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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, 2017
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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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81-5265638
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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
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(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Emerging growth company
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Page
Number
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Item 1.
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Business
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First lien mortgages
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Second lien mortgages
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Total first and second lien mortgages
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||||||||||||
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2017
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2016
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2017
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2016
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2017
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2016
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Active loans
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31.6
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30.9
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2.0
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1.1
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33.6
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32.0
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Market size
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51.2
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(1)
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50.9
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(1)
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15.4
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(2)
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14.8
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(2)
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66.6
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65.7
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Market share
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62
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%
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61
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%
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13
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%
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7
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%
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50
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%
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49
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%
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(1)
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According to the December Black Knight Mortgage Monitor Reports as of December 31, 2017 and 2016 for U.S. first lien mortgages.
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(2)
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According to the November 2017 and February 2017 Equifax National Consumer Credit Trends Reports as of September 30, 2017 and December 31, 2016, respectively, for U.S. second lien mortgages.
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•
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BKHI, a wholly-owned subsidiary of FNF, contributed all of its
83.3 million
shares of BKFS Class B common stock and all of its units of BKFS LLC to New BKH in exchange for 100% of the shares of New BKH common stock;
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•
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Following which BKHI converted into a limited liability company and distributed to FNF all of the shares of New BKH common stock held by BKHI;
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Immediately thereafter, FNF distributed the shares of New BKH common stock to the holders of FNF Group common stock on a pro-rata basis (the "Spin-off");
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Immediately following the Spin-off, Merger Sub One merged with and into New BKH (the "New BKH merger");
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In the New BKH merger, each outstanding share of New BKH common stock (other than shares owned by New BKH) was exchanged for one share of Black Knight, Inc. common stock. New BKH shares owned by New BKH immediately prior to the New BKH merger were canceled for no consideration. As a result of the Spin-Off and the New BKH merger, FNF Group shareholders received
0.3066322
shares of Black Knight, Inc. common stock for each share of FNF Group common stock they held;
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•
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Immediately following the New BKH merger, Merger Sub Two merged with and into Black Knight Financial Services, Inc. (the "BKFS merger");
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In the BKFS merger, each outstanding share of BKFS Class A common stock (other than shares owned by BKFS) was exchanged for one share of Black Knight, Inc. common stock. Shares of BKFS Class A common stock owned by BKFS, otherwise referred to as treasury stock, immediately prior to the BKFS merger were canceled for no consideration; and
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Black Knight, Inc. is the public company following the completion of the Distribution.
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2018
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2017
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2016
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Mortgage Originations:
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Purchase
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$
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1,183.0
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$
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1,110.0
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$
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1,052.0
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Refinance
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426.0
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600.0
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999.0
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Total
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$
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1,609.0
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$
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1,710.0
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$
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2,051.0
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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 contained broad changes for many sectors of the financial services and lending industries and established the CFPB, the 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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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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Increased demand for enhanced transparency and analytic insight
. As U.S. mortgage market participants work to minimize the risk in lending, servicing and capital markets, they rely on the integration of data and analytics with technologies that enhance the decision-making process. These industry participants rely on large comprehensive third-party databases coupled with enhanced analytics to achieve these goals.
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Servicing Software.
Our mortgage servicing platform LoanSphere 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 Software.
We offer two solutions that automate and facilitate the origination of mortgage loans in the United States: LoanSphere Empower, which supports retail and wholesale loan originations, and LoanSphere 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 software solutions 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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Property, Mortgage Performance Data and MLS
. We make our real estate database available to our clients in a standard, normalized format. We provide a rich and diverse data set for title production activities. We also provide tax status data on properties and offer a number of value-added analytic services designed to enable our clients to utilize our data to assess and mitigate risk, determine property values, track market performance and generate leads. We also provide an MLS system to large MLS groups in the U.S. and Canada.
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Mortgage and Real Estate Analytics
. We offer a broad range of property valuation services that allow our clients to analyze the value of underlying properties. These include, among others, automated valuation models, collateral risk scores, appraisal review services and valuation reconciliation services. To deliver these services, we utilize proprietary
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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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Market leadership with comprehensive and integrated solutions
. We are a leading provider of comprehensive and integrated solutions. 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 clients in the mortgage industry. We have used this insight to develop an integrated and comprehensive suite of proprietary software, data and analytics solutions to automate many of the mission-critical business processes across the entire homeownership lifecycle. 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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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 software solutions 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 analytical capabilities to create highly customized reports, including models of customer behavior for originators and servicers, portfolio analytics for capital markets and government agencies and proprietary market insights for real estate agencies. Our data and analytics capabilities are also embedded into our software solutions and workflow products, providing our clients with integrated and comprehensive solutions.
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Scalable and cost-effective operating model
. We believe we have a highly attractive and scalable operating model derived from our market leadership, hosted software solutions and the large number of clients we serve. 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 software solutions 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 software solutions, 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 software 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 software 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 and consumer loan, real estate and capital markets verticals for their platform, data and analytic needs. We
intend to enhance what we believe is a leadership position 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 homeownership lifecycle, 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 and consumer loan, real estate and capital market verticals. 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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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 laws, rules and regulations that affect our and our customers' businesses;
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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 software 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 software solutions;
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delays or difficulty in developing or implementing new, enhanced or existing mortgage processing or software solutions;
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change in the strength of the economy and housing market generally;
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our existing 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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the market price of our common stock may be volatile;
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future sales of our common stock in the public market;
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industry or securities analysts could publish unfavorable or inaccurate information about us;
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our charter and bylaws and provisions of Delaware law may discourage or prevent strategic transactions;
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our intention not to pay dividends on our common stock for the foreseeable future;
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if the Distribution is treated as a taxable transaction due to our acts or failure to act, we may have a significant indemnity obligation to FNF, which is not limited in amount or subject to any cap;
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the possibility that we will forgo certain transactions in order to avoid the risk of incurring significant tax-related liabilities; and
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restrictions on our ability to pursue potential business opportunities under a non-competition agreement with FNF that we entered in connection with the Distribution.
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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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•
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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
$1.4 billion
in principal amount of our debt bears interest at a floating rate as of
December 31, 2017
(an increase of one percentage point in the applicable interest rate could cause an increase in interest expense of approximately
$14.5 million
on an annual basis (
$6.5 million
including the effect
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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 of positive news by us or our competitors, such as announcements of new products, services, strategic investments or acquisitions;
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announcements of negative news by us or our competitors, such as announcements of poorer than expected results of operations, data breaches or significant litigation;
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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 common stock, including sales, distributions or issuances by us, our officers or directors and our significant shareholders, including THL and certain of their affiliates; and
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other developments affecting us, our industry or our competitors.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Location
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Number of locations
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Texas
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4
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California
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3
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Florida
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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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8
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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
eight
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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Black Knight
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Stock price
high
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Stock price
low
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||||
Year ended December 31, 2017
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|
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||||
First quarter
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$
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40.00
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$
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34.45
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Second quarter
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41.90
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38.10
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Third quarter
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44.75
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40.70
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Fourth quarter
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46.85
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42.00
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||
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||||
Year ended December 31, 2016
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|
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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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Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program (1)
|
|
Maximum Number of Shares That May Yet Be Purchased Under the Program (2)
|
|||||
2/3/2017 - 2/28/2017
|
|
—
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$
|
—
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|
|
—
|
|
|
10,000,000
|
|
3/1/2017 - 3/31/2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000,000
|
|
|
4/1/2017 - 4/30/2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000,000
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|
|
5/1/2017 - 5/31/2017
|
|
416,462
|
|
|
39.00
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|
416,462
|
|
|
9,583,538
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|
||
6/1/2017 - 6/30/2017
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|
773,659
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39.28
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|
773,659
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|
|
8,809,879
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|
||
7/1/2017 - 7/30/2017
|
|
—
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|
|
—
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|
|
—
|
|
|
8,809,879
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|
8/1/2017 - 8/31/2017
|
|
—
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|
|
—
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|
|
—
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|
|
8,809,879
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|
9/1/2017 - 9/30/2017
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|
—
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|
|
—
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|
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—
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|
|
8,809,879
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10/1/2017 - 10/31/2017
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|
—
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|
|
—
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|
|
—
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|
|
8,809,879
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11/1/2017 - 11/30/2017
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2,000,000
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|
45.07
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|
2,000,000
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|
|
6,809,879
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||
12/1/2017 - 12/31/2017
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|
—
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|
|
—
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|
|
—
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|
|
6,809,879
|
|
|
Total
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|
3,190,121
|
|
|
$
|
42.87
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|
|
3,190,121
|
|
|
6,809,879
|
|
(1)
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On January 31, 2017, our Board of Directors authorized a three-year share repurchase program, effective February 3, 2017, under which the Company may repurchase up to 10 million shares of its Class A common stock through February 2, 2020, through open market purchases, negotiated transactions or other means, in accordance with applicable securities laws and other restrictions. In connection with the Distribution, the Black Knight board of directors approved a share repurchase program authorizing the repurchase of shares of Black Knight, Inc. common stock consistent with the previous BKFS share repurchase program.
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(2)
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As of the last day of the applicable month.
|
Item 6.
