Employment Agreement by and between William P. Foley, II and BKFS I Management, Inc. dated January 8, 2016 (1)
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10.7
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Amended and Restated Employment Agreement by and between Thomas J. Sanzone and BKFS I Management, Inc. dated January 3, 2014 (incorporated by reference to Exhibit 10.10 to Amendment No. 3 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on April 20, 2015 (No. 333-201241)) (1)
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10.8
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Amended and Restated Employment Agreement by and between Kirk T. Larsen and BKFS I Management, Inc. dated April 23, 2015 (incorporated by reference to Exhibit 10.11 to Amendment No. 4 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on May 4, 2015 (No. 333-201241)) (1)
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10.9
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Black Knight Financial Services, LLC Incentive Plan dated January 1, 2014 (incorporated by reference to Exhibit 10.12 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on December 23, 2014 (No. 333-201241)) (1)
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10.10
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Black Knight Financial Services, LLC 2013 Management Incentive Plan (incorporated by reference to Exhibit 10.13 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on December 23, 2014 (No. 333-201241)) (1)
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10.11
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Amended and Restated Employment Agreement by and between Anthony Orefice and BKFS I Management, Inc. dated January 3, 2014 (incorporated by reference to Exhibit 10.14 to Amendment No. 3 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on April 20, 2015 (No. 333-201241)) (1)
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10.12
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Amendment to Employment Agreement by and between Anthony Orefice and BKFS I Management, Inc. effective as of September 2, 2014 (incorporated by reference to Exhibit 10.15 to Amendment No. 3 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on April 20, 2015 (No. 333-201241)) (1)
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10.13
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Employment Agreement by and between BKFS I Management, Inc. and Michael L. Gravelle, effective as of March 1, 2015 (incorporated by reference to Exhibit 10.16 to Amendment No. 3 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on April 20, 2015 (No. 333-201241)) (1)
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10.14
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Fidelity National Financial, Inc. Deferred Compensation Plan, as Amended and Restated, effective January 1, 2009 (incorporated by reference to 10.17 to Amendment No. 1 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on February 17, 2015 (No. 333-201241)) (1)
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10.15
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First Amendment to the Fidelity National Financial, Inc. Deferred Compensation Plan, effective February 1, 2012 (incorporated by reference to 10.18 to Amendment No. 1 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on February 17, 2015 (No. 333-201241)) (1)
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10.16
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Form of Black Knight Financial Services, Inc. 2015 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.19 to Amendment No. 3 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on April 20, 2015 (No. 333-201241)) (1)
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10.17
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Cross-Indemnity Agreement by and between Black Knight Financial Services, LLC and ServiceLink Holdings, LLC dated as of December 22, 2014 (incorporated by reference to 10.20 to Amendment No. 2 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on March 30, 2015 (No. 333-201241))
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10.18
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Black Knight Financial Services, LLC Unit Grant Agreement by and between William P. Foley II and Black Knight Financial Services, LLC dated January 9, 2014 (incorporated by reference to Exhibit 10.21 to Amendment No. 3 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on April 20, 2015 (No. 333-201241)) (1)
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10.19
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Black Knight Financial Services, LLC Unit Grant Agreement by and between Thomas J. Sanzone and Black Knight Financial Services, LLC dated October 29, 2014 (incorporated by reference to Exhibit 10.22 to Amendment No. 3 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on April 20, 2015 (No. 333-201241)) (1)
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10.20
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Black Knight Financial Services, LLC Unit Grant Agreement by and between Thomas J. Sanzone and Black Knight Financial Services, LLC dated January 9, 2014 (incorporated by reference to Exhibit 10.23 to Amendment No. 3 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on April 20, 2015 (No. 333-201241)) (1)
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10.21
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Black Knight Financial Services, LLC Unit Grant Agreement by and between Michael L. Gravelle and Black Knight Financial Services, LLC dated January 9, 2014 (incorporated by reference to Exhibit 10.24 to Amendment No. 3 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on April 20, 2015 (No. 333-201241)) (1)
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10.22
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Black Knight Financial Services, LLC Unit Grant Agreement by and between Kirk T. Larsen and Black Knight Financial Services, LLC dated January 9, 2014 (incorporated by reference to Exhibit 10.25 to Amendment No. 3 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on April 20, 2015 (No. 333-201241)) (1)
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10.23
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Black Knight Financial Services, LLC Unit Grant Agreement by and between Anthony Orefice and Black Knight Financial Services, LLC dated January 9, 2014 (incorporated by reference to Exhibit 10.26 to Amendment No. 3 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on April 20, 2015 (No. 333-201241)) (1)
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10.24
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Black Knight Financial Services, LLC Unit Grant Agreement by and between David K. Hunt and Black Knight Financial Services, LLC dated March 31, 2014 (incorporated by reference to Exhibit 10.27 to Amendment No. 3 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on April 20, 2015 (No. 333-201241)) (1)
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10.25
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Black Knight Financial Services, LLC Unit Grant Agreement by and between Richard N. Massey and Black Knight Financial Services, LLC dated January 9, 2014 (incorporated by reference to Exhibit 10.28 to Amendment No. 3 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on April 20, 2015 (No. 333-201241)) (1)
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10.26
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Black Knight Financial Services, LLC Unit Grant Agreement by and between John D. Rood and Black Knight Financial Services, LLC dated January 9, 2014 (incorporated by reference to Exhibit 10.29 to Amendment No. 3 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on April 20, 2015 (No. 333-201241)) (1)
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10.27
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Form of Grant Agreement for Restricted Stock Awards under the Black Knight Financial Services, Inc. 2015 Omnibus Incentive Plan to Be Issued upon Exchange of Grant Units (incorporated by reference to Exhibit 10.30 to Amendment No. 5 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on May 7, 2015 (No. 333-201241)) (1)
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10.28
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Form of Grant Agreement for Performance and Time Based Restricted Stock Awards under the Black Knight Financial Services, Inc. 2015 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.31 to Amendment No. 4 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on May 4, 2015 (No. 333-201241)) (1)
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10.29
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Form of Grant Agreement for Time Based Restricted Stock Awards under the Black Knight Financial Services, Inc. 2015 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.32 to Amendment No. 4 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on May 4, 2015 (No. 333-201241)) (1)
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10.30
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Form of Grant Agreement for Stock Option Awards under the Black Knight Financial Services, Inc. 2015 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.33 to Amendment No. 4 to the Form S-1 Registration Statement filed by Black Knight Financial Services, Inc. on May 4, 2015 (No. 333-201241)) (1)
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10.31
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Black Knight Financial Services, Inc. Employee Stock Purchase Plan (incorporated by reference to Exhibit 99.1 to the Form S-8 Registration Statement filed by Black Knight Financial Services, Inc. on July 21, 2015 (No. 333-205784))
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10.32
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Fidelity National Financial Group 401(k) Profit Sharing Plan (incorporated by reference to Exhibit 99.2 to the Form S-8 Registration Statement filed by Black Knight Financial Services, Inc. on July 21, 2015 (No. 333-205784))
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10.33
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Form of Notice of Restricted Stock Grant and Restricted Stock Award Agreement under Black Knight Financial Services, Inc. 2015 Omnibus Incentive Plan (1)
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10.34
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Form of Notice of Restricted Stock Grant and Restricted Stock Award Agreement with a 3 year vesting under Black Knight Financial Services, Inc. 2015 Omnibus Incentive Plan (1)
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10.35
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Form of Notice of Restricted Stock Grant and Restricted Stock Award Agreement with a 4 year vesting under Black Knight Financial Services, Inc. 2015 Omnibus Incentive Plan (1)
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21.1
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Subsidiaries of the Registrant
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23.1
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Consent of KPMG LLP, Independent Registered Public Accounting Firm
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31.1
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Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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31.2
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Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.1
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Certification by Chief Executive Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
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32.2
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Certification by Chief Financial Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
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99.1
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Audited Consolidated Financial Statements of Lender Processing Services, Inc. as of January 1, 2014 and December 31, 2013 and for the day ended January 1, 2014 and the year ended December 31, 2013
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101
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Interactive Data Files
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(1)
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A management or compensatory plan or arrangement required to be filed as an exhibit to this report pursuant to Item 15(c) of Form 10-K.
