##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from           to
 Commission File No. 001-34005
 
 Lender Processing Services, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    26-1547801(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)601 Riverside AvenueJacksonville, Florida
    
    32204(Address of principal executive offices)
    
    (Zip Code)
 (904) 854-5100  (Registrants telephone number, including area code)
  o þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



PagePart I:
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Consolidated and Combined Balance Sheets as of June 30, 2008 and December 31, 2007
    
    
    3Consolidated and Combined Statements of Earnings for the three and six months ended June 30, 2008 and 2007
    
    
    4Consolidated and Combined Statements of Comprehensive Earnings for the three and six months ended June 30, 2008 and 2007
    
    
    5Consolidated and Combined Statement of Stockholders Equity for the six months ended June 30, 2008
    
    
    6Consolidated and Combined Statements of Cash Flows for the six months ended June 30, 2008 and 2007
    
    
    7Notes to Consolidated and Combined Financial Statements (Unaudited)
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3.
    
    Quantitative and Qualitative Disclosure About Market Risks
    
    
    32Item 4T.
    
    Controls and Procedures
    
    
    32Part II:
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    33Item 1A.
    
    Risk Factors
    
    
    34Item 6.
    
    Exhibits
    
    
    36EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




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##### Table of Contents



Part I: FINANCIAL INFORMATION
 
 Item 1. Financial Statements (Unaudited)
 LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
 
 Consolidated and Combined Balance Sheets
 June 30, 2008
    
    
    December(Unaudited)
    
    
    31, 2007 (1)(In thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    18,628
    
    
    $
    39,566Trade receivables, net of allowance for doubtful accounts of $33.8 million
and $20.3 million at June 30, 2008 and December 31, 2007
    
    
    350,565
    
    
    
    286,236Other receivables
    
    
    12,318
    
    
    
    7,971Prepaid expenses and other current assets
    
    
    24,767
    
    
    
    33,323Deferred income taxes, net
    
    
    34,640
    
    
    
    40,440Total
current assets
    
    
    440,918
    
    
    
    407,536Property and equipment, net of accumulated depreciation and amortization
of $132.7 million and $126.1 million at June 30, 2008 and December 31, 2007
    
    
    92,487
    
    
    
    95,620Goodwill
    
    
    1,086,606
    
    
    
    1,078,154Other intangible assets, net of accumulated amortization of $255.5 million and
$239.0 million at June 30, 2008 and December 31, 2007
    
    
    103,347
    
    
    
    118,129Computer software, net of accumulated amortization of $72.6 million and
$73.9 million at June 30, 2008 and December 31, 2007
    
    
    149,562
    
    
    
    150,372Other non-current assets
    
    
    112,820
    
    
    
    112,232Total assets
    
    $
    1,985,740
    
    
    $
    1,962,043LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Trade accounts payable
    
    $
    28,358
    
    
    $
    19,499Accrued salaries and benefits
    
    
    23,037
    
    
    
    22,908Recording and transfer tax liabilities
    
    
    17,555
    
    
    
    10,657Other accrued liabilities
    
    
    65,189
    
    
    
    57,053Deferred revenues
    
    
    58,394
    
    
    
    58,076Total
current liabilities
    
    
    192,533
    
    
    
    168,193Deferred revenues
    
    
    31,312
    
    
    
    23,146Deferred income taxes, net
    
    
    54,844
    
    
    
    55,196Other long-term liabilities
    
    
    21,777
    
    
    
    34,419Total liabilities
    
    
    300,466
    
    
    
    280,954Minority interest
    
    
    10,773
    
    
    
    10,050Stockholders Equity:Preferred stock $0.0001 par value; 50 million shares authorized,
none issued at June 30, 2008 or December 31, 2007
    
    
    
    
    
    
    Common stock $0.0001 par value; 500 million shares authorized,
1,000 shares issued at June 30, 2008
    
    
    
    
    
    
    Additional paid-in capital
    
    
    1,667,268
    
    
    
    Retained earnings
    
    
    6,983
    
    
    
    FISs equity
    
    
    
    
    
    
    1,671,039Accumulated other comprehensive earnings
    
    
    250
    
    
    
    Total stockholders equity
    
    
    1,674,501
    
    
    
    1,671,039Total liabilities and stockholders equity
    
    $
    1,985,740
    
    
    $
    1,962,043
 
 (1)
    
    Derived from audited financial statements.  3




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
 
 Consolidated and Combined Statements of Earnings
 (Unaudited)
 Three months ended June 30,
    
    
    Six months ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands, except per share data)
    
    
    (In thousands, except per share data)Processing and services revenues, including $52.1 million
and $58.2 million of revenues from related parties for the
three month periods and $102.0 million and $107.0 million of
revenues from related parties for the six month periods
ended June 30, 2008 and 2007, respectively
    
    $
    460,380
    
    
    $
    425,010
    
    
    $
    913,106
    
    
    $
    826,438Cost of
revenues, including related party expenses of $2.1 million and
$1.3 million for the three month periods
and $4.7 million and $2.6 million for the six month periods
ended June 30, 2008 and 2007, respectively
    
    
    294,963
    
    
    
    269,042
    
    
    
    585,137
    
    
    
    526,823Gross profit
    
    
    165,417
    
    
    
    155,968
    
    
    
    327,969
    
    
    
    299,615Selling, general, and administrative expenses, including related
party expenses, net of expense reimbursements, of $8.7 million
and $3.3 million for the three month periods and
$22.3 million and $10.3 million for the six month periods
ended June 30, 2008 and 2007, respectively
    
    
    60,782
    
    
    
    55,603
    
    
    
    118,999
    
    
    
    109,072Operating income
    
    
    104,635
    
    
    
    100,365
    
    
    
    208,970
    
    
    
    190,543Other income (expense):Interest income
    
    
    303
    
    
    
    395
    
    
    
    563
    
    
    
    745Interest expense
    
    
    (40
    )
    
    
    (35
    )
    
    
    (58
    )
    
    
    (77
    )Other income, net
    
    
    282
    
    
    
