##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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Form 10-K



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|           |  |                                                                                                                       
|---------- |  | ----------------------------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                                       
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
    15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE
    REQUIRED)    
|          
|           |  | For the fiscal year ended December 31,
    2002                                                                       
|          
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR
    15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE
    REQUIRED)

Commission File No. 0-20312

Fidelity National Information Solutions,
Inc.

(Exact name of Registrant as specified in its
charter)


|                                                                   |  |                                                         
|------------------------------------------------------------------ |  | --------------------------------------------------------
|Delaware                                                           |  | 41-1293754                                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)                
|                                                                  
|4050 Calle Real
    Santa Barbara, California 93110                |  | (805) 696-7000                                          
|(Address of principal executive offices,
    including zip code)   |  | (Registrants telephone number,
    including area code)

Securities registered pursuant to
Section 12(b) of the Act:

|                              |  |                                          
|----------------------------- |  | -----------------------------------------
|Title of Each Class           |  | Name of Each Exchange on Which Registered
|                              |  |                                          
|Common Stock, $.001 par value |  | NASDAQ                                   

Securities Registered Pursuant to
Section 12(g) of the Act:

None


Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past
90 days.     Yes þ          No o

Indicate by check mark whether the registrant is
an accelerate filer (as defined in Rule 12b-2 of the
Act).     Yes þ          No o

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K, or any amendment to this
Form 10-K.     No þ

As of March 10, 2003, 39,612,056 shares of
Common Stock ($.001 par value) were outstanding.

The aggregate market value of the shares of the
Common Stock held by non-affiliates of the registrant on
June 30, 2002 was $131,084,352.

The information in Part III hereof is
incorporated herein by reference to the registrants Proxy
Statement on Schedule 14A for the fiscal year ended
December 31, 2002, to be filed within 120 days after
the close of the fiscal year that is the subject of this Report.

The index to exhibits is contained in Part IV
herein on Page 68.



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TABLE OF CONTENTS



|                |                                                                                               |  |  |  |  |  |  | 
|--------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I         
|                | Item 1. Business                                                                             
|                | Item 2. Properties                                                                           
|                | Item 3. Legal Proceedings                                                                    
|                | Item 4. Submission of Matters to a Vote of Security Holders                                  
|Part II        
|                | Item 5. Market for Registrants Common Stock and Related Stockholder Matters                 
|                | Item 6. Selected Financial Data                                                              
|                | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                | Item 7A. Quantitative and Qualitative Disclosure About the Market Risk                       
|                | Item 8. Financial Statements and Supplementary Data                                          
|                | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|PART III       
|                | Items 10 Through 13.                                                                         
|                | Item 14. Controls and Procedures                                                             
|PART IV        
|                | Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K                     
|SIGNATURES     
|EXHIBIT INDEX  
|EXHIBIT 10.64  
|EXHIBIT 10.65  
|EXHIBIT 10.65.1
|EXHIBIT 10.66  
|EXHIBIT 10.67  
|EXHIBIT 10.68  
|EXHIBIT 10.69  
|EXHIBIT 10.70  
|EXHIBIT 21.0   
|EXHIBIT 23.0   
|EXHIBIT 99.1   
|EXHIBIT 99.2   



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##### Table of Contents



TABLE OF CONTENTS

FORM 10-K

|         |  |                                                                                           |  |        |    | 
|-------- |  | ----------------------------------------------------------------------------------------- |  | ------ | -- | 
|         |  |                                                                                           |  | Page  
|         |  |                                                                                           |  | Number
|         |  |                                                                                           |  |       
|PART I  
|Item 1.  |  | Business                                                                                  |  |        | 1  | 
|Item 2.  |  | Properties                                                                                |  |        | 16 | 
|Item 3.  |  | Legal Proceedings                                                                         |  |        | 16 | 
|Item 4.  |  | Submission of Matters to a Vote of Security
    Holders                                   |  |        | 17 | 
|PART II 
|Item 5.  |  | Market for Registrants Common Stock and
    Related Stockholder Matters                  |  |        | 17 | 
|Item 6.  |  | Selected Financial Data                                                                   |  |        | 19 | 
|Item 7.  |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations |  |        | 21 | 
|Item 7A. |  | Quantitative and Qualitative Disclosure about the
    Market Risk                         |  |        | 33 | 
|Item 8.  |  | Financial Statements and Supplementary Data                                               |  |        | 34 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure  |  |        | 67 | 
|PART III
|Item 10. |  | Directors and Executive Officers of the Registrant                                        |  |        | 67 | 
|Item 11. |  | Executive Compensation                                                                    |  |        | 67 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners
    and Management                        |  |        | 67 | 
|Item 13. |  | Certain Relationships and Related Transactions                                            |  |        | 67 | 
|Item 14. |  | Controls and Procedures                                                                   |  |        | 67 | 
|PART IV 
|Item 15. |  | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K                       |  |        | 67 | 

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PART I

In this Annual Report on Form 10-K,
FNIS, the Company, we,
our and us refer to Fidelity National
Information Solutions, Inc. and its consolidated subsidiaries
(unless the context otherwise requires).

Through this Annual Report on Form 10-K,
references to dollars and $ are to
United States dollars.






Item 1.     Business


General

We provide data, technology solutions and
services needed by lenders and real estate professionals. We are
the only national provider whose offerings span the entire home
purchase and ownership life cycle, from contact through closing,
refinancing and resale. The products and services we provide
enable our customers to use information to improve their
business decision-making processes and to effectively manage
existing and prospective customer relationships. Our product and
service offerings include a full spectrum of technology
solutions, electronic partner networks, loan origination
systems, real estate tax services, credit reporting services,
flood compliance services, and automated valuation and appraisal
services. Additionally, we are the nations largest data
and service provider to the Multiple Listing Service
(MLS) systems industry. Our data, web services, MLS
systems, and productivity and management software serve more
than 50% of the nations Realtors®.

We are a majority-owned subsidiary of Fidelity
National Financial, Inc. (NYSE: FNF 
Fidelity). As of December 31, 2002, Fidelity
held approximately 66% of our outstanding common stock. We
provide services to Fidelity to support its title and escrow
functions and the revenue from providing such services accounted
for approximately 31% of our revenues in 2002.

Fidelity is the nations largest title
insurance and diversified real estate-related services company.
Fidelitys title insurance underwriters 
Fidelity National Title, Chicago Title, Ticor Title, Security
Union Title and Alamo Title  together issue
approximately 29 percent of all title insurance policies
issued nationally in 2001. Fidelity provides title insurance in
49 states, the District of Columbia, Guam, Puerto Rico, and
the U.S. Virgin Islands and in Canada and Mexico.

Our principal executive offices are located at
4050 Calle Real, Santa Barbara, California and our telephone
number is (805) 696-7000.

Our website address is www.fnis.com. Electronic
copies of our annual reports on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K
are available free of charge by visiting the Investor
Info section of our website. These reports are posted as
soon as reasonably practicable after they are electronically
filed with the Securities and Exchange Commission. In addition,
print copies may be obtained free of charge by contacting
Investor Relations at our executive office location or by phone
at (805) 696-7218.

Company Formation

We were formerly Vista Information Solutions,
Inc. (Vista), a publicly traded company. Our primary
business was to provide software solutions to the real estate
industry, including hosting MLS applications.

On August 1, 2001, pursuant to an Agreement
and Plan of Reorganization and Merger dated April 12, 2001,
we acquired one wholly-owned subsidiary of Fidelity and three
wholly-owned subsidiaries of Chicago Title and Trust Company
(Chicago Title), which is 100% owned by Fidelity. At
the same time, Fidelity transferred to us 80% of the issued and
outstanding stock of Fidelity National Tax Service, Inc.
(Tax). The subsidiary of Fidelity we acquired was
International Data Management Corporation (IDM),
which had been acquired by Fidelity in January 2001 (together
with Tax, the Fidelity Subsidiaries). The
subsidiaries of Chicago Title we acquired were Market
Intelligence, Inc. (MI), Fidelity National Credit
Service, Inc. (Credit), and Fidelity National Flood,
Inc. (Flood) (collectively, the Chicago
Subsidiaries).

In consideration for these transactions, we
transferred to Fidelity and Chicago Title 5,507,671 and
11,703,801 shares of our common stock, respectively.
Collectively, these shares then constituted approximately

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77% of our outstanding common stock. The
transactions had the effect of a reverse merger, following which
we became a majority-owned subsidiary of Fidelity. As a result,
the accompanying Consolidated Financial Statements issued prior
to December 31, 2001 only reflected the financial position,
results of operations, and cash flows of the Fidelity
Subsidiaries and Chicago Subsidiaries prior to the merger, as
the Fidelity Subsidiaries and Chicago Subsidiaries were treated
as the acquirer for accounting purposes. Vistas results
were included in the results of operations since the closing of
the business combination on August 1, 2001.


Acquisitions/ Dispositions

Since our formation on August 1, 2001, we
have made numerous strategic acquisitions designed to expand the
range and depth of the product and service offerings to our
customers. The acquisitions made by us in furtherance of our
strategy were:

|                 |  |                                                    |  |                                                            |  |                                                             
|---------------- |  | -------------------------------------------------- |  | ---------------------------------------------------------- |  | ------------------------------------------------------------
|Date of          |  |                                                    |  |                                                            |  |                                                             
|Acquisition      |  | Acquired Entity                                    |  | Product/Service Offerings                                  |  | Consideration                                               
|                 |  |                                                    |  |                                                            |  |                                                             
|August 2, 2001   |  | Risco, Inc.                                        |  | Multiple listing services                                  |  | 1,614,286 shares of common stock                            
|                
|August 2, 2001   |  | Reez.com                                           |  | Real estate transaction workflow management
    technology |  | 136,971 shares of common stock                              
|                
|October 10, 2001 |  | 20% interest in Tax Services (80% already owned)   |  | Real estate tax services                                   |  | $5.4 million in cash                                        
|                
|December 3, 2001 |  | XMLS Web division of HomeSeekers.com               |  | Multiple listing services                                  |  | $3.2 million in cash                                        
|                
|January 2, 2002  |  | ISDI.NET, LLC                                      |  | Technology, system integration and consulting
    services |  | $2.1 million in cash and 335,000 shares of
    common stock 
|                
|May 28, 2002     |  | 55% interest in Hansen Quality Loan Services, LLC. |  | Collateral risk assessment and valuation services          |  | $4.1 million in cash and a note payable of
    $4.1 million 
|                
|July 1, 2002     |  | Comstock Net Services, Inc.                        |  | Realtor desktop solutions                                  |  | $1.8 million in cash and 213,323 shares
    of common stock 
|                
|July 9, 2002     |  | MGEN, SoftPro and RealEC                           |  | Real estate transaction workflow management
    technology |  | 12,895,721 shares of common stock                           
|                
|October 29, 2002 |  | Eastern Financial Systems, Inc.                    |  | Mortgage loan origination software                         |  | $35.9 million in cash and
    880,726 shares of common stock

Micro General Corporation Acquisition.On April 29, 2002, we announced a
tender offer for all of the outstanding shares of Micro General
Corporation (MGEN), a majority-owned subsidiary of
Fidelity, whereby each share of MGEN common stock would be
exchanged for shares of our common stock. We received over 90%
of the outstanding MGEN shares in response to this offer, which
was closed on July 9, 2002. Also on July 9, 2002, we
acquired the remaining outstanding stock of MGEN through a
short-form merger. As a result of the tender offer and
subsequent short-form merger MGEN became our wholly-owned
subsidiary. The tender offer and merger were based on a fixed
exchange ratio of .696 shares of our common stock for each
share of MGEN common stock. As a result, we issued 12,895,721
new shares of our common stock to acquire MGEN.

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Prior to the merger, Fidelity held a controlling
interest in both MGEN and FNIS. Our acquisition of the
non-controlling equity interest of MGEN (48.4%) was accounted
for under the purchase method of accounting in accordance with
Statement of Financial Accounting Standards No. 141,
Business Combinations. The total purchase price of the minority
interest was $153.2 million and we recorded goodwill of
approximately $128.0 million. Our acquisition of
Fidelitys interest in MGEN (51.6%) is not considered a
business combination because MGEN and FNIS were entities under
common control of Fidelity. Therefore, we recorded this
transaction in a manner similar to a pooling-of-interests method
of accounting. As required by generally accepted accounting
principles in the U.S., all amounts contained herein have been
prepared as if the transaction took place on the first day of
the periods presented. SoftPro Corporation (SoftPro)
and RealEC Technologies (RealEC) were acquired by
MGEN in 2001. Their results were included in our results of
operations since the acquisition dates by MGEN as a result of
the pooling-of-interests accounting treatment of the MGEN
acquisition.

In addition, subsequent to the merger of MGEN,
Fidelity exercised its option to convert a $5.3 million
convertible note from MGEN into 403,120 shares of our common
stock.

Fidelitys ownership of our outstanding
stock decreased from approximately 80% as of December 31,
2001 to approximately 66% as of December 31, 2002. The
decrease resulted from the above transactions plus the effect of
shares we issued during 2002 in connection with the exercise of
stock options and warrants, and for employee benefit plans.

Other Transactions.On March 25, 2002, we sold our
Environmental Risk Management Solutions business for
$15.5 million in cash. The services provided by this
division were primarily used by commercial lenders and the
engineering community, neither of which are prime markets for
our organization. Proceeds from the sale were used to repay the
$12.6 million balance then outstanding under our revolving
credit agreement with Fidelity. The remaining proceeds of
$2.9 million were added to general working capital.

Also on December 31, 2002, we completed a
strategic, multi-year outsourcing and software application
services agreement with HomeServices of America
(HomeServices), a residential real estate company
and a Berkshire Hathaway affiliate. We acquired the TRIO®
software and certain other assets from HomeServices for a
purchase price of $2.0 million in cash, payable 50% upon
closing and 50% upon attainment of certain requirements under
the agreement. We intend to enhance the features and
functionality of the software with our broker and agent software
and services suite. This alliance represents our initial
relationship with more than 14,000 agents in the HomeServices
network and we believe it will create many more opportunities
for us to provide valuable data and technology solutions to the
HomeServices family of brokerages.

Strategy

We intend to be the leading provider of an
integrated suite of technology tools to the real estate and
lending industries. These tools include technical and consulting
professional services that are designed to manage our
customers transactions from contact to close. We believe
these tools will enable our customers to take time and cost out
of the real estate transaction process and operate more
efficiently and competitively. To accomplish our objective we
need to:



| |   |                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Capture real estate professionals and
    mortgage lenders computer desktops and leverage this
    common technology to provide integrated access to data,
    solutions and services that will help to increase their
    efficiency, minimize risk and reduce transaction costs through a
    single desktop platform.                                       
|
| |  | Continue to leverage our relationship with
    Fidelity. We believe our close relationship with Fidelity and
    access to its large customer base will help us continue to
    develop and expand our business.                                                                                                                                                 
|
| |  | Continue to increase our influence with MLS
    boards and associations, industry consultants, others selling
    professional services, and lenders focused on providing services
    into the residential real estate transaction.                                                                                                                             
|
| |  | Pursue new revenue opportunities and integrate
    the broker and agent platform with Fidelity and other companies
    who desire to sell products and services into the residential
    real estate channel, and to build products using public data to
    provide value added technical, analytical, and transaction
    related data products to our clients.

