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(Mark One)
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þ
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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, 2016
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o
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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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36-4798491
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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) 854-5100
(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, $0.0001 par value
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New York Stock Exchange
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Page
Number
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Item 1.
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Business
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2017
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2016
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2015
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||||||
Mortgage Originations:
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||||||
Purchase
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$
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1,092.0
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$
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990.0
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$
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903.0
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Refinance
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479.0
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901.0
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776.0
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Total
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$
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1,571.0
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$
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1,891.0
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$
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1,679.0
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•
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Evolving regulation
. Most U.S. mortgage market participants have become subject to increased 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 requirements.
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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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•
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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 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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•
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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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•
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Servicing Technology.
MSP is a software as a service 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 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 enhanced to assist with the changing regulatory requirements and are used to improve loan quality and store documents and images.
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•
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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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•
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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. These offerings can be tailored to meet client needs and any regulatory requirements.
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•
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Enterprise Business Intelligence.
We offer technological solutions that help mortgage lenders and servicers better leverage their extensive data assets by collecting, linking and storing loan data from their applications and from industry sources in a central location and delivering visualization and actionable insights into the data to support proactive decision making at all levels of the enterprise. In addition, we provide near real-time access to information to provide real-time analytics, enabling proactive management of operations through key performance indicators, scorecards, dashboards and on-demand dynamic reporting.
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•
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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. One or more of our solutions are utilized by 23 of the top 25 servicers and 22 of the top 25 originators in the United States according to Inside Mortgage Finance as of December 31, 2016. 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 processes, assist in improving organizational compliance and mitigating risk, and to ultimately deliver significant cost savings to our clients.
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•
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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 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
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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 assist with the 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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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 revenues and cost synergies.
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•
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our ability to successfully achieve the conditions to and consummate the tax-free spin-off of Black Knight from FNF;
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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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our ability to offer high-quality technical support services;
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our ability 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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our ability to adapt our solutions to technological changes or evolving industry standards;
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our ability to compete effectively;
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increase in the availability of free or relatively inexpensive information;
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our ability 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 ability 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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our ability 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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the adequacy of our risk management policies and procedures;
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our ability 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
$1.2 billion
in principal amount of our debt bears interest at a floating rate as of
December 31, 2016
(an increase of one percentage point in the applicable interest rate could cause an increase in interest expense of approximately
$11.8 million
on an annual basis (
$7.8 million
including the effect
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•
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exposing us to costs and risks associated with agreements limiting our exposure to higher interest rates, 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, distributions or issuances by us, our officers or directors and our significant shareholders, including BKHI, THL and certain of their affiliates; and
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•
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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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5
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Texas
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4
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Florida
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3
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Illinois
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3
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Maryland
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3
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Colorado
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2
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Other states(1)
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9
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India
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2
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(1)
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Represents one location in each of
nine
states.
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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 Shareholder 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, 2016
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First quarter
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$
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31.66
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$
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26.00
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Second quarter
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37.60
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28.89
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Third quarter
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41.04
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37.00
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Fourth quarter
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40.38
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35.75
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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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Initial
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6/30/15
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9/30/15
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12/31/15
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3/31/16
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6/30/16
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9/30/16
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12/31/16
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Black Knight
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$100.00
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$113.87
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$120.07
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$121.95
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$114.46
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$138.69
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$150.87
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$139.43
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S&P 500 Index
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$100.00
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$97.26
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$91.00
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$97.41
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$98.72
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$101.15
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$105.04
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$109.06
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S&P North American Technology Sector Index
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$100.00
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$96.13
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$93.14
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$102.61
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$102.72
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$102.14
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$114.89
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$114.97
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Item 6.
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Selected Financial Data
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Successor
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Predecessor
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||||||||||||
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Year ended December 31,
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Period from October 16, 2013 through
December 31, 2013
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||||||||||||
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2016
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2015
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2014
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|||||||||
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(In millions, except per share data)
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|||||||||||||||
Statements of Operations Data:
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||||||||
Revenues
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$
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1,026.0
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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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582.6
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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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208.3
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194.3
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188.8
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|
|
|
1.1
|
|
||||
Transition and integration costs
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2.3
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|
|
8.0
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|
|
119.3
|
|
|
|
—
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|
||||
Total expenses
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793.2
|
|
|
740.5
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|
|
823.0
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|
|
|
18.0
|
|
||||
Operating income (loss)
|
232.8
|
|
|
190.2
|
|
|
29.1
|
|
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(3.0
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)
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||||
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|
|
|
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|
|
|
|
||||||||
Other income and expense:
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|
|
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|
||||||||
Interest expense, net
|
(67.6
|
)
|
|
(89.8
|
)
|
|
(128.7
|
)
|
|
|
—
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|
||||
Other expense, net
|
(6.4
|
)
|
|
(4.6
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)
|
|
(12.0
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)
|
|
|
—
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|
||||
Total other expense, net
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(74.0
|
)
|
|
(94.4
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)
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(140.7
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)
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) from continuing operations before income taxes
|
158.8
|
|
|
95.8
|
|
|
(111.6
|
)
|
|
|
(3.0
|
)
|
||||
Income tax expense (benefit)
|
25.8
|
|
|
13.4
|
|
|
(5.3
|
)
|
|
|
—
|
|
||||
Net earnings (loss) from continuing operations
|
133.0
|
|
|
82.4
|
|
|
(106.3
|
)
|
|
|
(3.0
|
)
|
||||
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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|
||||
Net earnings (loss)
|
133.0
|
|
|
82.4
|
|
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(107.1
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)
|
|
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(3.0
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)
|
||||
Less: Net earnings (loss) attributable to noncontrolling interests
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87.2
|
|
|
62.4
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(107.1
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)
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|
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(3.0
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)
|
||||
Net earnings attributable to Black Knight Financial Services, Inc.
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$
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45.8
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$
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20.0
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|
|
$
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—
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Year ended December 31, 2016
|
|
May 26, 2015 through
December 31, 2015
|
|
|
|
|
|
||||||||
Net earnings per share attributable to Black Knight Financial Services, Inc., Class A common shareholders:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.69
|
|
|
$
|
0.31
|
|
|
|
|
|
|
||||
Diluted
|
$
|
0.67
|
|
|
$
|
0.29
|
|
|
|
|
|
|
||||
Weighted average shares of Class A common stock outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
65.9
|
|
|
64.4
|
|
|
|
|
|
|
||||||
Diluted
|
67.9
|
|
|
67.9
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
December 31,
|
|
|
December 31, 2013
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
|
|||||||||
|
(In millions)
|
|||||||||||||||
Balance Sheets Data:
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
133.9
|
|
|
$
|
186.0
|
|
|
$
|
61.9
|
|
|
|
$
|
7.4
|
|
Total assets
|
$
|
3,762.0
|
|
|
$
|
3,703.7
|
|
|
$
|
3,598.3
|
|
|
|
$
|
88.1
|
|
Total debt (current and long-term)
|
$
|
1,570.2
|
|
|
$
|
1,661.5
|
|
|
$
|
2,135.1
|
|
|
|
$
|
—
|
|
|
January 1, 2013 through
October 15, 2013
|
|
Year ended
December 31, 2012
|
||||
|
|
||||||
|
(In millions)
|
||||||
Statements of Operations Data:
|
|
|
|
||||
Revenues
|
$
|
58.2
|
|
|
$
|
73.5
|
|
Net (loss) earnings
|
$
|
(7.2
|
)
|
|
$
|
4.1
|
|
Balance Sheets Data:
|
|
|
|
||||
Total assets
|
$
|
79.1
|
|
|
$
|
90.4
|
|
|
Day ended January 1, 2014
|
|
Year ended December 31,
|
||||||||
|
|
2013 (1)
|
|
2012 (1)
|
|||||||
|
(In millions, except per share data)
|
||||||||||
Statements of Operations Data:
|
|
|
|
|
|
||||||
Revenues
|
$
|
—
|
|
|
$
|
1,716.2
|
|
|
$
|
1,991.3
|
|
Net (loss) earnings from continuing operations
|
$
|
(39.0
|
)
|
|
$
|
104.2
|
|
|
$
|
79.6
|
|
Net (loss) earnings
|
$
|
(39.0
|
)
|
|
$
|
102.7
|
|
|
$
|
70.4
|
|
Net earnings per share - basic from continuing operations
|
|
|
$
|
1.22
|
|
|
$
|
0.94
|
|
||
Net earnings per share - basic
|
|
|
$
|
1.20
|
|
|
$
|
0.83
|
|
||
Weighted average shares - basic
|
|
|
85.4
|
|
|
84.6
|
|
||||
Net earnings per share - diluted from continuing operations
|
|
|
$
|
1.21
|
|
|
$
|
0.94
|
|
||
Net earnings per share - diluted
|
|
|
$
|
1.19
|
|
|
$
|
0.83
|
|
||
Weighted average shares - diluted
|
|
|
85.9
|
|
|
84.9
|
|
||||
Balance Sheets Data:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
278.4
|
|
|
$
|
329.6
|
|
|
$
|
236.2
|
|
Total assets
|
$
|
2,446.6
|
|
|
$
|
2,486.7
|
|
|
$
|
2,445.8
|
|
Total debt (current and long-term)
|
$
|
1,068.1
|
|
|
$
|
1,068.1
|
|
|
$
|
1,068.1
|
|
Cash dividends per share
|
$
|
—
|
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
(1)
|
On June 30, 2014, we completed the sale of PCLender, the results of which have been included in discontinued operations.
|
|
Quarter Ended
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
|
(In millions, except per share data)
|
||||||||||||||
2016
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
241.9
|
|
|
$
|
255.5
|
|
|
$
|
267.1
|
|
|
$
|
261.5
|
|
Earnings from continuing operations before income taxes and noncontrolling interests
|
$
|
39.3
|
|
|
$
|
39.9
|
|
|
$
|
38.7
|
|
|
$
|
40.9
|
|
Net earnings
|
$
|
33.1
|
|
|
$
|
33.2
|
|
|
$
|
32.4
|
|
|
$
|
34.3
|
|
Net earnings attributable to Black Knight Financial Services, Inc.