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(a)
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the standard Company benefits enjoyed by the Company's other top executives as a group;
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(b)
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participation in the FNF Executive Medical Plan (for the Employee and any covered dependents);
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(c)
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eligibility to elect and purchase supplemental disability insurance in accordance with the Company’s or an affiliate's then current benefit offering;
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(d)
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an annual incentive bonus opportunity under Black Knight’s annual incentive plan (“Annual Bonus Plan”) for each calendar year included in the Employment Term, with such opportunity to be earned based upon attainment of performance objectives established by the Committee (“Annual Bonus”). The Employee’s target Annual Bonus under the Annual Bonus Plan shall be no less than 250% of the Employee’s Annual Base Salary (collectively, the target and maximum are referred to as the “Annual Bonus Opportunity”). The Employee’s Annual Bonus Opportunity may be periodically reviewed and increased (but not decreased without the Employee’s express written consent) at the discretion of the Committee. The Annual Bonus shall be paid no later than the March 15
th
first following the calendar year to which the Annual Bonus relates; and
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(e)
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participation in Black Knight's equity incentive plans, as determined by the Compensation Committee of the Board (provided that the aggregate grant date fair value of Foley’s annual equity grants from Black Knight shall be at least $7,000,000).
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(a)
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Notice of Termination
. Any purported termination of the Employee's employment (other than by reason of death) shall be communicated by written Notice of Termination (as defined herein) from one party to the other in accordance with the notice provisions contained in Section 25. For purposes of this Agreement, a "Notice of Termination" shall mean a notice that indicates the Date of Termination (as that term is defined in Subsection 8(b)) and, with respect to a termination due to Disability (as that term is defined in Subsection 8(e)), Cause (as that term is defined in Subsection 8(d)), or Good Reason (as that term is defined in Subsection 8(f)), sets forth in reasonable detail the facts and circumstances that are alleged to provide a basis for such termination. A Notice of Termination from the Company shall specify whether the termination is with or without Cause or due to the Employee's Disability. A Notice of Termination from the Employee shall specify whether the termination is with or without Good Reason.
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(b)
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Date of Termination
. For purposes of this Agreement, "Date of Termination" shall mean the date specified in the Notice of Termination (but in no event shall such date be earlier than the thirtieth (30
th
) day following the date the Notice of Termination is given) or the date of the Employee's death.
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(c)
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No Waiver
. The failure to set forth any fact or circumstance in a Notice of Termination, which fact or circumstance was not known to the party giving the Notice of Termination when the notice was given, shall not constitute a waiver of the right to assert such fact or circumstance in an attempt to enforce any right under or provision of this Agreement.
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(d)
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Cause
. For purposes of this Agreement, a termination for "Cause" means a termination by the Company based upon the Employee's: (i) persistent failure to perform duties consistent with a commercially reasonable standard of care (other than due to a physical or mental impairment or due to an action or inaction directed by the Company that would otherwise constitute Good Reason); (ii) willful neglect of duties (other than due to a physical or mental impairment or due to an action or inaction directed by the Company that would otherwise constitute Good Reason); (iii) conviction of, or pleading nolo contendere to, criminal or other illegal activities involving dishonesty; (iv) material breach of this Agreement; or (v) failure to materially cooperate with or impeding an investigation authorized by the Board. The Employee's termination for Cause shall be effective when and if a resolution is duly adopted by an affirmative vote of at least ¾ of the Board (less the Employee), stating that, in the good faith opinion of the Board, the Employee is guilty of the conduct described in the Notice of Termination and such conduct constitutes Cause under this Agreement;
provided
,
however
, that the Employee shall have been given reasonable opportunity (A) to cure any act or omission that constitutes Cause if capable of cure and (B), together with counsel, during the thirty (30) day period following the receipt by the Employee of the Notice of Termination and prior to the adoption of the Board's resolution, to be heard by the Board.
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(e)
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Disability
. For purposes of this Agreement, a termination based upon "Disability" means a termination by the Company based upon the Employee's entitlement to long-term disability benefits under the Company's or an affiliate's long-term disability plan or policy, as the case may be, as in effect on the Date of Termination.
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(b)
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Good Reason
. For purposes of this Agreement, a termination for "Good Reason" means a termination by the Employee during the Employment Term based upon the occurrence (without the Employee's express written consent) of any of the following:
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(i)
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a material diminution in the Employee's position or title, or the assignment of duties to the Employee that are materially inconsistent with the Employee's position or title;
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(ii)
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a material diminution in the Employee's Annual Base Salary or Annual Bonus Opportunity;
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(iii)
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within six (6) months immediately preceding or within two (2) years immediately following a Change in Control: (A) a material adverse change in the Employee's status, authority or responsibility (
e.g.
, the
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(iv)
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a material breach by the Company of any of its obligations under this Agreement; or
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(v)
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election of a new director to the Company’s Board who Employee (as a director of the Board) did not consent to or vote for.
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(c)
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Cross-Termination
. A termination by Employee or FNF of the Employee’s position on the Board of Directors of FNF for any reason under that certain Director Services Agreement between FNF and Employee shall constitute a termination for the same reason under this Agreement and Employee shall be entitled to the appropriate termination benefits under this Agreement.
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(a)
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Termination by Foley for Good Reason, Not Re-Elected to the Board or Removed from the Board
. If Foley’s employment or service as a director is terminated: (1) by the Company for any reason other than Cause, Death or Disability; (2) by Foley for Good Reason; or (3) because Foley is not nominated to run for re-election to the Board as Chairman, is nominated, but does not receive enough votes to be re-elected to the Board, or is removed from the position of Chairman of the Board for reasons other than Cause:
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(i)
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the Company shall pay the Employee the following (collectively, the "Accrued Obligations"): (A) within five (5) business days after the Date of Termination, any earned but unpaid Annual Base Salary; (B) within a reasonable time following submission of all applicable documentation, any expense reimbursement payments owed to the Employee for expenses incurred prior to the Date of Termination; and (C) no later than March 15
th
of the year in which the Date of Termination occurs, any earned but unpaid Annual Bonus payments relating to the prior calendar year;
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(ii)
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the Company shall pay the Employee no later than March 15
th
of the calendar year following the year in which the Date of Termination occurs, a prorated Annual Bonus based upon the actual Annual Bonus that would have been earned by the Employee for the year in which the Date of Termination occurs (based upon the target Annual Bonus Opportunity in the year in which the Date of Termination occurred, or the prior year if no target Annual Bonus Opportunity has yet been determined, and the actual satisfaction of the applicable performance measures, but ignoring any requirement under the Annual Bonus plan that the Employee must be employed on the payment date) multiplied by the percentage of the calendar year completed before the Date of Termination;
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(iii)
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the Company shall pay the Employee, no later than the sixty-fifth (65
th
) calendar day after the Date of Termination, a lump-sum payment equal to 300%
of the sum of: (A) the Employee's Annual Base Salary in effect immediately prior to the Date of Termination (disregarding any reduction in Annual Base
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(iv)
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all stock option, restricted stock, profits interest and other equity-based incentive awards granted by Black Knight or ServiceLink that were outstanding but not vested as of the Date of Termination shall become immediately vested and/or payable, as the case may be, unless the equity incentive awards are based upon satisfaction of performance criteria (not based solely on the passage of time); in which case, they will only vest pursuant to their express terms, provided, however, that any such equity awards that are vested pursuant to this provision and that constitute a non-qualified deferred compensation arrangement within the meaning of Code Section 409A shall be paid or settled on the earliest date coinciding with or following the Date of Termination that does not result in a violation of or penalties under Section 409A; and
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(v)
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the Company shall provide (or cause an affiliate to provide) the Employee with certain continued welfare benefits as follows:
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(A)
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Any life insurance coverage provided by the Company or an affiliate shall terminate at the same time as life insurance coverage would normally terminate for any other employee that terminates employment with the Company or an affiliate, and the Employee shall have the right to convert that life insurance coverage to an individual policy under the regular rules of the Company's or affiliate's, as the case may be, group policy. In addition, if the Employee is covered under or receives life insurance coverage provided by the Company or an affiliate on the Date of Termination, then within thirty (30) business days after the Date of Termination, the Company shall pay the Employee a lump sum cash payment equal to thirty-six (36) monthly life insurance premiums based on the monthly premiums that would be due assuming that the Employee had converted such life insurance coverage into an individual policy.
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(B)
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As long as the Employee pays the full monthly premiums for COBRA coverage, the Company shall provide (or cause an affiliate to provide) the Employee and, as applicable, the Employee's eligible dependents with continued medical and dental coverage, on the same basis as provided to the Company's active executives and their dependents until the earlier of: (i) three (3) years after the Date of Termination; or (ii) the date the Employee is first eligible for medical and dental coverage (without pre-existing condition limitations) with a subsequent employer. In addition, within thirty (30) business days after the Date of Termination, the Company shall pay the Employee a lump sum cash payment equal to thirty-six (36) monthly medical and dental COBRA premiums based on the level of coverage in effect for the Employee (
e.g.