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In conjunction with Fidelity, provide a
    comprehensive, integrated suite of products and services that
    enable real estate transaction participants, including real
    estate professionals, mortgage lenders, loan servicers and
    subservicers, default managers, title insurance providers,
    escrow companies and secondary market investors, to streamline
    their production processes, operate more profitable businesses
    and enhance their customers experiences.
|
| |  | Satisfy our customers needs with new
    products that combine multiple aspects of our data and services
    and offer information available for decision making; pursue
    bundled subscription sales to package and sell our suite of data
    information to new and existing customers, providing them with
    an alternative to transaction based sales and increasing the
    proportion of our revenues that are derived from term contracts.                                    
|
| |  | Expand our business through strategic
    acquisitions and alliances because we believe opportunities
    exist in the fragmented real estate and financial information
    technology services market. We believe the acquisitions of one
    or more complementary businesses, products, product rights or
    technologies will enable us to expand our product offerings and
    increase market share.                                                                                

Overview of Real Estate Transaction
Process

Real estate transactions and mortgage
underwriting are complex processes requiring a myriad of data
collected and analyzed from many disparate sources. The four
cycles of real estate transactions are:



| |   |                 
| | - | ----------------
| |  | Sales           
|
| |  | Lending         
|
| |  | Settlement      
|
| |  | Secondary Market

The four cycles refer to the start-to-finish
process of a real estate transaction. The first cycle is Sales,
beginning with the decision to list a home for sale and ending
when a buyer has been identified and definite purchase and sale
terms have been agreed upon. This begins the second cycle,
Lending, which is the buyers search for financing for the
transaction, although many buyers today begin this cycle prior
to the end of the sales cycle. When financing has been obtained,
the third cycle is the closing, or Settlement, wherein title and
funds are exchanged. The final cycle, which is largely invisible
to homebuyers and sellers, is the Secondary Market for
mortgages. Loan originators rarely retain loans on their books,
choosing instead to sell these loans to investors, or
package a large number of loans and sell interests
in these packages to investors in a process known as
securitization. The sales or securitization of
consumer mortgages diversifies the risk of holding a mortgage
portfolio and enables lenders to offer lower rates. Since the
originator then makes money from the fees associated with
underwriting the loan rather than the stream of interest
payments, process efficiency becomes the key to profitability.
If our customers can process more transactions in less time,
they can make better business decisions and obtain better
pricing through more complete and accurate data and reduce their
loan loss risk.

We have data, technology solutions and services
that address each of these four cycles of real estate
transactions with the goal of managing the work and data flow
from start to finish while significantly reducing the time and
cost involved in the real estate transaction process. The
following table illustrates information regarding our revenues
generated from each of these four cycles for the year ended
December 31, 2002:

|                 |  |            |     |  
|---------------- |  | ---------- | --- | -
|                 |  | % of Total
|                 |  | Revenue   
|                 |  |           
|Sales            |  |            | 15  | %
|Lending          |  |            | 28  |  
|Settlement       |  |            | 31  |  
|Secondary Market |  |            | 26  |  
|                 |  |            |     |  
|                 |  |            | 100 | %
|                 |  |            |     |  

4



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Business Segments

Our company is organized into three segments for
management and financial reporting purposes: Data, Solutions and
Services. The results of these segments for the three years
ended December 31, 2002 are included in the accompanying
Consolidated Financial Statements, and discussed in our
Managements Discussion and Analysis of Financial Condition
and Results of Operations in Item 7 of this document.

Data

General.The Data
segment includes information regarding both real estate and
consumers that can be aggregated, rendered, repurposed or
repackaged to meet the specific business needs of our customers.
This segment consists of five primary product lines: real estate
tax services, flood certification, credit reporting, property
valuation services and property records.

Real Estate Tax Services.We advise lending and mortgage related
institutions throughout the United States of the status of
property tax payments that are due on properties securing their
loans during the loan origination process and over the life of
the loan. We protect lenders against losses from failing to
monitor delinquent taxes.

Many residential loan investors and primary
mortgage insurers require that servicers of loans that do not
meet certain loan-to-value ratio requirements maintain escrow
accounts into which borrowers must deposit monthly payments
against pending property tax obligations. The servicer then pays
the taxes on or before the due date. In order to properly manage
these escrow accounts and ensure that the taxes are timely paid,
residential loan servicers utilize property tax monitoring
services. In addition, property tax service companies can help
lenders monitor borrowers to ensure that their real estate taxes
are paid on a timely basis even if an escrow account is not a
requirement of the loan. Our real property tax services business
line provides these property tax services and tax data to
financial institutions. We obtain property tax data from county
property recording offices, and format the data so that it can
be processed by a financial institution customers
automated loan servicing system. Using an automated escrow
reporting and payment system, a financial institution can make
timely payment of property taxes on those loans for which the
institution is required to provide property tax escrow accounts.
We also have an automated system that allows an institution to
significantly reduce the time and costs associated with the
manual processing of tax payments.

In addition to performing one-time checks on the
tax status of a property, we also offer lenders a monitoring
product that will notify them of any change in status for as
long as that loan is outstanding. The cost is only moderately
more than the one-time check, and is paid by the borrower, so
most lenders select this product. In most cases, the
notification of a change is handled in an automated fashion by
the same system that generated the report previously, so the
incremental cost to us is minimal.

Flood Zone Determination.Federal laws require a flood
certification before a mortgage loan can be closed. We offer the
required flood zone determination reports to mortgage lenders
nationwide.

Congress passed the Flood Disaster Protection Act
of 1973 and the National Flood Insurance Reform Act of 1994 in
response to catastrophic losses suffered in the wake of major
flooding disasters. Under these laws and the related
regulations, all federally-insured or regulated lenders must:



| |   |                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | determine whether or not a structure on the
    property offered as security for a loan is or will be located in
    a special flood hazard area;                                                           
|
| |  | document the method of determining flood hazard
    status;                                                                                                                                                 
|
| |  | require that flood insurance to the appropriate
    dollar limit is obtained; and                                                                                                                           
|
| |  | during the term of the loan, ensure that flood
    insurance is maintained or added if the lender becomes aware
    that the property involved subsequently becomes part of a
    special flood hazard area.

In response to this legislation, affected lenders
must either provide these services in connection with their loan
origination and servicing activities or outsource these required
services to third parties. To help financial

5



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institutions comply with these federal
requirements, our flood services business offers basic flood
zone determination certification and life-of-loan flood zone
determination services.


At the time of loan origination, the lender or
loan broker requests a determination from us as to whether a
particular address is located in a special flood hazard area. We
process this request through a proprietary automated system that
accesses and interprets Federal Emergency Management Agency, or
FEMA, flood maps, then certifies the status of the property to
the lender or loan broker. The certification is provided on a
real-time basis through the internet or a computer
desktop application.

In addition to the two main flood-related
services, we offer other real estate information services to
lenders, such as providing disclosures enabling mortgage
originators to comply with the Home Mortgage Disclosure Act and
census tract data and performing loan portfolio reviews for
flood zone regulatory compliance.

Our life-of-loan flood zone determination
contract monitors certificates for any changes, such as FEMA
flood map revisions. This monitoring service is designed to
enable financial institutions to comply with the federal
regulations mandating life-of-loan flood zone monitoring.

Credit Reporting.We
provide credit information reports to mortgage lenders
nationwide to help make loan decisions, as well as a variety of
related products to meet the needs of the mortgage industry.

Consumer credit information is critical to the
mortgage lending industry because a lenders decision to
make a loan is often based upon a consumers credit
history. In evaluating the credit quality of a borrower, the
loan originator uses the credit risk score of that borrower. The
credit risk score is a statistical credit score generated by
models developed by a third party and made available to mortgage
lenders through three national credit bureaus. The models are
derived by analyzing data on consumers in order to establish
patterns that are believed to be indicative of the
borrowers probability of defaulting on a loan. The credit
risk score is based on a borrowers historical credit data,
including payment history, delinquencies on accounts, levels of
outstanding indebtedness, length of credit history, types of
credit and bankruptcy experience. The extent to which a lender
will rely on credit information and seek to verify the
information from a credit report depends upon the lenders
risk tolerance and the nature of the loan product.

Our credit service business provides credit
reporting services to commercial banks, mortgage companies and
consumer lenders. Our products include a merged credit report
that contains credit history data on individual or joint credit
applicants acquired from the combined databases of three credit
bureaus (Experian, Trans Union and Equifax) for national
coverage. We consolidate and organize information from these
credit bureaus and deliver a concise report to our customer. We
also offer a residential mortgage credit report that meets the
guidelines of Federal National Mortgage Association, Federal
Home Loan Mortgage Corporation, Federal Housing Administration
and Veterans Administration. Additionally, we offer products
that provide credit information on individuals with little or no
credit history and credit information with respect to
self-employed borrowers.

In the fourth quarter of 2002, we introduced a
new product called QuadMerge Value which bundles our
proprietary QuadMerge Report, offering combined data from
the three consumer credit repositories with public record
information derived from our proprietary property database, the
4th Repository. The 4th Repository provides
instantaneous subject property ownership records, a legal
description to ensure the accuracy of loan application data and
title information, and comprehensive public record information
on property, ownership, sales and mortgage records for more than
150 million properties. QuadMerge Value also features
an automated valuation sourced from our proprietary
ValueSure Automated Valuation Model (AVM), in
conjunction with a confidence level score indicating the
quantity and quality of data used to render the property value.
A high or low value range, enabling customers to
assess valuation data using best and worst-case scenarios, also
accompanies each confidence score.

Property Valuation Services.We provide detailed real estate
property evaluation and collateral valuation services to lending
institutions utilizing artificial intelligence software,
detailed real estate statistical analysis and physical property
inspections.

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Assessing the value of the real property that
will secure a loan is one of the key components of a mortgage
lending decision. Loan servicers routinely re-evaluate loans and
loan portfolios to manage risk and loss due to loan defaults. In
addition, property valuation services are used by investors to
assess the value of a loan portfolio in connection with the sale
or securitization of mortgages and other secondary market
transactions. Historically, lenders and investors required a
comprehensive property appraisal as part of their loan
origination requirements or mortgage investment decisions. Such
appraisals traditionally involved labor-intensive inspections of
the real property in question and of comparable properties in
the same and similar neighborhoods. These types of appraisals
typically take weeks to complete.

In recent years, the increasing availability of
reliable information related to real estate and real estate
transactions has encouraged lenders and other real estate
professionals to use alternatives to traditional appraisals.
Depending on the nature of the loan and the amount of reliable
information available about a property, a lender may not require
a full appraisal. For example, a lender may not require that a
full appraisal be conducted for a second mortgage. Our
residential real property valuation business offers its
customers a broad range of services that allow them to match
their risk of loss with alternative forms of property
evaluations, depending upon their needs and regulatory
requirements.

Our core analytical product ValueSure is an
automated valuation model, commonly referred to in the industry
as an AVM. Our model combines data from public records, resale
information on comparable properties, average price appreciation
of homes in the same area, and tax-assessed values to estimate a
value for the subject property.

In the third quarter of 2002 we introduced a
unique patent-pending valuation platform, Collateral Valuation
Insurance (CVI), which is the first traditional
appraisal replacement that combines automated estimates of value
with a physical inspection of the property and valuation
insurance. While AVMs have been used extensively in home equity
lending and portfolio valuation, their use in the first mortgage
segment is significant because FNIS has developed a 100% AVM
solution for conforming residential properties in the United
States. Additionally, our CVI appraisal typically takes less
than four days to complete and retails for approximately 50% of
a traditional full appraisal.

Our other major products include alternative
property valuations performed by real estate professionals in
conjunction with our automated analytic tools designed to reduce
the time and cost associated with traditional appraisals for
equity and first mortgage lenders, and BPOs (Broker Price
Opinions) directed at the default servicing and mortgage backed
security investor industry.

To provide these services, we operate one of the
largest integrated on-site real estate agent and appraiser
networks in the United States with over 30,000 participants.

Property Records.We
provide public records data to the real estate, lending and
title insurance communities. Our public records data covers over
1,250 counties encompassing 150 million records in
connection with property ownership, mortgage and sales,
representing 80% of the total property owners in the United
States.

Official real property records are filed locally
in the county in which the related property is located. Many of
these local recording offices keep only paper or microfiche
records, and few have the ability to provide records in an
electronic format. Our real estate information business works
with Lexis-Nexis Group, a division of Reed Elsevier, Inc., to
build Lexis-Nexiss nationwide real estate information
database, providing the industry with access to these property
records in electronic format for a variety of applications. Our
real estate information business gathers property records in
various formats from county recording offices and contracts with
a company located in the Philippines to convert the records into
electronic format.

Solutions

General.Solutions
involve developing and supplying business processes and
technology that allow customers to improve efficiency, lower
costs, reduce risks and better manage and operate their
businesses to serve their customers needs. Our solutions
primarily include Web-based multiple listing systems and a suite
of technology products for the real estate service and lending
industry.

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Multiple Listing Services (MLS).We are the nations largest
provider of MLS systems with approximately 50% of the total MLSs
in the country.

Realtors become members of the local MLS
organization, which enables them to provide listing information
to their clients on available properties and pricing trends.
However, most local MLS organizations do not have the
technological capacities to manage the systems and provide
access efficiently. We develop and host MLS systems for these
local MLS organizations, enabling the realtors to search the
entire universe of available homes using the buyers
criteria, thus adding efficiency in the Sales cycle. We have
acquired some of the largest service providers in this area over
the last couple of years, including Risco and the XMLS Web
division of HomeSeekers.com.

Our Paragon and Paragon Offline
products provide management of MLS property listing data. These
systems provide management of data using advanced database
technology, access to pre-defined and customized information and
access to supplemental information such as special tax zones and
school districts. We also provide central hosting of these
systems on our networks to provide additional reliability and
security.

Agent Office and Broker Office.We are the second largest provider of
web-based and desktop solutions for real estate franchises,
brokers, agents and other real estate industry professionals.
Agent Office and Broker Office provide a complete technology
platform to real estate brokerage offices, enabling them to more
efficiently manage transactions, contracts, and client requests.
This enables agents to provide better client service and close
more deals in shorter amounts of time by eliminating
time-consuming tasks.

TransactionPoint.TransactionPointTM is a single transaction order
platform that enables real estate professionals to order,
confirm and schedule the delivery of multiple real
estate-related products and services. It is designed to
standardize and streamline the process of managing and closing
transactions, and creates a link between real estate
professionals, clients and service vendors.

The RealEC Exchange.The RealEC Exchange is a secure B2B
e-commerce exchange for real estate transactions. This
electronic partner network facilitates the origination,
servicing, and closing of real estate transactions and enables
real estate practitioners to significantly enhance their
businesses.

Through this online marketplace, over 800
mortgage-lending institutions can order online, from over 2,000
service providers located across the United States, products and
services in connection with loan originations. Lenders and
realtors can place orders for products using customized
parameters or through our intelligent ordering subsystem, which
manages the task of identifying the appropriate product and
service provider. Orders are transmitted to vendors of those
products and services electronically through the Internet and
other private networks. Those service providers can in turn
deliver the desired products, such as credit reports, title
reports and flood certifications, directly to the requesting
company through the RealEC Exchange. Products and services that
can be ordered using the RealEC Exchange include title reports
and insurance policies, closing and escrow services, appraisal,
automated property valuation, flood determination, credit
report, property inspections and tax notifications. We charge a
fee to vendors that receive and fill orders through the RealEC
Exchange. Our fees are based on the type of service being
offered. We also charge a per use transaction fee to customers
who use our intelligent ordering system.

RealEC iSelect offers order management,
status tracking and coordination by intelligently managing
vendor selection, product selection and coordinating the flow of
the entire real estate transaction process using a software
solution and tools that enable online collaboration.

Empower!On
October 29, 2002, we acquired Eastern Financial Systems,
Inc. (Eastern), a provider of mortgage loan
origination software. Easterns loan origination software,
Empower!, is an application offering connectivity to a wide
array of lending industry services. Empower! software is
targeted toward the premier lenders in the industry. This
software accommodates every aspect of lending from sale through
secondary marketing, as well as complete interfacing systems
with servicing, flood, appraisal, and title. This software
provides us with another tool for facilitating a more efficient
real estate process. We can integrate the loan origination
platform with our mortgage data products, providing single point
access and consistent routing of data. We believe this moves us
another step closer to offering more complete data exchange and
technical integration between the sales, mortgage lending and
settlement service processes of a real estate transaction.