|
$
|
11.4
|
|
|
$
|
11.4
|
|
|
$
|
11.2
|
|
|
$
|
11.8
|
|
Basic earnings per shares attributable to Black Knight Financial Services, Inc.
|
$
|
0.17
|
|
|
$
|
0.17
|
|
|
$
|
0.17
|
|
|
$
|
0.18
|
|
Diluted earnings per share attributable to Black Knight Financial Services, Inc.
|
$
|
0.17
|
|
|
$
|
0.17
|
|
|
$
|
0.16
|
|
|
$
|
0.17
|
|
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
|
$
|
14.5
|
|
|
$
|
7.8
|
|
|
$
|
30.0
|
|
|
$
|
30.1
|
|
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,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Technology
|
$
|
855.8
|
|
|
$
|
765.8
|
|
|
$
|
708.2
|
|
Data and Analytics
|
177.5
|
|
|
174.3
|
|
|
156.6
|
|
|||
Corporate and Other (1)
|
(7.3
|
)
|
|
(9.4
|
)
|
|
(12.7
|
)
|
|||
Total
|
$
|
1,026.0
|
|
|
$
|
930.7
|
|
|
$
|
852.1
|
|
(1)
|
Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.
|
•
|
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; and
|
•
|
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.
|
•
|
Evolving regulation
. Most U.S. mortgage market participants have become subject to increased 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 requirements.
|
•
|
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 that 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.
|
•
|
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.
|
•
|
Transition and integration costs
for 2016 consist of incremental costs associated with acquisitions and professional services related to the planned distribution of FNF's ownership interest. In 2015, these consist of costs related to our IPO, as well as member management fees through May 25, 2015. In 2014, these 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.
|
•
|
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 acquisitions. It also includes the amortization of previously deferred implementation-related expenses.
|
•
|
Interest expense
subsequent to May 26, 2015, consists of interest on the Senior Notes, interest on our new credit 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 11 in the Notes to Consolidated Financial Statements for a more detailed discussion of our Interest expense. In 2014 and 2015 through May 26, 2015, Interest expense consisted of interest on the Senior Notes and interest on the former intercompany notes and the former mirror note that were payable to FNF.
|
•
|
Other expense, net
for 2016 primarily consisted of litigation-related costs primarily associated with the Merion Capital legal matter, as described in Note 12 to the Notes to Consolidated Financial Statements. Other expense, net for 2015 includes a $4.8 million net loss on the partial redemption of the Senior Notes, as described in Note 11 to the Notes to Consolidated Financial Statements. In 2014, Other expense, net 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.
|
•
|
Income tax expense (benefit)
represents federal, state, local and foreign taxes based on income attributable to Black Knight in multiple jurisdictions.
|
•
|
Adjusted Revenues
— We define Adjusted Revenues as Revenues adjusted to include the revenues that were not recorded by Black Knight during the periods presented due to the deferred revenue purchase accounting adjustment recorded in accordance with GAAP. These adjustments are reflected in Corporate and Other.
|
•
|
Adjusted EBITDA
— We define Adjusted EBITDA as Net earnings, with adjustments to reflect the addition or elimination of certain income statement items including, but not limited to (i) depreciation and amortization; (ii) interest expense; (iii) income tax expense; (iv) the deferred revenue purchase accounting adjustment recorded in accordance with GAAP; (v) equity-based compensation; (vi) charges associated with significant legal and regulatory matters; (vii) member management fees paid to FNF and THL Managers, LLC; (viii) exit costs, impairments and other charges; (ix) costs associated with debt and equity offerings; (x) acquisition-related costs; (xi) discontinued operations and (xii) other expenses, net. These adjustments are reflected in Corporate and Other.
|
•
|
Adjusted EBITDA Margin
— Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by Adjusted Revenues.
|
|
Year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues
|
$
|
1,026.0
|
|
|
$
|
930.7
|
|
|
$
|
852.1
|
|
Expenses:
|
|
|
|
|
|
||||||
Operating expenses
|
582.6
|
|
|
538.2
|
|
|
514.9
|
|
|||
Depreciation and amortization
|
208.3
|
|
|
194.3
|
|
|
188.8
|
|
|||
Transition and integration costs
|
2.3
|
|
|
8.0
|
|
|
119.3
|
|
|||
Total expenses
|
793.2
|
|
|
740.5
|
|
|
823.0
|
|
|||
Operating income
|
232.8
|
|
|
190.2
|
|
|
29.1
|
|
|||
Operating margin
|
22.7
|
%
|
|
20.4
|
%
|
|
3.4
|
%
|
|||
Interest expense
|
(67.6
|
)
|
|
(89.8
|
)
|
|
(128.7
|
)
|
|||
Other expense, net
|
(6.4
|
)
|
|
(4.6
|
)
|
|
(12.0
|
)
|
|||
Earnings (loss) from continuing operations before income taxes
|
158.8
|
|
|
95.8
|
|
|
(111.6
|
)
|
|||
Income tax expense (benefit)
|
25.8
|
|
|
13.4
|
|
|
(5.3
|
)
|
|||
Net earnings (loss) from continuing operations
|
133.0
|
|
|
82.4
|
|
|
(106.3
|
)
|
|||
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|||
Net earnings (loss)
|
$
|
133.0
|
|
|
$
|
82.4
|
|
|
$
|
(107.1
|
)
|
|
|
|
|
|
|
||||||
Key Performance Metrics (Non-GAAP)
|
|
|
|
|
|
||||||
Adjusted Revenues
|
$
|
1,033.3
|
|
|
$
|
940.3
|
|
|
$
|
864.9
|
|
Adjusted EBITDA
|
$
|
463.1
|
|
|
$
|
413.5
|
|
|
$
|
354.9
|
|
Adjusted EBITDA Margin
|
44.8
|
%
|
|
44.0
|
%
|
|
41.0
|
%
|
|
Year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues
|
$
|
1,026.0
|
|
|
$
|
930.7
|
|
|
$
|
852.1
|
|
Deferred revenue adjustment
|
7.3
|
|
|
9.6
|
|
|
12.8
|
|
|||
Adjusted Revenues
|
$
|
1,033.3
|
|
|
$
|
940.3
|
|
|
$
|
864.9
|
|
|
Year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net earnings (loss)
|
$
|
133.0
|
|
|
$
|
82.4
|
|
|
$
|
(107.1
|
)
|
Depreciation and amortization
|
208.3
|
|
|
194.3
|
|
|
188.8
|
|
|||
Interest expense
|
67.6
|
|
|
89.8
|
|
|
128.7
|
|
|||
Income tax expense (benefit)
|
25.8
|
|
|
13.4
|
|
|
(5.3
|
)
|
|||
Other expense, net
|
6.4
|
|
|
4.6
|
|
|
12.0
|
|
|||
Discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
0.8
|
|
|||
EBITDA
|
441.1
|
|
|
384.5
|
|
|
217.9
|
|
|||
Deferred revenue adjustment
|
7.3
|
|
|
9.6
|
|
|
12.8
|
|
|||
Equity-based compensation
|
12.4
|
|
|
11.4
|
|
|
6.4
|
|
|||
Transition and integration costs
|
2.3
|
|
|
3.6
|
|
|
119.3
|
|
|||
IPO costs
|
—
|
|
|
4.4
|
|
|
—
|
|
|||
Legal and regulatory matters
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|||
Adjusted EBITDA
|
$
|
463.1
|
|
|
$
|
413.5
|
|
|
$
|
354.9
|
|
Adjusted EBITDA Margin
|
44.8
|
%
|
|
44.0
|
%
|
|
41.0
|
%
|
|
Year ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Technology
|
$
|
855.8
|
|
|
$
|
765.8
|
|
Data and Analytics
|
177.5
|
|
|
174.3
|
|
||
Corporate and Other (1)
|
(7.3
|
)
|
|
(9.4
|
)
|
||
Total
|
$
|
1,026.0
|
|
|
$
|
930.7
|
|
(1)
|
Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.
|
|
Year ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Technology
|
$
|
368.0
|
|
|
$
|
341.4
|
|
Data and Analytics
|
151.0
|
|
|
145.5
|
|
||
Corporate and Other
|
63.6
|
|
|
51.3
|
|
||
Total
|
$
|
582.6
|
|
|
$
|
538.2
|
|
|
Year ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Technology
|
$
|
106.2
|
|
|
$
|
93.3
|
|
Data and Analytics
|
8.8
|
|
|
7.2
|
|
||
Corporate and Other (1)
|
93.3
|
|
|
93.8
|
|
||
Total
|
$
|
208.3
|
|
|
$
|
194.3
|
|
(1)
|
Depreciation and amortization for Corporate and Other primarily represents net incremental depreciation and amortization adjustments associated with the application of purchase accounting recorded in accordance with GAAP.