    
    
    
    
    282
    
    
    
    Total other income (expense)
    
    
    545
    
    
    
    360
    
    
    
    787
    
    
    
    668Earnings before income taxes, equity in losses of
unconsolidated entity and minority interest
    
    
    105,180
    
    
    
    100,725
    
    
    
    209,757
    
    
    
    191,211Provision for income taxes
    
    
    40,810
    
    
    
    38,987
    
    
    
    81,386
    
    
    
    74,010Earnings before equity in losses of unconsolidated entity
and minority interest
    
    
    64,370
    
    
    
    61,738
    
    
    
    128,371
    
    
    
    117,201Equity in losses of unconsolidated entity
    
    
    (413
    )
    
    
    (958
    )
    
    
    (2,370
    )
    
    
    (1,720
    )Minority interest
    
    
    (411
    )
    
    
    (274
    )
    
    
    (723
    )
    
    
    (436
    )Net earnings
    
    $
    63,546
    
    
    $
    60,506
    
    
    $
    125,278
    
    
    $
    115,045Pro forma net earnings per share  basic (Note 3)
    
    $
    0.67
    
    
    
    
    
    
    $
    1.32Pro forma weighted average shares outstanding  basic (Note 3)
    
    
    94,611
    
    
    
    
    
    
    
    94,611Pro forma net earnings per share  diluted (Note 3)
    
    $
    0.67
    
    
    
    
    
    
    $
    1.30Pro forma weighted average shares outstanding  diluted (Note 3)
    
    
    95,070
    
    
    
    
    
    
    
    96,334
  4




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LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
 
 Consolidated and Combined Statements of Comprehensive Earnings
 (Unaudited)
 Three months ended June 30,
    
    
    Six months ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)
    
    
    (In thousands)Net earnings
    
    $
    63,546
    
    
    $
    60,506
    
    
    $
    125,278
    
    
    $
    115,045Other comprehensive earnings:Unrealized gain on other investments, net of tax
    
    
    250
    
    
    
    
    
    
    
    250
    
    
    
    Other comprehensive earnings
    
    
    250
    
    
    
    
    
    
    
    250
    
    
    
    Comprehensive earnings
    
    $
    63,796
    
    
    $
    60,506
    
    
    $
    125,528
    
    
    $
    115,045
  5




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LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
 
 Consolidated and Combined Statement of Stockholders Equity
 (In thousands)
 (Unaudited)
 Common
    
    
    Common
    
    
    Additional Paid-In
    
    
    Retained
    
    
    FISs
    
    
    Accumulated OtherComprehensive
    
    
    Total StockholdersShares
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Equity
    
    
    Earnings
    
    
    EquityBalances,
December 31, 2007
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,671,039
    
    
    $
    
    
    
    $
    1,671,039Net earnings
(January 1, 2008 to
June 20, 2008)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    118,295
    
    
    
    
    
    
    
    118,295Net distribution to FIS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (121,677
    )
    
    
    
    
    
    
    (121,677
    )Capitalization
of Lender Processing
Services, Inc.
    
    
    1
    
    
    
    
    
    
    
    1,667,268
    
    
    
    
    
    
    
    (1,667,657
    )
    
    
    389
    
    
    
    Net earnings
(June 21, 2008 to
June 30, 2008)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,983
    
    
    
    
    
    
    
    
    
    
    
    6,983Unrealized loss
on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (139
    )
    
    
    (139
    )Balances,
June 30, 2008
    
    
    1
    
    
    $
    
    
    
    $
    1,667,268
    
    
    $
    6,983
    
    
    $
    
    
    
    $
    250
    
    
    $
    1,674,501
  6




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LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
 
 Consolidated and Combined Statements of Cash Flows
 (Unaudited)
 Six months ended June 30,2008
    
    
    2007(In thousands)Cash flows from operating activities:Net earnings
    
    $
    125,278
    
    
    $
    115,045Adjustments to reconcile net earnings to net cash provided by
operating activities:Depreciation and amortization
    
    
    44,576
    
    
    
    52,373Deferred income taxes, net
    
    
    3,968
    
    
    
    13,634Stock-based compensation cost
    
    
    9,120
    
    
    
    7,215Loss on unconsolidated entity
    
    
    2,370
    
    
    
    1,720Minority interest
    
    
    723
    
    
    
    436Changes in assets and liabilities, net of effects of acquisitions:Net increase in trade receivables
    
    
    (63,750
    )
    
    
    (55,628
    )Net (increase) decrease in other receivables
    
    
    (4,348
    )
    
    
    22,286Net decrease (increase) in prepaid expenses and other assets
    
    
    7,931
    
    
    
    (13,444
    )Net increase in deferred contract costs
    
    
    (3,420
    )
    
    
    (18,674
    )Net decrease (increase) in deferred revenues
    
    
    8,235
    
    
    
    (18,249
    )Net decrease in accounts payable, accrued liabilities and other liabilities
    
    
    6,000
    
    
    
    26,675Net cash provided by operating activities
    
    
    136,683
    
    
    
    133,389Cash flows from investing activities:Additions to property and equipment
    
    
    (9,376
    )
    
    
    (6,099
    )Additions to capitalized software
    
    
    (15,761
    )
    
    
    (18,937
    )Acquisitions, net of cash acquired
    
    
    (15,488
    )
    
    
    (37,420
    )Net cash used in investing activities
    
    
    (40,625
    )
    
    
    (62,456
    )Cash flows from financing activities:Net distributions to FIS
    
    
    (116,996
    )
    
    
    (69,639
    )Net cash used in financing activities
    
    
    (116,996
    )
    
    
    (69,639
    )Net (decrease) increase in cash and cash equivalents
    
    
    (20,938
    )
    
    
    1,294Cash and cash equivalents, beginning of period
    
    
    39,566
    
    
    
    47,783Cash and cash equivalents, end of period
    
    $
    18,628
    
    
    $
    49,077Non-cash contribution relating to stock compensation
    
    $
    9,120
    
    
    $
    7,215Non-cash contribution for Espiel acquisition
    
    $
    
    
    