, employee only or family coverage) on the Date of Termination.
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(b)
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Termination by the Company for Cause and by the Employee without Good Reason
. If the Employee's employment is terminated (i) by the Company for Cause or (ii) by the Employee without Good Reason, the Company's only obligation under this Agreement shall be payment of any Accrued Obligations.
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(c)
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Termination due to Death or Disability
. If the Employee's employment is terminated due to death or Disability, the Company shall pay the Employee (or to the Employee's estate or personal representative in the case of death), within thirty (30) business days after the Date of Termination: (i) any Accrued Obligations, plus (ii) a prorated Annual Bonus based upon the target Annual Bonus opportunity in the year in which the Date of Termination occurred (or the prior year if no target Annual Bonus Opportunity has yet been determined) multiplied by the percentage of the calendar year completed before the Date of Termination.
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(d)
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Definition of Change in Control
. For purposes of this Agreement, the term "Change in Control" shall mean that the conditions set forth in any one of the following subsections shall have been satisfied:
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(i)
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the acquisition, directly or indirectly, by any "person" (within the meaning of Section 3(a)(9) of the Securities and Exchange Act of 1934, as amended (the "Exchange Act") and used in Sections 13(d) and 14(d) thereof) of "beneficial ownership" (within the meaning of Rule 13d-3 of the Exchange Act) of securities of Black Knight possessing more than fifty percent (50%) of the total combined voting power of all outstanding securities of Black Knight;
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(ii)
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a merger or consolidation in which Black Knight is not the surviving entity, except for a transaction in which the holders of the outstanding voting securities of Black Knight immediately prior to such merger or consolidation hold, in the aggregate, securities possessing more than fifty percent (50%) of the total
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(iii)
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a reverse merger in which Black Knight is the surviving entity but in which securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of Black Knight are transferred to or acquired by a person or persons different from the persons holding those securities immediately prior to such merger;
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(iv)
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during any period of two (2) consecutive years during the Employment Term or any extensions thereof, individuals, who, at the beginning of such period, constitute the Board, cease for any reason to constitute at least a majority thereof, unless the election of each director who was not a director at the beginning of such period has been approved in advance by directors representing at least two-thirds of the directors then in office who were directors at the beginning of the period;
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(v)
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the sale, transfer or other disposition (in one transaction or a series of related transactions) of assets of Black Knight that have a total fair market value equal to or more than one-third of the total fair market value of all of the assets of Black Knight immediately prior to such sale, transfer or other disposition, other than a sale, transfer or other disposition to an entity (A) which immediately following such sale, transfer or other disposition owns, directly or indirectly, at least fifty percent (50%) of Black Knight's outstanding voting securities or (B) fifty percent (50%) or more of whose outstanding voting securities is immediately following such sale, transfer or other disposition owned, directly or indirectly, by Black Knight. For purposes of the foregoing clause, the sale of stock of a subsidiary of Black Knight (or the assets of such subsidiary) shall be treated as a sale of assets of Black Knight; or
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(vi)
|
the approval by the stockholders of a plan or proposal for the liquidation or dissolution of Black Knight.
|
(e)
|
Six-Month Delay
. To the extent the Employee is a "specified employee," as defined in Section 409A(a)(2)(B)(i) of the Code and the regulations and other guidance promulgated thereunder and any elections made by the Company in accordance therewith, notwithstanding the timing of payment provided in any other Section of this Agreement, no payment, distribution or benefit under this Agreement that constitutes a distribution of deferred compensation (within the meaning of Treasury Regulation Section 1.409A-1(b)) upon separation from service (within the meaning of Treasury Regulation Section 1.409A-1(h)), after taking into account all available exemptions, that would otherwise be payable during the six (6) month period after separation from service, will be made during such six (6) month period, and any such payment, distribution or benefit will instead be paid on the first business day after such six (6) month period, provided, however, that if the Employee dies following the Date of Termination and prior to the payment, distribution, settlement or provision of any payments, distributions or benefits delayed on account of Code Section 409A, such payments, distributions or benefits shall be paid or provided to the personal representative of the Employee’s estate within 30 days after the date of Employee’s death.
|
(a)
|
During Employment Term
. The Employee agrees that, during the Employment Term, he will devote such business time, attention and energies reasonably necessary to the diligent and faithful performance of the services to the Company and its affiliates, and he will not engage in any way whatsoever, directly or indirectly, in any business that is a direct competitor with the Company's or its affiliates' principal business, nor solicit customers, suppliers or employees of the Company or affiliates on behalf of, or in any other manner work for or assist any business which is a direct competitor with the Company's or its affiliates' principal business. In addition, during the Employment Term, the Employee will undertake no planning for or organization of any business activity competitive with the work he performs as an employee of the Company, and the Employee will not combine or conspire with any other employee of the Company or any other person for the purpose of organizing any such competitive business activity.
|
(b)
|
After Employment Term
. The parties acknowledge that the Employee will acquire substantial knowledge and information concerning the business of the Company and its affiliates as a result of his employment. The parties further acknowledge that the scope of business in which the Company and its affiliates are engaged as of the Effective Date is national and very competitive and one in which few companies can successfully compete. Competition by the Employee in that business after the Employment Term would severely injure the Company and its affiliates. Accordingly, for a period of one (1) year after the Employee's employment terminates for any reason whatsoever, except as otherwise stated herein below, the Employee agrees: (i) not to become an employee, consultant, advisor, principal, partner or substantial shareholder of any firm or business that directly competes with the Company or its affiliates in their principal products and markets; and (ii), on behalf of any such competitive firm or business, not to solicit any person or business that was at the time of such termination and remains a customer or prospective customer, a supplier or prospective supplier, or an employee of the Company or an affiliate.
|
(c)
|
Exclusion
. Working, directly or indirectly, for any of the following entities shall not be considered competitive to the Company or its affiliates for the purpose of this Section 13: (i) Fidelity National Information Services, Inc., FNF, ServiceLink, their respective affiliates or their respective successors; or (ii) the Company, its affiliates or their successors.
|
|
BKFS I MANAGEMENT, INC.
|
|
|
By:
|
/s/ Michael L. Gravelle
|
|
Its:
|
Executive Vice President, General Counsel and Corporate Secretary
|
|
|
|
|
WILLIAM P. FOLEY, II
|
|
|
|
/s/ William P. Foley II
|
1.
|
Chairman of the Board of Directors of Black Knight Financial Services, Inc.;
|
2.
|
strategic planning and initiatives;
|
3.
|
mergers and acquisitions;
|
4.
|
business development;
|
5.
|
budget and long range planning advice;
|
6.
|
presiding over meetings of the Board of Directors of Black Knight Financial Services, Inc. and members as Chairman;
|
7.
|
planning the contents and agenda of such meetings with the assistance of Company management;
|
8.
|
supervising the Company's communications with its shareholders;
|
9.
|
participating in customer relations and public relations.
|
Name of Grantee:
|
|
Number of Shares of Restricted Stock Granted:
|
|
Effective Date of Grant:
|
December 21, 2015
|
Vesting and Period of Restriction:
|
Subject to the terms of the Plan and the Restricted Stock Award Agreement attached hereto, the Period of Restriction shall lapse, and the Shares shall vest and become free of the forfeiture provisions contained in the Restricted Stock Award Agreement, with respect to one third of the shares on each anniversary of the Effective Date of Grant and satisfaction of the Performance Restriction as set forth on Exhibit A of the Restricted Stock Award Agreement, attached hereto.
|
Section 1.
|
GRANT OF RESTRICTED STOCK
|
Section 2.
|
FORFEITURE AND TRANSFER RESTRICTIONS
|
Section 3.
|
STOCK CERTIFICATES
|
Section 4.
|
SHAREHOLDER RIGHTS
|
Section 5.
|
DIVIDENDS
|
Section 6.
|
MISCELLANEOUS PROVISIONS
|
Anniversary Date
|
% of Restricted Stock
|
First (1
st
) anniversary of the Effective Date of Grant
|
33.33%
|
Second (2
nd
) anniversary of the Effective Date of Grant
|
33.33%
|
Third (3
rd
) anniversary of the Effective Date of Grant
|
33.34%
|
Name of Grantee:
|
|
Number of Shares of Restricted Stock Granted:
|
|
Effective Date of Grant:
|
February 3, 2016
|
Vesting and Period of Restriction:
|
Subject to the terms of the Plan and the Restricted Stock Award Agreement attached hereto, the Period of Restriction shall lapse, and the Shares shall vest and become free of the forfeiture provisions contained in the Restricted Stock Award Agreement, with respect to one-third of the shares on each anniversary of the Effective Date of Grant and satisfaction of the Performance Restriction as set forth on Exhibit A of the Restricted Stock Award Agreement, attached hereto.