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SoftPro.SoftPro is
our pre-packaged, turnkey software application that provides
automation tools and back-office support to independent title
agents and attorneys for the management of real estate
transaction settlements. SoftPro includes features such as
automated generation of closing and title insurance forms, order
tracking and management reporting, trust accounting management
and reconciliation, title plant indexing, 1099-S IRS magnetic
media reporting, advanced amortization calculations and
schedules, and custom document design.

SoftPro SQL, a network-based software application
based on SoftPro, enables title and escrow companies to connect
hundreds of users in one location, or hundreds of offices around
the country, to use the software. SoftPro SQL is designed for
use by large title and escrow companies with multi-office
location. We charge a one-time license fee per site and a
monthly per seat fee for this application.

SIMON/TEAM and Net Global Solutions
(NGS).We provide SIMON,
an industry leading title workflow, escrow closing and trust
accounting software to the real estate services industry. SIMON
is a client server-based software system that allows its
customers to manage workflow and share data within their
organizations. SIMON has processed over $1 trillion in real
estate transactions and manages $2 billion in daily
balances. Our parent company, Fidelity uses SIMON for its real
estate settlement workflow management. Fidelity also uses a
legacy system TEAM to manage its Chicago Title offices. In
addition to Fidelity, over 150 independent companies use
SIMON to manage their escrow closing and trust accounting
processes.

During 2002, substantial development was
completed on NGS, a next generation enterprise software
solution. Implementation of NGS is expected to begin in March
2003. NGS is being built to operate on a web-based technology
platform. This technology platform allows NGS to receive and
transmit data over the Internet and to be seamlessly linked with
the internal systems of multiple real estate services providers.
NGS is being provided only to Fidelity, who holds the technology
rights. When NGS is fully implemented, it will replace SIMON and
TEAM as the enterprise software solution to Fidelity. We believe
that the knowledge and expertise we obtained from developing
this web-based technology platform on which NGS is being built
will enable us to develop other software applications that
further integrate and streamline the real estate transaction
settlement process.

Services

General.Services
are designed to add value by combining manual intervention,
outsourcing or process improvement with one or more of our data
and/or solutions components. They can range considerably in
scope, from improving a single process to providing complete
outsourcing capabilities. Services can add value by saving
customers time and money. These savings or efficiencies can be
accomplished in a number of ways, including reducing staffing
needs, streamlining paperwork and processes or stabilizing
business cycles, all of which can help to drive more revenue to
the customers bottom line. Our services offerings
primarily include the following products.

Traditional Appraisal Services.We provide full appraisal services to
real estate professionals and lenders through a national network
of more than 30,000 licensed real estate professionals and
appraisers. We do not own these appraisal offices and the
appraisers are not our employees. Instead, we generate leads for
the appraisers and manage the scheduling and reporting once the
process is complete. In return for this service, we in essence
buy the appraisal services at a discount and sell them to the
consumer at face value. Appraisals are fee-based and pricing
varies by region and by property.

In additional to traditional appraisal services,
our products also include Hansen Quality collateral risk
assessment scoring for use in the secondary market and at loan
origination to grade the quality and confidence associated with
collateral value opinions.

Real Estate Tax Outsourcing Services and
Disbursements.We provide complete
outsourcing of escrow/impounding services, including escrow line
and payee code establishment, escrow account debiting, payment
exception processing, production of payment checks and payment
remittance services. Tax outsourcing services are negotiated
based on required services and portfolio volume.

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Litigation Support Services.We provide imaging and coding services
for major law firms nationwide. High quality offshore legal
coding is provided through conversion facilities located in
Southern California and the Philippines (Manila). Pricing is
project and customer specific.

Commercial Printing.We provide print and electronic
publishing solutions ranging from full service book printing and
binding to electronic publication via searchable CDs or the
Internet. Pricing varies by project.

Competition

We compete with a number of companies in certain
of our markets and product lines. Some of these companies have
substantial resources.

In the real estate valuation business, the
leading competitors include First American Real Estate Services,
TransUnion and LSI. Our leading competitors in the tax services
industry are Transamerica Tax Service, First American Tax
Service, and Lenders Real Estate Tax Service. In the flood
services area, we compete with First American Flood Data,
TransAmerica Flood, TransUnion Settlement Solutions, and
Geotrac. Our credit services face three significant national
competitors in the industry: First American Credco, Equifax and
Factual Data. Other competitors include small, regional credit
service providers.

Interealty, MarketLinx, and Rapattoni currently
compete for the MLS business. In addition certain MLS
organizations provide their own MLS services. Our Lexis-Nexis
and real estate information businesses compete with the
databases maintained by First American Real Estate Information
and Dataquick. We also compete with Homestores.com for agent
desktop software.

The market for information technology is
intensely competitive and involves aggressive technological
development. We believe that the market for companies providing
real estate transaction closing solutions consists of only a
limited number of companies. Our competitors vary in size and in
the scope and breadth of the products they offer. In addition,
because many of our potential customers have historically
developed real estate transaction closing systems in-house and
therefore view their system requirements from a make-versus-buy
perspective, we often compete against our potential
customers in-house capacities.

In the Services sector, we compete with First
American for appraisal business and TransUnion for credit
business.

We do not believe that there is a competitor
currently offering the same level of product breadth and scope,
market coverage and services that we provide.

Customers

The majority of our customers fall within three
distinct groups:



| |   |                                               
| | - | ----------------------------------------------
| |  | Mortgage lenders and servicers                
|
| |  | Real estate professionals                     
|
| |  | Title insurance companies (including Fidelity)

The principal customers for our Data segment are
mortgage lenders and originators, residential loan servicers,
and other real estate professionals. Our public records services
provide data to real estate brokers and agents, MLS
associations, lenders and title companies. None of our product
lines experience material customer concentration.

Our customers for the Solution segment range from
major financial and real estate services providers to
independent agents, attorneys and MLS organizations. SoftPro is
used primarily by independent title agents and attorneys and has
been installed in approximately 6,300 sites and used by
approximately 23,000 users. The RealEC Exchange is used
primarily by mortgage lenders and settlement services providers.
Five of the largest ten mortgage lenders in the United States
use the RealEC Exchange. Empower! is used by banks, savings
& loans, mortgage bankers and sub-prime lenders with retail,
wholesale, and correspondent business channels. It

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has been selected by four of the top 50 and ten
of the top 200 mortgage lenders in the last twelve months. We
also provide Fidelity with certain data products. For the year
ended December 31, 2002, these Fidelity purchases accounted
for 2.4% of our total revenue.


Fidelity and its affiliates use SIMON and TEAM
for their real estate transaction settlement services. SIMON is
used by the Fidelity companies and TEAM is used by the Chicago
Title companies. Fidelity, operating under the brands Fidelity
National Title, Chicago Title, Ticor Title, Security Union Title
and Alamo Title, is the largest title insurance company in the
United States. Also included among Fidelity affiliates is
American Title, a brand operated by ANFI, Inc. (NASDAQ: ANFI), a
public company in which Fidelity has ownership interests and
which Fidelity is currently in the process of acquiring. Besides
Fidelity, over 150 independent companies use SIMON to
manage their escrow closing and trust accounting process. We are
developing NGS, a next generation enterprise software solution,
to replace SIMON. We derived 29% of our 2002 revenue from
Fidelity in connection with the development of NGS, supporting
SIMON and TEAM and providing certain other services. With the
implementation of the initial NGS software system, expected to
be completed sometime in early 2005, our revenues for NGS
development will be reduced. However, we anticipate deriving new
revenues from further deployment and implementation of NGS and
from a monthly per seat service fee. The monthly service fee
will include ongoing technical support, bandwidth usage and
upgrades.

Our customers for the Services segment include
realtors, lenders and title companies. There is no significant
customer concentration in this segment.

Business Seasonality and Revenue
Cyclicality

The business cycle of the residential real
property valuation services, flood services and credit services
business lines have historically been closely aligned with the
home equity credit market. Volumes generally increase in the
early spring, followed by a slower summer season, a relatively
busy fall and a significantly slower winter. Significant changes
in interest rates may alter these traditional seasonal patterns
due to the effect the cost of financing has on real estate
transactions. Our MLS and NGS development revenue is primarily
contract based and not significantly affected by seasonality,
or, in the short-term, by changes in interest rates.

Our revenue is derived from various customer
contracts and transactions. The following table provides the
percentage share of our 2002 revenue of $412.2 million derived
from our customer contracts and transactions and indicates the
principal business segment associated with each type:

|                                                                                                               |  |            |     |                  |  |                   
|-------------------------------------------------------------------------------------------------------------- |  | ---------- | --- | ---------------- |  | ------------------
|                                                                                                               |  | % of Total |     |                 
|Type of Contract or Transaction                                                                                |  | Revenue    |     | Business Segment
|                                                                                                               |  |            |     |                 
|Term contracts of three years or longer                                                                        |  |            | 37  | %                |  | Solutions         
|License and subscriptions of one year or longer                                                                |  |            | 8   |                  |  | Data and Solutions
|Revenue deferred at the point of sale and
    recognized over the estimated average life of the loan portfolio |  |            | 5   |                  |  | Data              
|Counter cyclical revenue principally associated
    with delinquent loans and loan defaults                    |  |            | 11  |                  |  | Data              
|Transaction based revenue from customers with a
    historical and long-term relationship with us              |  |            | 25  |                  |  | Data and Services 
|Other transaction based revenue                                                                                |  |            | 14  |                  |  | Data and Services 
|                                                                                                               |  |            |     |                  |  |                   
|                                                                                                               |  |            | 100 | %                |  |                   
|                                                                                                               |  |            |     |                  |  |                   

Sales and Marketing

We market and distribute our offerings to all
participants in the typical real estate transaction, including
loan originators, title insurance brokers, realtors and almost
any service provider related to the closing of a real estate
transaction. They purchase data, solutions and services from us
on either a subscription basis or on a

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per-transaction basis. Our marketing efforts are
led by a centralized corporate marketing division, which
supports our sales efforts.


Our sales force is organized around our three
business segments: Data, Solutions and Services. The Data sales
force focuses on the top 200 mortgage lending institutions in
the U.S. They sell our valuation services, credit and collateral
scoring products, flood zone information, and tax services,
among other things. Our sales force in the Solutions group sells
to a variety of end users. For instance, we sell desktop
solutions to realtors and MLS solutions to their local boards,
and we sell workflow solutions like Empower!, RealEC and RealEC
iSelect to lenders. We market SoftPro to independent title
agencies and real estate attorneys, as well as to the users of
SIMON and TEAM. Our sales force in the Services division also
sells traditional appraisals, tax-outsourcing services, title
plant keying and litigation support services.

All of these segments are targeted via direct
and/or indirect field sales, as well as inbound and outbound
telemarketing efforts. Our sales efforts are supported by both
traditional and non-traditional marketing efforts. These
activities include direct marketing, print advertising,
electronic advertising, media relations, public relations,
tradeshow and convention activities, seminars, collateral
material distribution, proposal submission and other targeted
activities.

In addition to our own internal sales channels,
our products and services are also actively marketed by
Fidelitys expansive sales force. These individuals, who
are familiar with our products and services, include
Fidelitys title representatives, escrow officers and
independent third party title agents, as well as its National
Lender Solutions, National Default Solutions, Residential
Solutions, Vendor Solutions, agency operations and other sales
forces.

Many of our offerings are also marketed
independent of our own sales efforts by external resellers and
strategic business partners. Our reseller and partner network is
comprised of real estate franchises, including Prudential Real
Estate Affiliates, Prudential California and RE/MAX; industry
influencers, including recognized industry experts and
professional speakers; associations and government sponsored
agencies, including the National Association of REALTORS®,
Microsoft, Fannie Mae and Freddie Mac; the media, including
Inman News, Mortgage Banking and Realty Times; representatives
from related industries who wish to offer additional services to
their existing and prospective customers, and, in some
instances, product level competitors who wish to expand their
offerings to compete in the bundled services arena.

Employees

As of December 31, 2002, we had
approximately 2,400 full-time equivalent employees. We believe
that our relations with employees are generally good.

Certain employees in our Canadian operations are
represented by a labor union. Our Canadian operations have never
been subject to any form of work stoppage or strike and have not
experienced any labor difficulties.

Intellectual Property

Our business is dependent upon our ability to
gather, manipulate and report publicly available data through
the use of proprietary techniques. We rely on copyright and
trade secret law to protect our technology. Further, we have
developed a number of brands that have accumulated substantial
goodwill in the marketplace, and we rely on trademark law to
protect our rights in that area. We intend to continue our
policy of taking all measures we deem necessary to protect our
copyright, trade secret and trademark rights. In addition, we
are cognizant of the benefits of patent protection, and
management will conduct the necessary screening procedures to
identify technology with patent potential.

Financial Information About Foreign and
Domestic Operations and Export Sales

Our operations are primarily conducted within the
United States and Canada. Approximately 3% of our revenues are
generated in Canada.

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Risks Factors

As discussed under the heading Statement
Regarding Forward-Looking Information later in this
report, the following items are some, but not all, of the risks,
uncertainties and assumptions that could cause our actual
results to be much different than those contained in any
forward-looking statements.



| |                                                                                                             
| | ------------------------------------------------------------------------------------------------------------
| | Decreased real estate activity may reduce
    our revenues and the demand for our products and
    services.

Most of our business is directly or indirectly
related to the real estate industry, the mortgage lending
industry, or both. Real estate activity and mortgage lending
activity is cyclical and highly sensitive to changes in mortgage
interest rates and other factors including seasons, demand,
employment and general economic conditions. Our revenues in
future periods will continue to be subject to these and other
factors which are beyond our control and, as a result, are
likely to fluctuate.



| |                                                                        
| | -----------------------------------------------------------------------
| | We must meet the demands of a wide variety
    of customers to succeed.

Our data, solutions, and services businesses must
meet the demands of customers ranging from small businesses to
large enterprises involved in, among other things, the title
insurance and escrow industry, the lending industry, real estate
sales industry, and other service providers to the real estate
industry. Our products and services may not appeal to or be
adopted by such a wide range of customers, and we may not be
able to service the needs of large enterprise customers. Since
August 2001, we have significantly reduced our personnel and the
personnel of some of the businesses we have acquired. We need to
adequately address any customer service issues caused by this
reduction to be successful.

In addition, the real estate industry is a
service-based business that involves a great deal of personal
interaction, and many of the industrys more seasoned
professionals are slow to embrace technology. In addition, many
of the industrys top producers do not even directly use
personal computers, relegating this task to assistants or other
support staff. We cannot succeed without encouraging and
facilitating the adoption of our integrated desktop and other
technological solutions by these professionals.



| |                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our business, operations and corporate
    structure changed and grew substantially in 2002, and as a
    result there is limited information upon which you can evaluate
    our business.

As discussed above under Item I. Business,
we consummated a major business combination with Fidelity on
August 1, 2001.

Also, as discussed above under the heading
Other Acquisitions/ Dispositions, since
August 1, 2001, we acquired:



| |   |                                                                                  
| | - | ---------------------------------------------------------------------------------
| |  | Risco, Inc.,                                                                     
|
| |  | all the assets and liabilities of Reez.com, Inc.,                                
|
| |  | all of the assets of HomeSeekers.com XMLS Web
    division,                      
|
| |  | the remaining 20% of the common stock of Fidelity
    National Tax Service, Inc.,
|
| |  | ISDI.NET, LLC,                                                                   
|
| |  | 55% of Hansen Quality Loan Services, LLC,                                        
|
| |  | Comstock Net Services, Inc.,                                                     
|
| |  | Micro General Corporation, including RealEC and
    SoftPro,                     
|
| |  | Eastern Financial Systems, Inc., and                                             
|
| |  | Trio software and certain other assets of
    HomeServices                      

Our limited operating history, as currently
configured, makes it difficult or impossible to predict future
results of operations, including operating expenses and
revenues. Any evaluation of our business and prospects must be
made in light of the risks and uncertainties often encountered
by early-stage companies in technology-related markets.