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Selected Financial Data
|
|
Successor
|
|
|
Predecessor
|
||||||||||||||||
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Year ended December 31,
|
|
|
Period from October 16, 2013 through
December 31, 2013
|
||||||||||||||||
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2017
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2016
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2015
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2014
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|||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(In millions, except per share data)
|
|||||||||||||||||||
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
1,051.6
|
|
|
$
|
1,026.0
|
|
|
$
|
930.7
|
|
|
$
|
852.1
|
|
|
|
$
|
15.0
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating expenses
|
569.5
|
|
|
582.6
|
|
|
538.2
|
|
|
514.9
|
|
|
|
16.9
|
|
|||||
Depreciation and amortization
|
206.5
|
|
|
208.3
|
|
|
194.3
|
|
|
188.8
|
|
|
|
1.1
|
|
|||||
Transition and integration costs
|
13.1
|
|
|
2.3
|
|
|
8.0
|
|
|
119.3
|
|
|
|
—
|
|
|||||
Total expenses
|
789.1
|
|
|
793.2
|
|
|
740.5
|
|
|
823.0
|
|
|
|
18.0
|
|
|||||
Operating income (loss)
|
262.5
|
|
|
232.8
|
|
|
190.2
|
|
|
29.1
|
|
|
|
(3.0
|
)
|
|||||
Other income and expense:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net
|
(57.5
|
)
|
|
(67.6
|
)
|
|
(89.8
|
)
|
|
(128.7
|
)
|
|
|
—
|
|
|||||
Other expense, net
|
(12.6
|
)
|
|
(6.4
|
)
|
|
(4.6
|
)
|
|
(12.0
|
)
|
|
|
—
|
|
|||||
Total other expense, net
|
(70.1
|
)
|
|
(74.0
|
)
|
|
(94.4
|
)
|
|
(140.7
|
)
|
|
|
—
|
|
|||||
Earnings (loss) from continuing operations before income taxes
|
192.4
|
|
|
158.8
|
|
|
95.8
|
|
|
(111.6
|
)
|
|
|
(3.0
|
)
|
|||||
Income tax (benefit) expense
|
(61.8
|
)
|
|
25.8
|
|
|
13.4
|
|
|
(5.3
|
)
|
|
|
—
|
|
|||||
Net earnings (loss) from continuing operations
|
254.2
|
|
|
133.0
|
|
|
82.4
|
|
|
(106.3
|
)
|
|
|
(3.0
|
)
|
|||||
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|
|
—
|
|
|||||
Net earnings (loss)
|
254.2
|
|
|
133.0
|
|
|
82.4
|
|
|
(107.1
|
)
|
|
|
(3.0
|
)
|
|||||
Less: Net earnings (loss) attributable to noncontrolling interests
|
71.9
|
|
|
87.2
|
|
|
62.4
|
|
|
(107.1
|
)
|
|
|
(3.0
|
)
|
|||||
Net earnings attributable to Black Knight
|
$
|
182.3
|
|
|
$
|
45.8
|
|
|
$
|
20.0
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
May 26, 2015 through December 31, 2015
|
|
|
|
|
|
||||||||||
|
Year ended December 31,
|
|
|
|
|
|
|
|||||||||||||
|
2017
|
|
2016
|
|
|
|
|
|
|
|||||||||||
Net earnings per share attributable to Black Knight common shareholders:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
2.06
|
|
|
$
|
0.69
|
|
|
$
|
0.31
|
|
|
|
|
|
|
||||
Diluted
|
$
|
1.47
|
|
|
$
|
0.67
|
|
|
$
|
0.29
|
|
|
|
|
|
|
||||
Weighted average shares of common stock outstanding:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
88.7
|
|
|
65.9
|
|
|
64.4
|
|
|
|
|
|
|
|||||||
Diluted
|
152.4
|
|
|
67.9
|
|
|
67.9
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||||||
|
December 31,
|
|
|
December 31, 2013
|
||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|
|||||||||||
|
(In millions)
|
|||||||||||||||||||
Balance Sheets Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
16.2
|
|
|
$
|
133.9
|
|
|
$
|
186.0
|
|
|
$
|
61.9
|
|
|
|
$
|
7.4
|
|
Total assets
|
$
|
3,655.9
|
|
|
$
|
3,762.0
|
|
|
$
|
3,703.7
|
|
|
$
|
3,598.3
|
|
|
|
$
|
88.1
|
|
Total debt (current and long-term)
|
$
|
1,434.1
|
|
|
$
|
1,570.2
|
|
|
$
|
1,661.5
|
|
|
$
|
2,135.1
|
|
|
|
$
|
—
|
|
|
Day ended
January 1, 2014
|
|
Year ended
December 31, 2013 (1)
|
||||
|
|
||||||
|
(In millions, except per share data)
|
||||||
Statements of Operations Data:
|
|
|
|
||||
Revenues
|
$
|
—
|
|
|
$
|
1,716.2
|
|
Net (loss) earnings from continuing operations
|
$
|
(39.0
|
)
|
|
$
|
104.2
|
|
Net (loss) earnings
|
$
|
(39.0
|
)
|
|
$
|
102.7
|
|
Net earnings per share - basic from continuing operations
|
|
|
$
|
1.22
|
|
||
Net earnings per share - basic
|
|
|
$
|
1.20
|
|
||
Weighted average shares - basic
|
|
|
85.4
|
|
|||
Net earnings per share - diluted from continuing operations
|
|
|
$
|
1.21
|
|
||
Net earnings per share - diluted
|
|
|
$
|
1.19
|
|
||
Weighted average shares - diluted
|
|
|
85.9
|
|
|||
Balance Sheets Data:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
278.4
|
|
|
$
|
329.6
|
|
Total assets
|
$
|
2,446.6
|
|
|
$
|
2,486.7
|
|
Total debt (current and long-term)
|
$
|
1,068.1
|
|
|
$
|
1,068.1
|
|
Cash dividends per share
|
$
|
—
|
|
|
$
|
0.40
|
|
(1)
|
On June 30, 2014, we completed the sale of PCLender.com, Inc., 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)
|
||||||||||||||
2017
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
258.1
|
|
|
$
|
262.2
|
|
|
$
|
263.8
|
|
|
$
|
267.5
|
|
Earnings before income taxes and noncontrolling interests
|
$
|
39.9
|
|
|
$
|
38.3
|
|
|
$
|
53.1
|
|
|
$
|
61.1
|
|
Net earnings
|
$
|
33.9
|
|
|
$
|
29.2
|
|
|
$
|
43.9
|
|
|
$
|
147.2
|
|
Net earnings attributable to Black Knight
|
$
|
12.2
|
|
|
$
|
8.2
|
|
|
$
|
14.7
|
|
|
$
|
147.2
|
|
Basic earnings per shares attributable to Black Knight
|
$
|
0.18
|
|
|
$
|
0.12
|
|
|
$
|
0.22
|
|
|
$
|
0.98
|
|
Diluted earnings per share attributable to Black Knight
|
$
|
0.18
|
|
|
$
|
0.11
|
|
|
$
|
0.21
|
|
|
$
|
0.97
|
|
2016
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
241.9
|
|
|
$
|
255.5
|
|
|
$
|
267.1
|
|
|
$
|
261.5
|
|
Earnings 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
|
$
|
11.4
|
|
|
$
|
11.4
|
|
|
$
|
11.2
|
|
|
$
|
11.8
|
|
Basic earnings per shares attributable to Black Knight
|
$
|
0.17
|
|
|
$
|
0.17
|
|
|
$
|
0.17
|
|
|
$
|
0.18
|
|
Diluted earnings per share attributable to Black Knight
|
$
|
0.17
|
|
|
$
|
0.17
|
|
|
$
|
0.16
|
|
|
$
|
0.17
|
|
Item 7.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
First lien mortgages
|
|
|
Second lien mortgages
|
|
Total first and second lien mortgages
|
||||||||||||
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||
Active loans
|
31.6
|
|
|
30.9
|
|
|
|
2.0
|
|
|
1.1
|
|
|
33.6
|
|
|
32.0
|
|
Market size
|
51.2
|
|
(1)
|
50.9
|
|
(1)
|
|
15.4
|
|
(2)
|
14.8
|
|
(2)
|
66.6
|
|
|
65.7
|
|
Market share
|
62
|
%
|
|
61
|
%
|
|
|
13
|
%
|
|
7
|
%
|
|
50
|
%
|
|
49
|
%
|
(1)
|
According to the December Black Knight Mortgage Monitor Reports as of December 31, 2017 and 2016 for U.S. first lien mortgages.
|
(2)
|
According to the November 2017 and February 2017 Equifax National Consumer Credit Trends Reports as of September 30, 2017 and December 31, 2016, respectively, for U.S. second lien mortgages.
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Software Solutions
|
$
|
893.8
|
|
|
$
|
855.8
|
|
|
$
|
765.8
|
|
Data and Analytics
|
162.3
|
|
|
177.5
|
|
|
174.3
|
|
|||
Corporate and Other (1)
|
(4.5
|
)
|
|
(7.3
|
)
|
|
(9.4
|
)
|
|||
Total
|
$
|
1,051.6
|
|
|
$
|
1,026.0
|
|
|
$
|
930.7
|
|
(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, Inc. for the period September 30, 2017, the day subsequent to the Distribution, through December 31, 2017;
|
•
|
the consolidated financial position, results of operations and cash flows of BKFS for the period following the completion of our IPO on May 26, 2015 through September 29, 2017, the date of the Distribution; and
|
•
|
the consolidated financial position, results of operations and cash flows of BKFS LLC for the period from January 1, 2015 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 contained broad changes for many sectors of the financial services and lending industries and established the CFPB, the 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 2017 primarily represent legal and professional fees related to the Distribution and transition-related costs as we transfer certain corporate functions from FNF. In 2016, these consist of incremental costs associated with acquisitions and professional services related to the Distribution. In 2015, these consist of costs related to our IPO, as well as member management fees through May 25, 2015.
|
•
|
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 relationship assets 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 through April 25, 2017, 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 paid FNF for its ongoing guarantee of the Senior Notes through April 25, 2017. See Note
11
in the Notes to Consolidated Financial Statements for a more detailed discussion of our Interest expense and the Senior Notes redemption. From January 1, 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 2017 primarily consisted of amounts related to the Senior Notes redemption, Term A Loan and Revolving Credit Facility refinancing and the Term B Loan repricing. Other expense, net for 2016 primarily consisted of legal fees associated with litigation matters. 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.
|
•
|
Income tax (benefit) expense
represents federal, state, local and foreign taxes based on income attributable to Black Knight in multiple jurisdictions. In 2017, it includes a one-time non-cash net tax benefit of
$110.9 million
related to the revaluation of our deferred income tax assets and liabilities as a result of the Tax Reform Act.
|
•
|
Adjusted Revenues
— We define Adjusted Revenues as Revenues adjusted to include the revenues that were not recorded by us 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:
|
◦
|
Depreciation and amortization;
|
◦
|
Interest expense;
|
◦
|
Income tax (benefit) expense;
|
◦
|
Other expense, net;
|
◦
|
Loss (gain) from discontinued operations, net of tax;
|
◦
|
deferred revenue purchase accounting adjustment recorded in accordance with GAAP;
|
◦
|
equity-based compensation, including related payroll taxes;
|
◦
|
costs associated with debt and/or equity offerings, including the Distribution;
|
◦
|
spin-off related transition costs;
|
◦
|
member management fees paid to FNF and THL Managers, LLC; and
|
◦
|
acquisition-related costs.
|
•
|
Adjusted EBITDA Margin
— Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by Adjusted Revenues.