|
Section 1.
|
GRANT OF RESTRICTED STOCK
|
Section 2.
|
FORFEITURE AND TRANSFER RESTRICTIONS
|
Section 3.
|
STOCK CERTIFICATES
|
Section 4.
|
SHAREHOLDER RIGHTS
|
Section 5.
|
DIVIDENDS
|
Section 6.
|
MISCELLANEOUS PROVISIONS
|
Anniversary Date
|
% of Restricted Stock
|
First (1
st
) anniversary of the Effective Date of Grant
|
33.33%
|
Second (2
nd
) anniversary of the Effective Date of Grant
|
33.33%
|
Third (3
rd
) anniversary of the Effective Date of Grant
|
33.34%
|
Name of Grantee:
|
|
Number of Shares of Restricted Stock Granted:
|
|
Effective Date of Grant:
|
February 3, 2016
|
Vesting and Period of Restriction:
|
Subject to the terms of the Plan and the Restricted Stock Award Agreement attached hereto, the Period of Restriction shall lapse, and the Shares shall vest and become free of the forfeiture provisions contained in the Restricted Stock Award Agreement, with respect to one-fourth of the shares on each anniversary of the Effective Date of Grant and satisfaction of the Performance Restriction as set forth on Exhibit A of the Restricted Stock Award Agreement, attached hereto.
|
Section 1.
|
GRANT OF RESTRICTED STOCK
|
Section 2.
|
FORFEITURE AND TRANSFER RESTRICTIONS
|
Section 3.
|
STOCK CERTIFICATES
|
Section 4.
|
SHAREHOLDER RIGHTS
|
Section 5.
|
DIVIDENDS
|
Section 6.
|
MISCELLANEOUS PROVISIONS
|
Anniversary Date
|
% of Restricted Stock
|
First (1
st
) anniversary of the Effective Date of Grant
|
25%
|
Second (2
nd
) anniversary of the Effective Date of Grant
|
25%
|
Third (3
rd
) anniversary of the Effective Date of Grant
|
25%
|
Fourth (4
th
) anniversary of the Effective Date of Grant
|
25%
|
|
|
|
Subsidiary
|
|
State or Other Jurisdiction of Formation
|
BKFS I Management, Inc.
|
|
Delaware
|
BKFS I Services, LLC
|
|
Delaware
|
Black Knight Data & Analytics, LLC
|
|
Delaware
|
Black Knight Financial Services, LLC
|
|
Delaware
|
Black Knight Financial Technology Solutions, LLC
|
|
Delaware
|
Black Knight India Solutions Private Limited
|
|
India
|
Black Knight InfoServ, LLC
|
|
Delaware
|
Black Knight IP Holding Company, LLC
|
|
Delaware
|
Black Knight Lending Solutions, Inc.
|
|
Delaware
|
Black Knight Management Services, LLC
|
|
Delaware
|
Black Knight National TaxNet, LLC
|
|
Delaware
|
Black Knight Origination Technologies, LLC
|
|
Delaware
|
Black Knight Real Estate Data Solutions, LLC
|
|
California
|
Black Knight Real Estate Group, LLC
|
|
Delaware
|
Black Knight Technology Solutions, LLC
|
|
Delaware
|
Espiel, LLC
|
|
Delaware
|
Fidelity National Commerce Velocity, LLC
|
|
Delaware
|
I-Net Reinsurance Limited
|
|
Turks & Caicos
|
McDash Analytics, LLC
|
|
Colorado
|
Property Insight, LLC
|
|
California
|
RealEC Technologies, LLC
|
|
Delaware
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
[omitted];
|
(c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
By:
|
|
/s/ Thomas J. Sanzone
|
|
|
Thomas J. Sanzone
President and Chief Executive Officer |
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
[omitted];
|
(c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
By:
|
|
/s/ Kirk T. Larsen
|
|
|
Kirk T. Larsen
Executive Vice President and Chief Financial Officer |
1.
|
The periodic report containing financial statements to which this certificate is an exhibit fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934.
|
2.
|
The information contained in the periodic report to which this certificate is an exhibit fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
|
/s/ Thomas J. Sanzone
|
|
|
Thomas J. Sanzone
|
|
|
President and Chief Executive Officer
|
|
1.
|
The periodic report containing financial statements to which this certificate is an exhibit fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934.
|
2.
|
The information contained in the periodic report to which this certificate is an exhibit fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
|
/s/ Kirk T. Larsen
|
|
|
Kirk T. Larsen
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
Page
|
|
Number
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets as of January 1, 2014 and December 31, 2013
|
|
Consolidated Statements of Earnings (Loss) for the day ended January 1, 2014 and the year ended December 31, 2013
|
|
Consolidated Statements of Comprehensive Earnings (Loss) for the day ended January 1, 2014 and the year ended December 31, 2013
|
|
Consolidated Statements of Stockholders’ Equity for the day ended January 1, 2014 and the year ended December 31, 2013
|
|
Consolidated Statements of Cash Flows for the day ended January 1, 2014 and the year ended December 31, 2013
|
|
Notes to Consolidated Financial Statements
|
|
January 1,
|
|
December 31,
|
||||
|
2014
|
|
2013
|
||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
|
|||
Cash and cash equivalents
|
$
|
278.4
|
|
|
$
|
329.6
|
|
Trade receivables, net
|
204.8
|
|
|
204.8
|
|
||
Other receivables
|
7.6
|
|
|
7.6
|
|
||
Income tax receivable
|
34.9
|
|
|
23.8
|
|
||
Prepaid expenses and other current assets
|
35.0
|
|
|
35.0
|
|
||
Deferred income taxes, net
|
102.1
|
|
|
102.1
|
|
||
Total current assets
|
662.8
|
|
|
702.9
|
|
||
|
|
|
|
||||
Property and equipment, net
|
119.8
|
|
|
119.8
|
|
||
Computer software, net
|
252.2
|
|
|
252.2
|
|
||
Other intangible assets, net
|
17.8
|
|
|
17.8
|
|
||
Goodwill
|
1,109.3
|
|
|
1,109.3
|
|
||
Other non-current assets (inclusive of investments carried at fair value) - note 4
|
284.7
|
|
|
284.7
|
|
||
Total assets
|
$
|
2,446.6
|
|
|
$
|
2,486.7
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
|
|
|
|||
Current portion of long-term debt
|
$
|
60.2
|
|
|
$
|
60.2
|
|
Trade accounts payable
|
46.5
|
|
|
46.5
|
|
||
Accrued salaries and benefits
|
89.6
|
|
|
89.6
|
|
||
Legal and regulatory accrual
|
99.3
|
|
|
99.3
|
|
||
Other accrued liabilities
|
130.7
|
|
|
131.8
|
|
||
Deferred revenues
|
54.7
|
|
|
54.7
|
|
||
Total current liabilities
|
481.0
|
|
|
482.1
|
|
||
|
|
|
|
||||
Deferred revenues
|
34.7
|
|
|
34.7
|
|
||
Deferred income taxes, net
|
226.1
|
|
|
226.1
|
|
||
Long-term debt, net of current portion
|
1,007.9
|
|
|
1,007.9
|
|
||
Other non-current liabilities
|
32.9
|
|
|
32.9
|
|
||
Total liabilities
|
1,782.6
|
|
|
1,783.7
|
|
||
Commitments and contingencies (note 13)
|
|
|
|
|
|||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock $0.0001 par value; 50 million shares authorized, none issued as of January 1, 2014 and December 31, 2013
|
—
|
|
|
—
|
|
||
Common stock $0.0001 par value; 500 million shares authorized, 97.4 million shares issued as of January 1, 2014 and December 31, 2013
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
229.4
|
|
|
229.4
|
|
||
Retained earnings
|
723.0
|
|
|
762.0
|
|
||
Accumulated other comprehensive loss
|
(2.8
|
)
|
|
(2.8
|
)
|
||
Treasury stock at cost; 9.5 million shares as of January 1, 2014 and December 31, 2013
|
(285.6
|
)
|
|
(285.6
|
)
|
||
Total stockholders’ equity
|
664.0
|
|
|
703.0
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,446.6
|
|
|
$
|
2,486.7
|
|
|
Day Ended January 1,
|
|
Year Ended December 31,
|
||||
|
2014
|
|
2013
|
||||
Revenues
|
$
|
—
|
|
|
$
|
1,723.5
|
|
Expenses:
|
|
|
|
||||
Operating expenses
|
—
|
|
|
1,285.1
|
|
||