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| |                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Recent personnel changes may interfere with
    our operations, and we need to attract and retain skilled
    personnel for permanent management and other key personnel
    positions to effectively implement our business
    plan.

Since August 1, 2001, we experienced
significant changes at the senior management level. In August
2001, William P. Foley II was appointed as Chief Executive
Officer and Chairman of the Board, and Eric D. Swenson was
appointed President and Chief Operating Officer. Mr. Foley
resigned as chief executive officer effective in January 2002,
and was succeeded by Patrick F. Stone. Also, following the
Fidelity transaction in August 2001, Thomas Gay, Jay Seid,
Patrick Rivelli, and Robert Boscamp resigned from our board of
directors. In their place Mr. Foley, Mr. Stone,
Bradley Inman, Willie Davis and Cary Thompson were elected.

In July of 2002, Dwayne Walker was appointed
President and Chief Operating Officer. In August of 2002,
Mr. Inman resigned from the board. In January 2003, Richard
A. Mendenhall was appointed to the board of directors.

This new management may have difficulty
implementing our business plan.

Our success depends on the skills, experience and
performance of our senior management and other key personnel.
These people can terminate their employment with us at any time.
To succeed we need to continue attracting and retaining highly
skilled personnel.



| |                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------
| | We cannot predict the value of our
    acquisition of certain intellectual property assets, and we may
    not be able to protect those assets.

In the acquisitions discussed above, we acquired
a substantial amount of intellectual property assets. We cannot
assure that these intellectual property assets will provide
ongoing value to us or help us achieve profitability.

Furthermore, to compete we must protect our
trademark, copyright, and other intellectual property rights.
Enforcing these rights is expensive and often difficult or
impossible. In addition, claims against us for patent, trademark
or copyright infringement or misappropriation of creative ideas
or formats, with or without merit, could be time consuming to
defend, result in costly litigation, and divert management
attention. Resolving these claims could require us to make
costly royalty or licensing arrangements or prevent our use of
important technologies, ideas or formats.



| |                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our recent growth continues to strain our
    managerial, operational and financial resources. Failure to
    manage growth effectively will harm our business, results of
    operations and financial condition.

We have, and in the future will, enter new
business areas, diversify our revenue sources and expand our
products and services by establishing subsidiaries, entering
into joint ventures and acquiring new or complementary
businesses, products and technologies.

When we pursue new or complementary business
opportunities, we may not be able to expand our product and
service offerings and related operations in a cost-effective or
timely manner. Integrating new businesses and services may
increase costs and delay and divert managements attention
from existing businesses and services. We may lose key personnel
from our operations or those of any acquired business. Any
launch of new businesses or services that is not successful
could damage our reputation and brand name in our current
markets.

Additionally, future acquisitions may also result
in potentially dilutive issuances of equity securities, the
incurring of additional debt, the assumption of known and
unknown liabilities and the amortization of expenses related to
intangible assets, all of which could have a material adverse
effect on our business, financial condition and operating
results.



| |                                                                                                  
| | -------------------------------------------------------------------------------------------------
| | We need third-party content to operate our
    business, and this content may become unavailable.

We currently license from third parties the
information incorporated into certain of our products. Our
introduction of new products and services may require us to
license additional information from other providers. We cannot
assure you that these third-party information licenses will
continue to be available to us

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on commercially reasonable terms, if at all. Our
performance will suffer if we fail to obtain any of these
information licenses.




| |                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------
| | Security breaches could harm our business
    by disrupting our delivery of services and products over the
    Internet.

Someone circumventing our security could
misappropriate proprietary, confidential information, place
false orders or cause interruptions in our services or
operations. The Internet is a public network, and data is sent
over this network from many sources. Recently, some internet
service providers and e-commerce web sites have been targeted by
denial of service and other attacks that overloaded
these web sites and forced them to shut down temporarily.

Computer viruses could be introduced into our
systems, corrupting our data, disrupting our online technology
and making our web site and internet related products
inaccessible. Protecting ourselves from the threat or effect of
security breaches or computer viruses is expensive and
time-consuming. Our security measures may not prevent security
breaches or combat the introduction of computer viruses, either
of which may result in loss of data, increased operating costs,
litigation and possible liability.

Concern about the security of the transmission of
confidential information over public networks is a significant
barrier to e-commerce and communication. Any well-publicized
security compromise could reduce the use of our businesses using
the Internet for commerce and communications.



| |                                                                      
| | ---------------------------------------------------------------------
| | Most of our common stock is owned by
    Fidelity and other insiders.

As of March 10, 2003, we had 39,612,056
shares of common stock outstanding, and 26,154,140 shares of
common stock were owned by Fidelity. Fidelity also holds
warrants to purchase 913,970 shares of our common stock at a
weighted average price of $10.56 per share. While
Fidelitys shares are not registered for sale to the
public, sales of a substantial number of shares of our common
stock in the public market, or the perception that substantial
sales might occur, could cause the market price of our stock to
decrease significantly. This could also make it more difficult
for us to raise capital by selling stock or use our stock as
currency in acquisitions.

In addition, Fidelity and our executive officers
and directors beneficially own a sufficient number of our
outstanding common stock to control the election of directors
and other matters requiring a vote of stockholders. This
concentrated ownership might delay or prevent a change in
control and may impede or prevent transactions in which
stockholders might otherwise receive a premium for their shares.

Statement Regarding Forward-Looking
Information

This Annual Report on Form 10-K contains
statements concerning our expectations, beliefs, plans and
objectives. Statements that are not historical facts are
forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on our managements
beliefs as well as assumptions made by, and information
currently available to, our management. Because such statements
are based on expectations as to future economic performance and
are not statements of fact, actual results may differ materially
from those projected. We undertake no obligation to update any
forward-looking statements, whether as a result of new
information, future events or otherwise.

Important factors that may affect these
projections or expectations include, but are not limited to:



| |   |                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | general political, economic and business
    conditions, including the possibility of intensified
    international hostilities, acts of terrorism, interest rate
    fluctuations and general volatility in the capital markets;
|
| |  | changes in the performance of the real estate
    markets and industries serving those markets;                                                                                                                                  
|
| |  | success of integrating acquired businesses;                                                                                                                                                                                      
|
| |  | the impact of competitive products and pricing;                                                                                                                                                                                  
|
| |  | success of operating initiatives;                                                                                                                                                                                                

15



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##### Table of Contents





| |   |                                                                                     
| | - | ------------------------------------------------------------------------------------
| |  | availability of qualified personnel;                                                
|
| |  | changes in, or the failure to comply with
    government regulations; and           
|
| |  | other risks detailed in our filings with the
    Securities and Exchange Commission.

All of these factors are difficult to predict and
many are beyond our control. Accordingly, while we believe these
forward-looking statements to be reasonable, we cannot assure
that they will approximate actual experience or that
expectations derived from them will be realized. You can often
identify a forward-looking statement by the words
anticipate, believe,
estimate, objective,
projection, forecast, goal,
or similar words.




Item 2.Properties

Our principal executive offices are located at
4050 Calle Real, Santa Barbara, CA 93110. As of
December 31, 2002, the principal locations where each of
our business segments operates are:



| |   |                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Data: Milford, MA; Monrovia, CA; Arlington,
    TX; Kingston, NY; Indianapolis, IN; and Los Angeles, CA.                                                                              
|
| |  | Solutions: Santa Ana, CA; Chicago, IL;
    Raleigh, NC; Houston, TX; Minneapolis, MN; East Lansing, MI;
    Olathe, KS; San Diego, CA; Honolulu, HI; Kennesaw, GA; and
    Sharon, PA.
|
| |  | Services: St. Louis Park, MN; Walnut Creek,
    CA; San Diego, CA; and Scarborough, ONT.                                                                                              

We believe that our existing facilities and
office space are adequate to meet current requirements.




Item 3.     Legal
Proceedings

A class action lawsuit was filed against us in
Los Angeles County Superior Court on January 3, 2000
alleging violations of state law and the U.S. Telephone Consumer
Protection Act (the TCPA) for unsolicited advertising by
facsimile. ACS Systems, Inc. (which merged with and into Micro
General Corporation, effective January 1, 2001) contracted
with Datamart to advertise its services by fax. Plaintiff
alleges the facsimiles did not contain the proper notice to the
recipients to notify the sender to discontinue the advertising
as required by the TCPA. Plaintiff alleges that the damages to
the class are $7.0 million if the violations of the statute
were unintentional and $21.0 million if the violations of
the statute were intentional. In March 2002, the court granted
judgment on our summary judgment motion. The plaintiffs have
appealed and we have cross-appealed. The issues that will be
determinative of the outcome of this litigation are issues of
first impression. It is not possible to predict with
any certainty how the court will rule on appeal. While we intend
to continue to vigorously defend the case, we cannot assure you
that the eventual outcome of the case will not have a material
adverse effect on our business, financial position and operating
results.

The three actions related to flood certifications
discussed below have been filed against us by insurers alleging
that they incurred losses based upon inaccurate flood
certifications. These actions were filed against various
subsidiaries and the allegations related to National Research
Center (NRC), which was acquired as part of our
Vista transaction.

On May 29, 2002 Travelers Indemnity filed a
complaint against NRC Insurance Services, Inc. in the
U.S. District Court, Eastern District of Missouri alleging
that NRC provided an erroneous flood certification when
Travelers underwrote a commercial location. Travelers Indemnity
seeks approximately $4.0 million plus expenses in damages.
An amended complaint was filed on January 15, 2003 adding
us and Vista Environmental Information, Inc., as additional
defendants. NRC and the other subsidiary defendants filed their
answer to the complaint on January 31, 2003. While we
intend to continue to vigorously defend the case, we cannot
assure you that the eventual outcome of the case will not have a
material adverse effect on our business, financial position and
operating results.

On May 10, 2001, Pennsylvania Manufacturers
Association Indemnity Company, d/b/a PMA Group (PMA) filed
a complaint in the U.S. District Court of New Jersey alleging
that NRC incorrectly issued a standard flood determination. PMA
seeks damages in the amount of $1.4 million, representing
the amount

16



---



##### Table of Contents



paid to its insured, Brandywine Senior Care, Inc.
(Brandywine) which seeks an additional amount in
excess of $2.3 million from PMA for alleged business income
loss. The obligation to pay business income loss is disputed by
PMA and is the subject of a Pennsylvania state court suit. If
PMA issues payment for business income loss, it will be added to
its claim for damages against NRC. The suit against NRC is
stayed pending resolution of the state court litigation between
PMA and Brandywine. While we intend to continue to vigorously
defend the case, we cannot assure you that the eventual outcome
of the case will not have a material adverse effect on our
business, financial position and operating results.


On November 6, 2002, St. Paul Fire &
Marine filed a complaint against us in the U.S. District Court,
Eastern District of Missouri alleging that NRC incorrectly
issued a standard flood determination, when St. Paul
underwrote a commercial location. Plaintiff seeks approximately
$12.0 million in damages. There has been no response to the
suit because the complaint has not been served on NRC. While we
intend to continue to vigorously defend the case, we cannot
assure you that the eventual outcome of the case will not have a
material adverse effect on our business, financial position and
operating results.

We are involved in various other claims and legal
actions arising in the ordinary course of business. In the
opinion of management, the ultimate disposition of these matters
will not have a material adverse effect on our liquidity,
financial condition and results of operations.




Item 4.     Submission
of Matters to a Vote of Security Holders

The Company did not submit any matters to a vote
of security holders in the fourth quarter of 2002.




Part II




Item 5.     Market
for Registrants Common Stock and Related Stockholder
Matters

Our common stock is traded on the NASDAQ National
Market under the symbol FNIS. The following table
shows, for the periods indicated, the high and low sales prices
of our common stock, as reported by NASDAQ. These quotations
reflect inter-dealer prices, without retail mark-up, markdown or
commission, and may not represent actual transactions.

|                                |                |      |   |       |  |  |   |       | 
|------------------------------- | -------------- | ---- | - | ----- |  |  | - | ----- | 
|                                |                | High |   | Low  
|                                |                |      |   |      
|Year ended December 31, 2002    |                |      |   |       |  |  |   |      
|                                | First quarter  |      | $ | 21.15 |  |  | $ | 10.49 | 
|                                | Second quarter |      |   | 32.30 |  |  |   | 21.38 | 
|                                | Third quarter  |      |   | 24.38 |  |  |   | 14.78 | 
|                                | Fourth quarter |      |   | 22.45 |  |  |   | 14.00 | 
|Year ended December 31, 2001(1) |                |      |   |       |  |  |   |      
|                                | First quarter  |      | $ | 13.34 |  |  | $ | 4.38  | 
|                                | Second quarter |      |   | 8.40  |  |  |   | 5.25  | 
|                                | Third quarter  |      |   | 9.73  |  |  |   | 5.32  | 
|                                | Fourth quarter |      |   | 10.69 |  |  |   | 5.78  | 



---



|    |                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Periods prior to the third quarter of 2001 were
    adjusted to give retroactive effect to a 1 for 7
    reverse split and did not reflect the composition of the Company
    subsequent to the business combination as of August 1, 2001.

On March 10, 2003, the last reported sale
price of our common stock on the NASDAQ National Market was
$16.85 per share. As of March 10, 2003, we had 382
stockholders of record.

We have not paid any cash dividends on our common
stock. We currently intend to retain any future earnings to fund
the development of our business and do not anticipate that we
will pay cash dividends on our common stock in the foreseeable
future.

17



---



##### Table of Contents



On July 1, 2002 we acquired Comstock Net
Services, Inc., a technology provider to real estate
professionals, in exchange for $1.8 million in cash and
213,323 shares of our common stock. In connection with the
issuance of the shares of our common stock, we relied on an
exemption pursuant to Rule 506 of Regulation D from
the registration requirements of the Securities Act of 1933, as
amended. We believe that an exemption from registration pursuant
to Rule 506 of Regulation D is appropriate, as the
sale of our common stock in this transaction was made to less
than 35 purchasers and each purchaser was either an
accredited investor (as defined in Rule 501 of
Regulation D) or we reasonably believed that such a person
had the knowledge and experience in financial and business
matters to be capable of evaluating the merits and risks of the
investment.

On July 24, 2002, Fidelity exercised its
option to convert a $5.3 million convertible note from MGEN
into 403,120 shares of our common stock. The MGEN note was
converted into the right to receive our common stock pursuant to
our tender offer for and subsequent short-form merger with MGEN
which closed on July 9, 2002. In connection with the
issuance of the shares of our common stock to Fidelity, we
relied on an exemption pursuant to Rule 506 of
Regulation D from the registration requirements of the
Securities Act of 1933, as amended. We believe that an exemption
from registration pursuant to Rule 506 of Regulation D
is appropriate, as the sale of our common stock in this
transaction was made to less than 35 purchasers and the
purchaser, Fidelity, was an accredited investor (as
defined in Rule 501 of Regulation D).

On October 29, 2002, we acquired Eastern
Financial Services, Inc., a provider of mortgage loan
origination software, in exchange for $35.9 million in cash
and 880,726 shares of our common stock. In connection with the
issuance of the shares of our common stock, we relied on an
exemption from the registration requirement pursuant to
Section 4(2) of the Securities Act of 1933, as amended. We
believe that an exemption from registration pursuant to
Section 4(2) is appropriate based on the number and
financial sophistication of the shareholders of Eastern
Financial Services, Inc.