|
|
Year ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
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
|
||||
Technology
|
$
|
93.3
|
|
|
$
|
84.7
|
|
Data and Analytics
|
7.2
|
|
|
6.5
|
|
||
Corporate and Other
|
93.8
|
|
|
97.6
|
|
||
Total
|
$
|
194.3
|
|
|
$
|
188.8
|
|
|
Year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows provided by operating activities
|
$
|
325.7
|
|
|
$
|
248.2
|
|
|
$
|
19.4
|
|
Cash flows used in investing activities
|
(230.2
|
)
|
|
(102.5
|
)
|
|
(65.4
|
)
|
|||
Cash flows (used in) provided by financing activities
|
(147.6
|
)
|
|
(21.6
|
)
|
|
107.9
|
|
|||
Net (decrease) increase in cash and cash equivalents
|
$
|
(52.1
|
)
|
|
$
|
124.1
|
|
|
$
|
61.9
|
|
|
|
|
|
Payments due by period
|
||||||||||||||||
|
|
Total
|
|
2017
|
|
2018-2019
|
|
2020-2021
|
|
Thereafter
|
||||||||||
Long-term debt
|
|
$
|
1,574.0
|
|
|
$
|
64.0
|
|
|
$
|
188.0
|
|
|
$
|
558.0
|
|
|
$
|
764.0
|
|
Interest on long-term debt (1)
|
|
289.1
|
|
|
60.5
|
|
|
113.4
|
|
|
80.4
|
|
|
34.8
|
|
|||||
Data processing and maintenance commitments
|
|
63.9
|
|
|
36.1
|
|
|
27.4
|
|
|
0.4
|
|
|
—
|
|
|||||
Purchase obligation
|
|
18.5
|
|
|
18.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating lease payments
|
|
23.8
|
|
|
9.4
|
|
|
10.8
|
|
|
3.5
|
|
|
0.1
|
|
|||||
Capital lease payments
|
|
5.0
|
|
|
5.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other (2)
|
|
51.9
|
|
|
5.3
|
|
|
18.3
|
|
|
16.5
|
|
|
11.8
|
|
|||||
Total
|
|
$
|
2,026.2
|
|
|
$
|
198.8
|
|
|
$
|
357.9
|
|
|
$
|
658.8
|
|
|
$
|
810.7
|
|
(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, 2016
; (c) the Term B Loan variable rate debt is priced at the one-month LIBOR rate in effect as of
December 31, 2016
; (d) the Revolving Credit Facility is priced at the one-month LIBOR rate in effect as of
December 31, 2016
; (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 the Senior Notes, commitment fees on our
|
Item 7A.
|
Quantitative and Qualitative Disclosure about Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
Page
Number
|
|
|
||||||
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
133.9
|
|
|
$
|
186.0
|
|
Trade receivables, net
|
155.8
|
|
|
138.7
|
|
||
Prepaid expenses and other current assets
|
45.4
|
|
|
28.2
|
|
||
Receivables from related parties
|
4.1
|
|
|
7.6
|
|
||
Total current assets
|
339.2
|
|
|
360.5
|
|
||
Property and equipment, net
|
173.0
|
|
|
152.0
|
|
||
Computer software, net
|
450.0
|
|
|
466.5
|
|
||
Other intangible assets, net
|
299.5
|
|
|
330.2
|
|
||
Goodwill
|
2,303.8
|
|
|
2,220.1
|
|
||
Other non-current assets
|
196.5
|
|
|
174.4
|
|
||
Total assets
|
$
|
3,762.0
|
|
|
$
|
3,703.7
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
|
||
Trade accounts payable and other accrued liabilities
|
$
|
55.2
|
|
|
$
|
42.1
|
|
Accrued compensation and benefits
|
61.1
|
|
|
52.2
|
|
||
Current portion of long-term debt
|
63.4
|
|
|
43.5
|
|
||
Deferred revenues
|
47.4
|
|
|
40.4
|
|
||
Total current liabilities
|
227.1
|
|
|
178.2
|
|
||
Deferred revenues
|
77.3
|
|
|
56.2
|
|
||
Deferred income taxes, net
|
7.9
|
|
|
4.7
|
|
||
Long-term debt, net of current portion
|
1,506.8
|
|
|
1,618.0
|
|
||
Other non-current liabilities
|
3.5
|
|
|
1.6
|
|
||
Total liabilities
|
1,822.6
|
|
|
1,858.7
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
|
|
||
Equity:
|
|
|
|
|
|||
Class A common stock; $0.0001 par value; 350,000,000 shares authorized, 69,091,008 and 68,303,680 shares issued and outstanding as of December 31, 2016 and 2015, respectively
|
—
|
|
|
—
|
|
||
Class B common stock; $0.0001 par value; 200,000,000 shares authorized, 84,826,282 shares issued and outstanding as of December 31, 2016 and 2015
|
—
|
|
|
—
|
|
||
Preferred stock; $0.0001 par value; 25,000,000 shares authorized; none issued and outstanding
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
810.8
|
|
|
798.9
|
|
||
Retained earnings
|
65.7
|
|
|
19.9
|
|
||
Accumulated other comprehensive loss
|
(0.8
|
)
|
|
(0.1
|
)
|
||
Total shareholders' equity
|
875.7
|
|
|
818.7
|
|
||
Noncontrolling interests
|
1,063.7
|
|
|
1,026.3
|
|
||
Total equity
|
1,939.4
|
|
|
1,845.0
|
|
||
Total liabilities and equity
|
$
|
3,762.0
|
|
|
$
|
3,703.7
|
|
|
Year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues
|
$
|
1,026.0
|
|
|
$
|
930.7
|
|
|
$
|
852.1
|
|
Expenses:
|
|
|
|
|
|
||||||
Operating expenses
|
582.6
|
|
|
538.2
|
|
|
514.9
|
|
|||
Depreciation and amortization
|
208.3
|
|
|
194.3
|
|
|
188.8
|
|
|||
Transition and integration costs
|
2.3
|
|
|
8.0
|
|
|
119.3
|
|
|||
Total expenses
|
793.2
|
|
|
740.5
|
|
|
823.0
|
|
|||
Operating income
|
232.8
|
|
|
190.2
|
|
|
29.1
|
|
|||
Other income and expense:
|
|
|
|
|
|
||||||
Interest expense
|
(67.6
|
)
|
|
(89.8
|
)
|
|
(128.7
|
)
|
|||
Other expense, net
|
(6.4
|
)
|
|
(4.6
|
)
|
|
(12.0
|
)
|
|||
Total other expense, net
|
(74.0
|
)
|
|
(94.4
|
)
|
|
(140.7
|
)
|
|||
Earnings (loss) from continuing operations before income taxes
|
158.8
|
|
|
95.8
|
|
|
(111.6
|
)
|
|||
Income tax expense (benefit)
|
25.8
|
|
|
13.4
|
|
|
(5.3
|
)
|
|||
Net earnings (loss) from continuing operations
|
133.0
|
|
|
82.4
|
|
|
(106.3
|
)
|
|||
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|||
Net earnings (loss)
|
133.0
|
|
|
82.4
|
|
|
(107.1
|
)
|
|||
Less: Net earnings (loss) attributable to noncontrolling interests
|
87.2
|
|
|
62.4
|
|
|
(107.1
|
)
|
|||
Net earnings attributable to Black Knight Financial Services, Inc.
|
$
|
45.8
|
|
|
$
|
20.0
|
|
|
$
|
—
|
|
Other comprehensive earnings (loss):
|
|
|
|
|
|
||||||
Unrealized holding losses, net of tax
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
|||
Reclassification adjustments for losses included in net earnings,
net of tax (1)
|
0.5
|
|
|
—
|
|
|
—
|
|
|||
Total unrealized losses on interest rate swaps, net of tax (2)
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
|||
Foreign currency translation adjustment
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|||
Other comprehensive loss
|
(0.7
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|||
Comprehensive earnings (loss) attributable to noncontrolling interests
|
86.0
|
|
|
62.4
|
|
|
(107.1
|
)
|
|||
Comprehensive earnings (loss)
|
$
|
131.1
|
|
|
$
|
82.3
|
|
|
$
|
(107.2
|
)
|
|
|
|
|
|
|
||||||
|
Year ended December 31, 2016
|
|
May 26, 2015 through
December 31, 2015
|
|
|
||||||
Net earnings per share attributable to Black Knight Financial Services, Inc., Class A common shareholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.69
|
|
|
$
|
0.31
|
|
|
|
||
Diluted
|
$
|
0.67
|
|
|
$
|
0.29
|
|
|
|
||
Weighted average shares of Class A common stock outstanding (see Note 5):
|
|
|
|
|
|
||||||
Basic
|
65.9
|
|
|
64.4
|
|
|
|
||||
Diluted
|
67.9
|
|
|
67.9
|
|
|
|
(1)
|
Amounts reclassified to net earnings relate to losses on interest rate swaps and are included in Interest expense on the Consolidated Statements of Operations and Comprehensive Earnings (Loss). Amount is net of income tax expense of
$0.3 million
for the year ended December 31, 2016.
|
(2)
|
Net of income tax benefit of
$0.4 million
for the year ended December 31, 2016.