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
$
|
1,051.6
|
|
|
$
|
1,026.0
|
|
|
$
|
930.7
|
|
Expenses:
|
|
|
|
|
|
||||||
Operating expenses
|
569.5
|
|
|
582.6
|
|
|
538.2
|
|
|||
Depreciation and amortization
|
206.5
|
|
|
208.3
|
|
|
194.3
|
|
|||
Transition and integration costs
|
13.1
|
|
|
2.3
|
|
|
8.0
|
|
|||
Total expenses
|
789.1
|
|
|
793.2
|
|
|
740.5
|
|
|||
Operating income
|
262.5
|
|
|
232.8
|
|
|
190.2
|
|
|||
Operating margin
|
25.0
|
%
|
|
22.7
|
%
|
|
20.4
|
%
|
|||
Interest expense
|
(57.5
|
)
|
|
(67.6
|
)
|
|
(89.8
|
)
|
|||
Other expense, net
|
(12.6
|
)
|
|
(6.4
|
)
|
|
(4.6
|
)
|
|||
Earnings before income taxes
|
192.4
|
|
|
158.8
|
|
|
95.8
|
|
|||
Income tax (benefit) expense
|
(61.8
|
)
|
|
25.8
|
|
|
13.4
|
|
|||
Net earnings
|
$
|
254.2
|
|
|
$
|
133.0
|
|
|
$
|
82.4
|
|
|
|
|
|
|
|
||||||
Key Performance Metrics (Non-GAAP)
|
|
|
|
|
|
||||||
Adjusted Revenues
|
$
|
1,056.1
|
|
|
$
|
1,033.3
|
|
|
$
|
940.3
|
|
Adjusted EBITDA
|
$
|
505.8
|
|
|
$
|
463.1
|
|
|
$
|
413.5
|
|
Adjusted EBITDA Margin
|
47.9
|
%
|
|
44.8
|
%
|
|
44.0
|
%
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
$
|
1,051.6
|
|
|
$
|
1,026.0
|
|
|
$
|
930.7
|
|
Deferred revenue purchase accounting adjustment
|
4.5
|
|
|
7.3
|
|
|
9.6
|
|
|||
Adjusted Revenues
|
$
|
1,056.1
|
|
|
$
|
1,033.3
|
|
|
$
|
940.3
|
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net earnings
|
$
|
254.2
|
|
|
$
|
133.0
|
|
|
$
|
82.4
|
|
Depreciation and amortization
|
206.5
|
|
|
208.3
|
|
|
194.3
|
|
|||
Interest expense
|
57.5
|
|
|
67.6
|
|
|
89.8
|
|
|||
Income tax (benefit) expense
|
(61.8
|
)
|
|
25.8
|
|
|
13.4
|
|
|||
Other expense, net
|
12.6
|
|
|
6.4
|
|
|
4.6
|
|
|||
EBITDA
|
469.0
|
|
|
441.1
|
|
|
384.5
|
|
|||
Deferred revenue purchase accounting adjustment
|
4.5
|
|
|
7.3
|
|
|
9.6
|
|
|||
Equity-based compensation
|
19.2
|
|
|
12.4
|
|
|
11.4
|
|
|||
Debt and/or equity offering expenses
|
7.5
|
|
|
0.6
|
|
|
4.4
|
|
|||
Spin-off related transition costs
|
5.6
|
|
|
—
|
|
|
—
|
|
|||
Management fees
|
—
|
|
|
—
|
|
|
3.6
|
|
|||
Acquisition-related costs
|
—
|
|
|
1.7
|
|
|
—
|
|
|||
Adjusted EBITDA
|
$
|
505.8
|
|
|
$
|
463.1
|
|
|
$
|
413.5
|
|
Adjusted EBITDA Margin
|
47.9
|
%
|
|
44.8
|
%
|
|
44.0
|
%
|
|
Year ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Software Solutions
|
$
|
893.8
|
|
|
$
|
855.8
|
|
Data and Analytics
|
162.3
|
|
|
177.5
|
|
||
Corporate and Other (1)
|
(4.5
|
)
|
|
(7.3
|
)
|
||
Total
|
$
|
1,051.6
|
|
|
$
|
1,026.0
|
|
(1)
|
Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.
|
|
Year ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Software Solutions
|
$
|
370.8
|
|
|
$
|
368.0
|
|
Data and Analytics
|
130.4
|
|
|
151.0
|
|
||
Corporate and Other
|
68.3
|
|
|
63.6
|
|
||
Total
|
$
|
569.5
|
|
|
$
|
582.6
|
|
|
Year ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Software Solutions
|
$
|
98.9
|
|
|
$
|
106.2
|
|
Data and Analytics
|
15.1
|
|
|
8.8
|
|
||
Corporate and Other (1)
|
92.5
|
|
|
93.3
|
|
||
Total
|
$
|
206.5
|
|
|
$
|
208.3
|
|
(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,
|
||||||
|
2016
|
|
2015
|
||||
Software Solutions
|
$
|
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
|
||||
Software Solutions
|
$
|
106.2
|
|
|
$
|
93.3
|
|
Data and Analytics
|
8.8
|
|
|
7.2
|
|
||
Corporate and Other
|
93.3
|
|
|
93.8
|
|
||
Total
|
$
|
208.3
|
|
|
$
|
194.3
|
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows provided by operating activities
|
$
|
351.1
|
|
|
$
|
325.7
|
|
|
$
|
248.2
|
|
Cash flows used in investing activities
|
(84.7
|
)
|
|
(230.2
|
)
|
|
(102.5
|
)
|
|||
Cash flows used in financing activities
|
(384.1
|
)
|
|
(147.6
|
)
|
|
(21.6
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
$
|
(117.7
|
)
|
|
$
|
(52.1
|
)
|
|
$
|
124.1
|
|
|
|
|
|
Payments due by period
|
||||||||||||||||
|
|
Total
|
|
2018
|
|
2019-2020
|
|
2021-2022
|
|
Thereafter
|
||||||||||
Long-term debt
|
|
$
|
1,449.3
|
|
|
$
|
55.5
|
|
|
$
|
188.3
|
|
|
$
|
1,205.5
|
|
|
$
|
—
|
|
Interest on long-term debt (1)
|
|
188.6
|
|
|
46.9
|
|
|
91.5
|
|
|
50.2
|
|
|
—
|
|
|||||
Data processing and maintenance commitments
|
|
42.5
|
|
|
27.8
|
|
|
12.3
|
|
|
2.4
|
|
|
—
|
|
|||||
Operating lease payments
|
|
30.3
|
|
|
9.9
|
|
|
15.3
|
|
|
4.6
|
|
|
0.5
|
|
|||||
Other (2)
|
|
5.0
|
|
|
1.2
|
|
|
2.4
|
|
|
1.4
|
|
|
—
|
|
|||||
Total
|
|
$
|
1,715.7
|
|
|
$
|
141.3
|
|
|
$
|
309.8
|
|
|
$
|
1,264.1
|
|
|
$
|
0.5
|
|
(1)
|
These calculations include the effect of our interest rate swaps and assume that (a) applicable margins remain constant; (b) the Term A Loan, Term B Loan and Revolving Credit Facility variable rate debt is priced at the one-month LIBOR rate in effect as of
December 31, 2017
; (c) only mandatory debt repayments are made; and (d) no refinancing occurs at debt maturity.
|
(2)
|
Other includes commitment fees on our Revolving Credit Facility and rating agency fees.
|
Item 7A.
|
Quantitative and Qualitative Disclosure about Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
Page
Number
|
|
|
||||||
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
16.2
|
|
|
$
|
133.9
|
|
Trade receivables, net
|
201.8
|
|
|
155.8
|
|
||
Prepaid expenses and other current assets
|
44.6
|
|
|
45.4
|
|
||
Receivables from related parties
|
18.1
|
|
|
4.1
|
|
||
Total current assets
|
280.7
|
|
|
339.2
|
|
||
Property and equipment, net
|
179.9
|
|
|
173.0
|
|
||
Computer software, net
|
416.8
|
|
|
450.0
|
|
||
Other intangible assets, net
|
231.6
|
|
|
299.5
|
|
||
Goodwill
|
2,306.8
|
|
|
2,303.8
|
|
||
Other non-current assets
|
240.1
|
|
|
196.5
|
|
||
Total assets
|
$
|
3,655.9
|
|
|
$
|
3,762.0
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
|
||
Trade accounts payable and other accrued liabilities
|
$
|
65.0
|
|
|
$
|
55.2
|
|
Accrued compensation and benefits
|
51.9
|
|
|
61.1
|
|
||
Current portion of long-term debt
|
55.1
|
|
|
63.4
|
|
||
Deferred revenues
|
59.6
|
|
|
47.4
|
|
||
Total current liabilities
|
231.6
|
|
|
227.1
|
|
||
Deferred revenues
|
100.7
|
|
|
77.3
|
|
||
Deferred income taxes, net
|
224.6
|
|
|
7.9
|
|
||
Long-term debt, net of current portion
|
1,379.0
|
|
|
1,506.8
|
|
||
Other non-current liabilities
|
11.2
|
|
|
3.5
|
|
||
Total liabilities
|
1,947.1
|
|
|
1,822.6
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
|
|
||
Equity:
|
|
|
|
|
|||
Black Knight, Inc. common stock; $0.0001 par value; 550,000,000 shares authorized; 153,430,030 shares issued and 151,430,030 shares outstanding as of December 31, 2017
|
—
|
|
|
—
|
|
||
Black Knight, Inc. preferred stock; $0.0001 par value; 25,000,000 shares authorized; issued and outstanding, none as of December 31, 2017
|
—
|
|
|
—
|
|
||
Black Knight Financial Services, Inc. Class A common stock; $0.0001 par value; 350,000,000 shares authorized, 69,091,008 shares issued and outstanding as of December 31, 2016
|
—
|
|
|
—
|
|
||
Black Knight Financial Services, Inc. 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
|
—
|
|
|
—
|
|
||
Black Knight Financial Services, Inc. preferred stock; $0.0001 par value; 25,000,000 shares authorized; issued and outstanding, none as of December 31, 2016
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,593.6
|
|
|
810.8
|
|
||
Retained earnings
|
201.4
|
|
|
65.7
|
|
||
Accumulated other comprehensive earnings (loss)
|
3.9
|
|
|
(0.8
|
)
|
||
Treasury stock, 2,000,000 and 0 shares as of December 31, 2017 and 2016, respectively, at cost
|
(90.1
|
)
|
|
—
|
|
||
Total shareholders' equity
|
1,708.8
|
|
|
875.7
|
|
||
Noncontrolling interests
|
—
|
|
|
1,063.7
|
|
||
Total equity
|
1,708.8
|
|
|
1,939.4
|
|
||
Total liabilities and equity
|
$
|
3,655.9
|
|
|
$
|
3,762.0
|
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
$
|
1,051.6
|
|
|
$
|
1,026.0
|
|
|
$
|
930.7
|
|
Expenses:
|
|
|
|
|
|
||||||
Operating expenses
|
569.5
|
|
|
582.6
|
|
|
538.2
|
|
|||
Depreciation and amortization
|
206.5
|
|
|
208.3
|
|
|
194.3
|
|
|||
Transition and integration costs
|
13.1
|
|
|
2.3
|
|
|
8.0
|
|
|||
Total expenses
|
789.1
|
|
|
793.2
|
|
|
740.5
|
|
|||
Operating income
|
262.5
|
|
|
232.8
|
|
|
190.2
|
|
|||
Other income and expense:
|
|
|
|
|
|
||||||
Interest expense
|
(57.5
|
)
|
|
(67.6
|
)
|
|
(89.8
|
)
|
|||
Other expense, net
|
(12.6
|
)
|
|
(6.4
|
)
|
|
(4.6
|
)
|
|||
Total other expense, net
|
(70.1
|
)
|
|
(74.0
|
)
|
|
(94.4
|
)
|
|||
Earnings before income taxes
|
192.4
|
|
|
158.8
|
|
|
95.8
|
|
|||
Income tax (benefit) expense
|
(61.8
|
)
|
|
25.8
|
|
|
13.4
|
|
|||
Net earnings
|
254.2
|
|
|
133.0
|
|
|
82.4
|
|
|||
Less: Net earnings attributable to noncontrolling interests
|
71.9
|
|
|
87.2
|
|
|
62.4
|
|
|||
Net earnings attributable to Black Knight
|
$
|
182.3
|
|
|
$
|
45.8
|
|
|
$
|
20.0
|
|
Other comprehensive earnings (loss):
|
|
|
|
|
|
||||||
Unrealized holding gains (losses), net of tax
|
3.7
|
|
|
(1.1
|
)
|
|
—
|
|
|||
Reclassification adjustments for losses included in net earnings,
net of tax (1)
|
0.4
|
|
|
0.5
|
|
|
—
|
|
|||
Total unrealized gains (losses) on interest rate swaps, net of tax (2)
|
4.1
|
|
|
(0.6
|
)
|
|
—
|
|
|||
Foreign currency translation adjustment
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|||
Other comprehensive earnings (loss)
|
4.1
|
|
|
(0.7
|
)
|
|
(0.1
|
)
|
|||
Comprehensive earnings attributable to noncontrolling interests
|
74.1
|
|
|
86.0
|
|
|
62.4
|
|
|||
Comprehensive earnings
|
$
|
260.5
|
|
|
$
|
131.1
|
|
|
$
|
82.3
|
|
|
|
|
|
|
|
||||||
|
Year Ended December 31,
|
|
May 26, 2015 through
December 31, 2015
|
||||||||
|
2017
|
|
2016
|
|
|||||||
Net earnings per share attributable to Black Knight common shareholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
2.06
|
|
|
$
|
0.69
|
|
|
$
|
0.31
|
|
Diluted
|
$
|
1.47
|
|
|
$
|
0.67
|
|
|
$
|
0.29
|
|
Weighted average shares of common stock outstanding (see Note 4):
|
|
|
|
|
|
||||||
Basic
|
88.7
|
|
|
65.9
|
|
|
64.4
|
|
|||
Diluted
|
152.4
|
|
|
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 Earnings and Comprehensive Earnings. Amount is net of income tax expense of
$0.3 million
for the years ended December 31, 2017 and 2016.