    $
    6,000Non-cash redistribution of assets to Parent
    
    $
    (13,801
    )
    
    $
    
  7




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LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
 
 NOTES TO CONSOLIDATED
AND COMBINED FINANCIAL STATEMENTS (Unaudited)
 Except as otherwise indicated or unless the context otherwise requires, all references to
LPS, we, the Company, or the registrant are to Lender Processing Services, Inc., a Delaware
corporation that was incorporated in December 2007 as a wholly-owned subsidiary of FIS, and its
subsidiaries; all references to FIS, the former parent, or the holding company are to
Fidelity National Information Services, Inc., a Georgia corporation formerly known as Certegy Inc.,
and its subsidiaries, that owned all of LPSs shares until July 2, 2008; all references to former
FIS are to Fidelity National Information Services, Inc., a Delaware corporation, and its
subsidiaries, prior to the Certegy merger described below; all references to old FNF are to
Fidelity National Financial, Inc., a Delaware corporation that owned a majority of FISs shares
through November 9, 2006; and all references to FNF are to Fidelity National Financial, Inc.
(formerly known as Fidelity National Title Group, Inc.), formerly a subsidiary of old FNF but now a
stand-alone company that remains a related entity from an accounting perspective.
 (1) Basis of Presentation
  Capitalization of Lender Processing Services, Inc.
    8




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited)  Continued
   Principles of Consolidation and Combination
   Separation from FIS
  Reporting Segments
   
    
    our mortgage processing services, which we conduct using our market-leading mortgage
servicing platform and our team of experienced support personnel based primarily at our
Jacksonville, Florida data center;
    
    our Desktop application, a workflow system that assists our customers in managing
business processes, which today is primarily used in connection with mortgage loan default
management, but which has broader applications;
    
    our other software and related service offerings, including our mortgage origination
software, our real estate closing and title insurance production software and our middleware
application which provides collaborative network connectivity among mortgage industry
participants; and
 9




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LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited)  Continued
 
    
    our data and analytics businesses, the most significant of
which are our alternative
property valuations business, which provides a range of valuations other than traditional
appraisals, our property records business, and our advanced analytic services, which assist
our customers in their loan marketing or loss mitigation efforts.
   
    
    settlement services, which consist of title agency services, in which we act as an agent
for title insurers, closing services, in which we assist in the closing of real estate
transactions, and lien recording and release services;
    
    appraisal services, which consist of traditional appraisal and appraisal management
services; and
    
    other origination services, which consist of real estate tax services, which provide
lenders with information about the tax status of a property, flood zone information, which
assists lenders in determining whether a property is in a federally designated flood zone,
and qualified exchange intermediary services for customers who seek to engage in qualified
exchanges under Section 1031 of the Internal Revenue Code.
  
    
    foreclosure management services, including access to a nationwide network of independent
attorneys, document preparation and recording and other services;
    
    property inspection and preservation services, designed to preserve the value of
properties securing defaulted loans; and
    
    asset management services, providing disposition services for our customers real estate
owned properties through a network of independent real estate brokers, attorneys and other
vendors to facilitate the transaction.
  (2) Related Party Transactions
  
    
    Agreements to provide title agency services.These agreements allow us to provide
services to existing customers through loan facilitation transactions, primarily with large
national lenders. The arrangement involves providing title agency services which result in
the issuance of title policies on behalf of title insurance underwriters owned by FNF and
its subsidiaries. Subject to certain early termination provisions for cause, each of these
agreements may be terminated upon five years prior written notice, which notice may not be
given until after the fifth anniversary of the effective date of each agreement, which
ranges from July 2004 through September 2006 (thus effectively resulting in a minimum ten
year term and a rolling one-year term thereafter). Under these agreements, we earn
commissions which, in aggregate, are equal to approximately 88% of the total title premium
from title policies that we place with subsidiaries of FNF. We also perform similar
functions in connection with trustee sale guarantees, a form of title insurance that
subsidiaries of FNF issue as part of the foreclosure process on a defaulted loan.
 10




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LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited)  Continued
 
    
    Agreements to provide software development and services.These agreements govern the fee
structure under which we are paid for providing software development and services to FNF
which consist of developing software for use in the title operations of FNF.
    
    Arrangements to provide other data services.Under these arrangements, we are paid for
providing other data services to FNF, which consist primarily of data services required by
the title insurance operations.
  Three months ended June 30,
    
    
    Six months ended 
June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Title agency commissions
    
    $
    34.2
    
    
    $
    36.1
    
    
    $
    66.8
    
    
    $
    68.3Software development revenue
    
    
    14.3
    
    
    
    15.5
    
    
    
    28.1
    
    
    
    28.7Other data related services
    
    
    3.6
    
    
    
    6.6
    
    
    
    7.1
    
    
    
    10.0Total revenues
    
    $
    52.1
    
    
    $
    58.2
    
    
    $
    102.0
    
    
    $
    107.0
 
    
    Title plant information expense.These agreements provide for our title agency
operations to access title plant assets owned by FNF.
    
    Allocation by FIS of corporate services.Prior to the spin-off, FIS provided general
management, accounting, treasury, tax, finance, payroll, human resources, employee benefits,
internal audit, mergers and acquisitions, and other corporate and administrative support to
the Company. Management believes the methods used to allocate the amounts included in these
financial statements for corporate services are reasonable.
    