Depreciation and amortization
|
—
|
|
|
105.4
|
|
||
Legal and regulatory charges
|
—
|
|
|
74.4
|
|
||
Exit costs, impairments and other charges
|
50.1
|
|
|
49.4
|
|
||
Total expenses
|
50.1
|
|
|
1,514.3
|
|
||
Operating (loss) income
|
(50.1
|
)
|
|
209.2
|
|
||
Other income (expense):
|
|
|
|
|
|||
Interest income
|
—
|
|
|
2.3
|
|
||
Interest expense
|
—
|
|
|
(52.4
|
)
|
||
Other income, net
|
—
|
|
|
0.1
|
|
||
Total other income (expense)
|
—
|
|
|
(50.0
|
)
|
||
(Loss) earnings from continuing operations before income taxes
|
(50.1
|
)
|
|
159.2
|
|
||
Provision for income tax (benefit) expense
|
(11.1
|
)
|
|
54.1
|
|
||
Net (loss) earnings from continuing operations
|
(39.0
|
)
|
|
105.1
|
|
||
Loss from discontinued operations, net of tax
|
—
|
|
|
(2.4
|
)
|
||
Net (loss) earnings
|
$
|
(39.0
|
)
|
|
$102.7
|
||
|
|
|
|
||||
Net (loss) earnings per share — basic from continuing operations
|
$
|
(0.44
|
)
|
|
$
|
1.23
|
|
Net loss per share — basic from discontinued operations
|
—
|
|
|
(0.03
|
)
|
||
Net (loss) earnings per share — basic
|
$
|
(0.44
|
)
|
|
$
|
1.20
|
|
Weighted average shares outstanding — basic
|
87.9
|
|
|
85.4
|
|
||
|
|
|
|
||||
Net (loss) earnings per share — diluted from continuing operations
|
$
|
(0.44
|
)
|
|
$
|
1.22
|
|
Net loss per share — diluted from discontinued operations
|
—
|
|
|
(0.03
|
)
|
||
Net (loss) earnings per share — diluted
|
$
|
(0.44
|
)
|
|
$
|
1.19
|
|
Weighted average shares outstanding — diluted
|
88.4
|
|
|
85.9
|
|
|
Day Ended January 1,
|
|
Year Ended December 31,
|
||||
|
2014
|
|
2013
|
||||
Net (loss) earnings
|
$
|
(39.0
|
)
|
|
$
|
102.7
|
|
Other comprehensive earnings (loss):
|
|
|
|
||||
Unrealized gain (loss) on investments, net of tax (1):
|
|
|
|
||||
Unrealized holding gains (losses)
|
—
|
|
|
(2.3
|
)
|
||
Total unrealized gain (loss) on investments, net of tax (1)
|
—
|
|
|
(2.3
|
)
|
||
|
|
|
|
||||
Unrealized gain (loss) on interest rate swaps, net of tax (2):
|
|
|
|
||||
Unrealized holding gains (losses)
|
—
|
|
|
0.1
|
|
||
Reclassification adjustments for losses included in net earnings
|
—
|
|
|
2.6
|
|
||
Total unrealized gain (loss) on interest rate swaps, net of tax (2)
|
—
|
|
|
2.7
|
|
||
Currency translation adjustment
|
—
|
|
|
(0.1
|
)
|
||
Other comprehensive earnings (loss)
|
—
|
|
|
0.3
|
|
||
Comprehensive (loss) earnings
|
$
|
(39.0
|
)
|
|
$
|
103.0
|
|
(1)
|
Net of income tax benefit of
$1.4
million for the year ended December 31, 2013.
|
(2)
|
Net of income tax expense of
$1.6
million for the year ended December 31, 2013.
|
|
Common
Shares
|
|
Common
Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Treasury
Shares
|
|
Treasury
Stock
|
|
Total Stockholders' Equity
|
||||||||||||||||
Balances, December 31, 2012
|
$
|
97.4
|
|
|
$
|
—
|
|
|
$
|
250.0
|
|
|
$
|
694.1
|
|
|
$
|
(3.1
|
)
|
|
$
|
(12.5
|
)
|
|
$
|
(398.2
|
)
|
|
$
|
542.8
|
|
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
102.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
102.7
|
|
||||||||
Cash dividends declared (1) (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(34.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34.8
|
)
|
||||||||
Exercise of stock options and restricted stock vesting
|
—
|
|
|
—
|
|
|
(48.2
|
)
|
|
—
|
|
|
—
|
|
|
3.0
|
|
|
112.6
|
|
|
64.4
|
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
27.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27.6
|
|
||||||||
Unrealized loss on investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.3
|
)
|
|
—
|
|
|
—
|
|
|
(2.3
|
)
|
||||||||
Unrealized gain on interest rate swaps, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.7
|
|
|
—
|
|
|
—
|
|
|
2.7
|
|
||||||||
Currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
||||||||
Balances, December 31, 2013
|
97.4
|
|
|
—
|
|
|
229.4
|
|
|
762.0
|
|
|
(2.8
|
)
|
|
(9.5
|
)
|
|
(285.6
|
)
|
|
703.0
|
|
||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(39.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(39.0
|
)
|
||||||||
Balances, January 1, 2014
|
97.4
|
|
|
$
|
—
|
|
|
$
|
229.4
|
|
|
$
|
723.0
|
|
|
$
|
(2.8
|
)
|
|
(9.5
|
)
|
|
$
|
(285.6
|
)
|
|
$
|
664.0
|
|
|
Day Ended January 1,
|
|
Year Ended December 31,
|
||||
|
2014
|
|
2013
|
||||
Cash flows from operating activities:
|
|
|
|
|
|||
Net earnings
|
$
|
(39.0
|
)
|
|
$
|
102.7
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
—
|
|
|
105.4
|
|
||
Amortization of debt issuance costs
|
—
|
|
|
4.2
|
|
||
Asset impairment charges
|
—
|
|
|
29.4
|
|
||
Deferred income taxes, net
|
—
|
|
|
76.8
|
|
||
Stock-based compensation cost
|
—
|
|
|
27.6
|
|
||
Income tax effect of equity compensation
|
—
|
|
|
(4.3
|
)
|
||
Changes in assets and liabilities, net of effects of acquisitions and divestitures:
|
|
|
|
||||
Trade receivables
|
—
|
|
|
69.8
|
|
||
Other receivables
|
—
|
|
|
(3.8
|
)
|
||
Income tax receivable
|
(11.1
|
)
|
|
(23.8
|
)
|
||
Prepaid expenses and other assets
|
—
|
|
|
(17.1
|
)
|
||
Deferred revenues
|
—
|
|
|
5.5
|
|
||
Accounts payable, accrued liabilities and other liabilities
|
(1.1
|
)
|
|
(171.4
|
)
|
||
Net cash (used in) provided by operating activities
|
(51.2
|
)
|
|
201.0
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|||
Additions to property and equipment
|
—
|
|
|
(27.0
|
)
|
||
Additions to capitalized software
|
—
|
|
|
(86.8
|
)
|
||
Purchases of investments
|
—
|
|
|
(13.1
|
)
|
||
Proceeds from sale of investments
|
—
|
|
|
5.9
|
|
||
Acquisition of title plants and property records data
|
—
|
|
|
(19.8
|
)
|
||
Net cash used in investing activities
|
—
|
|
|
(140.8
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|||
Exercise of stock options and restricted stock vesting
|
—
|
|
|
64.4
|
|
||
Income tax effect of equity compensation
|
—
|
|
|
4.3
|
|
||
Dividends paid
|
—
|
|
|
(34.5
|
)
|
||
Payment of contingent consideration related to acquisitions
|
—
|
|
|
(1.0
|
)
|
||
Net cash provided by (used in) financing activities
|
—
|
|
|
33.2
|
|
||
Net (decrease) increase in cash and cash equivalents
|
(51.2
|
)
|
|
93.4
|
|
||
Cash and cash equivalents, beginning of period
|
329.6
|
|
|
236.2
|
|
||
Cash and cash equivalents, end of period
|
$
|
278.4
|
|
|
$
|
329.6
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|||
Cash paid for interest
|
$
|
—
|
|
|
$
|
51.7
|
|
Cash paid for taxes
|
$
|
—
|
|
|
$
|
4.9
|
|
|
|
|
|
(1)
|
Description of Business
|
•
|
mortgage processing services conducted using our mortgage servicing platform ("MSP") and our team of experienced support personnel;
|
•
|
the Desktop application, a workflow system that assists customers in managing business processes, which is primarily used in connection with mortgage loan default management;
|
•
|
other software and related service offerings, including our mortgage origination software and our collaborative electronic vendor network, which provides connectivity among mortgage industry participants; and
|
•
|
data and analytics businesses, the most significant of which are our alternative property valuations business, which provides a range of valuations other than traditional appraisals, and our aggregated property, loan and tax data services.