|
(2)
|
Net of income tax expense (benefit) of
$2.4 million
and
$(0.4) million
for the years ended December 31, 2017 and 2016, respectively.
|
|
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
|
|
|
$
|
—
|
|
|
Black Knight Financial Services, Inc.
|
|
Black Knight, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
|
Class A common stock
|
|
Class B common stock
|
|
Common stock
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive (loss) earnings
|
|
Treasury stock
|
|
|
|
|
||||||||||||||||||||||||||||||
|
Shares
|
|
$
|
|
Shares
|
|
$
|
|
Shares
|
|
$
|
|
|
|
|
Shares
|
|
$
|
|
Noncontrolling interests
|
|
Total equity
|
|||||||||||||||||||||||||
Balance,
December 31, 2016
|
69.1
|
|
|
$
|
—
|
|
|
84.8
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
810.8
|
|
|
$
|
65.7
|
|
|
$
|
(0.8
|
)
|
|
—
|
|
|
$
|
—
|
|
|
$
|
1,063.7
|
|
|
$
|
1,939.4
|
|
Issuance of restricted shares of Class A common stock
|
1.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Forfeitures of restricted shares of Class A common stock
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Exchange of Class B common stock for Class A common stock
|
0.2
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Tax withholding payments for restricted share vesting
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(6.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.1
|
)
|
|||||||||
Purchases of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.2
|
|
|
(136.7
|
)
|
|
—
|
|
|
(136.7
|
)
|
|||||||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18.7
|
|
|||||||||
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
182.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
71.9
|
|
|
254.2
|
|
|||||||||
Unrealized gains on interest rate swaps, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.1
|
|
|
—
|
|
|
—
|
|
|
2.2
|
|
|
6.3
|
|
|||||||||
Tax distributions to members
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(75.3
|
)
|
|
(75.3
|
)
|
|||||||||
Distribution of FNF's ownership interest and related transactions
|
(70.1
|
)
|
|
—
|
|
|
(84.6
|
)
|
|
—
|
|
|
153.5
|
|
|
—
|
|
|
770.2
|
|
|
(46.6
|
)
|
|
0.6
|
|
|
(1.2
|
)
|
|
46.6
|
|
|
(1,062.5
|
)
|
|
(291.7
|
)
|
|||||||||
Balance,
December 31, 2017
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
153.4
|
|
|
$
|
—
|
|
|
$
|
1,593.6
|
|
|
$
|
201.4
|
|
|
$
|
3.9
|
|
|
2.0
|
|
|
$
|
(90.1
|
)
|
|
$
|
—
|
|
|
$
|
1,708.8
|
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|||||
Net earnings
|
$
|
254.2
|
|
|
$
|
133.0
|
|
|
$
|
82.4
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
206.5
|
|
|
208.3
|
|
|
194.3
|
|
|||
Amortization of debt issuance costs, bond premium and original issue discount
|
3.5
|
|
|
2.7
|
|
|
0.8
|
|
|||
Loss on extinguishment of debt, net
|
12.6
|
|
|
—
|
|
|
4.8
|
|
|||
Deferred income taxes, net
|
(78.4
|
)
|
|
3.2
|
|
|
11.8
|
|
|||
Equity-based compensation
|
18.9
|
|
|
12.4
|
|
|
11.4
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Trade and other receivables, including receivables from related parties
|
(52.5
|
)
|
|
(6.4
|
)
|
|
(20.9
|
)
|
|||
Prepaid expenses and other assets
|
1.7
|
|
|
(11.2
|
)
|
|
(6.4
|
)
|
|||
Deferred contract costs
|
(48.5
|
)
|
|
(51.9
|
)
|
|
(54.9
|
)
|
|||
Deferred revenues
|
35.6
|
|
|
26.2
|
|
|
32.6
|
|
|||
Trade accounts payable and other accrued liabilities, including accrued compensation and benefits
|
(2.5
|
)
|
|
9.4
|
|
|
(7.7
|
)
|
|||
Net cash provided by operating activities
|
351.1
|
|
|
325.7
|
|
|
248.2
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|||||
Additions to property and equipment
|
(27.4
|
)
|
|
(38.1
|
)
|
|
(45.6
|
)
|
|||
Additions to computer software
|
(53.3
|
)
|
|
(41.9
|
)
|
|
(50.1
|
)
|
|||
Business acquisitions, net of cash acquired
|
—
|
|
|
(150.2
|
)
|
|
—
|
|
|||
Investment in property records database
|
—
|
|
|
—
|
|
|
(6.8
|
)
|
|||
Other investing activities
|
(4.0
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(84.7
|
)
|
|
(230.2
|
)
|
|
(102.5
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|||||
Borrowings, net of original issue discount
|
480.0
|
|
|
55.0
|
|
|
1,299.0
|
|
|||
Senior Notes redemption
|
(390.0
|
)
|
|
—
|
|
|
—
|
|
|||
Senior Notes redemption fee
|
(18.8
|
)
|
|
—
|
|
|
—
|
|
|||
Debt service payments
|
(214.8
|
)
|
|
(149.0
|
)
|
|
(1,745.9
|
)
|
|||
Purchases of treasury stock
|
(136.7
|
)
|
|
—
|
|
|
—
|
|
|||
Distributions to members
|
(75.3
|
)
|
|
(48.6
|
)
|
|
(17.4
|
)
|
|||
Capital lease payments
|
(13.8
|
)
|
|
(5.0
|
)
|
|
—
|
|
|||
Tax withholding payments for restricted share vesting
|
(6.1
|
)
|
|
—
|
|
|
—
|
|
|||
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
|
(8.6
|
)
|
|
—
|
|
|
(20.6
|
)
|
|||
Senior notes call premium
|
—
|
|
|
—
|
|
|
(11.8
|
)
|
|||
Net cash used in financing activities
|
(384.1
|
)
|
|
(147.6
|
)
|
|
(21.6
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
(117.7
|
)
|
|
(52.1
|
)
|
|
124.1
|
|
|||
Cash and cash equivalents, beginning of period
|
133.9
|
|
|
186.0
|
|
|
61.9
|
|
|||
Cash and cash equivalents, end of period
|
$
|
16.2
|
|
|
$
|
133.9
|
|
|
$
|
186.0
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|||||
Interest paid
|
$
|
(56.7
|
)
|
|
$
|
(60.2
|
)
|
|
$
|
(89.2
|
)
|
Income taxes (paid) refunded, net
|
$
|
(15.7
|
)
|
|
$
|
(21.9
|
)
|
|
$
|
0.2
|
|
(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 voted as a single class on all matters submitted for a vote to shareholders;
|
•
|
the issuance of shares of Class B common stock by BKFS to FNF and certain Thomas H. Lee Partners, L.P. ("THL") affiliates ("THL Affiliates"), former holders of membership interests in BKFS LLC ("Units"). BKFS Class B common stock was neither registered nor publicly traded and did not entitle the holders thereof to any of the economic rights, including rights to dividends and distributions upon liquidation, that would have been provided to holders of BKFS Class A common stock; and the total voting power of the BKFS Class B common stock was equal to the percentage of Units not held by us;
|
•
|
the issuance of shares of BKFS 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 BKFS to the investors in the IPO;
|
•
|
our contribution 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 BKFS 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 BKFS 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 BKFS Class B common stock for, at our option, shares of BKFS 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
|
|
$
|
—
|
|
•
|
BKHI, a wholly-owned subsidiary of FNF, contributed all of its
83.3 million
shares of BKFS Class B common stock and all of its units of BKFS LLC to New BKH in exchange for 100% of the shares of New BKH common stock;
|
•
|
Following which BKHI converted into a limited liability company and distributed to FNF all of the shares of New BKH common stock held by BKHI;
|
•
|
Immediately thereafter, FNF distributed the shares of New BKH common stock to the holders of FNF Group common stock on a pro-rata basis (the "Spin-off");
|
•
|
Immediately following the Spin-off, Merger Sub One merged with and into New BKH (the "New BKH merger");
|
•
|
In the New BKH merger, each outstanding share of New BKH common stock (other than shares owned by New BKH) was exchanged for one share of Black Knight, Inc. common stock. New BKH shares owned by New BKH immediately prior to the New BKH merger were canceled for no consideration. As a result of the Spin-Off and the New BKH merger, FNF Group shareholders received
0.3066322
shares of Black Knight, Inc. common stock for each share of FNF Group common stock they held;
|
•
|
Immediately following the New BKH merger, Merger Sub Two merged with and into Black Knight Financial Services, Inc. (the "BKFS merger");
|
•
|
In the BKFS merger, each outstanding share of BKFS Class A common stock (other than shares owned by BKFS) was exchanged for one share of Black Knight, Inc. common stock. Shares of BKFS Class A common stock owned by BKFS, otherwise referred to as treasury stock, immediately prior to the BKFS merger were canceled for no consideration; and
|
•
|
Black Knight, Inc. is the public company following the completion of the Distribution.