|
|
Black Knight Financial Services, LLC
|
||||||||||||||||||
|
Contributed member capital
|
|
Accumulated deficit
|
|
Accumulated
other
comprehensive
loss
|
|
Total equity
|
|
Redeemable members' interest
|
||||||||||
Balance, 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 interests expense
|
6.1
|
|
|
—
|
|
|
—
|
|
|
6.1
|
|
|
—
|
|
|||||
Dividend profits interests to Fidelity National Financial, Inc. for awards granted to non-employees
|
3.2
|
|
|
(3.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Redemption values of profits interests grants
|
(28.1
|
)
|
|
—
|
|
|
—
|
|
|
(28.1
|
)
|
|
28.1
|
|
|||||
Net 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
|
|
|
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
|
|
|
—
|
|
|||||||||||
Issuance of restricted shares of Class A common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.9
|
|
|
—
|
|
|||||||||||
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45.8
|
|
|
—
|
|
|
87.2
|
|
|
133.0
|
|
|
—
|
|
|||||||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|||||||||||
Unrealized loss on interest rate swaps
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
(1.2
|
)
|
|
(1.8
|
)
|
|
—
|
|
|||||||||||
Tax distributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(48.6
|
)
|
|
(48.6
|
)
|
|
—
|
|
|||||||||||
Balance,
December 31, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
69.1
|
|
|
$
|
—
|
|
|
84.8
|
|
|
$
|
—
|
|
|
$
|
810.8
|
|
|
$
|
65.7
|
|
|
$
|
(0.8
|
)
|
|
$
|
1,063.7
|
|
|
$
|
1,939.4
|
|
|
$
|
—
|
|
|
Year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|||||
Net earnings (loss)
|
$
|
133.0
|
|
|
$
|
82.4
|
|
|
$
|
(107.1
|
)
|
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
208.3
|
|
|
194.3
|
|
|
188.8
|
|
|||
Amortization of debt issuance costs, bond premium and original issue discount
|
2.7
|
|
|
0.8
|
|
|
(2.1
|
)
|
|||
Loss on extinguishment of debt, net
|
—
|
|
|
4.8
|
|
|
—
|
|
|||
Deferred income taxes, net
|
3.2
|
|
|
11.8
|
|
|
0.1
|
|
|||
Equity-based compensation
|
12.4
|
|
|
11.4
|
|
|
6.4
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Trade and other receivables, including receivables from related parties
|
(6.4
|
)
|
|
(20.9
|
)
|
|
0.2
|
|
|||
Prepaid expenses and other assets
|
(11.2
|
)
|
|
(6.4
|
)
|
|
(9.5
|
)
|
|||
Deferred contract costs
|
(51.9
|
)
|
|
(54.9
|
)
|
|
(42.5
|
)
|
|||
Deferred revenues
|
26.2
|
|
|
32.6
|
|
|
27.8
|
|
|||
Trade accounts payable and other accrued liabilities
|
9.4
|
|
|
(7.7
|
)
|
|
(42.7
|
)
|
|||
Net cash provided by operating activities
|
325.7
|
|
|
248.2
|
|
|
19.4
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|||||
Additions to property and equipment
|
(38.1
|
)
|
|
(45.6
|
)
|
|
(21.4
|
)
|
|||
Additions to computer software
|
(41.9
|
)
|
|
(50.1
|
)
|
|
(45.5
|
)
|
|||
Business acquisitions, net of cash acquired
|
(150.2
|
)
|
|
—
|
|
|
—
|
|
|||
Investment in property records database
|
—
|
|
|
(6.8
|
)
|
|
—
|
|
|||
Proceeds from sale of PCLender
|
—
|
|
|
—
|
|
|
1.5
|
|
|||
Net cash used in investing activities
|
(230.2
|
)
|
|
(102.5
|
)
|
|
(65.4
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|||||
Borrowings, net of original issue discount
|
55.0
|
|
|
1,299.0
|
|
|
88.0
|
|
|||
Debt service payments
|
(149.0
|
)
|
|
(1,745.9
|
)
|
|
(432.2
|
)
|
|||
Distributions to members
|
(48.6
|
)
|
|
(17.4
|
)
|
|
(16.9
|
)
|
|||
Capital lease payments
|
(5.0
|
)
|
|
—
|
|
|
—
|
|
|||
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
|
|
|||
Net cash (used in) provided by financing activities
|
(147.6
|
)
|
|
(21.6
|
)
|
|
107.9
|
|
|||
Net (decrease) increase in cash and cash equivalents
|
(52.1
|
)
|
|
124.1
|
|
|
61.9
|
|
|||
Cash and cash equivalents, beginning of period
|
186.0
|
|
|
61.9
|
|
|
—
|
|
|||
Cash and cash equivalents, end of period
|
$
|
133.9
|
|
|
$
|
186.0
|
|
|
$
|
61.9
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|||||
Interest paid
|
$
|
(60.2
|
)
|
|
$
|
(89.2
|
)
|
|
$
|
(131.8
|
)
|
Income taxes (paid) refunded, net
|
$
|
(21.9
|
)
|
|
$
|
0.2
|
|
|
$
|
30.7
|
|
(1)
|
Basis of Presentation
|
•
|
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 11)
|
|
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
|
103.0
|
|
|
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
|
2,148.5
|
|
|
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,
|
||||||
|
2016
|
|
2015
|
||||
Unrestricted:
|
|
|
|
||||
Cash
|
$
|
129.8
|
|
|
$
|
52.3
|
|
Cash equivalents
|
1.8
|
|
|
130.1
|
|
||
Total unrestricted cash and cash equivalents
|
131.6
|
|
|
182.4
|
|
||
Restricted cash equivalents (1)
|
2.3
|
|
|
3.6
|
|
||
Total cash and cash equivalents
|
$
|
133.9
|
|
|
$
|
186.0
|
|
(1)
|
Restricted cash equivalents relate to our subsidiary, I-Net Reinsurance Limited, and are held in trust until the final reinsurance policy is canceled.
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Trade receivables — billed
|
$
|
115.4
|
|
|
$
|
102.7
|
|
Trade receivables — unbilled
|
42.6
|
|
|
38.5
|
|
||
Total trade receivables
|
158.0
|
|
|
141.2
|
|
||
Allowance for doubtful accounts
|
(2.2
|
)
|
|
(2.5
|
)
|
||
Total trade receivables, net
|
$
|
155.8
|
|
|
$
|
138.7
|
|
|
|
Beginning balance
|
|
Bad debt expense
|
|
Write-offs, net of recoveries
|
|
Transfers and acquisitions
|
|
Ending balance
|
||||||||||
Year ended December 31, 2014
|
|
$
|
—
|
|
|
$
|
(1.5
|
)
|
|
$
|
0.1
|
|
|
$
|
(0.2
|
)
|
|
$
|
(1.6
|
)
|
Year ended December 31, 2015
|
|
(1.6
|
)
|
|
(2.1
|
)
|
|
1.1
|
|
|
0.1
|
|
|
(2.5
|
)
|
|||||
Year ended December 31, 2016
|
|
(2.5
|
)
|
|
(0.6
|
)
|
|
0.9
|
|
|
—
|
|
|
(2.2
|
)
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Prepaid expenses
|
$
|
37.2
|
|
|
$
|
25.0
|
|
Other current assets
|
8.2
|
|
|
3.2
|
|
||
Prepaid expenses and other current assets
|
$
|
45.4
|
|
|
$
|
28.2
|
|
|
Year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Property and equipment
|
$
|
28.4
|
|
|
$
|
28.4
|
|
|
$
|
29.6
|
|
Computer software
|
78.0
|
|
|
70.3
|
|
|
65.2
|
|
|||
Other intangible assets
|
76.4
|
|
|
86.4
|
|
|
93.0
|
|
|||
Deferred contract costs
|
25.5
|
|
|
9.2
|
|
|
1.0
|
|
|||
Total
|
$
|
208.3
|
|
|
$
|
194.3
|
|
|
$
|
188.8
|
|
(
4
)
|
Business Acquisitions
|
Cash paid from cash on hand
|
$
|
95.6
|
|
Cash paid from Revolving Credit Facility (Note 11)
|
25.0
|
|
|
Less: cash acquired
|
(5.6
|
)
|
|
Total consideration paid, net
|
$
|
115.0
|
|
Total purchase price consideration
|
$
|
115.0
|
|
|
|
||
Trade receivables
|
$
|
3.8
|
|
Prepaid expenses and other current assets
|
3.9
|
|
|
Property and equipment
|
1.1
|
|
|
Computer software
|
14.0
|
|
|
Other intangible assets (Note 9)
|
35.2
|
|
|
Goodwill (Note 10)
|
64.0
|
|
|
Total assets acquired
|
122.0
|
|
|
Trade accounts payable and other accrued liabilities
|
4.5
|
|
|
Accrued compensation and benefits
|
1.1
|
|
|
Deferred revenues
|
1.4
|
|
|
Total liabilities assumed
|
7.0
|
|
|
Net assets acquired
|
$
|
115.0
|
|
Cash paid from Revolving Credit Facility (Note 11)
|
$
|
30.0
|
|
Cash paid from cash on hand
|
6.0
|
|
|
Less: cash acquired
|
(0.8
|
)
|
|
Total consideration paid, net
|
$
|
35.2
|
|
Total purchase price consideration
|
$
|
35.2
|
|
|
|
||
Trade receivables
|
$
|
0.4
|
|
Prepaid expenses and other current assets
|
0.7
|
|
|
Property and equipment
|
0.1
|
|
|
Computer software
|
5.7
|
|
|
Other intangible assets (Note 9)
|
10.5
|
|
|
Goodwill (Note 10)
|
19.7
|
|
|
Total assets acquired
|
37.1
|
|
|
Trade accounts payable and other accrued liabilities
|
1.4
|
|
|
Deferred revenues
|
0.5
|
|
|
Total liabilities assumed
|
1.9
|
|
|
Net assets acquired
|
$
|
35.2
|
|
|
Gross carrying value
|
|
Weighted average
estimated life
(in years)
|
||||||||||
|
eLynx
|
|
Motivity
|
|
Total
|
|
|||||||
Computer software
|
$
|
14.0
|
|
|
$
|
5.7
|
|
|
$
|
19.7
|
|
|
5
|
Property and equipment
|
1.1
|
|
|
0.1
|
|
|
1.2
|
|
|
3
|
|||
Other intangible assets:
|
|
|
|
|
|
|
|
||||||
Customer relationships
|
34.6
|
|
|
8.4
|
|
|
43.0
|
|
|
10
|
|||
Trade names
|
0.4
|
|
|
1.7
|
|
|
2.1
|
|
|
8
|
|||
Non-compete agreements
|
0.2
|
|
|
0.4
|
|
|
0.6
|
|
|
4
|
|||
Total Other intangible assets (Note 9)
|
35.2
|
|
|
10.5
|
|
|
45.7
|
|
|
|
|||
Total gross carrying value
|
$
|
50.3
|
|
|
$
|
16.3
|
|
|
$
|
66.6
|
|
|
|
(
5
)
|
Earnings Per Share
|
|
Year ended
December 31, 2016
|
|
May 26, 2015 through
December 31, 2015
|
||||
Basic:
|
|
|
|
||||
Net earnings attributable to Black Knight
|
$
|
45.8
|
|
|
$
|
20.0
|
|
Shares used for basic net earnings per share:
|
|
|
|
||||
Weighted average shares of Class A common stock outstanding
|
65.9
|
|
|
64.4
|
|
||
Basic net earnings per share
|
$
|
0.69
|
|
|
$
|
0.31
|
|
|
|
|
|
||||
Diluted:
|
|
|
|
||||
Net earnings attributable to Black Knight
|
$
|
45.8
|
|
|
$
|
20.0
|
|
Shares used for diluted net earnings per share:
|
|
|
|
||||
Weighted average shares of Class A common stock outstanding
|
65.9
|
|
|
64.4
|
|
||
Dilutive effect of unvested restricted shares of Class A common stock
|
2.0
|
|
|
3.5
|
|
||
Weighted average shares of Class A common stock, diluted
|
67.9
|
|
|
67.9
|
|
||
Diluted net earnings per share
|
$
|
0.67
|
|
|
$
|
0.29
|
|
(6)
|
Related Party Transactions
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||
|
Shares
|
|
Ownership
percentage
|
|
Shares
|
|
Ownership
percentage
|
||||
Class A common stock:
|
|
|
|
|
|
|
|
||||
THL and its affiliates
|
39.3
|
|
|
25.5
|
%
|
|
39.3
|
|
|
25.7
|
%
|
Restricted shares
|
2.9
|
|
|
1.9
|
%
|
|
3.9
|
|
|
2.5
|
%
|
Other, including those publicly traded
|
26.9
|
|
|
17.5
|
%
|
|
25.1
|
|
|
16.4
|
%
|
Total shares of Class A common stock
|
69.1
|
|
|
44.9
|
%
|
|
68.3
|
|
|
44.6
|
%
|
Class B common stock:
|
|
|
|
|
|
|
|
||||
FNF
|
83.3
|
|
|
54.1
|
%
|
|
83.3
|
|
|
54.4
|
%
|
THL and its affiliates
|
1.5
|
|
|
1.0
|
%
|
|
1.5
|
|
|
1.0
|
%
|
Total shares of Class B common stock
|
84.8
|
|
|
55.1
|
%
|
|
84.8
|
|
|
55.4
|
%
|
Total common stock outstanding
|
153.9
|
|
|
100.0
|
%
|
|
153.1
|
|
|
100.0
|
%
|
|
Year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues
|
$
|
73.5
|
|
|
$
|
68.5
|
|
|
$
|
71.8
|
|
Operating expenses
|
15.6
|
|
|
8.0
|
|
|
(3.3
|
)
|
|||
Management fees (1)
|
—
|
|
|
2.3
|
|
|
5.8
|
|
|||
Interest expense (2)
|
3.9
|
|
|
39.5
|
|
|
97.5
|
|
(1)
|
Amounts are included in Transition and integration costs on the Consolidated Statements of Operations and Comprehensive Earnings (Loss).