    Licensing, leasing, cost sharing and other agreements.These agreements provide for the
reimbursement of certain amounts from FNF and FIS related to various ancillary leasing and
cost sharing agreements, as well as the payment of certain amounts by the Company to FNF or
its subsidiaries in connection with our use of certain intellectual property or other assets
of or services by FNF. Included as expense reimbursements are amounts received related to
leases of certain office space to FIS and FNF, as well as amounts received for property
management services for office space located on our corporate headquarters campus. In
addition, our expenses include expenses for a sublease of office space and furnishings from
FNF at our corporate headquarters campus.
  Three months ended 
June 30,
    
    
    Six months ended 
June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Title plant information expense
    
    $
    2.1
    
    
    $
    1.3
    
    
    $
    4.7
    
    
    $
    2.6Corporate services
    
    
    13.9
    
    
    
    9.9
    
    
    
    27.6
    
    
    
    19.8Licensing, leasing and cost sharing agreements
    
    
    (5.2
    )
    
    
    (6.6
    )
    
    
    (5.3
    )
    
    
    (9.5
    )Total expenses
    
    $
    10.8
    
    
    $
    4.6
    
    
    $
    27.0
    
    
    $
    12.9
  11




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LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited)  Continued
 Other related party transactions:
 Investment by FNF in Fidelity National Real Estate Solutions, Inc.
  (3) Unaudited Pro Forma Net Earnings per Share
 Earnings per Share
   Three months ended
    
    
    Six months endedJune 30, 2008
    
    

June 30, 2008Pro forma weighted average shares outstanding  basic
    
    
    94,611
    
    
    
    94,611Plus: Pro forma common stock equivalent shares assumed
from conversion of options
    
    
    459
    
    
    
    1,723Pro forma weighted average shares outstanding  diluted
    
    
    95,070
    
    
    
    96,334Pro forma basic net earnings per share
    
    $
    0.67
    
    
    $
    1.32Pro forma diluted net earnings per share
    
    $
    0.67
    
    
    $
    1.30
 (4) Acquisitions
   12




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LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited)  Continued
 (5) Long-Term Debt
  (6) Income Taxes
 Accounting for Uncertainty in Income Taxes
 (7) Commitments and Contingencies
 Litigation
  
    
    These matters raise difficult and complicated factual and legal issues and are subject to
many uncertainties and complexities.
    
    In these matters, plaintiffs seek a variety of remedies including equitable relief in the
form of injunctive and other remedies and monetary relief in the form of compensatory
damages. In some cases, the monetary damages sought include punitive or treble damages. None
of the cases described below includes a specific statement as to the dollar amount of
damages demanded. Instead, each of the cases includes a demand in an amount to be proved at
trial.
    
    For the reasons specified above, it is not possible to make meaningful estimates of the
amount or range of loss that could result from these matters at this time. We review these
matters on an ongoing basis and follow the provisions of SFAS No. 5, Accounting for
Contingencies, when making accrual and disclosure decisions. When assessing reasonably
possible and probable outcomes, we base our decision on our assessment of the ultimate
outcome following all appeals.
    
    We intend to vigorously defend each of these matters, and we do not believe that the
ultimate disposition of these lawsuits will have a material adverse impact on our financial
position.
 National Title Insurance of New York, Inc. Litigation
  13




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited)  Continued
  Harris, Ernest and Mattie v. FIS Foreclosure Solutions, Inc.
  (8) Stock Option Plans
      14




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited)  Continued
 (9) Segment Information
   Technology,
    
    
    LoanData and
    
    
    Transaction
    
    
    CorporateAnalytics
    
    
    Services
    
    
    and Other
    
    
    TotalProcessing and services revenues
    
    $
    141,744
    
    
    $
    322,347
    
    
    $
    (3,711
    )
    
    $
    460,380Cost of revenues
    
    
    81,397
    
    
    
    217,337
    
    
    
    (3,771
    )
    
    
    294,963Gross profit
    
    
    60,347
    
    
    
    105,010
    
    
    
    60
    
    
    
    165,417Selling, general and administrative expenses
    
    
    17,471
    
    
    
    29,366
    
    
    
    13,945
    
    
    
    60,782Operating income
    
    $
    42,876
    
    
    $
    75,644
    
    
    $
    (13,885
    )
    
    $
    104,635Depreciation and amortization
    
    $
    13,971
    
    
    $
    5,310
    
    
    $
    1,599
    
    
    $
    20,880Total assets
    
    $
    1,014,288
    
    
    $
    907,908
    
    
    $
    63,544
    
    
    $
    1,985,740Goodwill
    
    $
    662,172
    
    
    $
    424,434
    
    
    $
    
    
    
    $
    1,086,606
  Technology,
    
    
    LoanData and
    
    
    Transaction
    
    
    CorporateAnalytics
    
    
    Services
    
    
    and Other
    
    
    TotalProcessing and services revenues
    
    $
    142,009
    
    
    $
    281,677
    
    
    $
    1,324
    
    
    $
    425,010Cost of revenues
    
    
    78,187
    
    
    
    192,174
    
    
    
    (1,319
    )
    
    
    269,042Gross profit
    
    
    63,822
    
    
    
    89,503
    
    
    
    2,643
    
    
    
    155,968Selling, general and administrative expenses
    
    
    16,954
    
    
    
    27,711
    
    
    
    10,938
    
    
    
    55,603Operating income
    
    $
    46,868
    
    
    $
    61,792
    
    
    $
    (8,295
    )
    
    $
    100,365Depreciation and amortization
    
    $
    17,437
    
    
    $
    7,449
    
    
    $
    1,366
    
    
    $
    26,252Total assets
    
    $
    1,007,360
    
    
    $
    835,746
    
    
    $
    104,106
    
    
    $
    1,947,212Goodwill
    
    $
    650,412
    
    
    $
    426,554
    
    
    $
    
    
    
    $
    1,076,966
  Technology,
    
    
    LoanData and
    
    
    Transaction
    
    
    CorporateAnalytics
    
    
    Services
    
    
    and Other
    
    
    TotalProcessing and services revenues
    
    $
    277,568
    
    
    $
    642,577
    
    
    $
    (7,039
    )
    
    $
    913,106Cost of revenues
    
    
    155,507
    
    
    
    436,793
    
    
    
    (7,163
    )
    
    
    585,137Gross profit
    
    
    122,061
    
    
    
    205,784
    
    
    
    124
    
    
    
    327,969Selling, general and administrative expenses
    
    
    33,729
    
    
    
    57,829
    
    
    
    27,441
    
    
    
    118,999Operating income
    
    $
    88,332
    
    
    $
    147,955
    
    
    $
    (27,317
    )
    