|
(2)
|
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,
|
||||||
|
2017
|
|
2016
|
||||
Unrestricted:
|
|
|
|
||||
Cash
|
$
|
13.1
|
|
|
$
|
129.8
|
|
Cash equivalents
|
1.3
|
|
|
1.8
|
|
||
Total unrestricted cash and cash equivalents
|
14.4
|
|
|
131.6
|
|
||
Restricted cash equivalents (1)
|
1.8
|
|
|
2.3
|
|
||
Total cash and cash equivalents
|
$
|
16.2
|
|
|
$
|
133.9
|
|
(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,
|
||||||
|
2017
|
|
2016
|
||||
Trade receivables — billed
|
$
|
159.6
|
|
|
$
|
115.4
|
|
Trade receivables — unbilled
|
44.1
|
|
|
42.6
|
|
||
Total trade receivables
|
203.7
|
|
|
158.0
|
|
||
Allowance for doubtful accounts
|
(1.9
|
)
|
|
(2.2
|
)
|
||
Total trade receivables, net
|
$
|
201.8
|
|
|
$
|
155.8
|
|
|
|
Beginning balance
|
|
Bad debt expense
|
|
Write-offs, net of recoveries
|
|
Transfers and acquisitions
|
|
Ending balance
|
||||||||||
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
|
)
|
|||||
Year ended December 31, 2017
|
|
(2.2
|
)
|
|
(0.8
|
)
|
|
1.1
|
|
|
—
|
|
|
(1.9
|
)
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Prepaid expenses
|
$
|
36.1
|
|
|
$
|
37.2
|
|
Other current assets
|
8.5
|
|
|
8.2
|
|
||
Prepaid expenses and other current assets
|
$
|
44.6
|
|
|
$
|
45.4
|
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Property and equipment
|
$
|
29.0
|
|
|
$
|
28.4
|
|
|
$
|
28.4
|
|
Computer software
|
84.0
|
|
|
78.0
|
|
|
70.3
|
|
|||
Other intangible assets
|
67.8
|
|
|
76.4
|
|
|
86.4
|
|
|||
Deferred contract costs
|
25.7
|
|
|
25.5
|
|
|
9.2
|
|
|||
Total
|
$
|
206.5
|
|
|
$
|
208.3
|
|
|
$
|
194.3
|
|
(
3
)
|
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
|
11.4
|
|
|
Other intangible assets (Note 8)
|
35.1
|
|
|
Goodwill (Note 9)
|
67.0
|
|
|
Total assets acquired
|
122.3
|
|
|
Trade accounts payable and other accrued liabilities
|
4.5
|
|
|
Accrued compensation and benefits
|
1.4
|
|
|
Deferred revenues
|
1.4
|
|
|
Total liabilities assumed
|
7.3
|
|
|
Net assets acquired
|
$
|
115.0
|
|
Goodwill
|
$
|
3.0
|
|
Computer software
|
(2.6
|
)
|
|
Accrued compensation and benefits
|
(0.3
|
)
|
|
Other intangible assets
|
(0.1
|
)
|
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 8)
|
10.5
|
|
|
Goodwill (Note 9)
|
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
|
|
(
4
)
|
Earnings Per Share
|
|
Year ended December 31,
|
|
May 26, 2015
through
December 31, 2015 |
||||||||
|
2017
|
|
2016
|
|
|||||||
Basic:
|
|
|
|
|
|
||||||
Net earnings attributable to Black Knight
|
$
|
182.3
|
|
|
$
|
45.8
|
|
|
$
|
20.0
|
|
Shares used for basic net earnings per share:
|
|
|
|
|
|
||||||
Weighted average shares of common stock outstanding
|
88.7
|
|
|
65.9
|
|
|
64.4
|
|
|||
Basic net earnings per share
|
$
|
2.06
|
|
|
$
|
0.69
|
|
|
$
|
0.31
|
|
|
|
|
|
|
|
||||||
Diluted:
|
|
|
|
|
|
||||||
Earnings before income taxes
|
$
|
192.4
|
|
|
|
|
|
||||
Income tax benefit excluding the effect of noncontrolling interests
|
(32.2
|
)
|
|
|
|
|
|||||
Net earnings
|
$
|
224.6
|
|
|
|
|
|
||||
Net earnings attributable to Black Knight
|
|
|
$
|
45.8
|
|
|
$
|
20.0
|
|
||
Shares used for diluted net earnings per share:
|
|
|
|
|
|
||||||
Weighted average shares of common stock outstanding
|
88.7
|
|
|
65.9
|
|
|
64.4
|
|
|||
Dilutive effect of unvested restricted shares of common stock
|
0.6
|
|
|
2.0
|
|
|
3.5
|
|
|||
Weighted average shares of BKFS Class B common stock outstanding
|
63.1
|
|
|
|
|
|
|||||
Weighted average shares of common stock, diluted
|
152.4
|
|
|
67.9
|
|
|
67.9
|
|
|||
Diluted net earnings per share
|
$
|
1.47
|
|
|
$
|
0.67
|
|
|
$
|
0.29
|
|
(
5
)
|
Related Party Transactions
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||
|
Shares
|
|
Ownership
percentage
|
|
Shares
|
|
Ownership
percentage
|
||||
Black Knight, Inc. common stock:
|
|
|
|
|
|
|
|
||||
THL and its affiliates
|
28.1
|
|
|
18.5
|
%
|
|
—
|
|
|
—
|
%
|
Restricted shares
|
1.6
|
|
|
1.1
|
%
|
|
—
|
|
|
—
|
%
|
Other, including those publicly traded
|
121.7
|
|
|
80.4
|
%
|
|
—
|
|
|
—
|
%
|
Total shares of Black Knight, Inc. common stock
|
151.4
|
|
|
100.0
|
%
|
|
—
|
|
|
—
|
%
|
BKFS Class A common stock:
|
|
|
|
|
|
|
|
||||
THL and its affiliates
|
—
|
|
|
—
|
%
|
|
39.3
|
|
|
25.5
|
%
|
Restricted shares
|
—
|
|
|
—
|
%
|
|
2.9
|
|
|
1.9
|
%
|
Other, including those publicly traded
|
—
|
|
|
—
|
%
|
|
26.9
|
|
|
17.5
|
%
|
Total shares of BKFS Class A common stock
|
—
|
|
|
—
|
%
|
|
69.1
|
|
|
44.9
|
%
|
BKFS Class B common stock:
|
|
|
|
|
|
|
|
||||
FNF
|
—
|
|
|
—
|
%
|
|
83.3
|
|
|
54.1
|
%
|
THL and its affiliates
|
—
|
|
|
—
|
%
|
|
1.5
|
|
|
1.0
|
%
|
Total shares of BKFS Class B common stock
|
—
|
|
|
—
|
%
|
|
84.8
|
|
|
55.1
|
%
|
Total shares of BKFS common stock outstanding
|
—
|
|
|
—
|
%
|
|
153.9
|
|
|
100.0
|
%
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
$
|
56.8
|
|
|
$
|
73.5
|
|
|
$
|
68.5
|
|
Operating expenses
|
12.3
|
|
|
15.6
|
|
|
8.0
|
|
|||
Management fees (1)
|
—
|
|
|
—
|
|
|
2.3
|
|
|||
Interest expense (2)
|
1.2
|
|
|
3.9
|
|
|
39.5
|
|
(1)
|
Amounts are included in Transition and integration costs on the Consolidated Statements of Earnings and Comprehensive Earnings.
|
(2)
|
Amounts include guarantee fee (see below).
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Operating expenses
|
$
|
0.3
|
|
|
$
|
1.3
|
|
|
$
|
1.6
|
|
Management fees (1)
|
—
|
|
|
—
|
|
|
1.3
|
|
|||
Software and software-related purchases
|
—
|
|
|
1.1
|
|
|
1.4
|
|
(1)
|
Amounts are included in Transition and integration costs on the Consolidated Statements of Earnings and Comprehensive Earnings.
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Data and analytics services
|
$
|
24.0
|
|
|
$
|
47.2
|
|
|
$
|
48.1
|
|
Servicing, origination and default software services
|
32.8
|
|
|
26.3
|
|
|
20.4
|
|
|||
Total related party revenues
|
$
|
56.8
|
|
|
$
|
73.5
|
|
|
$
|
68.5
|
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Data entry, indexing services and other operating expenses
|
$
|
5.1
|
|
|
$
|
9.6
|
|
|
$
|
8.7
|
|
Corporate services
|
9.2
|
|
|
10.4
|
|
|
8.8
|
|
|||
Technology and corporate services
|
(1.7
|
)
|
|
(3.1
|
)
|
|
(7.9
|
)
|
|||
Total related party expenses, net
|
$
|
12.6
|
|
|
$
|
16.9
|
|
|
$
|
9.6
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Land
|
$
|
11.9
|
|
|
$
|
11.9
|
|
Buildings and improvements
|
65.8
|
|
|
64.1
|
|
||
Leasehold improvements
|
5.4
|
|
|
4.8
|
|
||
Computer equipment
|
203.1
|
|
|
172.5
|
|
||
Furniture, fixtures and other equipment
|
9.3
|
|
|
9.2
|
|
||
Property and equipment
|
295.5
|
|
|
262.5
|
|
||
Accumulated depreciation and amortization
|
(115.6
|
)
|
|
(89.5
|
)
|
||
Property and equipment, net
|
$
|
179.9
|
|
|
$
|
173.0
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Internally developed software
|
$
|
679.4
|
|
|
$
|
634.9
|
|
Purchased software
|
45.7
|
|
|
42.4
|
|
||
Computer software
|
725.1
|
|
|
677.3
|
|
||
Accumulated amortization
|
(308.3
|
)
|
|
(227.3
|
)
|
||
Computer software, net
|
$
|
416.8
|
|
|
$
|
450.0
|
|
2018 (1)
|
$
|
90.1
|
|
2019
|
83.7
|
|
|
2020
|
75.8
|
|
|
2021
|
62.0
|
|
|
2022
|
53.7
|
|
(1)
|
Assumes assets not in service as of
December 31, 2017
are placed in service equally throughout the year.