|
•
|
settlement and title agency services, including acting as an agent for title insurers or as an underwriter, and closing services, which includes assisting in the closing of real estate transactions;
|
•
|
appraisal services, which consist of traditional property appraisals provided through our appraisal management company; and
|
•
|
flood zone determination services, which assisted lenders in determining whether a property is in a federally designated flood zone.
|
•
|
property inspection and preservation services designed to preserve the value of properties securing defaulted loans; and
|
•
|
foreclosure administrative services, including administrative services and support provided to independent attorneys and trustees, mandatory title searches, posting and publishing, and other services.
|
(2)
|
Acquisition by FNF
|
(3)
|
Significant Accounting Policies
|
(a)
|
Principles of Consolidation and Basis of Presentation
|
(b)
|
Fair Value
|
•
|
Level 1 Inputs to the valuation methodology were unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access.
|
•
|
Level 2 Inputs to the valuation methodology included:
|
•
|
quoted prices for similar assets or liabilities in active markets;
|
•
|
quoted prices for identical or similar assets or liabilities in inactive markets;
|
•
|
inputs other than quoted prices that were observable for the asset or liability; and
|
•
|
inputs that were derived principally from or corroborated by observable market data by correlation or other means.
|
•
|
Level 3 Inputs to the valuation methodology were unobservable and significant to the fair value measurement.
|
|
|
|
|
|
|
Fair Value
|
||||||||||||||||
|
|
Classification
|
|
Carrying Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||
Investments (note 4)
|
|
Asset
|
|
$
|
77.0
|
|
|
$
|
4.6
|
|
|
$
|
72.4
|
|
|
$
|
—
|
|
|
$
|
77.0
|
|
Interest rate swaps (note 12)
|
|
Liability
|
|
$
|
4.3
|
|
|
$
|
—
|
|
|
$
|
4.3
|
|
|
$
|
—
|
|
|
$
|
4.3
|
|
|
|
|
|
|
|
Fair Value
|
||||||||||||||||
|
|
Classification
|
|
Carrying Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||
Investments (note 4)
|
|
Asset
|
|
$
|
77.0
|
|
|
$
|
4.6
|
|
|
$
|
72.4
|
|
|
$
|
—
|
|
|
$
|
77.0
|
|
Interest rate swaps (note 12)
|
|
Liability
|
|
$
|
4.3
|
|
|
$
|
—
|
|
|
$
|
4.3
|
|
|
$
|
—
|
|
|
$
|
4.3
|
|
(c)
|
Management Estimates
|
(d)
|
Cash and Cash Equivalents
|
(e)
|
Trade Receivables, Net
|
|
January 1, 2014
|
|
December 31, 2013
|
||||
Trade receivables — billed
|
$
|
216.6
|
|
|
$
|
216.6
|
|
Trade receivables — unbilled
|
28.1
|
|
|
28.1
|
|
||
Total trade receivables
|
244.7
|
|
|
244.7
|
|
||
Allowance for doubtful accounts
|
(39.9
|
)
|
|
(39.9
|
)
|
||
Total trade receivables, net
|
$
|
204.8
|
|
|
$
|
204.8
|
|
|
|
Balance at Beginning of Period
|
|
Bad Debt Expense
|
|
Write-offs, Net of Recoveries
|
|
Transfers and Acquisitions
|
|
Balance at End of Period
|
|||||||
Year ended December 31, 2013
|
|
$
|
(45.5
|
)
|
|
(8.2
|
)
|
|
13.7
|
|
|
0.1
|
|
|
$
|
(39.9
|
)
|
Day ended January 1, 2014
|
|
$
|
(39.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
(39.9
|
)
|
(f)
|
Deferred Contract Costs
|
(g)
|
Long-Lived Assets
|
(h)
|
Property and Equipment
|
(i)
|
Computer Software
|
(j)
|
Intangible Assets
|
(k)
|
Goodwill
|
(l)
|
Trade Accounts Payable
|
(m)
|
Loss Contingencies
|
(n)
|
Restructuring Activities
|
(o)
|
Deferred Compensation Plan
|
(p)
|
Derivative Instruments
|
(q)
|
Revenue Recognition
|
(r)
|
Expenses
|
(s)
|
Stock-Based Compensation Plans
|
(t)
|
Income Taxes
|
(u)
|
Net Earnings Per Share and Equity
|
(v)
|
Recent Accounting Pronouncements
|
(4)
|
Investments
|
|
|
Adjusted
Cost
|
|
Gross Unrealized
Gains
|
|
Gross Unrealized
Losses
|
|
Fair Value
|
||||||||
As of January 1, 2014
|
|
$
|
77.0
|
|
|
$
|
1.5
|
|
|
$
|
(1.6
|
)
|
|
$
|
76.9
|
|
As of December 31, 2013
|
|
$
|
77.0
|
|
|
$
|
1.5
|
|
|
$
|
(1.6
|
)
|
|
$
|
76.9
|
|
|
Adjusted
Cost
|
|
Fair
Value
|
||||
2014-2018
|
$
|
27.3
|
|
|
$
|
28.0
|
|
2019-2023
|
28.3
|
|
|
28.0
|
|
||
2024-2028
|
14.0
|
|
|
13.3
|
|
||
2029-2033
|
4.9
|
|
|
5.1
|
|
||
Thereafter
|
2.5
|
|
|
2.6
|
|
||
Total
|
$
|
77.0
|
|
|
$
|
77.0
|
|
(5)
|
Property and Equipment
|
|
January 1, 2014
|
|
December 31, 2013
|
||||
Land
|
$
|
4.9
|
|
|
$
|
4.9
|
|
Buildings
|
81.3
|
|
|
81.3
|
|
||
Leasehold improvements
|
16.8
|
|
|
16.8
|
|
||
Computer equipment
|
196.2
|
|
|
196.2
|
|
||
Furniture, fixtures, and other equipment
|
36.7
|
|
|
36.7
|
|
||
Property and equipment
|
335.9
|
|
|
335.9
|
|
||
Accumulated depreciation and amortization
|
(216.1
|
)
|
|
(216.1
|
)
|
||
Property and equipment, net of depreciation and amortization
|
$
|
119.8
|
|
|
$
|
119.8
|
|
(6)
|
Computer Software
|
|
January 1, 2014
|
|
December 31, 2013
|
||||
Software from business acquisitions
|
$
|
85.2
|
|
|
$
|
85.2
|
|
Capitalized software development costs
|
372.0
|
|
|
372.0
|
|
||
Purchased software
|
42.2
|
|
|
42.2
|
|
||
Computer software
|
499.4
|
|
|
499.4
|
|
||
Accumulated amortization
|
(247.2
|
)
|
|
(247.2
|
)
|
||
Computer software, net of accumulated amortization
|
$
|
252.2
|
|
|
$
|
252.2
|
|
(7)
|
Intangible Assets
|
|
|
January 1, 2014
|
|
December 31, 2013
|
||||||||||||||||||||
|
|
Gross Carrying
Amount |
|
Accumulated
Amortization |
|
Net Carrying
Amount |
|
Gross Carrying
Amount |
|
Accumulated
Amortization |
|
Net Carrying
Amount |
||||||||||||
Customer relationships
|
|
$
|
251.2
|
|
|
$
|
(242.4
|
)
|
|
$
|
8.8
|
|
|
$
|
251.2
|
|
|
$
|
(242.4
|
)
|
|
$
|
8.8
|
|
Customer contracts
|
|
40.6
|
|
|
(40.6
|
)
|
|
—
|
|
|
40.6
|
|
|
(40.6
|
)
|
|
—
|
|
||||||
Purchase data files
|
|
11.3
|
|
|
(4.9
|
)
|
|
6.4
|
|
|
11.3
|
|
|
(4.9
|
)
|
|
6.4
|
|
||||||
Other
|
|