    $
    208,970Depreciation and amortization
    
    $
    29,986
    
    
    $
    11,496
    
    
    $
    3,094
    
    
    $
    44,576
 15




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited)  Continued
  Technology,
    
    
    LoanData and
    
    
    Transaction
    
    
    CorporateAnalytics
    
    
    Services
    
    
    and Other
    
    
    TotalProcessing and services revenues
    
    $
    284,385
    
    
    $
    540,929
    
    
    $
    1,124
    
    
    $
    826,438Cost of revenues
    
    
    160,308
    
    
    
    369,167
    
    
    
    (2,652
    )
    
    
    526,823Gross profit
    
    
    124,077
    
    
    
    171,762
    
    
    
    3,776
    
    
    
    299,615Selling, general and administrative expenses
    
    
    32,776
    
    
    
    54,753
    
    
    
    21,543
    
    
    
    109,072Operating income
    
    $
    91,301
    
    
    $
    117,009
    
    
    $
    (17,767
    )
    
    $
    190,543Depreciation and amortization
    
    $
    35,619
    
    
    $
    14,219
    
    
    $
    2,535
    
    
    $
    52,373
 (10) Subsequent Events
 Closing of LPS Spin-off Transaction and Issuance of Common Stock Shares
   Long-term Debt
    16




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LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited)  Continued
     th
     17




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LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited)  Continued
   Interest Rate Swaps
  Notional Amount
    
    Bank Pays
    
    LPS paysAmortization
Period
    
    (in millions)
    
    Variable Rate of(1)
    
    Fixed Rate of(2)July 31,
2008 to December 31, 2008
    
    $
    420.0
    
    
    1 Month LIBOR
    
    
    3.275
    %December 31,
2008 to March 31, 2009
    
    $
    400.0
    
    
    1 Month LIBOR
    
    
    3.275
    %March 31,
2009 to June 30, 2009
    
    $
    385.0
    
    
    1 Month LIBOR
    
    
    3.275
    %June 30,
2009 to September 30, 2009
    
    $
    365.0
    
    
    1 Month LIBOR
    
    
    3.275
    %September 30,
2009 to December 31, 2009
    
    $
    345.0
    
    
    1 Month LIBOR
    
    
    3.275
    %December 31,
2009 to March 31, 2010
    
    $
    330.0
    
    
    1 Month LIBOR
    
    
    3.275
    %March 31,
2010 to June 30, 2010
    
    $
    310.0
    
    
    1 Month LIBOR
    
    
    3.275
    %June 30,
2010 to July 31, 2010
    
    $
    290.0
    
    
    1 Month LIBOR
    
    
    3.275
    %
 
 (1)
    
    2.46% as of July 2, 2008.(2)
    
    In addition to the fixed rate paid under the swaps, we pay an applicable margin to our bank
lenders on the Term A Loan, Term B Loan and Revolving Loan equal to 2.50% as of July 2, 2008. Accounting for Derivative Instruments and Hedging Activities Fair Value Measurements
  18




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LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited)  Continued
 Pro Forma Financial Statements
  Pro Forma Condensed Consolidated Balance Sheet  Unaudited
 Pro Forma
    
    
    Pro FormaJune 30, 2008
    
    
    Adjustments
    
    
    June 30, 2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    18,628
    
    
    $
    
    
    
    $
    18,628Trade receivables, net of allowance for doubtful accounts
    
    
    350,565
    
    
    
    
    
    
    
    350,565Other current assets
    
    
    71,725
    
    
    
    
    
    
    
    71,725Total current assets
    
    
    440,918
    
    
    
    
    
    
    
    440,918Property and equipment, net of accumulated depreciation
and amortization
    
    
    92,487
    
    
    
    
    
    
    
    92,487Goodwill
    
    
    1,086,606
    
    
    
    
    
    
    
    1,086,606Intangible assets, net of accumulated amortization
    
    
    103,347
    
    
    
    
    
    
    
    103,347Computer software, net of accumulated amortization
    
    
    149,562
    
    
    
    
    
    
    
    149,562Other non-current assets
    
    
    112,820
    
    
    
    25,700
    (1)
    
    
    138,520Total assets
    
    $
    1,985,740
    
    
    $
    25,700
    
    
    $
    2,011,440LIABILITIES AND STOCKHOLDERS EQUITYTotal current liabilities
    
    $
    192,533
    
    
    $
    135,800
    (1)
    
    $
    328,333Total non-current liabilities
    
    
    107,933
    
    
    
    1,474,900
    (1)
    
    
    1,582,833Total liabilities
    
    
    300,466
    
    
    
    1,610,700
    
    
    
    1,911,166Minority interest
    
    
    10,773
    
    
    
    
    
    
    
    10,773Stockholders equity
    
    
    1,674,501
    
    
    
    (1,585,000)
    (1)
    
    
    89,501Total liabilities and stockholders equity
    
    $
    1,985,740
    
    
    $
    25,700
    
    
    $
    2,011,440
 
 (1)
    
    The June 30, 2008 pro forma condensed consolidated balance sheet reflects $25.7 million
in other non-current assets for the capitalization of debt issuance costs incurred in
connection with the issuance of
$1,585.0 million in debt. The current portion of the debt and the outstanding balance on our
revolving line of credit, $110.1 million and $25.7 million, respectively, is reflected in
current liabilities. The long-term portion of the debt, which totaled
$1,474.9 million, is
reflected in non-current liabilities. 19




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LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES AND AFFILIATES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited)  Continued
 Pro Forma Condensed Consolidated Statement of Earnings  Unaudited
 Pro FormaSix month period
    
    Pro Forma
    
    six months endedended June 30, 2008
    
    Adjustments
    
    June 30, 2008Processing and services revenues
    
    $
    913,106
    
    
    
    
    
    
    $
    913,106Operating income
    
    $
    208,970
    
    
    
    
    
    
    $
    208,970Net earnings
    
    $
    125,278
    
    
    $
    (28,131)
    (2)
    