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
|
Gross carrying
amount |
|
Accumulated
amortization |
|
Net carrying
amount |
|
Gross carrying
amount |
|
Accumulated
amortization |
|
Net carrying
amount |
||||||||||||
Customer relationships
|
|
$
|
555.9
|
|
|
$
|
(326.0
|
)
|
|
$
|
229.9
|
|
|
$
|
557.8
|
|
|
$
|
(260.7
|
)
|
|
$
|
297.1
|
|
Other
|
|
5.3
|
|
|
(3.6
|
)
|
|
1.7
|
|
|
12.5
|
|
|
(10.1
|
)
|
|
2.4
|
|
||||||
Total intangible assets
|
|
$
|
561.2
|
|
|
$
|
(329.6
|
)
|
|
$
|
231.6
|
|
|
$
|
570.3
|
|
|
$
|
(270.8
|
)
|
|
$
|
299.5
|
|
2018
|
$
|
56.5
|
|
2019
|
55.7
|
|
|
2020
|
45.0
|
|
|
2021
|
34.2
|
|
|
2022
|
23.5
|
|
|
Software Solutions
|
|
Data and Analytics
|
|
Corporate and Other
|
|
Total
|
||||||||
Balance, December 31, 2015
|
$
|
2,048.0
|
|
|
$
|
172.1
|
|
|
$
|
—
|
|
|
$
|
2,220.1
|
|
Increases to goodwill related to:
|
|
|
|
|
|
|
|
||||||||
eLynx acquisition (Note 3)
|
64.0
|
|
|
—
|
|
|
—
|
|
|
64.0
|
|
||||
Motivity acquisition (Note 3)
|
—
|
|
|
19.7
|
|
|
—
|
|
|
19.7
|
|
||||
Balance, December 31, 2016
|
2,112.0
|
|
|
191.8
|
|
|
—
|
|
|
2,303.8
|
|
||||
Activity (Note 3)
|
3.0
|
|
|
—
|
|
|
—
|
|
|
3.0
|
|
||||
Balance, December 31, 2017
|
$
|
2,115.0
|
|
|
$
|
191.8
|
|
|
$
|
—
|
|
|
$
|
2,306.8
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Deferred contract costs, net of accumulated amortization
|
$
|
136.1
|
|
|
$
|
113.3
|
|
Property records database
|
59.7
|
|
|
59.7
|
|
||
Unbilled receivables
|
14.6
|
|
|
14.8
|
|
||
Other
|
29.7
|
|
|
8.7
|
|
||
Other non-current assets
|
$
|
240.1
|
|
|
$
|
196.5
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
|
Principal
|
|
Debt
issuance costs |
|
Discount
|
|
Total
|
|
Principal
|
|
Debt
issuance
costs
|
|
Premium (discount)
|
|
Total
|
||||||||||||||||
Term A Loan
|
$
|
1,004.3
|
|
|
$
|
(7.0
|
)
|
|
$
|
—
|
|
|
$
|
997.3
|
|
|
$
|
740.0
|
|
|
$
|
(7.0
|
)
|
|
$
|
—
|
|
|
$
|
733.0
|
|
Term B Loan
|
390.0
|
|
|
(2.5
|
)
|
|
(1.4
|
)
|
|
386.1
|
|
|
394.0
|
|
|
(3.4
|
)
|
|
(0.8
|
)
|
|
389.8
|
|
||||||||
Revolving Credit Facility
|
55.0
|
|
|
(4.3
|
)
|
|
—
|
|
|
50.7
|
|
|
50.0
|
|
|
(3.7
|
)
|
|
—
|
|
|
46.3
|
|
||||||||
Senior Notes, issued at par
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
390.0
|
|
|
—
|
|
|
11.1
|
|
|
401.1
|
|
||||||||
Total long-term debt
|
1,449.3
|
|
|
(13.8
|
)
|
|
(1.4
|
)
|
|
1,434.1
|
|
|
1,574.0
|
|
|
(14.1
|
)
|
|
10.3
|
|
|
1,570.2
|
|
||||||||
Less: Current portion of long-term debt
|
55.5
|
|
|
(0.4
|
)
|
|
—
|
|
|
55.1
|
|
|
64.0
|
|
|
(0.6
|
)
|
|
—
|
|
|
63.4
|
|
||||||||
Long-term debt, net of current portion
|
$
|
1,393.8
|
|
|
$
|
(13.4
|
)
|
|
$
|
(1.4
|
)
|
|
$
|
1,379.0
|
|
|
$
|
1,510.0
|
|
|
$
|
(13.5
|
)
|
|
$
|
10.3
|
|
|
$
|
1,506.8
|
|
Payment Dates
|
|
Percentage
|
September 30, 2015 through and including June 30, 2019
|
|
1.25%
|
Commencing on September 30, 2019 through and including June 30, 2021
|
|
2.50%
|
Commencing on September 30, 2021 through and including December 31, 2021
|
|
3.75%
|
|
|
December 31,
|
||||||
Balance Sheet Account
|
|
2017
|
|
2016
|
||||
Other non-current assets
|
|
$
|
6.7
|
|
|
$
|
—
|
|
Other non-current liabilities
|
|
$
|
—
|
|
|
$
|
2.2
|
|
|
Year ended December 31, 2017
|
|
Year ended December 31, 2016
|
||||||||||||
|
Amount of gain
recognized in OCE |
|
Amount of loss reclassified from Accumulated OCE
into Net earnings |
|
Amount of loss
recognized in OCE |
|
Amount of loss reclassified from Accumulated OCE
into Net earnings |
||||||||
Swap agreements
|
|
|
|
|
|
|
|
||||||||
Attributable to noncontrolling interests
|
$
|
1.7
|
|
|
$
|
0.5
|
|
|
$
|
(2.2
|
)
|
|
$
|
1.0
|
|
Attributable to Black Knight
|
3.7
|
|
|
0.4
|
|
|
(1.1
|
)
|
|
0.5
|
|
||||
Total
|
$
|
5.4
|
|
|
$
|
0.9
|
|
|
$
|
(3.3
|
)
|
|
$
|
1.5
|
|
2018
|
$
|
55.5
|
|
2019
|
81.3
|
|
|
2020
|
107.0
|
|
|
2021
|
132.8
|
|
|
2022
|
1,072.7
|
|
|
Total
|
$
|
1,449.3
|
|
(
12
)
|
Commitments and Contingencies
|
2018
|
$
|
9.9
|
|
2019
|
8.5
|
|
|
2020
|
6.8
|
|
|
2021
|
3.0
|
|
|
2022
|
1.6
|
|
|
Thereafter
|
0.5
|
|
|
Total
|
$
|
30.3
|
|
2018
|
$
|
27.8
|
|
2019
|
9.2
|
|
|
2020
|
3.1
|
|
|
2021
|
2.4
|
|
|
Total
|
$
|
42.5
|
|
(
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
|
|
|
*
|
|
|
Granted
|
982,764
|
|
|
$
|
38.31
|
|
Forfeited
|
(127,801
|
)
|
|
$
|
34.23
|
|
Vested
|
(2,181,626
|
)
|
|
*
|
|
|
Balance, December 31, 2017
|
1,581,711
|
|
|
$
|
34.48
|
|
*
|
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, ranges from
$2.01
to
$3.77
per unit.
|
(
14
)
|
Employee Stock Purchase Plan and 401(k) Plan
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
10.4
|
|
|
$
|
15.3
|
|
|
$
|
0.5
|
|
State
|
5.3
|
|
|
6.0
|
|
|
0.7
|
|
|||
Foreign
|
0.9
|
|
|
1.0
|
|
|
0.4
|
|
|||
Total current
|
16.6
|
|
|
22.3
|
|
|
1.6
|
|
|||
|
|
|
|
|
|
||||||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(87.5
|
)
|
|
5.0
|
|
|
11.3
|
|
|||
State
|
9.1
|
|
|
(1.1
|
)
|
|
0.5
|
|
|||
Foreign
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|||
Total deferred
|
(78.4
|
)
|
|
3.5
|
|
|
11.8
|
|
|||
Total income tax (benefit) expense
|
$
|
(61.8
|
)
|
|
$
|
25.8
|
|
|
$
|
13.4
|
|
|
Year ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Federal statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
2.9
|
|
|
2.0
|
|
|
1.3
|
|
Noncontrolling interests
|
(13.7
|
)
|
|
(19.2
|
)
|
|
(14.9
|
)
|
Partnership income not subject to tax
|
—
|
|
|
—
|
|
|
(7.7
|
)
|
Tax credits
|
(0.6
|
)
|
|
(0.6
|
)
|
|
(0.3
|
)
|
Transaction costs
|
1.4
|
|
|
—
|
|
|
—
|
|
Domestic production activities deduction
|
(0.5
|
)
|
|
(1.1
|
)
|
|
—
|
|
Effect of Tax Reform Act
|
(57.6
|
)
|
|
—
|
|
|
—
|
|
Other
|
1.0
|
|
|
0.1
|
|
|
0.6
|
|
Effective tax rate
|
(32.1
|
)%
|
|
16.2
|
%
|
|
14.0
|
%
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
||||
Deferred revenues
|
$
|
26.7
|
|
|
$
|
—
|
|
Net operating loss carryovers
|
1.3
|
|
|
—
|
|
||
State income tax
|
—
|
|
|
1.6
|
|
||
Other
|
12.8
|
|
|
0.4
|
|
||
Total deferred tax assets
|
40.8
|
|
|
2.0
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation and amortization
|
(219.9
|
)
|
|
—
|
|
||
Deferred contract costs
|
(36.2
|
)
|
|
—
|
|
||
Partnership basis
|
—
|
|
|
(9.9
|
)
|
||
Other
|
(9.3
|
)
|
|
—
|
|
||
Total deferred tax liabilities
|
(265.4
|
)
|
|
(9.9
|
)
|
||
Net deferred tax liability
|
$
|
(224.6
|
)
|
|
$
|
(7.9
|
)
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Balance, January 1
|
$
|
—
|
|
|
$
|
—
|
|
Additions based on tax positions of prior years
|
8.3
|
|
|
—
|
|
||
Balance, December 31
|
$
|
8.3
|
|
|
$
|
—
|
|
(16)
|
Concentrations of Risk
|
(
17
)
|
Segment Information
|
•
|
Software Solutions —
offers software and hosting solutions that support loan servicing, loan origination and settlement services. The Software Solutions segment was formerly known as the Technology segment.
|
•
|
Data and Analytics —
offers data and analytics solutions to the mortgage, real estate and capital markets verticals. These solutions include property ownership data, lien data, servicing data, automated valuation models, collateral risk scores, prepayment and default models, lead generation, multiple listing service solutions and other data solutions.