|
(2)
|
Amounts include guarantee fee (see below).
|
|
Year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Operating expenses
|
$
|
1.3
|
|
|
$
|
1.6
|
|
|
$
|
1.6
|
|
Management fees (1)
|
—
|
|
|
1.3
|
|
|
3.2
|
|
|||
Software and software-related purchases
|
1.1
|
|
|
1.4
|
|
|
2.2
|
|
(1)
|
Amounts are included in Transition and integration costs on the Consolidated Statements of Operations and Comprehensive Earnings (Loss).
|
|
Year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Data and analytics services
|
$
|
47.2
|
|
|
$
|
48.1
|
|
|
$
|
55.4
|
|
Servicing, origination and default technology services
|
26.3
|
|
|
20.4
|
|
|
16.4
|
|
|||
Total related party revenues
|
$
|
73.5
|
|
|
$
|
68.5
|
|
|
$
|
71.8
|
|
|
Year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Data entry, indexing services and other operating expenses
|
$
|
9.6
|
|
|
$
|
8.7
|
|
|
$
|
11.8
|
|
Corporate services
|
10.4
|
|
|
8.8
|
|
|
12.4
|
|
|||
Technology and corporate services
|
(3.1
|
)
|
|
(7.9
|
)
|
|
(25.9
|
)
|
|||
Total related party expenses, net
|
$
|
16.9
|
|
|
$
|
9.6
|
|
|
$
|
(1.7
|
)
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Land
|
$
|
11.9
|
|
|
$
|
11.9
|
|
Buildings and improvements
|
64.1
|
|
|
62.3
|
|
||
Leasehold improvements
|
4.8
|
|
|
4.7
|
|
||
Computer equipment
|
172.5
|
|
|
128.8
|
|
||
Furniture, fixtures and other equipment
|
9.2
|
|
|
6.1
|
|
||
Property and equipment
|
262.5
|
|
|
213.8
|
|
||
Accumulated depreciation and amortization
|
(89.5
|
)
|
|
(61.8
|
)
|
||
Property and equipment, net
|
$
|
173.0
|
|
|
$
|
152.0
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Internally developed software
|
$
|
634.9
|
|
|
$
|
578.1
|
|
Purchased software
|
42.4
|
|
|
37.8
|
|
||
Computer software
|
677.3
|
|
|
615.9
|
|
||
Accumulated amortization
|
(227.3
|
)
|
|
(149.4
|
)
|
||
Computer software, net
|
$
|
450.0
|
|
|
$
|
466.5
|
|
2017 (1)
|
$
|
83.7
|
|
2018
|
85.0
|
|
|
2019
|
74.7
|
|
|
2020
|
66.8
|
|
|
2021
|
52.7
|
|
(1)
|
Assumes assets not in service as of
December 31, 2016
are placed in service equally throughout the year.
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
|
Gross carrying
amount |
|
Accumulated
amortization |
|
Net carrying
amount |
|
Gross carrying
amount |
|
Accumulated
amortization |
|
Net carrying
amount |
||||||||||||
Customer relationships
|
|
$
|
557.8
|
|
|
$
|
(260.7
|
)
|
|
$
|
297.1
|
|
|
$
|
514.8
|
|
|
$
|
(186.3
|
)
|
|
$
|
328.5
|
|
Other
|
|
12.5
|
|
|
(10.1
|
)
|
|
2.4
|
|
|
9.8
|
|
|
(8.1
|
)
|
|
1.7
|
|
||||||
Total intangible assets
|
|
$
|
570.3
|
|
|
$
|
(270.8
|
)
|
|
$
|
299.5
|
|
|
$
|
524.6
|
|
|
$
|
(194.4
|
)
|
|
$
|
330.2
|
|
2017
|
$
|
67.8
|
|
2018
|
56.5
|
|
|
2019
|
55.8
|
|
|
2020
|
45.0
|
|
|
2021
|
34.2
|
|
|
Technology
|
|
Data and Analytics
|
|
Corporate and Other
|
|
Total
|
||||||||
Balance, December 31, 2014
|
$
|
2,048.0
|
|
|
$
|
172.1
|
|
|
$
|
—
|
|
|
$
|
2,220.1
|
|
Activity
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Balance, December 31, 2015
|
2,048.0
|
|
|
172.1
|
|
|
—
|
|
|
2,220.1
|
|
||||
Increases to goodwill related to:
|
|
|
|
|
|
|
|
||||||||
eLynx acquisition (Note 4)
|
64.0
|
|
|
—
|
|
|
—
|
|
|
64.0
|
|
||||
Motivity acquisition (Note 4)
|
—
|
|
|
19.7
|
|
|
—
|
|
|
19.7
|
|
||||
Balance, December 31, 2016
|
$
|
2,112.0
|
|
|
$
|
191.8
|
|
|
$
|
—
|
|
|
$
|
2,303.8
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||||||||||
|
Principal
|
|
Debt
issuance costs |
|
Premium (discount)
|
|
Total
|
|
Principal
|
|
Debt
issuance
costs
|
|
Premium (discount)
|
|
Total
|
||||||||||||||||
Term A Loan
|
$
|
740.0
|
|
|
$
|
(7.0
|
)
|
|
$
|
—
|
|
|
$
|
733.0
|
|
|
$
|
780.0
|
|
|
$
|
(9.4
|
)
|
|
$
|
—
|
|
|
$
|
770.6
|
|
Term B Loan
|
394.0
|
|
|
(3.4
|
)
|
|
(0.8
|
)
|
|
389.8
|
|
|
398.0
|
|
|
(3.9
|
)
|
|
(0.9
|
)
|
|
393.2
|
|
||||||||
Revolving Credit Facility
|
50.0
|
|
|
(3.7
|
)
|
|
—
|
|
|
46.3
|
|
|
100.0
|
|
|
(4.8
|
)
|
|
—
|
|
|
95.2
|
|
||||||||
Senior Notes, issued at par
|
390.0
|
|
|
—
|
|
|
11.1
|
|
|
401.1
|
|
|
390.0
|
|
|
—
|
|
|
12.5
|
|
|
402.5
|
|
||||||||
Total long-term debt
|
1,574.0
|
|
|
(14.1
|
)
|
|
10.3
|
|
|
1,570.2
|
|
|
1,668.0
|
|
|
(18.1
|
)
|
|
11.6
|
|
|
1,661.5
|
|
||||||||
Less: Current portion of long-term debt
|
64.0
|
|
|
(0.6
|
)
|
|
—
|
|
|
63.4
|
|
|
44.0
|
|
|
(0.5
|
)
|
|
—
|
|
|
43.5
|
|
||||||||
Long-term debt, net of current portion
|
$
|
1,510.0
|
|
|
$
|
(13.5
|
)
|
|
$
|
10.3
|
|
|
$
|
1,506.8
|
|
|
$
|
1,624.0
|
|
|
$
|
(17.6
|
)
|
|
$
|
11.6
|
|
|
$
|
1,618.0
|
|
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%
|
Redemption Period
|
|
Percentage
|
October 15, 2017 to October 14, 2018
|
|
102.875%
|
October 15, 2018 to October 14, 2019
|
|
101.917%
|
October 15, 2019 to October 14, 2020
|
|
100.958%
|
October 15, 2020 and thereafter
|
|
100.000%
|
Balance Sheet Account
|
|
December 31, 2016
|
||
Other non-current liabilities
|
|
$
|
2.2
|
|
|
Year ended December 31, 2016
|
||||||
|
Amount of loss
recognized in OCE |
|
Amount of loss reclassified from Accumulated OCE
into Net earnings |
||||
Swap agreements
|
|
|
|
||||
Attributable to noncontrolling interests
|
$
|
(2.2
|
)
|
|
$
|
1.0
|
|
Attributable to Black Knight
|
(1.1
|
)
|
|
0.5
|
|
||
Total
|
$
|
(3.3
|
)
|
|
$
|
1.5
|
|
2017
|
$
|
64.0
|
|
2018
|
84.0
|
|
|
2019
|
104.0
|
|
|
2020
|
554.0
|
|
|
2021
|
4.0
|
|
|
Thereafter
|
764.0
|
|
|
Total
|
$
|
1,574.0
|
|
(
12
)
|
Commitments and Contingencies
|
2017
|
$
|
9.4
|
|
2018
|
6.1
|
|
|
2019
|
4.7
|
|
|
2020
|
2.9
|
|
|
2021
|
0.6
|
|
|
Thereafter
|
0.1
|
|
|
Total
|
$
|
23.8
|
|
2017
|
$
|
36.1
|
|
2018
|
26.7
|
|
|
2019
|
0.7
|
|
|
2020
|
0.4
|
|
|
Total
|
$
|
63.9
|
|
(13)
|
Equity-Based Compensation
|
|
Shares
|
|
Weighted average 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
|
|
|
*
|
|
|
Granted
|
844,646
|
|
|
$
|
28.56
|
|
Forfeited
|
(57,484
|
)
|
|
*
|
|
|
Vested
|
(1,793,132
|
)
|
|
*
|
|
|
Balance, December 31, 2016
|
2,908,374
|
|
|
*
|
|
*
|
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.