    $
    97,147Pro forma net earnings per share  basic
    
    $
    1.32
    
    
    
    
    
    
    $
    1.03Pro forma net earnings per share  diluted
    
    $
    1.30
    
    
    
    
    
    
    $
    1.01
 
 (2)
    
    The pro forma condensed consolidated statement of earnings for the six months ended June
30, 2008 reflects $46.0 million in interest expense ($28.1 million, net of tax, using our
effective tax rate of 38.8%) we would have incurred on the $1,585.0 million in debt. Stock Compensation Plan
  4 01(k) Profit Sharing and Employee Stock Purchase Plans
  20




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##### Table of Contents



Except as otherwise indicated or unless the context otherwise requires, all references to
LPS, we, the Company, or the registrant are to Lender Processing Services, Inc., a Delaware
corporation that was incorporated in December 2007 as a wholly-owned subsidiary of FIS, and its
subsidiaries; all references to FIS, the former parent, or the holding company are to
Fidelity National Information Services, Inc., a Georgia corporation formerly known as Certegy Inc.,
and its subsidiaries, that owned all of LPSs shares until July 2, 2008; all references to former
FIS are to Fidelity National Information Services, Inc., a Delaware corporation, and its
subsidiaries, prior to the Certegy merger described below; all references to old FNF are to
Fidelity National Financial, Inc., a Delaware corporation that owned a majority of FISs shares
through November 9, 2006; and all references to FNF are to Fidelity National Financial, Inc.
(formerly known as Fidelity National Title Group, Inc.), formerly a subsidiary of old FNF but now a
stand-alone company that remains a related entity from an accounting perspective.
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
   
    
    our mortgage processing services, which we conduct using our market-leading mortgage
servicing platform and our team of experienced support personnel based primarily at our
Jacksonville, Florida data center;
 21




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##### Table of Contents




    
    our Desktop application, a workflow system that assists our customers in managing
business processes, which today is primarily used in connection with mortgage loan default
management, but which has broader applications;
    
    our other software and related service offerings, including our mortgage origination
software, our real estate closing and title insurance production software and our middleware
application which provides collaborative network connectivity among mortgage industry
participants; and
    
    our data and analytics businesses, the most significant of
which are our alternative
property valuations business, which provides a range of valuations other than traditional
appraisals, our property records business, and our advanced analytic services, which assist
our customers in their loan marketing or loss mitigation efforts.
   
    
    settlement services, which consist of title agency services, in which we act as an agent
for title insurers, closing services, in which we assist in the closing of real estate
transactions, and lien recording and release services;
    
    appraisal services, which consist of traditional appraisal and appraisal management
services; and
    
    other origination services, which consist of real estate tax services, which provide
lenders with information about the tax status of a property, flood zone information, which
assists lenders in determining whether a property is in a federally designated flood zone,
and qualified exchange intermediary services for customers who seek to engage in qualified
exchanges under Section 1031 of the Internal Revenue Code.
  
    
    foreclosure management services, including access to a nationwide network of independent
attorneys, document preparation and recording and other services;
 
    
    property inspection and preservation services, designed to preserve the value of
properties securing defaulted loans; and
 
    
    asset management services, providing disposition services for our customers real estate
owned properties through a network of independent real estate brokers, attorneys and other
vendors to facilitate the transaction.
   22




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##### Table of Contents



Critical Accounting Policies
  Transactions with Related Parties
  Comparisons of three and six months ended June 30, 2008 and 2007
 Consolidated Results of Operations  Unaudited
  % of Revenue
    
    
    VarianceThree months ended June 30,
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %(in millions)Processing and services revenues
    
    $
    460.4
    
    
    $
    425.0
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    35.4
    
    
    
    8.3
    %Cost of revenues
    
    
    295.0
    
    
    
    269.0
    
    
    
    64.1
    %
    
    
    63.3
    %
    
    
    (26.0
    )
    
    
    -9.7
    %Gross profit
    
    
    165.4
    
    
    
    156.0
    
    
    
    35.9
    %
    
    
    36.7
    %
    
    
    9.4
    
    
    
    6.0
    %Gross margin
    
    
    35.9
    %
    
    
    36.7
    %Selling, general and administrative expenses
    60.8
    
    
    
    55.6
    
    
    
    13.2
    %
    
    
    13.1
    %
    
    
    (5.2
    )
    
    
    -9.4
    %Operating income
    
    $
    104.6
    
    
    $
    100.4
    
    
    
    22.7
    %
    
    
    23.6
    %
    
    $
    4.2
    
    
    
    4.2
    %Operating margin
    
    
    22.7
    %
    
    
    23.6
    %
 % of Revenue
    
    
    VarianceSix months ended June 30,
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %(in millions)Processing and services revenues
    
    
    913.1
    
    
    $
    826.4
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    86.7
    
    
    
    10.5
    %Cost of revenues
    
    
    585.1
    
    
    
    526.8
    
    
    
    64.1
    %
    
    
    63.7
    %
    
    
    (58.3
    )
    
    
    -11.1
    %Gross profit
    
    
    328.0
    
    
    
    299.6
    
    
    
    35.9
    %
    
    
    36.3
    %
    
    
    28.4
    
    
    
    9.5
    %Gross margin
    
    
    35.9
    %
    
    
    36.3
    %Selling, general and administrative expenses
    119.0
    
    
    
    109.1
    
    
    
    13.0
    %
    
    
    13.2
    %
    
    
    (9.9
    )
    
    
    -9.1
    %Operating income
    
    $
    209.0
    
    
    $
    190.5
    
    
    
    22.9
    %
    
    
    23.1
    %
    
    $
    18.5
    
    
    
    9.7
    %Operating margin
    
    
    22.9
    %
    
    
    23.1
    %
 23




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Processing and Services Revenues
  Cost of Revenues
  Gross Margin
  Selling General and Administrative Expenses
  Operating Income
  24




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##### Table of Contents



Segment Results of Operations  Technology, Data and Analytics  Unaudited
 % of Revenue
    
    
    VarianceThree months ended June 30,
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %(in millions)Processing and services revenues
    