|
|
Year ended December 31, 2017
|
||||||||||||||
|
Software Solutions
|
|
Data and Analytics
|
|
Corporate and Other
|
|
Total
|
||||||||
Revenues
|
$
|
893.8
|
|
|
$
|
162.3
|
|
|
$
|
(4.5
|
)
|
(1)
|
$
|
1,051.6
|
|
Expenses:
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
370.8
|
|
|
130.4
|
|
|
68.3
|
|
|
569.5
|
|
||||
Transition and integration costs
|
—
|
|
|
—
|
|
|
13.1
|
|
|
13.1
|
|
||||
EBITDA
|
523.0
|
|
|
31.9
|
|
|
(85.9
|
)
|
|
469.0
|
|
||||
Depreciation and amortization
|
98.9
|
|
|
15.1
|
|
|
92.5
|
|
(2)
|
206.5
|
|
||||
Operating income (loss)
|
424.1
|
|
|
16.8
|
|
|
(178.4
|
)
|
|
262.5
|
|
||||
Interest expense
|
|
|
|
|
|
|
(57.5
|
)
|
|||||||
Other expense, net
|
|
|
|
|
|
|
(12.6
|
)
|
|||||||
Earnings before income taxes
|
|
|
|
|
|
|
192.4
|
|
|||||||
Income tax expense
|
|
|
|
|
|
|
(61.8
|
)
|
|||||||
Net earnings
|
|
|
|
|
|
|
$
|
254.2
|
|
||||||
Balance sheet data:
|
|
|
|
|
|
|
|
||||||||
Total assets
|
$
|
3,175.9
|
|
|
$
|
352.3
|
|
|
$
|
127.7
|
|
|
$
|
3,655.9
|
|
Goodwill
|
$
|
2,115.0
|
|
|
$
|
191.8
|
|
|
$
|
—
|
|
|
$
|
2,306.8
|
|
(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, 2016
|
||||||||||||||
|
Software Solutions
|
|
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
|
||||||||||||||
|
Software Solutions
|
|
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.
|
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, Inc.
|
|
|
|
By:
|
/s/ Thomas J. Sanzone
|
|
|
|
Thomas J. Sanzone
|
|
|
|
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
|
|
Chief Executive Officer
|
|
February 23, 2018
|
Thomas J. Sanzone
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Kirk T. Larsen
|
|
Executive Vice President and Chief Financial Officer
|
|
February 23, 2018
|
Kirk T. Larsen
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ William P. Foley, II
|
|
Director and Executive Chairman of the Board
|
|
February 23, 2018
|
William P. Foley, II
|
|
|
|
|
|
|
|
|
|
/s/ Thomas M. Hagerty
|
|
Director
|
|
February 23, 2018
|
Thomas M. Hagerty
|
|
|
|
|
|
|
|
|
|
/s/ David K. Hunt
|
|
Director
|
|
February 23, 2018
|
David K. Hunt
|
|
|
|
|
|
|
|
|
|
/s/ Richard N. Massey
|
|
Director
|
|
February 23, 2018
|
Richard N. Massey
|
|
|
|
|
|
|
|
|
|
/s/ Ganesh B. Rao
|
|
Director
|
|
February 23, 2018
|
Ganesh B. Rao
|
|
|
|
|
|
|
|
|
|
/s/ John D. Rood
|
|
Director
|
|
February 23, 2018
|
John D. Rood
|
|
|
|
|
|
|
|
|
|
Exhibit Number
|
|
|
|
Description
|
|
2.1
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
10.7
|
|
|
|
|
|
10.8
|
|
|
|
|
|
10.9
|
|
|
|
|
|
10.10
|
|
|
|
|
|
10.11
|
|
|
|
|
|
10.12
|
|
|
|
|
|
10.13
|
|
|
|
|
|
10.14
|
|
|
|
|
|
10.15
|
|
|
|
|
|
10.16
|
|
|
|
|
|
10.17
|
|
|
|
|
|
10.18
|
|
|
|
|
|
10.19
|
|
|
|
|
|
10.20
|
|
|
|
|
|
10.21
|
|
|
|
|
|
10.22
|
|
|
|
|
|
10.23
|
|
|
|
|
|
10.24
|
|
|
|
|
|
10.25
|
|
|
|
|
|
10.26
|
|
|
|
|
|
10.27
|
|
|
|
|
|
10.28
|
|
|
|
|
|
10.29
|
|
|
|
|
|
10.30
|
|
|
|
|
|
10.31
|
|
|
|
|
|
10.32
|
|
|
|
|
|
10.33
|
|
|
|
|
|
10.34
|
|
|
|
|
|
10.35
|
|
|
|
|
|
21.1
|
|
|
|
|
|
23.1
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
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.
|
ARTICLE I
Establishment and Purpose
|
|
1
|
|
ARTICLE II
Definitions
|
|
1
|
|
ARTICLE III
Eligibility and Participation
|
|
7
|
|
ARTICLE IV
Deferrals
|
|
7
|
|
ARTICLE V
Company Contributions
|
|
10
|
|
ARTICLE VI
Benefits
|
|
11
|
|
ARTICLE VII
Modifications to Payment Schedules
|
|
14
|
|
ARTICLE VIII
Valuation of Account Balances; Investments
|
|
15
|
|
ARTICLE IX
Administration
|
|
16
|
|
ARTICLE X
Amendment and Termination
|
|
17
|
|
ARTICLE XI
Informal Funding
|
|
18
|
|
ARTICLE XII
Claims
|
|
18
|
|
ARTICLE XIII
General Provisions
|
|
22
|
|
|
|
|
|
|
|
|
|
BLACK KNIGHT INFOSERV, LLC
|
|
||
|
|
|
|
|
|
|
|
By:
|
/s/ Melissa Circelli
|
|
|
|
|
|
|
|
|
|
|
Its:
|
Chief Human Resources Officer
|
|
(a)
|
Benefits
. Employee shall be eligible to receive standard medical and other insurance coverage (for Employee and any covered dependents) provided by the Company to employees generally;
|
(b)
|
Annual Bonus Opportunity
. Employee shall be eligible to receive an annual incentive bonus opportunity under BK’s annual incentive plan for each calendar year included in the Employment Term during which Employee is an employee of the Company, including for calendar year 2018 a full year annual bonus with such opportunity to be earned based upon attainment of performance objectives established by the BK Compensation Committee ("Annual Bonus"). Employee's target Annual Bonus shall be 200% of the Employee's then current Annual Base Salary and Employee’s maximum Annual Bonus shall be 600% (two times up to 300%) of the Employees’ then current Annual Base Salary (the Annual Bonus is referred to as the "Annual Bonus Opportunity"). Employee's Annual Bonus Opportunity may be periodically reviewed and increased by the Company, but may not be decreased without Employee's express written consent. Employee’s Annual Bonus is subject to BK’s clawback policy, pursuant to which the Company may recoup all or a portion of any bonus paid if, after payment, there is a finding of fraud, a restatement of financial results, or errors or omissions discovered that the Compensation Committee determines negatively affects the business results on which the bonus was based. If owed pursuant to the terms of the plan, the Annual Bonus shall be paid no later than the March 15th first following the calendar year to which the Annual Bonus relates. Except as otherwise provided otherwise herein or by the Compensation Committee of BK, no Annual Bonus shall be paid to Employee unless Employee is employed by the Company or an affiliate thereof, on the last day of the measurement period; provided, however, that Employee shall remain eligible for a pro-rata Annual Bonus based on Employee’s period of employment with the Company during the final year of the Employment Term, if the Employment Term ends prior to the end of the calendar year by the Company’s decision not to renew the Agreement, or by not offering to renew the agreement on substantially similar terms and conditions;
|
(c)
|
2018 and Beyond Equity. Participation in the BK’s equity incentive plans, which for Employee’s 2018 equity grant will be $7,500,000, made under the Company’s Omnibus Incentive Plan on or shortly after the Effective Date (April 1, 2018), vest in three equal annual installments on each anniversary date of the grant, carry a performance vesting condition that the Company achieve at least $506 million of adjusted EBITDA from January 1, 2018 through December 31, 2018, and generally be on the same terms as the Company’s 2018 equity each to its employees.
|
(d)
|
Catch Up Equity
.
In addition to the foregoing, the Company agrees to provide Employee on or shortly after the Effective Date (April 1, 2018) with a grant of $9,400,000 of BK restricted stock under the Company’s Omnibus Incentive Plan, of which $2,300,000 will become fully vested on November 1, 2018, $5,300,000 will become fully vested on July 1, 2019, and $1,800,000 will become fully vested on July 1, 2020. Under Section 5(c) and (d), the number of Company shares will be determined based on the closing price of the Company’s common stock on April 2, 2018.
|
(e)
|
Discretionary Bonus
. In the event that the Company (i) is sold during the Employment Term and/or (ii) grows beyond and outperforms its financial projections in any given
|
(a)
|
Notice of Termination
. Any purported termination of Employee's employment (other than by reason of death) shall be communicated by written Notice of Termination (as defined herein) from one party to the other in accordance with the notice provisions contained in this Agreement. For purposes of this Agreement, a "Notice of Termination" shall mean a notice that indicates the "Date of Termination" and, with respect to a termination due to "Cause", "Disability" or "Good Reason", sets forth in reasonable detail the facts and circumstances that are alleged to provide a basis for such termination. A Notice of Termination from the Company shall specify whether the termination is with or without Cause or due to Employee's Disability. A Notice of Termination from Employee shall specify whether the termination is with or without Good Reason.
|
(b)
|
Date of Termination
. For purposes of this Agreement, "Date of Termination" shall mean the date specified in the Notice of Termination (but in no event shall such date be earlier than the thirtieth (30
th
) day following the date the Notice of Termination is given) or the date of Employee's death. If the Company disagrees with an Employee’s designated Date of Termination, the Company shall have the right to set an alternative earlier final Date of Termination, which, in and of itself, shall not change the characterization of the termination (e.g., from an Employee Termination Without Good Reason to a Company Termination Without Cause).
|
(c)
|
No Waiver
. The failure to set forth any fact or circumstance in a Notice of Termination, which fact or circumstance was not known to the party giving the Notice of Termination when the notice was given, shall not constitute a waiver of the right to assert such fact or circumstance in an attempt to enforce any right under or provision of this Agreement.
|
(d)
|
Cause
. For purposes of this Agreement, a termination for "Cause" means a termination by the Company based upon Employee's: (i) persistent failure to perform duties consistent with a commercially reasonable standard of care (other than due to a physical or mental impairment or due to an action or inaction directed by the Company that would otherwise constitute Good Reason); (ii) willful neglect of duties (other than due to a physical or mental impairment or due to an action or inaction directed by the Company that would otherwise constitute Good Reason); (iii) conviction of, or pleading nolo contendere to, criminal or other illegal activities involving dishonesty or moral turpitude; (iv) material breach of this Agreement; (v) material breach of the Company's business policies, accounting practices or standards of ethics; (vi) material breach of any applicable non-competition, non-solicitation, trade secrets, confidentiality or similar restrictive covenant, or (vii) failure to materially cooperate with or impeding an investigation authorized by the Board of Directors of the Company. Employee’s termination for Cause shall not be effective unless the Company has given Employee no less than thirty days’ notice of termination and the actions underlying its Cause determination, and Employee has failed to cure the condition or event constituting Cause to the Board’s reasonable satisfaction within thirty days following receipt of the Company’s Notice of Termination.
|
(e)
|
Disability
. For purposes of this Agreement, a termination based upon "Disability" means a termination by the Company based upon Employee's entitlement to long-term disability benefits under BK’s long-term disability plan or policy, as the case may be, as in effect on the Date of Termination.