18



---



##### Table of Contents






Item 6.     Selected
Financial Data

The table set forth below shows our selected
consolidated financial information derived from our historical
consolidated financial statements, which have reflected:



| |   |                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the merger with the Fidelity Subsidiaries and
    Chicago Subsidiaries and the related reverse merger accounting
    treatment (see Note 1 to the Consolidated Financial
    Statements); and                       
|
| |  | the acquisition of MGEN and the related
    as-if pooling-of-interests accounting treatment for
    the purchase of the 51.6% portion owned by Fidelity (see
    Note 3 to the Consolidated Financial Statements).

The information should be read in conjunction
with the accompanying Consolidated Financial Statements and
related notes and Managements Discussion and
Analysis of Financial Condition and Results of Operations
included elsewhere in this Form 10-K.

|                    |                                                           |                                                                |   |         |  |      |   |         |  |      |   |         |  |  |   |        |   |  |   |        |  
|------------------- | --------------------------------------------------------- | -------------------------------------------------------------- | - | ------- |  | ---- | - | ------- |  | ---- | - | ------- |  |  | - | ------ | - |  | - | ------ | -
|                    |                                                           |                                                               
|                    |                                                           | Year Ended December 31, (see note (1), (2), (3) and (4) below)
|                    |                                                           |                                                               
|                    |                                                           | 2002                                                           |   | 2001    |  | 2000 |   | 1999    |  | 1998
|                    |                                                           |                                                                |   |         |  |      |   |         |  |     
|                    |                                                           |                                                               
|                    |                                                           | (In thousands, except per share data)                         
|Balance Sheet Data: |                                                           |                                                                |   |         |  |      |   |         |  |      |   |         |  |  |   |        |   |  |   |       
|                    | Cash and short-term investments                           |                                                                | $ | 22,058  |  |      | $ | 12,909  |  |      | $ | 6,553   |  |  | $ | 2,504  |   |  | $ | 1,010  |  
|                    | Trade accounts receivable due from affiliates             |                                                                |   | 23,854  |  |      |   | 14,112  |  |      |   | 19,783  |  |  |   | 3,021  |   |  |   | 4,351  |  
|                    | Goodwill, net                                             |                                                                |   | 274,829 |  |      |   | 101,962 |  |      |   | 39,274  |  |  |   | 8,571  |   |  |   | 9,977  |  
|                    | Total assets                                              |                                                                |   | 508,908 |  |      |   | 275,397 |  |      |   | 115,765 |  |  |   | 45,690 |   |  |   | 45,915 |  
|                    | Debt with parent                                          |                                                                |   |        |  |      |   | 23,918  |  |      |   | 6,642   |  |  |   | 5,265  |   |  |   | 14,100 |  
|                    | Notes payable and capital lease obligations               |                                                                |   | 13,461  |  |      |   | 8,920   |  |      |   | 6,776   |  |  |   |       |   |  |   | 903    |  
|                    | Minority interest and preferred stock of
    subsidiary   |                                                                |   | 8,631   |  |      |   | 19,283  |  |      |   | 5,388   |  |  |   | 1,960  |   |  |   |       |  
|                    | Total stockholders equity                                |                                                                |   | 395,496 |  |      |   | 156,363 |  |      |   | 66,125  |  |  |   | 20,071 |   |  |   | 11,419 |  
|Operating Data:     |                                                           |                                                                |   |         |  |      |   |         |  |      |   |         |  |  |   |        |   |  |   |       
|                    | Revenue                                                   |                                                                | $ | 412,168 |  |      | $ | 294,622 |  |      | $ | 160,771 |  |  | $ | 75,811 |   |  | $ | 67,258 |  
|                    | Amortization of goodwill                                  |                                                                |   |        |  |      |   | 4,191   |  |      |   | 4,303   |  |  |   | 2,517  |   |  |   | 1,155  |  
|                    | Total costs and expenses                                  |                                                                |   | 356,598 |  |      |   | 259,418 |  |      |   | 146,469 |  |  |   | 78,298 |   |  |   | 68,071 |  
|                    | Earnings (loss) from continuing operations                |                                                                |   | 30,731  |  |      |   | 18,702  |  |      |   | 10,115  |  |  |   | (3,321 | ) |  |   | (2,555 | )
|                    | Net earnings (loss)                                       |                                                                |   | 30,731  |  |      |   | 11,083  |  |      |   | 2,311   |  |  |   | (6,176 | ) |  |   | (2,701 | )
|Per Share Data:     |                                                           |                                                                |   |         |  |      |   |         |  |      |   |         |  |  |   |        |   |  |   |       
|                    | Earnings (loss) from continuing operations,
    per share |                                                                |   |         |  |      |   |         |  |      |   |         |  |  |   |        |   |  |   |        |  
|                    |  basic                                                   |                                                                | $ | 0.88    |  |      | $ | 0.70    |  |      | $ | 0.56    |  |  | $ | (0.46  | ) |  | $ | (0.44  | )
|                    |  diluted                                                 |                                                                | $ | 0.84    |  |      | $ | 0.70    |  |      | $ | 0.56    |  |  | $ | (0.46  | ) |  | $ | (0.44  | )
|                    | Earnings (loss) per share                                 |                                                                |   |         |  |      |   |         |  |      |   |         |  |  |   |        |   |  |   |        |  
|                    |  basic                                                   |                                                                | $ | 0.88    |  |      | $ | 0.41    |  |      | $ | 0.13    |  |  | $ | (0.86  | ) |  | $ | (0.47  | )
|                    |  diluted                                                 |                                                                | $ | 0.84    |  |      | $ | 0.41    |  |      | $ | 0.13    |  |  | $ | (0.86  | ) |  | $ | (0.47  | )
|                    | Weighted average shares outstanding 
    basic           |                                                                |   | 34,827  |  |      |   | 26,748  |  |      |   | 18,091  |  |  |   | 7,156  |   |  |   | 5,785  |  
|                    | Weighted average shares outstanding 
    diluted         |                                                                |   | 36,769  |  |      |   | 26,829  |  |      |   | 18,156  |  |  |   | 7,156  |   |  |   | 5,785  |  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | We acquired MGEN on July 9, 2002, including
    a 51.6% majority ownership acquired from our parent
    company, Fidelity. The acquisition of Fidelitys majority
    interest in MGEN was accounted for in a manner similar to a
    pooling-of-interests because FNIS and MGEN were entities under
    common control of Fidelity. As required by generally accepted
    accounting principles, we have therefore included the operating
    results of MGEN for all periods presented as if FNIS and MGEN
    had always been combined.

19



---



##### Table of Contents





|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Financial results for the year ended
    December 31, 2001 include the results of operations of the
    Fidelity Subsidiaries and Chicago Subsidiaries for the full year
    of 2001 and Vistas results for the period from
    August 1, 2001, the acquisition date, through
    December 31, 2001. 2001 results also include Reez and Risco
    that were acquired under the purchase accounting method on
    August 2, 2001, and the XMLS Web division of
    HomeSeekers.com acquired on December 3, 2001.
|   
|(3) | On March 20, 2000, Fidelity acquired Chicago
    Title and merged certain subsidiaries of the two companies.
    Accordingly, 2000 results include a partial year, from
    March 20 through December 31, of operations of the
    Chicago Subsidiaries, and 1999 and 1998 results were exclusive
    of the operations of Chicago Subsidiaries.                                                                                                                                                                
|   
|(4) | Effective January 1, 2002, we adopted
    Statement of Financial Accounting Standards No. 142
    Goodwill and Other Intangible Assets (SFAS
    No. 142) and as a result, have ceased to amortize
    goodwill.                                                                                                                                                                                                                                                                                            

SELECTED QUARTERLY FINANCIAL DATA
(UNAUDITED)

Selected quarterly financial data is as follows:

|                                                |  |                                       |        |         |  |              |        |             |  |   |         |  |  |   |         | 
|----------------------------------------------- |  | ------------------------------------- | ------ | ------- |  | ------------ | ------ | ----------- |  | - | ------- |  |  | - | ------- | 
|                                                |  |                                      
|                                                |  | Quarter Ended                        
|                                                |  |                                      
|                                                |  | March 31                              |        | June 30 |  | September 30 |        | December 31
|                                                |  |                                       |        |         |  |              |        |            
|                                                |  |                                      
|                                                |  | (In thousands, except per share data)
|2002                                            |  |                                       |        |         |  |              |        |             |  |   |         |  |  |   |         | 
|Revenue                                         |  | $                                     | 94,818 |         |  | $            | 92,084 |             |  | $ | 107,588 |  |  | $ | 117,678 | 
|Net earnings                                    |  |                                       | 6,839  |         |  |              | 6,239  |             |  |   | 5,925   |  |  |   | 11,728  | 
|Basic earnings per share                        |  | $                                     | 0.22   |         |  | $            | 0.20   |             |  | $ | 0.16    |  |  | $ | 0.30    | 
|Diluted earnings per share                      |  | $                                     | 0.21   |         |  | $            | 0.19   |             |  | $ | 0.15    |  |  | $ | 0.29    | 
|2001                                            |  |                                       |        |         |  |              |        |             |  |   |         |  |  |   |         | 
|Revenue                                         |  | $                                     | 59,251 |         |  | $            | 63,179 |             |  | $ | 77,312  |  |  | $ | 94,880  | 
|Earnings from continuing operations             |  |                                       | 3,653  |         |  |              | 4,836  |             |  |   | 3,994   |  |  |   | 6,219   | 
|Net earnings                                    |  |                                       | 2,677  |         |  |              | 3,780  |             |  |   | 3,100   |  |  |   | 1,526   | 
|Earnings from continuing operations, per share: |  |                                       |        |         |  |              |        |             |  |   |         |  |  |   |         | 
| basic                                         |  | $                                     | 0.15   |         |  | $            | 0.20   |             |  | $ | 0.14    |  |  | $ | 0.20    | 
| diluted                                       |  | $                                     | 0.15   |         |  | $            | 0.20   |             |  | $ | 0.14    |  |  | $ | 0.20    | 
|Earnings per share:                             |  |                                       |        |         |  |              |        |             |  |   |         |  |  |   |         | 
| basic                                         |  | $                                     | 0.11   |         |  | $            | 0.16   |             |  | $ | 0.11    |  |  | $ | 0.05    | 
| diluted                                       |  | $                                     | 0.11   |         |  | $            | 0.16   |             |  | $ | 0.11    |  |  | $ | 0.05    | 

20



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##### Table of Contents








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis
    of Financial Condition and Results of Operations

The following discussion should be read in
conjunction with the Consolidated Financial Statements and the
Notes thereto and Selected Financial Data included elsewhere in
this Form 10-K.

Factors Affecting Comparability.As explained earlier in this document,
on August 1, 2001, we merged with the Fidelity Subsidiaries
and the Chicago Subsidiaries. The merger had the effect of a
reverse merger and we became a majority-owned subsidiary of
Fidelity. Our Consolidated Statements of Earnings therefore
include the operations of Vista since August 1, 2001, and
the operations of the Fidelity Subsidiaries and Chicago
Subsidiaries prior to that date. Also, since August 1, 2001
we have completed several acquisitions.

As a result of our formation and the subsequent
acquisitions, period-to-period comparisons may not be
meaningful. In addition, the Consolidated Statements of Earnings
have been adjusted to reflect the merger with MGEN that has been
accounted for in a manner similar to a pooling-of-interests. See
Note 3 to the Consolidated Financial Statements.

The following table illustrates the period of
time each entity is reflected in our operations as a result of
the mergers and acquisitions, and the business segment in which
each entity operates:

|                                            |  |                         |    |         |  |      |    |      |  |           |    |          |  |  |   |  |  |  |   |  |  |  |   | 
|------------------------------------------- |  | ----------------------- | -- | ------- |  | ---- | -- | ---- |  | --------- | -- | -------- |  |  | - |  |  |  | - |  |  |  | - | 
|                                            |  |                         |    |        
|                                            |  | Year Ended December 31, |    | Segment
|                                            |  |                         |    |        
|                                            |  | 2002                    |    | 2001    |  | 2000 |    | Data |  | Solutions |    | Services
|                                            |  |                         |    |         |  |      |    |      |  |           |    |         
|                                            |  |                         |    |         |  |      |    |     
|                                            |  | Number of months        |    |         |  |      |    |     
|Fidelity National Flood, Inc.               |  |                         | 12 |         |  |      | 12 |      |  |           | 12 |          |  |  | x |  |  |  |   |  |  |  |   | 
|Fidelity National Tax Services, Inc.        |  |                         | 12 |         |  |      | 12 |      |  |           | 12 |          |  |  | x |  |  |  |   |  |  |  | x | 
|Fidelity National Credit Services,
    Inc. |  |                         | 12 |         |  |      | 12 |      |  |           | 12 |          |  |  | x |  |  |  |   |  |  |  | x | 
|Micro General Corporation                   |  |                         | 12 |         |  |      | 12 |      |  |           | 12 |          |  |  |   |  |  |  | x |  |  |  |   | 
|Market Intelligence, Inc.                   |  |                         | 12 |         |  |      | 12 |      |  |           | 9  |          |  |  | x |  |  |  |   |  |  |  | x | 
|IDM                                         |  |                         | 12 |         |  |      | 12 |      |  |           | 0  |          |  |  | x |  |  |  |   |  |  |  | x | 
|Environmental Risk Management Solutions(1)  |  |                         | 3  |         |  |      | 5  |      |  |           | 0  |          |  |  | x |  |  |  |   |  |  |  |   | 
|Geographic Underwriting System              |  |                         | 12 |         |  |      | 5  |      |  |           | 0  |          |  |  |   |  |  |  |   |  |  |  | x | 
|MLS                                         |  |                         | 12 |         |  |      | 5  |      |  |           | 0  |          |  |  |   |  |  |  | x |  |  |  |   | 
|Risco                                       |  |                         | 12 |         |  |      | 5  |      |  |           | 0  |          |  |  |   |  |  |  | x |  |  |  |   | 
|Reez.com, Inc.,                             |  |                         | 12 |         |  |      | 5  |      |  |           | 0  |          |  |  |   |  |  |  | x |  |  |  |   | 
|SoftPro Corporation                         |  |                         | 12 |         |  |      | 4  |      |  |           | 0  |          |  |  |   |  |  |  | x |  |  |  |   | 
|RealEC Technologies                         |  |                         | 12 |         |  |      | 2  |      |  |           | 0  |          |  |  |   |  |  |  | x |  |  |  |   | 
|XMLS Web Division of HomeSeekers            |  |                         | 12 |         |  |      | 1  |      |  |           | 0  |          |  |  |   |  |  |  | x |  |  |  |   | 
|ISDI.NET                                    |  |                         | 12 |         |  |      | 0  |      |  |           | 0  |          |  |  |   |  |  |  | x |  |  |  |   | 
|Hansen Quality Loan Services, LLC.          |  |                         | 7  |         |  |      | 0  |      |  |           | 0  |          |  |  |   |  |  |  |   |  |  |  | x | 
|Comstock Net Services, Inc.                 |  |                         | 6  |         |  |      | 0  |      |  |           | 0  |          |  |  |   |  |  |  | x |  |  |  |   | 
|Eastern Financial Systems, Inc.             |  |                         | 2  |         |  |      | 0  |      |  |           | 0  |          |  |  |   |  |  |  | x |  |  |  |   | 




(1) Sold in March 2002.