    $
    141.7
    
    
    $
    142.0
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    (0.3
    )
    
    
    -0.2
    %Cost of revenues
    
    
    81.4
    
    
    
    78.2
    
    
    
    57.4
    %
    
    
    55.1
    %
    
    
    (3.2
    )
    
    
    -4.1
    %Gross profit
    
    
    60.3
    
    
    
    63.8
    
    
    
    42.6
    %
    
    
    44.9
    %
    
    
    (3.5
    )
    
    
    -5.5
    %Gross margin
    
    
    42.6
    %
    
    
    44.9
    %Selling, general and administrative expenses
    17.5
    
    
    
    17.0
    
    
    
    12.4
    %
    
    
    12.0
    %
    
    
    (0.5
    )
    
    
    -2.9
    %Operating income
    
    $
    42.8
    
    
    $
    46.8
    
    
    
    30.2
    %
    
    
    33.0
    %
    
    $
    (4.0
    )
    
    
    -8.5
    %Operating margin
    
    
    30.2
    %
    
    
    33.0
    %
 % of Revenue
    
    
    VarianceSix months ended June 30,
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %(in millions)Processing and services revenues
    
    $
    277.6
    
    
    $
    284.4
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    (6.8
    )
    
    
    -2.4
    %Cost of revenues
    
    
    155.5
    
    
    
    160.3
    
    
    
    56.0
    %
    
    
    56.4
    %
    
    
    4.8
    
    
    
    3.0
    %Gross profit
    
    
    122.1
    
    
    
    124.1
    
    
    
    44.0
    %
    
    
    43.6
    %
    
    
    (2.0
    )
    
    
    -1.6
    %Gross margin
    
    
    44.0
    %
    
    
    43.6
    %Selling, general and administrative expenses
    33.7
    
    
    
    32.8
    
    
    
    12.1
    %
    
    
    11.5
    %
    
    
    (0.9
    )
    
    
    -2.7
    %Operating income
    
    $
    88.4
    
    
    $
    91.3
    
    
    
    31.8
    %
    
    
    32.1
    %
    
    $
    (2.9
    )
    
    
    -3.2
    %Operating margin
    
    
    31.8
    %
    
    
    32.1
    %
 Processing and Services Revenues
  Cost of Revenues
  Gross Margin
  Selling General and Administrative Expenses
  25




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Operating Income
  Segment Results of Operations  Loan Transaction Services  Unaudited
 % of Revenue
    
    
    VarianceThree months ended June 30,
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %(in millions)Processing and services revenues
    
    $
    322.3
    
    
    $
    281.7
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    40.6
    
    
    
    14.4
    %Cost of revenues
    
    
    217.3
    
    
    
    192.2
    
    
    
    67.4
    %
    
    
    68.2
    %
    
    
    (25.1
    )
    
    
    -13.1
    %Gross profit
    
    
    105.0
    
    
    
    89.5
    
    
    
    32.6
    %
    
    
    31.8
    %
    
    
    15.5
    
    
    
    17.3
    %Gross margin
    
    
    32.6
    %
    
    
    31.8
    %Selling, general and administrative expenses
    29.4
    
    
    
    27.7
    
    
    
    9.1
    %
    
    
    9.8
    %
    
    
    (1.7
    )
    
    
    -6.1
    %Operating income
    
    $
    75.6
    
    
    $
    61.8
    
    
    
    23.5
    %
    
    
    21.9
    %
    
    $
    13.8
    
    
    
    22.3
    %Operating margin
    
    
    23.5
    %
    
    
    21.9
    %
 % of Revenue
    
    
    VarianceSix months ended June 30,
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %(in millions)Processing and services revenues
    
    $
    642.6
    
    
    $
    540.9
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    101.7
    
    
    
    18.8
    %Cost of revenues
    
    
    436.8
    
    
    
    369.2
    
    
    
    68.0
    %
    
    
    68.3
    %
    
    
    (67.6
    )
    
    
    -18.3
    %Gross profit
    
    
    205.8
    
    
    
    171.7
    
    
    
    32.0
    %
    
    
    31.7
    %
    
    
    34.1
    
    
    
    19.9
    %Gross margin
    
    
    32.0
    %
    
    
    31.7
    %Selling, general and administrative expenses
    57.8
    
    
    
    54.8
    
    
    
    9.0
    %
    
    
    10.1
    %
    
    
    (3.0
    )
    
    
    -5.5
    %Operating income
    
    $
    148.0
    
    
    $
    116.9
    
    
    
    23.0
    %
    
    
    21.6
    %
    
    $
    31.1
    
    
    
    26.6
    %Operating margin
    
    
    23.0
    %
    
    
    21.6
    %
 Processing and Services Revenues
  26




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##### Table of Contents



Cost of Revenues
  Gross Margin
  Selling General and Administrative Expenses
  Operating Income
  Segment Results of Operations  Corporate and Othe r
  Liquidity and Capital Resources
 Cash Requirements
   27




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##### Table of Contents



Capital Expenditures
  Financing
      28




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##### Table of Contents



th
      29




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##### Table of Contents



Interest Rate Swaps
  Notional Amount
    
    Bank Pays
    
    LPS paysAmortization Period
    
    (in millions)
    
    Variable Rate of(1)
    
    Fixed Rate of(2)July 31,
2008 to December 31, 2008
    
    $
    420.0
    
    
    1 Month LIBOR
    
    
    3.275
    %December 31,
2008 to March 31, 2009
    
    $
    400.0
    
    
    1 Month LIBOR
    
    
    3.275
    %March 31,
2009 to June 30, 2009
    
    $
    385.0
    
    
    1 Month LIBOR
    
    
    3.275
    %June 30,
2009 to September 30, 2009
    
    $
    365.0
    
    
    1 Month LIBOR
    
    
    3.275
    %September 30,
2009 to December 31, 2009
    
    $
    345.0
    
    
    1 Month LIBOR
    
    
    3.275
    %December 31,
2009 to March 31, 2010
    
    $
    330.0
    
    
    1 Month LIBOR
    
    
    3.275
    %March 31,
2010 to June 30, 2010
    
    $
    310.0
    
    
    1 Month LIBOR
    
    
    3.275
    %June 30,
2010 to July 31, 2010
    
    $
    290.0
    
    
    1 Month LIBOR
    
    
    3.275
    %
 
 (1)
    