7.8
|
|
|
(5.2
|
)
|
|
2.6
|
|
|
7.8
|
|
|
(5.2
|
)
|
|
2.6
|
|
||||||
Total Intangible Assets
|
|
$
|
310.9
|
|
|
$
|
(293.1
|
)
|
|
$
|
17.8
|
|
|
$
|
310.9
|
|
|
$
|
(293.1
|
)
|
|
$
|
17.8
|
|
2014
|
$
|
3.9
|
|
2015
|
3.6
|
|
|
2016
|
2.9
|
|
|
2017
|
2.3
|
|
|
2018
|
1.8
|
|
(8)
|
Goodwill
|
|
Technology,
Data and
Analytics
|
|
Transaction
Services
|
|
Total
|
||||||
Balance, December 31, 2012
|
$
|
724.8
|
|
|
$
|
384.5
|
|
|
$
|
1,109.3
|
|
Increases to goodwill related to acquisitions
|
—
|
|
|
—
|
|
|
—
|
|
|||
Decreases to goodwill related to disposals and impairments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance, December 31, 2013
|
724.8
|
|
|
384.5
|
|
|
1,109.3
|
|
|||
Increases to goodwill related to acquisitions
|
—
|
|
|
—
|
|
|
—
|
|
|||
Decreases to goodwill related to disposals and impairments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance, January 1, 2014
|
$
|
724.8
|
|
|
$
|
384.5
|
|
|
$
|
1,109.3
|
|
|
January 1,
|
|
December 31,
|
||||
|
2014
|
|
2013
|
||||
Revenues
|
$
|
—
|
|
|
$
|
4.8
|
|
Pretax loss from discontinued operations
|
—
|
|
|
(3.6
|
)
|
||
Income tax benefit (expense) on discontinued operations
|
—
|
|
|
1.2
|
|
||
Loss from discontinued operations, net of tax
|
$
|
—
|
|
|
$
|
(2.4
|
)
|
|
January 1, 2014
|
|
December 31, 2013
|
||||
Assets:
|
|
|
|
||||
Trade receivables, net
|
$
|
—
|
|
|
$
|
—
|
|
Prepaid expenses and other current assets
|
—
|
|
|
—
|
|
||
Total assets held for sale
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
||||
Trade accounts payable, accrued salaries and benefits and other accrued liabilities
|
$
|
3.0
|
|
|
$
|
3.0
|
|
Other long-term liabilities
|
0.5
|
|
|
0.5
|
|
||
Total liabilities related to assets held for sale
|
$
|
3.5
|
|
|
$
|
3.5
|
|
|
January 1, 2014
|
|
December 31, 2013
|
||||
Other operating expense accruals
|
$
|
48.0
|
|
|
$
|
49.1
|
|
Title claims reserve
|
66.3
|
|
|
66.3
|
|
||
Recording and transfer tax liabilities
|
8.7
|
|
|
8.7
|
|
||
Interest accrual on debt and swap obligations
|
7.7
|
|
|
7.7
|
|
||
Total other accrued liabilities
|
$
|
130.7
|
|
|
$
|
131.8
|
|
Fourth Quarter 2012 Restructuring Plan
|
|
Other Accrued Liabilities December 31, 2012
|
|
Cash Paid
|
|
Other Accrued Liabilities December 31, 2013
|
|
Cash Paid
|
|
Other Accrued Liabilities January 1, 2014
|
|||||||||
Ongoing termination arrangement
|
|
$
|
1.1
|
|
|
(0.7
|
)
|
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
January 1, 2014
|
|
December 31, 2013
|
||||
Term A Loan, secured, interest payable at LIBOR plus 2.00% (2.17% as of January 1, 2014) quarterly principal amortization, maturing August 2016
|
$
|
468.1
|
|
|
$
|
468.1
|
|
Revolving Loan, secured, interest payable at LIBOR plus 2.00% (Eurocurrency Borrowings) (2.17% as of January 1, 2014), Fed-funds plus 2.00% (Swingline borrowings) (2.08% as of January 1, 2014), or the highest of (a) Fed-funds plus 0.50%, (b) Prime or (c) LIBOR plus 1%, plus the Applicable Margin for Base Rate borrowings of 1.50% (Base Rate Borrowings) (2.08%, 4.75% or 2.67% respectively as of January 1, 2014), maturing August 2016. Total of $398.1 million unused (net of outstanding letters of credit) as of January 1, 2014
|
—
|
|
|
—
|
|
||
Senior unsecured notes, issued at par, interest payable semiannually at 5.75%, due October 2023
|
600.0
|
|
|
600.0
|
|
||
Total debt
|
1,068.1
|
|
|
1,068.1
|
|
||
Less current portion
|
60.2
|
|
|
60.2
|
|
||
Long-term debt, excluding current portion
|
$
|
1,007.9
|
|
|
$
|
1,007.9
|
|
Balance Sheet Account
|
|
January 1, 2014
|
|
December 31, 2013
|
||||
Other accrued liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
Other long-term liabilities
|
|
$
|
4.3
|
|
|
$
|
4.3
|
|
|
|
Amount of Loss Recognized in OCE on Derivatives
|
|
Amount of Loss Reclassified from Accumulated OCE into Interest Expense
|
||||
Interest Rate Swap contract
|
|
2013
|
|
2013
|
||||
Year ended December 31,
|
|
$
|
0.1
|
|
|
$
|
4.2
|
|
2014
|
$
|
60.2
|
|
2015
|
80.2
|
|
|
2016
|
327.7
|
|
|
2017
|
—
|
|
|
2018
|
—
|
|
|
Thereafter
|
600.0
|
|
|
Total
|
$
|
1,068.1
|
|
(13)
|
Commitments and Contingencies
|
•
|
These matters raised difficult and complicated factual and legal issues and were subject to many uncertainties and complexities.
|
•
|
In the litigation matters, plaintiffs sought a variety of remedies including equitable relief in the form of injunctive and other remedies and monetary relief in the form of compensatory damages. In some cases, the monetary damages sought included punitive or treble damages. Unless otherwise specified, none of the cases described below included a specific statement as to the dollar amount of damages demanded. Instead, each of the cases included a demand in an amount to be proved at trial. Regulatory authorities also could seek a variety of remedies and in general did not make specific demands during the course of an investigation or inquiry.
|
2014
|
$
|
16.2
|
|
2015
|
10.5
|
|
|
2016
|
5.9
|
|
|
2017
|
5.3
|
|
|
2018
|
2.8
|
|
|
Thereafter
|
3.3
|
|
|
Total
|
$
|
44.0
|
|
(14)
|
Employee Benefit Plans
|
|
|
Number of Shares
|
|
Weighted Average
Exercise Price
|
|||
Outstanding as of December 31, 2012
|
|
7.2
|
|
|
28.80
|
|
|
Granted
|
|
—
|
|
|
—
|
|
|
Exercised (1)
|
|
(2.7
|
)
|
|
26.62
|
|
|
Cancelled
|
|
(1.3
|
)
|
|
31.82
|
|
|
Outstanding as of December 31, 2013 (2)
|
|
3.2
|
|
|
$
|
29.37
|
|
(1)
|
The total intrinsic value of stock options exercised during the year ended December 31, 2013 was $23.1 million.
|
(2)
|
No activity occurred during the day ended January 1, 2014. As a result, the ending amounts outstanding as of January 1, 2014 were equal to the ending amounts as of December 31, 2013.