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##### Table of Contents



Overview.The
following table presents certain financial data for the years
indicated:

|                                                          |  |                              |         |      |  |      |         |  |  |   |         | 
|--------------------------------------------------------- |  | ---------------------------- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|                                                          |  |                             
|                                                          |  | Year Ended December 31,     
|                                                          |  |                             
|                                                          |  | 2002                         |         | 2001 |  | 2000
|                                                          |  |                              |         |      |  |     
|                                                          |  |                             
|                                                          |  | (Dollars in thousands except
|                                                          |  | per share data)             
|Total revenue                                             |  | $                            | 412,168 |      |  | $    | 294,622 |  |  | $ | 160,771 | 
|                                                          |  |                              |         |      |  |      |         |  |  |   |         | 
|Total costs and expenses                                  |  | $                            | 356,598 |      |  | $    | 259,418 |  |  | $ | 146,469 | 
|                                                          |  |                              |         |      |  |      |         |  |  |   |         | 
|Earnings from continuing operations                       |  | $                            | 30,731  |      |  | $    | 18,702  |  |  | $ | 10,115  | 
|                                                          |  |                              |         |      |  |      |         |  |  |   |         | 
|Net earnings                                              |  | $                            | 30,731  |      |  | $    | 11,083  |  |  | $ | 2,311   | 
|                                                          |  |                              |         |      |  |      |         |  |  |   |         | 
|Diluted earnings per share from continuing
    operations |  | $                            | 0.84    |      |  | $    | 0.70    |  |  | $ | 0.56    | 
|                                                          |  |                              |         |      |  |      |         |  |  |   |         | 
|Diluted earnings per share                                |  | $                            | 0.84    |      |  | $    | 0.41    |  |  | $ | 0.13    | 
|                                                          |  |                              |         |      |  |      |         |  |  |   |         | 

Our consolidated financial information presents
the net effect of the results from discontinued operations
separate from the results of our continuing operations. The
discussion and analysis that follows focuses on the results from
continuing operations.

On December 31, 2001, the operations of
LDExchange, a wholly-owned subsidiary of MGEN, were
discontinued. The financial statements for the three years ended
December 31, 2002 reflect our results from continuing
operations. The loss incurred by LDExchange and the loss on
disposal of this operation, classified separately as
discontinued operations, are $7.6 million and
$7.8 million, net of tax, for the years ended
December 31, 2001 and 2000, respectively.

Impact of Merger Related Costs.As discussed in Note 3 to the
Consolidated Financial Statements, during the third quarter of
2002 we completed a merger with MGEN. Also in the third quarter
we agreed to, but later cancelled, a merger with a credit
services company. As a result of these transactions we incurred
substantial costs in the period. In the case of MGEN these costs
were expensed under the accounting treatment for companies under
common control, and in the case of the credit services company
the costs were expensed under the accounting treatment
appropriate for a cancelled acquisition. Typically, direct costs
incurred in connection with an acquisition are included as part
of the total purchase price, and not immediately expensed.

The following supplemental earnings information
is presented to show our results of operations before
recognition of these merger related costs (all merger related
costs in the table and described in this section are net of
income tax at an effective rate of 39%). This information is
intended to illustrate the impact of the merger related costs on
earnings from continuing operations and diluted earnings per
share from continuing operations and should not be considered as
an alternative to any measure of performance as promulgated
under generally accepted accounting principles
(GAAP). We are presenting this information because
we believe it is useful to investors considering the unique
nature of the transactions.

As shown in the table below, excluding merger
related costs, we would have reported net earnings from
continuing operations for the year ended December 31, 2002
of $35.4 million, or $0.97 per diluted share, as compared
with net earnings for the corresponding periods in 2001 and 2000
of $18.7 million or $0.70 per diluted share and
$10.1 million, or $0.56 per diluted share, respectively.

The merger related costs, net of taxes, consist
of $3.6 million of non-cash compensation charges associated
with the exchange of vested and unvested stock options and
warrants of MGEN; and $0.7 million and $0.4 million of
direct costs incurred in connection with the MGEN and credit
services company transactions, respectively.

Additionally, at December 31, 2002, there
remains $1.6 million of unearned compensation costs
associated with the exchange of unvested options of MGEN, which
are recorded in Stockholders Equity in the accompanying
Consolidated Balance Sheet as of December 31, 2002. These
costs will be expensed in the future, over the vesting period of
the options.

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|                                                                   |  |                                  |        |      |  |      |        |  |  |   |        | 
|------------------------------------------------------------------ |  | -------------------------------- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|                                                                   |  |                                 
|                                                                   |  | Year Ended December 31,         
|                                                                   |  |                                 
|                                                                   |  | 2002                             |        | 2001 |  | 2000
|                                                                   |  |                                  |        |      |  |     
|                                                                   |  |                                 
|                                                                   |  | (Dollars in thousands except per
|                                                                   |  | share data)                     
|Net earnings from continuing operations                            |  | $                                | 30,731 |      |  | $    | 18,702 |  |  | $ | 10,115 | 
|Add back: merger related costs, net of taxes                       |  |                                  | 4,653  |      |  |      |       |  |  |   |       | 
|                                                                   |  |                                  |        |      |  |      |        |  |  |   |        | 
|Adjusted earnings from continuing operations                       |  | $                                | 35,384 |      |  | $    | 18,702 |  |  | $ | 10,115 | 
|                                                                   |  |                                  |        |      |  |      |        |  |  |   |        | 
|Adjusted diluted earnings per share from
    continuing operations |  | $                                | 0.97   |      |  | $    | 0.70   |  |  | $ | 0.56   | 
|                                                                   |  |                                  |        |      |  |      |        |  |  |   |        | 

Revenue.The
following table presents the components of our revenue:

|                          |               |                         |         |         |  |      |         |         |  |   |        |         | 
|------------------------- | ------------- | ----------------------- | ------- | ------- |  | ---- | ------- | ------- |  | - | ------ | ------- | 
|                          |               |                        
|                          |               | Year Ended December 31,
|                          |               |                        
|                          |               | 2002                    |         | 2001    |  | 2000
|                          |               |                         |         |         |  |     
|                          |               |                        
|                          |               | (Dollars in thousands) 
|Revenue:                  |               |                         |         |         |  |      |         |         |  |   |        |        
|Data                      |               | $                       | 148,083 |         |  | $    | 121,324 |         |  | $ | 75,656 |        
|Data  related party      |               |                         | 9,751   |         |  |      | 2,027   |         |  |   |       |        
|Solutions                 |               |                         | 63,634  |         |  |      | 26,481  |         |  |   | 3,567  |        
|Solutions  related party |               |                         | 117,773 |         |  |      | 106,142 |         |  |   | 68,563 |        
|Services                  |               |                         | 72,927  |         |  |      | 38,648  |         |  |   | 12,985 |        
|                          |               |                         |         |         |  |      |         |         |  |   |        |        
|                          | Total Revenue |                         | $       | 412,168 |  |      | $       | 294,622 |  |   | $      | 160,771 | 
|                          |               |                         |         |         |  |      |         |         |  |   |        |        

The increase in total revenue over the period
from 2000 to 2002 has resulted primarily from mergers and
acquisitions, organic growth driven by low mortgage interest
rates and a high number of real estate and refinancing
transactions and increases in services provided to Fidelity.

Our customers are primarily lenders, real estate
professionals and title companies. Accordingly, the level of
real estate activity impacts our revenue. Real estate sales are
directly affected by changes in mortgage interest rates as well
as other macroeconomic factors including demand for housing,
employment levels, family income levels and general economic
conditions. Beginning in December 2000 and continuing through
the fourth quarter of 2002, interest rates have been reduced by
525 basis points, bringing interest rates down to their lowest
level in recent history, which has significantly increased the
volume of refinance activity.

Interest rate changes have a particularly
significant impact on our Data and Services segments. Our flood,
credit, tax and property valuation business lines have
historically been closely aligned with the home equity credit
market. Revenue increases during periods of relatively low
interest rates due to higher refinance volumes and declines
during periods of relatively high interest rates. Our tax and
property valuation businesses also serve the default markets
that typically increase in demand during periods of rising
interest rates, partially offsetting the decline in refinancing
activity.

In the Solutions segment, our revenues from MLS,
as well as software development, technical and other services
provided to Fidelity, are primarily connected with term
contracts, licenses and subscriptions and are therefore not
directly affected by interest rate changes and mortgage
financing activities. Year over year increases in this segment
were primarily a result of merger and acquisition activities, as
well as increases in the amount of services provided to
Fidelity. Low interest rates and the high level of real estate
activity have significantly improved Fidelitys revenue,
which has resulted in more demand for our services by Fidelity.
Also contributing to the growth in revenue from Fidelity is
their acquisition of Chicago Title in March of 2000 and
development of NGS which began in the last half of 2000. We
expect revenues from NGS development to gradually decline as the
project approaches completion of the rollout, which is expected
to be sometime in early 2005. However, we also expect the
development revenues to be partially replaced by revenues from
the maintenance and service of NGS which should increase as the
roll out occurs and the development of other products. See
Effects of Transactions with Related Parties later
in this section.

23



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##### Table of Contents



The Data segments revenue in 2002 increased
$34.5 million to $157.8 million, an increase of 28.0% over
2001. The increase in revenue from 2001 to 2002 is due primarily
to increases in real estate and refinance activity as a result
of decreasing interest rates. The increase is partially offset
by the sale of the Environmental Risk Management Solutions unit
in March of 2002. This business accounted for $4.9 million
of revenue in 2001 and $2.7 million in 2002. The Data
segments revenue in 2001 increased $47.7 million to
$123.4 million, an increase of 63.0% over 2000. The
increase is primarily due to the increases in real estate
activity as a result of decreasing interest rates and the
inclusion of the Chicago Subsidiaries (Market
Intelligence, Chicago Flood and Chicago Credit) operations for a
full year in 2001 versus nine months in 2000.

The Solutions segments revenue in 2002
increased $48.8 million to $181.4 million, an increase
of 36.8% over 2001. The increase in revenue from 2001 to 2002 is
due primarily to 1) increases in real estate and refinance
activity as a result of decreasing interest rates, 2) the
inclusion of a full year of revenue from the MLS, Risco,
Homeseekers, SoftPro and RealEC businesses in 2002 versus a
partial year in 2001, 3) the Eastern acquisition in October
of 2002 and 4) an increase in revenues from services
provided to Fidelity. Solutions revenue from Fidelity increased
$11.6 million or 11.0% to $117.8 million in 2002
compared to 2001. This is due to higher NGS development revenue
and increased demand for services resulting from the higher real
estate activity. The Solutions segments revenue in 2001
increased $60.5 million to $132.6 million, an increase
of 83.4% over 2000. This is primarily due to the acquisition of
the MLS, Risco, SoftPro and RealEC businesses in 2001 and an
increase in revenues from services provided to Fidelity.
Solutions revenue from Fidelity increased $37.6 million or
54.8% to $106.1 million in 2001 compared to 2000. This is
due primarily to the increase in Fidelitys business
following its acquisition of Chicago Title in March of 2000 and
the commencement of NGS development in mid 2000.

The Service segments revenue in 2002
increased $34.3 million to $72.9 million, an increase
of 88.7% over 2001. The increase in revenue from 2001 to 2002 is
due primarily to increases in real estate and refinance activity
as a result of decreasing interest rates and the acquisitions
during 2001 and 2002 as shown in the table at the top of this
section (including Hansen, which was acquired in May of 2002 and
accounted for $14.1 million of the increase in 2002). The
Service segments revenue in 2001 increased
$25.7 million to $38.6 million, an increase of 197.6%
over 2000. This is primarily due to the increases in real estate
activity as a result of decreasing interest rates, the
acquisitions during 2001 and the inclusion of one of the Chicago
Subsidiaries operations (Market Intelligence) for a full
year in 2001 versus a partial year in 2000.

Costs and expenses.The following table presents
information regarding the components of total costs and
expenses, excluding amortization of goodwill:

|                          |       |                         |         |            |  |      |      |            |   |      |         |            |  |  |      |      |   |   |        |         |  |  |      |      |  
|------------------------- | ----- | ----------------------- | ------- | ---------- |  | ---- | ---- | ---------- | - | ---- | ------- | ---------- |  |  | ---- | ---- | - | - | ------ | ------- |  |  | ---- | ---- | -
|                          |       |                        
|                          |       | Year Ended December 31,
|                          |       |                        
|                          |       |                         |         | % of       |  |      |      | % of       |   |      |         | % of      
|                          |       |                         |         | Related    |  |      |      | Related    |   |      |         | Related   
|                          |       | 2002                    |         | Revenue(1) |  | 2001 |      | Revenue(1) |   | 2000 |         | Revenue(1)
|                          |       |                         |         |            |  |      |      |            |   |      |         |           
|                          |       |                        
|                          |       | (Dollars in thousands) 
|Cost of data revenue      |       | $                       | 50,738  |            |  |      | 32.1 | %          |   | $    | 43,859  |            |  |  | 35.6 | %    |   | $ | 26,284 |         |  |  | 34.7 | %   
|Cost of solutions revenue |       |                         | 76,687  |            |  |      | 42.3 | %          |   |      | 64,539  |            |  |  | 48.7 | %    |   |   | 33,360 |         |  |  | 46.2 | %   
|Cost of services revenue  |       |                         | 38,909  |            |  |      | 53.4 | %          |   |      | 19,758  |            |  |  | 51.1 | %    |   |   | 6,094  |         |  |  | 46.9 | %   
|                          |       |                         |         |            |  |      |      |            |   |      |         |            |  |  |      |      |   |   |        |         |  |  |      |     
|                          |       | $                       | 166,334 |            |  |      | 40.3 | %          |   | $    | 128,156 |            |  |  | 43.5 | %    |   | $ | 65,738 |         |  |  | 40.9 | %   
|                          |       |                         |         |            |  |      |      |            |   |      |         |            |  |  |      |      |   |   |        |         |  |  |      |     
|Operating expenses        |       | $                       | 182,636 |            |  |      | 44.3 | %          |   | $    | 127,071 |            |  |  | 43.1 | %    |   |   | 76,428 |         |  |  | 47.5 | %   
|Merger related costs      |       |                         | 7,628   |            |  |      | 1.9  | %          |   |      |        |            |  |  | 0.0  | %    |   |   |       |         |  |  | 0.0  | %   
|                          |       |                         |         |            |  |      |      |            |   |      |         |            |  |  |      |      |   |   |        |         |  |  |      |     
|                          | Total |                         | $       | 356,598    |  |      |      | 86.5       | % |      | $       | 255,227    |  |  |      | 86.6 | % |   | $      | 142,166 |  |  |      | 88.4 | %
|                          |       |                         |         |            |  |      |      |            |   |      |         |            |  |  |      |      |   |   |        |         |  |  |      |     



---



|    |                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents cost of data, solutions, and services
    revenue as a percentage of their respective revenue, i.e. cost
    of data revenue divided by data revenue. Total cost of revenues,
    operating expenses, merger related costs and total costs and
    expenses are calculated as a percentage of total revenue.

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##### Table of Contents



The cost of revenue consists primarily of direct
costs associated with the sales of products and services. Major
direct costs include consulting fees, subcontracted appraisal
fees, purchased real estate data, direct printing costs, royalty
and license fees, reseller commissions, variable sales
compensation and in the case of the Solutions segment, certain
salaries and benefits. The year over year increases in the total
dollar amount of cost of revenue shown above is a result of the
growth of our business through acquisition and organic growth as
discussed earlier in this section.

In 2002 the cost of revenue for the Data segment
decreased to 32.1% of revenue from 35.6% of revenue in 2001. The
decrease is due primarily to an increase in the proportion of
revenue from our Tax services operation (which has a relatively
lower cost of revenue) in the current year as compared with the
prior year. The increase of 0.9% in the cost of revenue as a
percentage of revenue in 2001 compared to 2000 is due primarily
to changes in the underlying mix of business as a result of the
acquisitions in 2001 and 2000.

In 2002 the cost of revenue for the Solutions
segment decreased to 42.3% of revenue from 48.7% of revenue in
2001. This is due primarily to lower costs for work performed
for Fidelity as a result of using a greater proportion of
employees rather than outside consultants to provide the
services, and a greater proportion of revenues from the MLS
business unit which has a relatively low cost of revenue. The
MLS operations are included in 12 months of 2002 as
compared to five months in 2001. The increase of 2.5% in the
cost of revenue as a percentage of revenue in 2001 compared to
2000 is due primarily to changes in the underlying mix of
business as a result of the acquisitions in 2001 and 2000.