    2.46% as of July 2, 2008.(2)
    
    In addition to the fixed rate paid under the swaps, we pay an applicable margin to our bank
lenders on the Term A Loan, Term B Loan and Revolving Loan equal to 2.50% as of July 2, 2008. Accounting for Derivative Instruments and
Hedging Activities Fair Value Measurements
  Contractual Obligations
  2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    Thereafter
    
    
    TotalLong-term debt (1)
    
    $
    37,550
    
    
    $
    145,100
    
    
    $
    145,100
    
    
    $
    145,100
    
    
    $
    145,100
    
    
    $
    992,750
    
    
    $
    1,610,700Interest on long-term debt (1)
    
    
    32,900
    
    
    
    91,723
    
    
    
    82,934
    
    
    
    74,131
    
    
    
    66,937
    
    
    
    161,652
    
    
    
    510,277Operating lease payments
    
    
    9,977
    
    
    
    16,507
    
    
    
    10,601
    
    
    
    7,148
    
    
    
    5,112
    
    
    
    481
    
    
    
    49,826Deferred compensation (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,572
    
    
    
    20,572Total
    
    $
    80,427
    
    
    $
    253,330
    
    
    $
    238,635
    
    
    $
    226,379
    
    
    $
    217,149
    
    
    $
    1,175,455
    
    
    $
    2,191,375
 
 (1)
    
    Long-term debt and interest on long-term debt are presented on a pro forma basis, as the
Company had no debt on the balance sheet as of June 30, 2008.(2)
    
    Deferred compensation is presented as payable after 2012 because of the uncertain timing of
the payables. Off-Balance Sheet Arrangements
  30




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##### Table of Contents



Escrow Arrangements
  Recent Accounting Pronouncements
 Determining Whether Instruments Granted in Share-Based Payment
Transactions Are Participating Securities,
 The Hierarchy of Generally Accepted Accounting
Principles
 Disclosures about Derivative Instruments and
Hedging Activities-an amendment of FASB Statement No. 133.
 Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51
 31




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##### Table of Contents



Business Combinations
 Effective Date of FASB
Statement No. 157
 
 Item 3. Quantitative and Qualitative Disclosure About Market Risks
    
 Item 4T. Controls and Procedures
   32




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##### Table of Contents



Part II: OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
    
    These matters raise difficult and complicated factual and legal issues and are subject to
many uncertainties and complexities.
    
    In these matters, plaintiffs seek a variety of remedies including equitable relief in the
form of injunctive and other remedies and monetary relief in the form of compensatory
damages. In some cases, the monetary damages sought include punitive or treble damages. None
of the cases described below includes a specific statement as to the dollar amount of
damages demanded. Instead, each of the cases includes a demand in an amount to be proved at
trial.
    
    For the reasons specified above, it is not possible to make meaningful estimates of the
amount or range of loss that could result from these matters at this time. We review these
matters on an ongoing basis and follow the provisions of Statement of Financial Accounting
Standards No. 5, Accounting for Contingencies, when making accrual and disclosure decisions.
When assessing reasonably possible and probable outcomes, we base our decision on our
assessment of the ultimate outcome following all appeals.
    
    We intend to vigorously defend each of these matters, and we do not believe that the
ultimate disposition of these lawsuits will have a material adverse impact on our financial
position.
 National Title Insurance of New York, Inc. Litigation
 Barton v. National Title Insurance of New York, Inc. et al. Gentilcore v.
National Title Insurance of New York, Inc. et al. Martinez v. National Title Insurance of New
York, Inc. et al. Swick v. National Title Insurance of New York, Inc. et al. Davis v. National Title Insurance
of New York, Inc. et al. Pepe v. National Title Insurance of New York, Inc. et al. Kornbluth v.
National Title Insurance of New York, Inc. et al. Lamb v. National Title Insurance of New York, Inc. et
al. Blackwell
v. National Title Insurance of New York, Inc. et al. Magana v. National Title Insurance of New York,
Inc. et al. Moynahan v. National Title Insurance of New York, Inc. et al. Romero v. National Title
Insurance of New York, Inc. et al.
 33




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##### Table of Contents



Harris, Ernest and Mattie v. FIS Foreclosure Solutions, Inc.
  
 Item 1A. Risk Factors
  Consolidation in the banking and financial services industry could adversely affect our
revenues by eliminating some of our existing and potential customers and could make us more
dependent on a more limited number of customers.
    34




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##### Table of Contents



In the wake of the current mortgage market, there could be adverse regulatory consequences or
litigation that could affect us.
       35




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##### Table of Contents



Item 6. Exhibits
  31.1
    
    Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification by Chief Executive Officer of Periodic
Financial Reports pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.32.2
    
    Certification by Chief Financial Officer of Periodic
Financial Reports pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 
18 U.S.C. Section 1350.
 36




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##### Table of Contents



SIGNATURES
  Date: August 13, 2008
    Lender Processing Services, Inc.By:
    /s/ FRANCIS K. CHANFrancis K. ChanExecutive Vice President and Chief Financial Officer 37




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
 FORM 10-Q
 INDEX TO EXHIBITS
  ExhibitNo.
    
    Description31.1
    
    
    Certification of Jeffrey S. Carbiener, Chief Executive Officer of
Lender Processing Services, Inc., pursuant to rule 13a-14(a) or
15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Francis K. Chan, Chief Financial Officer of Lender
Processing Services, Inc., pursuant to rule 13a-14(a) or 15d-14(a) of
the Exchange Act, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Jeffrey S. Carbiener, Chief Executive Officer of
Lender Processing Services, Inc., pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Francis K. Chan, Chief Financial Officer of Lender
Processing Services, Inc., pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 38