|
(14)
|
Employee Benefit Plans
|
|
Year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
15.3
|
|
|
$
|
0.5
|
|
|
$
|
(5.3
|
)
|
State
|
6.0
|
|
|
0.7
|
|
|
0.1
|
|
|||
Foreign
|
1.0
|
|
|
0.4
|
|
|
—
|
|
|||
Total current
|
22.3
|
|
|
1.6
|
|
|
(5.2
|
)
|
|||
|
|
|
|
|
|
||||||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
5.0
|
|
|
11.3
|
|
|
(0.1
|
)
|
|||
State
|
(1.1
|
)
|
|
0.5
|
|
|
—
|
|
|||
Foreign
|
(0.4
|
)
|
|
—
|
|
|
—
|
|
|||
Total deferred
|
3.5
|
|
|
11.8
|
|
|
(0.1
|
)
|
|||
Total income tax expense (benefit)
|
$
|
25.8
|
|
|
$
|
13.4
|
|
|
$
|
(5.3
|
)
|
|
Year ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Federal statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
2.0
|
|
|
1.3
|
|
|
—
|
|
Noncontrolling interests
|
(19.2
|
)
|
|
(14.9
|
)
|
|
—
|
|
Partnership income not subject to tax
|
—
|
|
|
(7.7
|
)
|
|
(22.2
|
)
|
Tax credits
|
(0.6
|
)
|
|
(0.3
|
)
|
|
—
|
|
Transaction costs
|
—
|
|
|
—
|
|
|
(8.1
|
)
|
Domestic Production Activities Deduction
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
Other
|
0.1
|
|
|
0.6
|
|
|
—
|
|
Effective tax rate
|
16.2
|
%
|
|
14.0
|
%
|
|
4.7
|
%
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryovers
|
$
|
—
|
|
|
$
|
10.1
|
|
Tax credit carryovers
|
—
|
|
|
0.7
|
|
||
State income tax
|
1.6
|
|
|
—
|
|
||
Other
|
0.4
|
|
|
0.2
|
|
||
Total deferred tax assets
|
2.0
|
|
|
11.0
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Partnership basis
|
(9.9
|
)
|
|
(15.6
|
)
|
||
Other - foreign
|
—
|
|
|
(0.1
|
)
|
||
Total deferred tax liabilities
|
(9.9
|
)
|
|
(15.7
|
)
|
||
Net deferred tax liability
|
$
|
(7.9
|
)
|
|
$
|
(4.7
|
)
|
(16)
|
Concentrations of Risk
|
(
17
)
|
Segment Information
|
•
|
Technology —
offers software and hosting solutions that support loan servicing, loan origination and settlement services.
|
•
|
Data and Analytics —
offers data and analytics solutions to 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.
|
|
Year ended December 31, 2016
|
||||||||||||||
|
Technology
|
|
Data and Analytics
|
|
Corporate and Other
|
|
Total
|
||||||||
Revenues
|
$
|
855.8
|
|
|
$
|
177.5
|
|
|
$
|
(7.3
|
)
|
(1)
|
$
|
1,026.0
|
|
Expenses:
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
368.0
|
|
|
151.0
|
|
|
63.6
|
|
|
582.6
|
|
||||
Transition and integration costs
|
—
|
|
|
—
|
|
|
2.3
|
|
|
2.3
|
|
||||
EBITDA
|
487.8
|
|
|
26.5
|
|
|
(73.2
|
)
|
|
441.1
|
|
||||
Depreciation and amortization
|
106.2
|
|
|
8.8
|
|
|
93.3
|
|
(2)
|
208.3
|
|
||||
Operating income (loss)
|
381.6
|
|
|
17.7
|
|
|
(166.5
|
)
|
|
232.8
|
|
||||
Interest expense
|
|
|
|
|
|
|
(67.6
|
)
|
|||||||
Other expense, net
|
|
|
|
|
|
|
(6.4
|
)
|
|||||||
Earnings before income taxes
|
|
|
|
|
|
|
158.8
|
|
|||||||
Income tax expense
|
|
|
|
|
|
|
25.8
|
|
|||||||
Net earnings
|
|
|
|
|
|
|
$
|
133.0
|
|
||||||
Balance sheet data:
|
|
|
|
|
|
|
|
||||||||
Total assets
|
$
|
3,196.7
|
|
|
$
|
355.6
|
|
|
$
|
209.7
|
|
|
$
|
3,762.0
|
|
Goodwill
|
$
|
2,112.0
|
|
|
$
|
191.8
|
|
|
$
|
—
|
|
|
$
|
2,303.8
|
|
(1)
|
Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.
|
(2)
|
Depreciation and amortization for Corporate and Other primarily represents net incremental depreciation and amortization adjustments associated with the application of purchase accounting recorded in accordance with GAAP.
|
|
Year ended December 31, 2015
|
||||||||||||||
|
Technology
|
|
Data and Analytics
|
|
Corporate and Other
|
|
Total
|
||||||||
Revenues
|
$
|
765.8
|
|
|
$
|
174.3
|
|
|
$
|
(9.4
|
)
|
(1)
|
$
|
930.7
|
|
Expenses:
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
341.4
|
|
|
145.5
|
|
|
51.3
|
|
|
538.2
|
|
||||
Transition and integration costs
|
—
|
|
|
—
|
|
|
8.0
|
|
|
8.0
|
|
||||
EBITDA
|
424.4
|
|
|
28.8
|
|
|
(68.7
|
)
|
|
384.5
|
|
||||
Depreciation and amortization
|
93.3
|
|
|
7.2
|
|
|
93.8
|
|
(2)
|
194.3
|
|
||||
Operating income (loss)
|
331.1
|
|
|
21.6
|
|
|
(162.5
|
)
|
|
190.2
|
|
||||
Interest expense
|
|
|
|
|
|
|
(89.8
|
)
|
|||||||
Other expense, net
|
|
|
|
|
|
|
(4.6
|
)
|
|||||||
Earnings before income taxes
|
|
|
|
|
|
|
95.8
|
|
|||||||
Income tax expense
|
|
|
|
|
|
|
13.4
|
|
|||||||
Net earnings
|
|
|
|
|
|
|
$
|
82.4
|
|
||||||
Balance sheet data:
|
|
|
|
|
|
|
|
||||||||
Total assets
|
$
|
3,126.7
|
|
|
$
|
312.1
|
|
|
$
|
264.9
|
|
|
$
|
3,703.7
|
|
Goodwill
|
$
|
2,048.0
|
|
|
$
|
172.1
|
|
|
$
|
—
|
|
|
$
|
2,220.1
|
|
(1)
|
Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.
|
(2)
|
Depreciation and amortization for Corporate and Other primarily represents net incremental depreciation and amortization adjustments associated with the application of purchase accounting recorded in accordance with GAAP.
|
|
Year ended December 31, 2014
|
||||||||||||||
|
Technology
|
|
Data and Analytics
|
|
Corporate and Other
|
|
Total
|
||||||||
Revenues
|
$
|
708.2
|
|
|
$
|
156.6
|
|
|
$
|
(12.7
|
)
|
(1)
|
$
|
852.1
|
|
Expenses:
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
338.2
|
|
|
140.2
|
|
|
36.5
|
|
|
514.9
|
|
||||
Transition and integration costs
|
—
|
|
|
—
|
|
|
119.3
|
|
|
119.3
|
|
||||
EBITDA
|
370.0
|
|
|
16.4
|
|
|
(168.5
|
)
|
|
217.9
|
|
||||
Depreciation and amortization
|
84.7
|
|
|
6.5
|
|
|
97.6
|
|
(2)
|
188.8
|
|
||||
Operating income (loss)
|
285.3
|
|
|
9.9
|
|
|
(266.1
|
)
|
|
29.1
|
|
||||
Interest expense
|
|
|
|
|
|
|
(128.7
|
)
|
|||||||
Other expense, net
|
|
|
|
|
|
|
(12.0
|
)
|
|||||||
Loss from continuing operations before income taxes
|
|
|
|
|
|
|
(111.6
|
)
|
|||||||
Income tax benefit
|
|
|
|
|
|
|
(5.3
|
)
|
|||||||
Net loss from continuing operations
|
|
|
|
|
|
|
$
|
(106.3
|
)
|
(1)
|
Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.
|
(2)
|
Depreciation and amortization for Corporate and Other primarily represents net incremental depreciation and amortization adjustments associated with the application of purchase accounting recorded in accordance with GAAP.