In 2002 the cost of revenue for the Services
segment increased to 53.4% of revenue from 51.1% of revenue in
2001. The increase is due primarily to an increase in the
proportion of revenue from our appraisal services operation,
which has a relatively higher cost of revenue than the other
businesses in the segment, in the current year as compared to
the prior year. The increase in the cost of revenue as a
percentage of revenue in 2001 to 51.1% compared to 46.9 % in
2000 is due primarily to the higher proportion of revenue from
our appraisal business and to changes in the underlying mix of
business as a result of the acquisitions in 2001 and 2000.

The following table presents the portion of
operating expense that consists of personnel costs by year:

|                         |                          |                         |        |            |  |      |      |            |   |      |        |            |  |  |      |      |   |   |        |        |  |  |      |      |  
|------------------------ | ------------------------ | ----------------------- | ------ | ---------- |  | ---- | ---- | ---------- | - | ---- | ------ | ---------- |  |  | ---- | ---- | - | - | ------ | ------ |  |  | ---- | ---- | -
|                         |                          |                        
|                         |                          | Year Ended December 31,
|                         |                          |                        
|                         |                          |                         |        | % of Total |  |      |      | % of Total |   |      |        | % of Total
|                         |                          | 2002                    |        | Revenue    |  | 2001 |      | Revenue    |   | 2000 |        | Revenue   
|                         |                          |                         |        |            |  |      |      |            |   |      |        |           
|                         |                          |                        
|                         |                          | (Dollars in thousands) 
|Personnel costs(1)       |                          | $                       | 92,227 |            |  |      | 22.4 | %          |   | $    | 63,749 |            |  |  | 21.6 | %    |   | $ | 36,644 |        |  |  | 22.8 | %   
|Other operating expenses |                          |                         | 90,409 |            |  |      | 21.9 | %          |   |      | 63,322 |            |  |  | 21.5 | %    |   |   | 39,784 |        |  |  | 24.7 | %   
|                         |                          |                         |        |            |  |      |      |            |   |      |        |            |  |  |      |      |   |   |        |        |  |  |      |     
|                         | Total operating expenses |                         | $      | 182,636    |  |      |      | 44.3       | % |      | $      | 127,071    |  |  |      | 43.1 | % |   | $      | 76,428 |  |  |      | 47.5 | %
|                         |                          |                         |        |            |  |      |      |            |   |      |        |            |  |  |      |      |   |   |        |        |  |  |      |     



---



|    |                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Personnel costs shown in the table exclude
    certain direct salaries, bonuses, commissions and benefits
    included in cost of the segments revenue in the amounts of
    $45.3 million, $35.3 million and $15.3 million in
    2002, 2001 and 2000, respectively.

Personnel costs include base salaries, bonuses
and benefits paid to employees, and are one of our most
significant operating expenses. Although the majority of these
costs are fixed, certain of the costs fluctuate with the mix and
level of revenue. We have taken significant measures to maintain
appropriate personnel levels and costs relative to the volume
and mix of business while maintaining customer service standards
and quality controls. We continue to monitor prevailing market
conditions and will adjust personnel costs in accordance with
operating activity.

The year over year increases in the total dollar
amount of personnel costs shown above is a result of the growth
of our business through acquisition and organic growth as
discussed earlier in this section. The increase of 0.8% in
personnel costs as a percentage of revenue in 2002 as compared
to 2001 is due primarily to an increase in corporate personnel
costs offset by reductions in personnel at the business unit
level from synergies realized in the mergers and acquisitions.
Prior to formation in August of 2001, with the exception of
MGEN, there was no corporate structure as the acquiring
companies were part of Fidelity and Chicago Title. The

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##### Table of Contents



decrease of 1.2% in 2001 personnel costs as a
percentage of revenue as compared to 2000 is due primarily to
reductions from synergies realized in the mergers and
acquisitions.


Other operating expenses consist primarily of
facilities expenses, postage and courier services, computer
services, professional services, advertising expenses, general
insurance, depreciation, trade receivable allowances and service
fees paid to Fidelity. We are committed to cost control
measures. We have implemented aggressive cost control programs
in order to maintain operating expenses at levels consistent
with the levels of revenue. However, certain fixed costs are
incurred regardless of revenue levels, resulting in
period-over-period fluctuations. Our cost control programs are
designed to evaluate expenses, both current and budgeted,
relative to existing and projected market conditions.

The year over year increases in the total dollar
amount of other operating expenses shown above is a result of
the growth of our business through acquisition and organic
growth as discussed earlier in this section. Other operating
expenses as a percentage of total revenue were 21.9% in 2002,
21.5% in 2001, and 24.7% in 2000. The slight increase in other
operating expenses as a percentage of total revenues in 2002
compared with 2001 is primarily attributable to an increase in
corporate operating costs, offset by reductions in operating
costs at the business unit level from synergies realized in the
mergers and acquisitions. Prior to formation in August of 2001,
with the exception of MGEN, there was no corporate structure as
the acquiring companies were part of Fidelity and Chicago Title,
and not separately operated companies. The decrease of 3.2% in
other operating costs as a percentage of revenue in 2001 as
compared to 2000 is due primarily to reductions from synergies
realized in the mergers and acquisitions and an improvement in
the expense to revenue ratio at the operating unit level.

Merger-related costs of $7.6 million in 2002
include $5.9 million of non-cash stock option compensation
charges incurred in connection with the MGEN merger and
$1.7 million in transaction costs, of which
$1.1 million is associated with the MGEN transaction. There
were no similar transactions in 2001 and 2000.

Interest expense, net was $1.1 million,
$1.3 million and $0.9 million for 2002, 2001 and 2000,
respectively and primarily represents interest expense related
to lines of credit, capital leases and notes payable, partially
offset by interest income from invested cash. Interest expense
for 2002 includes approximately $0.2 million incurred in
connection with the revolving credit facility with Fidelity and
$0.3 million incurred in connection with a convertible note
payable held by Fidelity. Fidelity exercised its option to
convert the note to common stock on July 24, 2002. Interest
expense in 2001 included approximately $0.7 million
incurred in connection with the revolving credit facility with
Fidelity which was entered into in August 2001, and
$0.5 million incurred in connection with a convertible note
payable held by Fidelity. In 2001, the increase in expense from
the revolving credit facility with Fidelity was partially offset
by interest income from higher cash balances than in 2000.
Interest expense in 2000 includes approximately
$0.5 million incurred in connection with a convertible note
payable held by Fidelity.

Income taxes as a percentage of earnings before
income taxes and minority interests for 2002, 2001 and 2000 was
38.9%, 38.1% and 18.6%, respectively. The fluctuation in income
taxes as a percentage of earnings is attributable to our
estimate of ultimate income tax liability as well as the
recognition of net operating loss carryforwards and the effect
of amortization of goodwill consistent with SFAS No. 142.

Other income and expense, net in 2002 includes a
$0.4 million gain on sale of Environmental Risk Management
Solutions, which was sold on March 25, 2002 for
$15.5 million in cash. The $0.6 million expense in
2000 represents the loss recorded on a joint venture between
RealEC and Stewart Title Company.

There was no amortization of goodwill in 2002 as
a result of adopting SFAS No. 142. Amortization of goodwill
was $4.2 million and $4.3 million in 2001 and 2000,
respectively. The decrease of $0.1 million in 2001 as
compared to 2000 is due to a $1.0 million reduction in
amortization from prior acquisitions of MGEN as a result of
extending the amortization period and from the utilization of
net operating losses that reduced the amount of goodwill. The
reduction was partially offset by additional amortization from
the acquisitions completed in 2001. See Notes 2 and 7 to
the Consolidated Financial Statements.

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Minority interests include the amount of after
tax earnings attributable to the portion of MGEN not owned by
Fidelity, and in 2002 also included the 45% interest in Hansen
not owned by us. The increase in 2002 to $2.6 million from
$2.3 million in 2001 is due to the addition of
$1.4 million attributable to the acquisition of our 55%
interest in Hansen in May 2002, partially offset by a reduction
resulting from the purchase of the minority interest in MGEN by
us on July 9, 2002. The increase in 2001 as compared to
2000 of $1.9 million is due to higher MGEN net income in
2001.

Liquidity and Capital Resources

Cash Flows.Our cash
requirements include personnel and other operating expenses,
taxes, capital expenditures, systems development, business
acquisitions and debt service. We believe that all anticipated
cash requirements for current operations will be met from
internally generated funds and borrowings through existing
credit facilities. Our short and long-term liquidity
requirements are monitored regularly to match cash inflows with
cash requirements. We forecast the daily needs of our business
units and periodically review their short and long-term
projected sources and uses of funds, as well as the asset,
liability, investment and cash flow assumptions underlying these
projections.

Net cash provided by operating activities from
continuing operations in 2002 was $60.8 million. Other
significant sources of cash in 2002 were proceeds from the sale
of Environmental Risk Management Solutions and proceeds from
exercise of stock options and employee benefit plans of
$15.5 million and $20.8 million, respectively. The
most significant uses of cash during 2002 were for business
acquisitions, repayment of debt and capital expenditures, which
were $44.0 million, $24.0 million and
$18.4 million, respectively.

Seasonality.The
business cycle of the residential real property valuation
services, flood services and credit services business lines have
historically been closely aligned with the home equity credit
market. Volumes generally increase in the early spring, followed
by a slower summer season, a relatively busy fall and a
significantly slower winter. Significant changes in interest
rates may alter these traditional seasonal patterns due to the
effect the cost of financing has on real estate transactions.
Our MLS and NGS development revenue is primarily contract based
and not significantly affected by seasonality, or, in the
short-term, by changes in interest rates.

Financing.We have
two credit facilities available to us: a syndicated secured
$75.0 million senior bank credit facility and a
$25.0 million unsecured revolving credit agreement with
Fidelity.

On December 20, 2002, we entered into a
syndicated secured credit facility agreement with a group of
banks. This senior credit facility, comprised of a revolving
credit facility and a standby letter of credit facility,
provides for an aggregate maximum line of credit of
$75.0 million that expires in December 2005, and is secured
by our assets. The maximum credit line can be increased to
$100.0 million under certain circumstances. As of
December 31, 2002, there were no amounts outstanding under
the facility and we had the entire $75.0 million in
borrowings available to us.

Under the senior bank credit facility, we may
elect loan arrangements as either a Base Rate Loan or a LIBOR
Rate Loan. The Base Rate Loan bears an interest rate of the
greater of (a) the Prime Rate and (b) the Federal Fund
Rate plus 0.5%, plus an applicable margin of 0.25% to 0.75%
depending upon our leverage ratio. The LIBOR Rate Loans
interest rate is LIBOR plus an applicable margin of 1.50% to
2.00% depending upon our leverage ratio. We are also required to
pay a non-refundable commitment fee at a rate of 0.375% to
0.625% per annum based on the usage of the credit facility.

The senior credit agreement imposes certain
affirmative and negative covenants on us relating to current
debt ratings, certain financial ratios related to liquidity, net
worth, investments, acquisitions and restricted payments, and
certain dividend restrictions. We were in compliance with all of
the debt covenants as of December 31, 2002.

The unsecured revolving credit agreement with
Fidelity provides for a maximum credit line of
$25.0 million that expires and is due in September 2006 and
bears interest at a variable rate of prime plus 2.0%. As of
December 31, 2002, there was no amount outstanding under
the Fidelity credit agreement and we

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had the full $25.0 million in borrowings
available to us. This facility is subordinated to the senior
bank credit facility.


Contractual Obligations.Our financing obligations generally
include our credit agreements described above, operating and
capital lease payments on certain of our premises and equipment,
a building mortgage, and a note payable to Hansen Quality Loan
Services.

In October 2001 we entered into a strategic
alliance agreement with Lexis-Nexis to acquire a 50% ownership
interest in their national real estate database. The terms of
the agreement require us to make annual payments through October
2005 to complete the transaction. The estimated payments to be
made in the next three years are $0.9 million,
$1.2 million and $1.5 million, respectively. These
payments may be accelerated at our option. During 2002 we
entered into an agreement with a vendor to purchase
$7.0 million of computer equipment by December 31,
2003. During 2002 we also entered into a purchase commitment for
telecommunication services totaling $20.0 million,
extending through 2006, in connection with services to be
provided to Fidelity.

The following table represents a summary of our
contractual obligations:

|                              |  |                        |        |      |  |      |        |      |  |      |        |            |  |          |        |       |  |   |       |  |  |   |       |  |  |   |        |   |  |   |        | 
|----------------------------- |  | ---------------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ---------- |  | -------- | ------ | ----- |  | - | ----- |  |  | - | ----- |  |  | - | ------ | - |  | - | ------ | 
|                              |  |                        |        |      |  |      |        |      |  |      |        |            |  | Portion  |        |      
|                              |  |                        |        |      |  |      |        |      |  |      |        |            |  | Relating |        |      
|                              |  |                        |        |      |  |      |        |      |  |      |        |            |  | to       |        |      
|                              |  | 2003                   |        | 2004 |  | 2005 |        | 2006 |  | 2007 |        | Thereafter |  | Interest |        | Total
|                              |  |                        |        |      |  |      |        |      |  |      |        |            |  |          |        |      
|                              |  |                       
|                              |  | (Dollars in thousands)
|Notes payable(1)              |  | $                      | 1,020  |      |  | $    | 50     |      |  | $    | 4,179  |            |  | $        | 59     |       |  | $ | 930   |  |  | $ |      |  |  | $ |       |   |  | $ | 6,238  | 
|Capital lease payments        |  |                        | 2,618  |      |  |      | 2,982  |      |  |      | 2,456  |            |  |          | 1,265  |       |  |   | 354   |  |  |   |      |  |  |   | (2,452 | ) |  |   | 7,223  | 
|Operating lease payments      |  |                        | 15,677 |      |  |      | 14,993 |      |  |      | 5,973  |            |  |          | 4,308  |       |  |   | 3,420 |  |  |   | 2,664 |  |  |   |       |   |  |   | 47,035 | 
|Purchase obligations          |  |                        | 12,900 |      |  |      | 6,200  |      |  |      | 6,500  |            |  |          | 5,000  |       |  |   |      |  |  |   |      |  |  |   |       |   |  |   | 30,600 | 
|                              |  |                        |        |      |  |      |        |      |  |      |        |            |  |          |        |       |  |   |       |  |  |   |       |  |  |   |        |   |  |   |        | 
|Total contractual obligations |  | $                      | 32,215 |      |  | $    | 24,225 |      |  | $    | 19,108 |            |  | $        | 10,632 |       |  | $ | 4,704 |  |  | $ | 2,664 |  |  | $ | (2,452 | ) |  | $ | 91,096 | 
|                              |  |                        |        |      |  |      |        |      |  |      |        |            |  |          |        |       |  |   |       |  |  |   |       |  |  |   |        |   |  |   |        | 




|    |                                                                                               
|--- | ----------------------------------------------------------------------------------------------
|(1) | A 7.5% mortgage note of $1.1 million, due
    January 2007, was paid in full in February 2003.

Effects of Transactions with Related Parties.We entered into a service agreement
with Fidelity on August 1, 2001, which is automatically
renewable each year. Under the agreement, we pay an annual base
fee, plus an hourly rate over the base, to Fidelity for
executive and general management, accounting, legal, investment
and administrative services. The amount of fees for providing
such services is based on estimated time incurred to perform
each of the functions and the estimated personnel costs for the
function performed. Such fees paid to Fidelity, included in
operating expenses, were $1.5 million and $0.5 million
for 2002 and 2001, respectively.