|
(f)
|
Good Reason
. For purposes of this Agreement, a termination for "Good Reason" means a termination by Employee based upon the occurrence (without Employee's express written consent) of any of the following:
|
(i)
|
a material change in the geographic location of Employee's principal working location, which the Company has determined to be a relocation of more than thirty-five (35) miles;
|
(ii)
|
a material diminution in Employee's title, Annual Base Salary or Annual Bonus Opportunity; or
|
(iii)
|
a material breach by the Company of any of its respective obligations under this Agreement.
|
(a)
|
Terminati
o
n by the Company for a
Reason Other than Caus
e,
Death or Disability and Termination by Employee for Good Reason
. If
Employee's employment is terminated during the Employment Term by: (1) the Company for any reason other than Cause, Death or Disability; or (2) Employee for Good Reason:
|
(i)
|
The Company shall pay Employee the following (collectively, the "Accrued Obligations"): (A) within five (5) business days after the Date of Termination, any earned but unpaid Annual Base Salary; (B) within a reasonable time following submission of all applicable documentation, any expense reimbursement payments owed to Employee for expenses incurred prior to the Date of Termination; and (C) no later than March 15th of the year in which the Date of Termination occurs, any earned but unpaid Annual Bonus payments relating to the prior calendar year;
|
(ii)
|
If the Employee was eligible to earn an Annual Bonus in the year in which the Date of Termination occurs, the Company shall pay Employee no later than March 15th of the calendar year following the year in which the Date of Termination occurs, a prorated Annual Bonus based upon the actual satisfaction of any applicable performance measures or other conditions applicable to the Annual Bonus multiplied by the percentage of the calendar year completed before the Date of Termination;
|
(iii)
|
Subject to Section 26(b) hereof, the Company shall pay Employee shall pay Employee as soon as practicable, but not later than the sixty-fifth (65th) day after the Date of Termination, a lump-sum payment equal to 250% of the sum of: (A) Employee's Annual Base Salary in effect immediately prior to the Date of Termination); and (B) the target Annual Bonus in the year in which the Date of Termination occurs;
|
(iv)
|
All stock options, restricted stock and other equity-based incentive awards granted by BK that were outstanding but not vested as of the Date of Termination shall become immediately vested and/or payable, as the case may be, unless the equity incentive awards are based upon satisfaction of performance criteria (not based solely on the passage of time); in which case, they will only vest pursuant to their express terms, provided, however, that any such equity awards that are vested pursuant to this provision and that a constitute arrangement within the meaning of Code Section 409A shall be paid or settled on the earlier date coinciding with or following the Date of Termination that does not result in a violation of or penalties under Section 409A;
|
(v)
|
Subject to Section 26(b) hereof, any life insurance coverage provided by the Company shall terminate at the same time as life insurance coverage would normally terminate for any other employee that terminates employment with the Company. Employee shall have the right to convert that life insurance coverage to an individual policy under the regular rules of the Company’s group policy. As soon as practicable, but not later than the sixty-fifth (65th) day after the Date of Termination, the Company shall pay Employee a lump
|
(vi)
|
As long as Employee pays the full monthly premiums for COBRA coverage to the Company, the Company shall provide Employee and, as applicable, Employee's eligible dependents with continued medical and dental coverage, on the same basis as provided to the Company’s active executives and their dependents until the earlier of: (i) 36 months after the Date of Termination; or (ii) the date Employee is first eligible for medical and dental coverage (without pre-existing condition limitations) with a subsequent employer. In addition, as soon as practicable, but not later than the sixty-fifth (65th) day after the Date of Termination, the Company shall pay Employee a lump sum cash payment equal to thirty-six monthly medical and dental COBRA premiums based on the level of coverage in effect for the Employee (e.g., employee only or family coverage) on the Date of Termination.
|
(b)
|
Termination by the Company for Cause and by Employee without Good Reason
. If Employee's employment is terminated during the Employment Term by the Company for Cause or by Employee without Good Reason, the Company's only obligation under this Agreement shall be payment of any Accrued Obligations.
|
(c)
|
Termination due to Death or Disability
. If Employee's employment is terminated during the Employment Term due to death or Disability, the Company shall pay Employee (or to Employee's estate or personal representative in the case of death), as soon as practicable, but not later than the sixty-fifth (65th) day after the Date of Termination: (i) any Accrued Obligations; (ii) a prorated Annual Bonus based upon the target Annual Bonus Opportunity in the year in which the Date of Termination occurred multiplied by the percentage of the calendar year completed before the Date of Termination; plus (iii) all stock options, restricted stock and other equity-based incentive awards granted by BK that were outstanding but not vested as of the Date of Termination shall become immediately vested and/or payable, as the case may be, unless the equity incentive awards are based upon satisfaction of performance criteria (not based solely on the passage of time); in which case, they will only vest pursuant to their express terms, provided, however, that any such equity awards that are vested pursuant to this provision and that a constitute arrangement within the meaning of Code Section 409A shall be paid or settled on the earlier date coinciding with or following the Date of Termination that does not result in a violation of or penalties under Section 409A.
|
12.
|
Non-Competition
.
|
(a)
|
During Employment Term
. During the Employment Term Employee will devote such business time, attention and energies reasonably necessary to the diligent and faithful performance of the services to the Company and its affiliates, and will not engage in any way whatsoever, directly or indirectly, in any business that is a competitor with the Company's or its affiliates' principal business, that is a reasonably anticipated extension of their principal business, or that is engaged in the research or development of a product that will compete with the Company’s or its affiliates’ principal business, nor solicit customers, suppliers or employees of the Company or its affiliates on behalf of, or in any other manner work for or assist any business which is a direct competitor with the Company's or its affiliates' principal business, except that Employee may provide transition consulting services to Fidelity National Information Services, Inc. through March 31, 2018. In addition, during the Employment Term, Employee will not combine or conspire with any other employee of the Company or any other person for the purpose of organizing any competitive business activity.
|
(b)
|
After Employment Term
. The parties acknowledge that Employee will acquire substantial knowledge and information concerning the business of the Company and its affiliates as a result of employment. The parties further acknowledge that the scope of business in which the Company and its affiliates are engaged is national and very competitive and one in which few companies can successfully compete. Competition by Employee in that business after the Employment Term would severely injure the Company and its affiliates. Accordingly, for a period of one year after Employee's employment terminates for any reason whatsoever with the Company, Employee agrees: (1) not to become an employee, consultant, advisor, principal, partner or substantial shareholder of any firm or business that competes with the Company or its affiliates in their principal products and markets, that is a reasonably anticipated extension of the Company or its affiliates in their principal products and markets, or that is engaged in the research or development of a product that will compete with the Company or its affiliates in their principal products and markets; and (2), on behalf of any such competitive firm or business, not to solicit any person
|
(a)
|
Withholding
. The Company or an affiliate thereof may deduct from all compensation and benefits payable under this Agreement any taxes or withholdings the Company is required to deduct pursuant to state, federal or local laws.
|
(b)
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Section 409A
. This Agreement and any payment, distribution or other benefit hereunder shall comply with the requirements of Section 409A of the Code, as well as any related regulations or other guidance promulgated by the U.S. Department of the Treasury or the Internal Revenue Service ("Section 409A"), to the extent applicable. To the extent Employee is a "specified employee" under Section 409A, no payment, distribution or other benefit described in this Agreement constituting a distribution of deferred compensation (within the meaning of Treasury Regulation Section 1.409A-1(b)) to be paid during the six-month period following a separation from service (within the meaning of Treasury Regulation Section 1.409A-1(h)) will be made during such six-month period. Instead, any such deferred compensation shall be paid on the first business day following the six-month anniversary of the separation from service. In no event may Employee, directly or indirectly, designate the calendar year of a payment. Any provision that would cause this Agreement or
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BKFS I Services, LLC
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By:
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/s/ William P. Foley, II
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Name:
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William P. Foley, II
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Title:
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Executive Chairman, Black Knight, Inc.
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Employee
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Anthony M. Jabbour
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/s/ Anthony M. Jabbour
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Name of Grantee:
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Number of Shares of Restricted Stock Granted:
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Effective Date of Grant:
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February 9, 2018
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Vesting and Period of Restriction:
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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.
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Section 1.
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GRANT OF RESTRICTED STOCK
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Section 2.
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FORFEITURE AND TRANSFER RESTRICTIONS
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Section 3.
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STOCK CERTIFICATES
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Section 4.
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SHAREHOLDER RIGHTS
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Section 5.
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DIVIDENDS
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Section 6.
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MISCELLANEOUS PROVISIONS
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Anniversary Date
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% of Restricted Stock
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First (1
st
) anniversary of the Effective Date of Grant
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33.33%
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Second (2
nd
) anniversary of the Effective Date of Grant
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33.33%
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Third (3
rd
) anniversary of the Effective Date of Grant
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33.34%
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Subsidiary
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State or Other Jurisdiction of Formation
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BKFS I Management, Inc.
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Delaware
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BKFS I Services, LLC
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Delaware
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Black Knight Data & Analytics, LLC
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Delaware
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Black Knight Financial Services, Inc.
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Delaware
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Black Knight Financial Services, LLC
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Delaware
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Black Knight Financial Technology Solutions, LLC
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Delaware
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Black Knight India Solutions Private Limited
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India
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Black Knight InfoServ, LLC
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Delaware
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Black Knight IP Holding Company, LLC
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Delaware
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Black Knight Lending Solutions, Inc.
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Delaware
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Black Knight National TaxNet, LLC
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Delaware
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Black Knight Origination Technologies, LLC
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Delaware
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Black Knight Real Estate Data Solutions, LLC
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California
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Black Knight Real Estate Group, LLC
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Delaware
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Black Knight Technology Solutions, LLC
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Delaware
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eLynx Holdings, LLC
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Delaware
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eLynx Ltd.
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Ohio
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Espiel, LLC
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Delaware
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Fidelity National Commerce Velocity, LLC
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Delaware
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I-Net Reinsurance Limited
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Turks & Caicos
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McDash Analytics, LLC
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Colorado
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Motivity Solutions, LLC
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Colorado
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Property Insight, LLC
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California
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RealEC Technologies, LLC
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Delaware
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SwiftView, LLC
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Oregon
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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(a)
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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
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(b)
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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.
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By:
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/s/ Thomas J. Sanzone
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Thomas J. Sanzone
Chief Executive Officer |
(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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(a)
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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
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(b)
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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.
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By:
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/s/ Kirk T. Larsen
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Kirk T. Larsen
Executive Vice President and Chief Financial Officer |
1.
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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.
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2.
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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.
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By:
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/s/ Thomas J. Sanzone
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Thomas J. Sanzone
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Chief Executive Officer
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1.
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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.
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2.
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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.
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By:
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/s/ Kirk T. Larsen
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Kirk T. Larsen
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Executive Vice President and Chief Financial Officer
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