|
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, 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 24, 2017
|
Thomas J. Sanzone
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Kirk T. Larsen
|
|
Executive Vice President and Chief Financial Officer
|
|
February 24, 2017
|
Kirk T. Larsen
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ William P. Foley, II
|
|
Director and Executive Chairman of the Board
|
|
February 24, 2017
|
William P. Foley, II
|
|
|
|
|
|
|
|
|
|
/s/ Thomas M. Hagerty
|
|
Director
|
|
February 24, 2017
|
Thomas M. Hagerty
|
|
|
|
|
|
|
|
|
|
/s/ David K. Hunt
|
|
Director
|
|
February 24, 2017
|
David K. Hunt
|
|
|
|
|
|
|
|
|
|
/s/ Richard N. Massey
|
|
Director
|
|
February 24, 2017
|
Richard N. Massey
|
|
|
|
|
|
|
|
|
|
/s/ Ganesh B. Rao
|
|
Director
|
|
February 24, 2017
|
Ganesh B. Rao
|
|
|
|
|
|
|
|
|
|
/s/ John D. Rood
|
|
Director
|
|
February 24, 2017
|
John D. Rood
|
|
|
|
|
|
|
|
|
|
Exhibit Number
|
|
|
|
Description
|
|
3.1
|
|
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))
|
|
|
|
3.2
|
|
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))
|
|
|
|
4.1
|
|
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))
|
|
|
|
4.2
|
|
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))
|
|
|
|
4.3
|
|
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))
|
|
|
|
4.4
|
|
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))
|
|
|
|
4.5
|
|
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))
|
|
|
|
4.6
|
|
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))
|
|
|
|
4.7
|
|
Fourth Supplemental Indenture, dated as of June 6, 2016, by and among Black Knight InfoServ, LLC, Black Knight Lending Solutions, Inc., 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 4.1 to the Form 10-Q filed by Black Knight Financial Services, Inc. on August 9, 2016 (No. 001-37394))
|
|
|
|
4.8
|
|
Fifth Supplemental Indenture, dated as of July 12, 2016, by and among Black Knight InfoServ, LLC, Black Knight Lending Solutions, Inc., 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 4.2 to the Form 10-Q filed by Black Knight Financial Services, Inc. on August 9, 2016 (No. 001-37394))
|
|
|
|
4.9
|
|
Sixth Supplemental Indenture, dated as of August 4, 2016 by and among Black Knight InfoServ, LLC, Black Knight Lending Solutions, Inc., 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 10-Q filed by Black Knight Financial Services, Inc. on August 9, 2016 (No. 001-37394))
|
|
|
|
10.1
|
|
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))
|
|
|
|
10.2
|
|
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))
|
|
|
|
10.3
|
|
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))
|
|
|
|
10.4
|
|
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))
|
|
|
|
10.5
|
|
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))
|
|
|
|
10.6
|
|
Amended and Restated Employment Agreement by and between William P. Foley, II and BKFS I Management, Inc. dated January 8, 2016 (incorporated by reference to Exhibit 10.6 to the Form 10-K filed by Black Knight Financial Services, Inc. on February 26, 2016 (No. 001-37394)) (1)
|
|
|
|
10.7
|
|
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)
|
|
|
|
10.8
|
|
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)
|
|
|
|
10.9
|
|
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)
|
|
|
|
10.10
|
|
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)
|
|
|
|
10.11
|
|
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)
|
|
|
|
10.12
|
|
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)
|
|
|
|
10.13
|
|
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)
|
|
|
|
10.14
|
|
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)
|
|
|
|
10.15
|
|
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)
|
|
|
|
10.16
|
|
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)
|
|
|
|
10.17
|
|
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))
|
|
|
|
10.18
|
|
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)
|
|
|
|
10.19
|
|
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)
|
|
|
|
10.20
|
|
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)
|
|
|
|
10.21
|
|
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)
|
|
|
|
10.22
|
|
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)
|
|
|
|
10.23
|
|
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)
|
|
|
|
10.24
|
|
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)
|
|
|
|
10.25
|
|
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)
|
|
|
|
10.26
|
|
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)
|
|
|
|
10.27
|
|
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)
|
|
|
|
10.28
|
|
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))
|
|
|
|
10.29
|
|
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))
|
|
|
|
10.30
|
|
First Amendment to Amended and Restated Employment Agreement by and between Kirk T. Larsen and BKFS I Management, Inc. dated March 17, 2016 (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed by Black Knight Financial Services, Inc. on April 29, 2016 (No. 001-37394)) (1)
|
|
|
|
10.31
|
|
Amendment No. 2 to Amended and Restated Employment Agreement by and between Anthony Orefice and BKFS I Management, Inc. dated January 3, 2016 (incorporated by reference to Exhibit 10.2 to the Form 10-Q filed by Black Knight Financial Services, Inc. on April 29, 2016 (No. 001-37394)) (1)
|
|
|
|
10.32
|
|
Second Amendment to Employment Agreement by and between BKFS I Management, Inc. and Kirk Larsen effective April 30, 2016 (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed by Black Knight Financial Services, Inc. on August 9, 2016 (No. 001-37394)) (1)
|
|
|
|
10.33
|
|
Amendment No. 3 to Employment Agreement by and between BKFS I Management, Inc. and Tony Orefice effective April 30, 2016 (incorporated by reference to Exhibit 10.2 to the Form 10-Q filed by Black Knight Financial Services, Inc. on August 9, 2016 (No. 001-37394)) (1)
|
|
|
|
10.34
|
|
First Amendment to Amended and Restated Employment Agreement by and between BKFS I Management, Inc. and Tom Sanzone effective April 30, 2016 (incorporated by reference to Exhibit 10.3 to the Form 10-Q filed by Black Knight Financial Services, Inc. on August 9, 2016 (No. 001-37394)) (1)
|
|
|
|
10.35
|
|
First Amendment to Employment Agreement by and between BKFS I Management, Inc. and Michael L. Gravelle effective April 30, 2016 (incorporated by reference to Exhibit 10.4 to the Form 10-Q filed by Black Knight Financial Services, Inc. on August 9, 2016 (No. 001-37394)) (1)
|
|
|
|
10.36
|
|
Amendment to the Restricted Stock Award Agreement (Subject to Time-Based Restriction) (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed by Black Knight Financial Services, Inc. on November 3, 2016 (No. 001-37394))
|
|
|
|
10.37
|
|
Form of Notice of Restricted Stock Grant and Restricted Stock Award Agreement (2015) under Black Knight Financial Services, Inc. 2015 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.33 to the Form 10-K filed by Black Knight Financial Services, Inc. on February 26, 2016 (No. 001-37394)) (1)
|
|
|
|
10.38
|
|
Form of Notice of Restricted Stock Grant and Restricted Stock Award Agreement (2016) with a 3 year vesting under Black Knight Financial Services, Inc. 2015 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.34 to the Form 10-K filed by Black Knight Financial Services, Inc. on February 26, 2016 (No. 001-37394)) (1)
|
|
|
|
10.39
|
|
Form of Notice of Restricted Stock Grant and Restricted Stock Award Agreement (2016) with a 4 year vesting under Black Knight Financial Services, Inc. 2015 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.35 to the Form 10-K filed by Black Knight Financial Services, Inc. on February 26, 2016 (No. 001-37394)) (1)
|
|
|
|
10.40
|
|
Form of Notice of Restricted Stock Grant and Restricted Stock Award Agreement (2017) with a 3 year vesting under Black Knight Financial Services, Inc. 2015 Omnibus Incentive Plan (1)
|
|
|
|
10.41
|
|
Form of Notice of Restricted Stock Grant and Restricted Stock Award Agreement (2017) with a 4 year vesting under Black Knight Financial Services, Inc. 2015 Omnibus Incentive Plan (1)
|
|
|
|
21.1
|
|
Subsidiaries of the Registrant
|
|
|
|
23.1
|
|
Consent of KPMG LLP, Independent Registered Public Accounting Firm
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.1
|
|
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
|
|
|
|
32.2
|
|
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
|
|
|
|
99.1
|
|
Audited Consolidated Financial Statements of Lender Processing Services, Inc. as of January 1, 2014 for the day ended January 1, 2014
|
|
|
|
101
|
|
Interactive Data Files
|
(1)
|
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.
|
Name of Grantee:
|
|
Number of Shares of Restricted Stock Granted:
|
|
Effective Date of Grant:
|
February 3, 2017
|
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, 2017
|
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
|
eLynx Holdings, LLC
|
|
Delaware
|
eLynx Ltd.