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||||||||||||
Range of Exercise Prices
|
|
Number of Options
|
|
Weighted
Average Remaining Contractual Life
|
|
Weighted Average Exercise Price
|
|
Intrinsic Value at January 1, 2014
|
|
Number of Options
|
|
Weighted
Average Remaining Contractual Life
|
|
Weighted Average Exercise Price
|
|
Intrinsic Value at January 1, 2014
|
||||||||||
13.67-23.66
|
|
328,072
|
|
|
4.57
|
|
$
|
14.37
|
|
|
$
|
7,549,680
|
|
|
43,765
|
|
|
3.33
|
|
$
|
14.22
|
|
|
$
|
1,013,386
|
|
23.67-28.35
|
|
756,729
|
|
|
5.38
|
|
23.67
|
|
|
10,374,755
|
|
|
118,476
|
|
|
5.38
|
|
23.67
|
|
|
1,624,306
|
|
||||
28.36-31.95
|
|
601,746
|
|
|
3.97
|
|
28.42
|
|
|
5,391,393
|
|
|
285,639
|
|
|
3.25
|
|
28.37
|
|
|
2,574,854
|
|
||||
31.96-35.17
|
|
393,932
|
|
|
1.64
|
|
34.56
|
|
|
1,109,848
|
|
|
391,332
|
|
|
1.62
|
|
34.58
|
|
|
1,095,730
|
|
||||
35.18-42.74
|
|
1,084,610
|
|
|
1.69
|
|
36.54
|
|
|
911,321
|
|
|
1,084,610
|
|
|
1.69
|
|
36.54
|
|
|
911,321
|
|
||||
13.67-42.74
|
|
3,165,089
|
|
|
3.30
|
|
$
|
29.37
|
|
|
$
|
25,336,997
|
|
|
1,923,822
|
|
|
2.17
|
|
$
|
33.63
|
|
|
$
|
7,219,597
|
|
|
|
Restricted Shares
|
|
Weighted Average
Grant Date Fair Value
|
|||
Outstanding as of December 31, 2012
|
|
1.3
|
|
|
24.19
|
|
|
Granted
|
|
0.9
|
|
|
26.92
|
|
|
Vested
|
|
(0.6
|
)
|
|
24.86
|
|
|
Cancelled
|
|
(0.1
|
)
|
|
26.31
|
|
|
Outstanding as of December 31, 2013 and January 1, 2014 (1)
|
|
1.5
|
|
|
$
|
25.40
|
|
(1)
|
No activity occurred during the day ended January 1, 2014. As a result, the ending amounts outstanding as of January 1, 2014 were equal to the ending amounts as of December 31, 2013.
|
(15)
|
Income Taxes
|
|
January 1,
|
|
December 31,
|
||||
|
2014
|
|
2013
|
||||
Current provision:
|
|
|
|
|
|||
Federal
|
$
|
(11.1
|
)
|
|
$
|
(20.6
|
)
|
State
|
—
|
|
|
(1.0
|
)
|
||
Total current provision
|
(11.1
|
)
|
|
(21.6
|
)
|
||
Deferred provision:
|
|
|
|
|
|||
Federal
|
—
|
|
|
70.1
|
|
||
State
|
—
|
|
|
5.6
|
|
||
Total deferred provision
|
—
|
|
|
75.7
|
|
||
Total (benefit) provision for income taxes
|
$
|
(11.1
|
)
|
|
$
|
54.1
|
|
|
January 1,
|
|
December 31,
|
||
|
2014
|
|
2013
|
||
Federal statutory income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
—
|
|
|
3.0
|
|
Legal and regulatory accrual
|
—
|
|
|
0.2
|
|
Non cash stock option forfeitures
|
—
|
|
|
1.2
|
|
Domestic production deduction
|
—
|
|
|
(0.4
|
)
|
Research and development credit
|
—
|
|
|
(4.1
|
)
|
Transaction costs
|
(12.8
|
)
|
|
—
|
|
Other
|
—
|
|
|
(0.9
|
)
|
Effective income tax rate
|
22.2
|
%
|
|
34.0
|
%
|
|
January 1, 2014
|
|
December 31, 2013
|
||||
Deferred income tax assets:
|
|
|
|
|
|
||
Accruals and reserves
|
$
|
49.0
|
|
|
$
|
49.0
|
|
Employee benefit accruals
|
30.5
|
|
|
30.5
|
|
||
Deferred revenue
|
30.1
|
|
|
30.1
|
|
||
Allowance for doubtful accounts
|
15.2
|
|
|
15.2
|
|
||
Net operating losses
|
8.6
|
|
|
8.6
|
|
||
Investments
|
1.7
|
|
|
1.7
|
|
||
Total gross deferred income tax assets
|
135.1
|
|
|
135.1
|
|
||
Less: valuation allowance
|
—
|
|
|
—
|
|
||
Total deferred income tax assets
|
135.1
|
|
|
135.1
|
|
||
Deferred income tax liabilities:
|
|
|
|
|
|
||
Amortization of goodwill and intangible assets
|
(225.4
|
)
|
|
(225.4
|
)
|
||
Depreciation
|
(15.1
|
)
|
|
(15.1
|
)
|
||
Deferred contract costs
|
(18.2
|
)
|
|
(18.2
|
)
|
||
State taxes
|
(0.4
|
)
|
|
(0.4
|
)
|
||
Total deferred income tax liabilities
|
(259.1
|
)
|
|
(259.1
|
)
|
||
Net deferred income tax liabilities
|
$
|
(124.0
|
)
|
|
$
|
(124.0
|
)
|
|
January 1, 2014
|
|
December 31, 2013
|
||||
Current assets
|
$
|
102.1
|
|
|
$
|
102.1
|
|
Non-current liabilities
|
(226.1
|
)
|
|
(226.1
|
)
|
||
Net deferred income tax liabilities
|
$
|
(124.0
|
)
|
|
$
|
(124.0
|
)
|
|
Gross Amount
|
||
Amount of unrecognized tax benefit as of December 31, 2012
|
$
|
1.0
|
|
Increases as a result of tax positions taken in 2013
|
—
|
|
|
Increases as a result of tax positions taken in a prior period
|
—
|
|
|
Amount of unrecognized tax benefit as of December 31, 2013 and January 1, 2014
|
$
|
1.0
|
|
(16)
|
Concentration of Risk
|
(17)
|
Segment Information
|
|
Technology,
Data and
Analytics
|
|
Transaction
Services
|
|
Corporate
and Other
|
|
Total
|
||||||||
Revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating expenses (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Depreciation and amortization
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Legal and regulatory charges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Exit costs, impairments and other charges
|
—
|
|
|
—
|
|
|
50.1
|
|
|
50.1
|
|
||||
Operating income (loss)
|
—
|
|
|
—
|
|
|
(50.1
|
)
|
|
(50.1
|
)
|
||||
Total other income (expense)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Earnings (loss) from continuing operations before income tax
|
—
|
|
|
—
|
|
|
(50.1
|
)
|
|
(50.1
|
)
|
||||
Income tax provision (benefit)
|
—
|
|
|
—
|
|
|
(11.1
|
)
|
|
(11.1
|
)
|
||||
Earnings (loss) from continuing operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(39.0
|
)
|
|
$
|
(39.0
|
)
|
Capital expenditures (2)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total assets (3)
|
$
|
1,314.2
|
|
|
$
|
669.3
|
|
|
$
|
463.1
|
|
|
$
|
2,446.6
|
|
Goodwill (3)
|
$
|
724.8
|
|
|
$
|
384.5
|
|
|
$
|
—
|
|
|
$
|
1,109.3
|
|
|
Technology,
Data and
Analytics
|
|
Transaction
Services
|
|
Corporate
and Other
|
|
Total
|
||||||||
Revenues
|
$
|
757.2
|
|
|
$
|
965.9
|
|
|
$
|
0.4
|
|
|
$
|
1,723.5
|
|
Operating expenses (1)
|
456.4
|
|
|
788.5
|
|
|
40.2
|
|
|
1,285.1
|
|
||||
Depreciation and amortization
|
83.2
|
|
|
18.7
|
|
|
3.5
|
|
|
105.4
|
|
||||
Legal and regulatory charges
|
—
|
|
|
1.8
|
|
|
72.6
|
|
|
74.4
|
|
||||
Exit costs, impairments and other charges
|
0.7
|
|
|
33.9
|
|
|
14.8
|
|
|
49.4
|
|
||||
Operating income (loss)
|
216.9
|
|
|
123.0
|
|
|
(130.7
|
)
|
|
209.2
|
|
||||
Total other income (expense)
|
1.9
|
|
|
3.3
|
|
|
(55.2
|
)
|
|
(50.0
|
)
|
||||
Earnings (loss) from continuing operations before income tax
|
218.8
|
|
|
126.3
|
|
|
(185.9
|
)
|
|
159.2
|
|
||||
Income tax provision (benefit)
|
75.5
|
|
|
43.6
|
|
|
(65.0
|
)
|
|
54.1
|
|
||||
Earnings (loss) from continuing operations
|
$
|
143.3
|
|
|
$
|
82.7
|
|
|
$
|
(120.9
|
)
|
|
$
|
105.1
|
|
Capital expenditures (2)
|
$
|
96.6
|
|
|
$
|
15.4
|
|
|
$
|
1.8
|
|
|
$
|
113.8
|
|
Total assets (3)
|
$
|
1,314.2
|
|
|
$
|
669.3
|
|
|
$
|
503.2
|
|
|
$
|
2,486.7
|
|
Goodwill (3)
|
$
|
724.8
|
|
|
$
|
384.5
|
|
|
$
|
—
|
|
|
$
|
1,109.3
|
|
(18)
|
Subsequent Events
|