|
|
Ohio
|
Espiel, LLC
|
|
Delaware
|
Fidelity National Commerce Velocity, LLC
|
|
Delaware
|
I-Net Reinsurance Limited
|
|
Turks & Caicos
|
McDash Analytics, LLC
|
|
Colorado
|
Motivity Solutions, LLC
|
|
Colorado
|
Property Insight, LLC
|
|
California
|
RealEC Technologies, LLC
|
|
Delaware
|
SwiftView, LLC
|
|
Oregon
|
(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)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(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)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(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 Sheet as of January 1, 2014
|
|
Consolidated Statement of Loss for the day ended January 1, 2014
|
|
Consolidated Statement of Comprehensive Loss for the day ended January 1, 2014
|
|
Consolidated Statement of Stockholders’ Equity for the day ended January 1, 2014
|
|
Consolidated Statement of Cash Flows for the day ended January 1, 2014
|
|
Notes to Consolidated Financial Statements
|
|
January 1,
2014
|
||
ASSETS
|
|||
Current assets:
|
|
||
Cash and cash equivalents
|
$
|
278.4
|
|
Trade receivables, net
|
204.8
|
|
|
Other receivables
|
7.6
|
|
|
Income tax receivable
|
34.9
|
|
|
Prepaid expenses and other current assets
|
35.0
|
|
|
Deferred income taxes, net
|
102.1
|
|
|
Total current assets
|
662.8
|
|
|
|
|
||
Property and equipment, net
|
119.8
|
|
|
Computer software, net
|
252.2
|
|
|
Other intangible assets, net
|
17.8
|
|
|
Goodwill
|
1,109.3
|
|
|
Other non-current assets (inclusive of investments carried at fair value) - note 4
|
284.7
|
|
|
Total assets
|
$
|
2,446.6
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||
Current liabilities:
|
|
||
Current portion of long-term debt
|
$
|
60.2
|
|
Trade accounts payable
|
46.5
|
|
|
Accrued salaries and benefits
|
89.6
|
|
|
Legal and regulatory accrual
|
99.3
|
|
|
Other accrued liabilities
|
130.7
|
|
|
Deferred revenues
|
54.7
|
|
|
Total current liabilities
|
481.0
|
|
|
|
|
||
Deferred revenues
|
34.7
|
|
|
Deferred income taxes, net
|
226.1
|
|
|
Long-term debt, net of current portion
|
1,007.9
|
|
|
Other non-current liabilities
|
32.9
|
|
|
Total liabilities
|
1,782.6
|
|
|
Commitments and contingencies (note 10)
|
|
||
Stockholders’ equity:
|
|
|
|
Preferred stock $0.0001 par value; 50 million shares authorized, none issued as of January 1, 2014
|
—
|
|
|
Common stock $0.0001 par value; 500 million shares authorized, 97.4 million shares issued as of January 1, 2014
|
—
|
|
|
Additional paid-in capital
|
229.4
|
|
|
Retained earnings
|
723.0
|
|
|
Accumulated other comprehensive loss
|
(2.8
|
)
|
|
Treasury stock at cost; 9.5 million shares as of January 1, 2014
|
(285.6
|
)
|
|
Total stockholders’ equity
|
664.0
|
|
|
Total liabilities and stockholders’ equity
|
$
|
2,446.6
|
|
|
Day Ended January 1,
2014
|
||
Expenses:
|
|
||
Exit costs, impairments and other charges
|
$
|
50.1
|
|
Operating loss
|
(50.1
|
)
|
|
Provision for income tax benefit
|
(11.1
|
)
|
|
Net loss
|
$
|
(39.0
|
)
|
|
|
||
Net loss per share — basic
|
$
|
(0.44
|
)
|
Weighted average shares outstanding — basic
|
87.9
|
|
|
|
|
||
Net loss per share — diluted
|
$
|
(0.44
|
)
|
Weighted average shares outstanding — diluted
|
88.4
|
|
|
Day Ended January 1,
2014
|
||
Net loss
|
$
|
(39.0
|
)
|
Other comprehensive earnings (loss)
|
—
|
|
|
Comprehensive loss
|
$
|
(39.0
|
)
|
|
Common
Shares
|
|
Common
Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Treasury
Shares
|
|
Treasury
Stock
|
|
Total Stockholders' Equity
|
||||||||||||||
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,
2014
|
||
Cash flows from operating activities:
|
|
||
Net loss
|
$
|
(39.0
|
)
|
Adjustments to reconcile net earnings to net cash used in operating activities:
|
|
||
Income tax receivable
|
(11.1
|
)
|
|
Accounts payable, accrued liabilities and other liabilities
|
(1.1
|
)
|
|
Net cash used in operating activities
|
(51.2
|
)
|
|
Net decrease in cash and cash equivalents
|
(51.2
|
)
|
|
Cash and cash equivalents, beginning of period
|
329.6
|
|
|
Cash and cash equivalents, end of period
|
$
|
278.4
|
|
|
|
||
Supplemental disclosures of cash flow information:
|
|
||
Cash paid for interest
|
$
|
—
|
|
Cash paid for taxes
|
$
|
—
|
|
|
|
(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 swap (note 9)
|
|
Liability
|
|
$
|
4.3
|
|
|
$
|
—
|
|
|
$
|
4.3
|
|
|
$
|
—
|
|
|
$
|
4.3
|
|
(c)
|
Management Estimates
|
(d)
|
Cash and Cash Equivalents
|
(e)
|
Trade Receivables, Net
|
|
January 1, 2014
|
||
Trade receivables — billed
|
$
|
216.6
|
|
Trade receivables — unbilled
|
28.1
|
|
|
Total trade receivables
|
244.7
|
|
|
Allowance for doubtful accounts
|
(39.9
|
)
|
|
Total trade receivables, net
|
$
|
204.8
|
|
(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
|
(4)
|
Investments
|
|
|
Adjusted
Cost
|
|
Gross Unrealized
Gains
|
|
Gross Unrealized
Losses
|
|
Fair Value
|
||||||||
As of January 1, 2014
|
|
$
|
77.0
|
|
|
$
|
1.5
|
|
|
$
|
(1.5
|
)
|
|
$
|
77.0
|
|
|
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
|
||
Land
|
$
|
4.9
|
|
Buildings
|
81.3
|
|
|
Leasehold improvements
|
16.8
|
|
|
Computer equipment
|
196.2
|
|
|
Furniture, fixtures, and other equipment
|
36.7
|
|
|
Property and equipment
|
335.9
|
|
|
Accumulated depreciation and amortization
|
(216.1
|
)
|
|
Property and equipment, net of depreciation and amortization
|
$
|
119.8
|
|
(6)
|
Computer Software
|
|
January 1, 2014
|
||
Software from business acquisitions
|
$
|
85.2
|
|
Capitalized software development costs
|
372.0
|
|
|
Purchased software
|
42.2
|
|
|
Computer software
|
499.4
|
|
|
Accumulated amortization
|
(247.2
|
)
|
|
Computer software, net of accumulated amortization
|
$
|
252.2
|
|
(7)
|
Intangible Assets
|
|
|
January 1, 2014
|
||||||||||
|
|
Gross Carrying
Amount |
|
Accumulated
Amortization |
|
Net Carrying
Amount |
||||||
Customer relationships
|
|
$
|
251.2
|
|
|
$
|
(242.4
|
)
|
|
$
|
8.8
|
|
Customer contracts
|
|
40.6
|
|
|
(40.6
|
)
|
|
—
|
|
|||
Purchase data files
|
|
11.3
|
|
|
(4.9
|
)
|
|
6.4
|
|
|||
Other
|
|
7.8
|
|
|
(5.2
|
)
|
|
2.6
|
|
|||
Total Intangible Assets
|
|
$
|
310.9
|
|
|
$
|
(293.1
|
)
|
|
$
|
17.8
|
|
2014
|
$
|
3.9
|
|
2015
|
3.6
|
|
|
2016
|
2.9
|
|
|
2017
|
2.3
|
|
|
2018
|
1.8
|
|
|
January 1, 2014
|
||
Other operating expense accruals
|
$
|
48.0
|
|
Title claims reserve
|
66.3
|
|
|
Recording and transfer tax liabilities
|
8.7
|
|
|
Interest accrual on debt and swap obligations
|
7.7
|
|
|
Total other accrued liabilities
|
$
|
130.7
|
|
Balance Sheet Account
|
|
January 1, 2014
|
||
Other long-term liabilities
|
|
$
|
4.3
|
|
2014
|
$
|
60.2
|
|
2015
|
80.2
|
|
|
2016
|
327.7
|
|
|
2017
|
—
|
|
|
2018
|
—
|
|
|
Thereafter
|
600.0
|
|
|
Total
|
$
|
1,068.1
|
|
(10)
|
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
|
|
(11)
|
Employee Benefit Plans
|
|
|
Number of Shares
|
|
Weighted Average
Exercise Price
|
|||
Outstanding as of January 1, 2014
|
|
3.2
|
|
|
$
|
29.37
|
|
|
|
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 January 1, 2014
|
|
1.5
|
|
|
$
|
25.40
|
|
(12)
|
Income Taxes
|
|
January 1,
|
||
|
2014
|
||
Current provision:
|
|
||
Federal
|
$
|
(11.1
|
)
|
Total current provision
|
(11.1
|
)
|
|
Total benefit for income taxes
|
$
|
(11.1
|
)
|
|
January 1,
|
|
|
2014
|
|
Federal statutory income tax rate
|
35.0
|
%
|
Transaction costs
|
(12.8
|
)
|
Effective income tax rate
|
22.2
|
%
|
|
January 1, 2014
|
||
Deferred income tax assets:
|
|
|
|
Accruals and reserves
|
$
|
49.0
|
|
Employee benefit accruals
|
30.5
|
|
|
Deferred revenue
|
30.1
|
|
|
Allowance for doubtful accounts
|
15.2
|
|
|
Net operating losses
|
8.6
|
|
|
Investments
|
1.7
|
|
|
Total gross deferred income tax assets
|
135.1
|
|
|
Less: valuation allowance
|
—
|
|
|
Total deferred income tax assets
|
135.1
|
|
|
Deferred income tax liabilities:
|
|
|
|
Amortization of goodwill and intangible assets
|
(225.4
|
)
|
|
Depreciation
|
(15.1
|
)
|
|
Deferred contract costs
|
(18.2
|
)
|
|
State taxes
|
(0.4
|
)
|
|
Total deferred income tax liabilities
|
(259.1
|
)
|
|
Net deferred income tax liabilities
|
$
|
(124.0
|
)
|
|
January 1, 2014
|
||
Current assets
|
$
|
102.1
|
|
Non-current liabilities
|
(226.1
|
)
|
|
Net deferred income tax liabilities
|
$
|
(124.0
|
)
|
|
Gross Amount
|
||
Amount of unrecognized tax benefit as of January 1, 2014
|
$
|
1.0
|
|
(13)
|
Segment Information
|
|
Technology,
Data and
Analytics
|
|
Transaction
Services
|
|
Corporate
and Other
|
|
Total
|
||||||||
Exit costs, impairments and other charges
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
50.1
|
|
|
$
|
50.1
|
|
Operating loss
|
—
|
|
|
—
|
|
|
(50.1
|
)
|
|
(50.1
|
)
|
||||
Income tax benefit
|
—
|
|
|
—
|
|
|
(11.1
|
)
|
|
(11.1
|
)
|
||||
Loss from continuing operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(39.0
|
)
|
|
$
|
(39.0
|
)
|
Total assets
|
$
|
1,314.2
|
|
|
$
|
669.3
|
|
|
$
|
463.1
|
|
|
$
|
2,446.6
|
|
Goodwill
|
$
|
724.8
|
|
|
$
|
384.5
|
|
|
$
|
—
|
|
|
$
|
1,109.3
|
|
(14)
|
Subsequent Events
|