The amount payable to a related party of
$4.9 million and $1.2 million at December 31,
2002 and 2001, respectively, represents amounts paid by Fidelity
on our behalf.

We provide support services for TEAM and SIMON,
real estate settlement software solutions used by Fidelity and
its affiliates. In addition, we have been developing for
Fidelity a new enterprise software solution, NGS, which will
eventually replace TEAM and SIMON. Revenue derived from Fidelity
and its affiliates in connection with the development of NGS,
supporting TEAM and SIMON and providing other services was
$117.8 million, $106.1 million and $68.6 million
in 2002, 2001 and 2000, respectively.

In addition, included in the 2002 and 2001 Data
revenue were $9.8 million and $2.0 million related to
sales of data products to Fidelity.

The amounts due from Fidelity as of
December 31, 2002 and 2001 related to the above
transactions were $23.9 million and $14.1 million,
respectively.

We negotiated the rates we charge Fidelity under
a Master Services Agreement (MSA). The MSA outlines
the scope of services we provide to Fidelity and certain of the
pricing and billing arrangements. It requires that we provide
services to Fidelity at prices no higher than we charge to any
direct competitor of Fidelity. Certain projects are billed to
Fidelity on a cost plus fixed percentage profit basis. The
remainder of

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the revenues from Fidelity are derived from the
provisioning of a variety of products and services that are
billed under one of the following methods: time and expenses,
monthly maintenance, and fees based on per transaction, per user
and per location. Subject to the provisions of the agreement the
current MSA expires December 31, 2003.


IDM, our wholly-owned subsidiary, entered into
several transactions with IDM-Manila, a Philippines company
partially owned by the former owner of IDM, who is currently an
employee of ours. IDM-Manila converts data into requested
formats as instructed by IDM. Additionally, IDM contracts with
IDM-Manila to maintain the Lexis-Nexis database. During 2002,
2001 and 2000, IDM paid to IDM-Manila approximately
$3.1 million, $1.7 million and $1.6 million,
respectively, for data entry. The fee is based on the number of
records converted.

We entered into several notes related to
equipment financing. These notes are secured by agreements which
assign the respective revenue stream from Fidelity to the note
holders in the event of a default under the notes.

MGEN had a $5.3 million convertible note
payable to Fidelity. This note was converted into our common
stock in July 2002.

On May 28, 2002, we purchased a 55% interest
in Hansen Quality Loan Services, LLC. The remaining 45% interest
is held by Hansen Quality Loan Services, the principal of which
is also our employee. In connection with the acquisition, we
issued a convertible note of $4.1 million payable to Hansen
Quality Loan Services. The conversion feature was subsequently
eliminated by mutual consent of the parties to the note. We also
granted a stock option for 136,000 shares of our common
stock to this employee.

In connection with the business combination with
Fidelity we transferred to Chicago Title 11,703,801 shares of
our common stock and transferred to Fidelity 5,507,671 shares of
our common stock. Collectively, these shares of common stock
then constituted approximately 77% of our outstanding common
stock.

On August 2, 2001, we issued to Fidelity
1,614,286 shares of our common stock for all of the outstanding
common stock of Risco, Inc. Risco is a multiple listing service
vendor in the United States.

On August 2, 2001, we acquired all the
assets and liabilities of Reez.com., Inc., from Fidelity in
exchange for 136,971 shares of our common stock. Reezs
software provides the realtor, consumer and settlement service
provider with an on-line platform to schedule, track and close
real estate transactions.

Capital Stock Transactions.On September 28, 2001, our Board
of Directors authorized us to repurchase up to 1,000,000 shares
of our common stock. Purchases may be made by us from time to
time in the open market or in block purchases or in privately
negotiated transactions depending on market conditions and other
factors. During October 2001, we repurchased a total of
53,800 shares of our common stock for $0.3 million, at
an average purchase price of $6.30 per share. No other
repurchases have been made as of December 31, 2002.

On January 2, 2002, we issued 275,000 shares
of common stock to acquire ISDI.NET, LLC (ISDI).
Under the agreement, the owner of ISDI had the right to receive
additional consideration from us based on ISDIs earnings.
In 2002, we issued approximately 60,000 shares of our common
stock in exchange for such right.

On July 1, 2002 we issued 213,323 shares of
our common stock to acquire Comstock Net Services, Inc.

On July 9, 2002, we issued 12,895,721 shares
of our common stock in connection with the completion of the
merger of MGEN.

On July 24, 2002 Fidelity exercised its
option to convert a note payable by MGEN into
403,120 shares of our common stock.

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On October 29, 2002 we issued 880,726 shares
of our common stock in connection with the completion of the
acquisition of Eastern.

See Note 3 to the Consolidated Financial
Statements for the details of the above acquisitions.

Critical Accounting Policies

The accounting policies described below are those
we consider critical in preparing our Consolidated Financial
Statements. Certain of these policies require management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of certain contingent
assets and liabilities at the date of the Consolidated Financial
Statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates. See Note 2 to the Consolidated Financial
Statements for a more detailed description of our significant
accounting policies that have been followed in preparing our
Consolidated Financial Statements.

Software Development Costs and Purchased
Software.Costs incurred in creating
computer software to be licensed or sold are charged to expense
when incurred until technological feasibility has been
established. Technological feasibility is established upon
completion of a detail program design or, in its absence,
completion of a working model. Costs incurred in developing
software intended for internal use are capitalized after the
initial planning phase is completed. Thereafter, certain
software production costs are capitalized and subsequently
reported at the lower of amortized cost or net realizable value.
Capitalized costs are amortized based on current and future
revenue for each product with an annual minimum equal to the
straight-line amortization over the remaining estimated economic
life of the product. Estimated economic life is generally three
to ten years.

Software obtained through acquisition to be
marketed and sold is recorded at fair value and amortized at a
rate that approximates its estimated future cash flow and
typically equals a period of three to ten years.

We regularly assess the recoverability of the
cost of our capitalized software development costs and software
obtained through acquisitions based on an analysis of the
undiscounted cash flows generated by the underlying assets.

Goodwill and Other Intangible Assets.Goodwill represents the excess of
purchase price over the fair value of assets acquired and the
liabilities assumed relating to acquisitions. Prior to 2002,
goodwill was amortized on a straight-line basis over five to
25 years. In January 2002, we adopted Statement of
Financial Accounting Standards (SFAS) No. 142,
Goodwill and Other Intangible Assets and as a
result, have ceased to amortize goodwill. Instead, we performed
a transitional impairment review of goodwill as of
January 1, 2002 and an annual impairment review thereafter.
We have evaluated the impact of its adoption and determined that
no impairment charge was required upon adoption of this
standard. Our impairment test was performed through comparison
of the fair value of the reporting units with the carrying value
of their assets.

Other intangible assets primarily include
contract values, service contracts with Fidelity, trademarks,
customer relationships, and certain other assets and are
amortized over the expected periods of benefit of the assets.
MLS contracts are amortized over a ten to 25 year life on a
basis consistent with the expected renewal rate of the
underlying contracts. The other intangible assets are amortized
over a two to 20 year life either on a straight-line basis
or at a rate that approximates its future expected cash flow.
One trademark and a joint venture agreement, totaling
$5.0 million, possess characteristics associated with an
indefinite life and accordingly, are not being amortized.
Impairment of intangible assets is monitored on a continuing
basis, and is assessed based on the undiscounted cash flows
generated by the underlying assets.

Revenue Recognition.We recognize revenue from the sale of
services or data when evidence of the arrangement exists,
delivery has occurred, the sales price has been determined and
collectibility is deemed probable, generally in the month in
which the report is shipped or in which information is
transmitted to the customer, in accordance with Staff Accounting
Bulletin No. 101, Revenue Recognition
(SAB 101). Our flood and tax units provide
various services including life-of-loan monitoring services.
Revenue is recognized based on the estimated fair values of
services being provided upfront and over the life of the loan.
The amount

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recognized upfront is approximately 75% for flood
and 50% for tax of the total revenue received. The amounts
deferred are recognized ratably over the estimated average life
of the loan portfolio, which is determined based on our
historical experience.


Revenue from the sale of software is recognized
in the month in which the revenue recognition criteria of
Statement of Position No. 97-2, Software Revenue
Recognition (SOP 97-2) are met, generally
the month in which the software is shipped to the customer.

We follow SOP 81-1, Accounting for
Performance of Construction-Type and Certain Production-Type
Contracts for software contracts with significant
customization. We recognize revenue from software contracts with
customization using the percentage of completion method of
accounting whereby revenue is recognized based on the stage of
completion of individual contracts using estimates of service
days to total estimated service days.

System solutions sold to our customers may
involve a selection of the following elements: computer hardware
(sold or leased), internally developed software,
telecommunications services, information security, training and
customer support. These system solutions services have been
accounted for under the provisions of SOP 97-2. Revenue
recognition commences at the point at which we have delivered to
the customer all elements essential to the functionality of the
system solutions. Accordingly, we defer and recognize revenue
associated with these arrangements ratably over the terms of the
underlying agreements, commencing at contract
cutover. Cutover is generally defined as the point
at which the hardware is installed, software has been delivered,
training is completed, and the service is accessible to and
usable by the customer. Cash received prior to cutover are
deferred and recognized as revenue ratably over the life of the
contract. For certain sales, we provide 90 to 360 day
initial maintenance and support to the customer. We accrue costs
relating to this initial support period at the time of the sale.

Certain other elements of the agreements, such as
ongoing maintenance, involve separately stated monthly fees.
Revenues associated with such other elements are recognized over
the periods during which the services are performed, generally
on a monthly basis.

Hardware may be sold or leased to our system
solutions customers. Such hardware is a standard, non-customized
equipment that can be used for other information processing
applications. Leases of hardware are generally classified as
sales-type leases in accordance with the provisions
of SOP 97-2 and Statement of Financial Accounting Standards
No. 13, Accounting for Leases, and revenue is
recognized upon delivery.

Revenues from providing management support and
consulting services are recognized as services are performed.

Deferred Taxes.Under SFAS No. 109,
Accounting for Income Taxes,deferred tax
assets and liabilities are determined based on differences
between the financial reporting and tax basis of assets and
liabilities, and are measured using enacted tax rates and laws
that will be in effect when the differences are expected to
reverse. SFAS No. 109 provides for the recognition of
deferred tax assets if realization of such assets is more likely
than not. Based on the weight of available evidence, we have
provided a valuation allowance against certain deferred tax
assets. The valuation allowance was based on the historical
earnings patterns within individual tax jurisdictions that make
it uncertain that we will have sufficient income in the
appropriate jurisdictions to realize the full value of the
assets. We will continue to evaluate the realizability of the
deferred tax assets on a quarterly basis.

Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards
Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 141,
Business Combinations and SFAS No. 142,
Goodwill and Other Intangible Assets. SFAS
No. 141 requires that all business combinations be
accounted for under the purchase method. The statement further
requires separate recognition of intangible assets that meet one
of two criteria. The statement applies to all business
combinations initiated after June 30, 2001.

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SFAS No. 142 requires that an intangible
asset that is acquired shall be initially recognized and
measured based on its fair value. The statement also provides
that goodwill should not be amortized, but shall be tested for
impairment annually, or more frequently if circumstances
indicate potential impairment, through a comparison of fair
value to its carrying amount. SFAS No. 142 is generally
effective for fiscal periods beginning after December 15,
2001 and the amortization provisions of SFAS No. 142 are
effective for acquisitions subsequent to June 30, 2001. We
adopted SFAS No. 142 effective January 1, 2002 (See
Notes 2 and 7 to the Consolidated Financial Statements).

In October 2001, the FASB issued SFAS
No. 144, Accounting for the Impairment of Long-Lived
Assets which addresses financial accounting and reporting
for the impairment or disposal of long-lived assets. While SFAS
No. 144 supersedes SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of, it retains many of the fundamental
provisions of that statement. SFAS No. 144 is effective for
fiscal years beginning after December 15, 2001. The
adoption of SFAS No. 144 did not have a material impact on
our financial position, results of operations and cash flows.

In April 2002, the FASB issued SFAS No. 145,
Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical
Corrections (SFAS 145). SFAS 145
rescinds SFAS 4, which required all gains and losses from
extinguishment of debt to be aggregated and, if material,
classified as an extraordinary item, net of related income tax
effect. Upon adoption of SFAS 145, we will be required to
apply the criteria in APB Opinion No. 30, Reporting the
Results of Operations  Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions
(Opinion No. 30), in determining the
classification of gains and losses resulting from the
extinguishment of debt. Additionally, SFAS 145 amends
SFAS 13 to require that certain lease modifications that
have economic effects similar to sale-leaseback transactions to
be accounted for in the same manner as sale-leaseback
transactions. SFAS 145 will be effective for fiscal years
beginning after May 15, 2002 with early adoption of the
provisions related to the rescission of SFAS 4 encouraged.
Upon adoption, companies must reclassify prior period items that
do not meet the extraordinary item classification criteria in
Opinion No. 30. The adoption of SFAS 145 as of
December 31, 2002 did not have a material impact on our
consolidated financial statements.

In June 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit and Disposal
Activities. SFAS 146 nullifies Emerging Issues Task
Force (EITF) issue 94-3, Liability Recognition
for Certain Employee Termination Benefits and Other Costs to
Exit an Activity (including Certain Costs Incurred in a
Restructuring). Under EITF issue 94-3, a liability for an
exit cost is recognized at the date of an entitys
commitment to an exit plan. Under SFAS 146, the liabilities
associated with an exit or disposal activity will be measured at
fair value and recognized when the liability is incurred and
meets the definition of a liability in the FASBs
conceptual framework. This statement is effective for exit or
disposal activities initiated after December 31, 2002. We
believe that the adoption of SFAS 146 will not have a
material impact on our consolidated financial statements.

In November 2002, the FASB issued Interpretation
No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness to Others (FIN 45), an
interpretation of FASB Statements Nos. 5, 57 and 107 and a
rescission of FASB Interpretation No. 34. FIN 45
elaborates on the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations
under guarantees issued. FIN 45 also clarifies that a
guarantor is required to recognize, at inception of a guarantee,
a liability for the fair value of the obligation undertaken. The
initial recognition and measurement provisions of FIN 45
are applicable to guarantees issued or modified after
December 31, 2002 and are not expected to have an impact on
our financial position, results of operations and cash flows.

In November 2002, the FASBs EITF issued
EITF 00-21 Revenue Arrangements with Multiple
Deliverables. EITF 00-21 addresses certain aspects of
the accounting by a vendor for arrangements under which it will
perform multiple revenue-generating activities. Specifically,
EITF 00-21 addresses how to determine whether an
arrangement involving multiple deliverables contains more than
one unit of accounting. In applying EITF 00-21, separate
contracts with the same entity or related parties that are
entered into at or near the same time are presumed to have been
negotiated as a package and should, therefore, be evaluated as

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a single arrangement in considering whether there
are one or more units of accounting. That presumption may be
overcome if there is sufficient evidence to the contrary.
EITF 00-21 also addresses how arrangement consideration
should be measured and allocated to the separate units of
accounting in the arrangement. The guidance in this Issue is
effective for revenue arrangements entered into in fiscal
periods beginning after June 15, 2003. Alternatively,
companies may elect to report the change in accounting as a
cumulative-effect adjustment. Early application of this
consensus is permitted. We have not yet adopted EITF 00-21
and are currently analyzing its impact on our financial
position, results of operations and cash flows.


In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure 
an amendment of SFAS No. 123. This statement provides
alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee
compensation. This statement also amends the disclosure
requirements of SFAS No. 123 and APB Opinion No. 28,
Interim Financial Reporting, to require prominent
disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee
compensation and the effect of the method used on reported
results. Certain of the disclosure modifications are required
for fiscal years ending after December 15, 2002 and are
included in the Notes to these Consolidated Financial
Statements. We will implement SFAS No. 148 effective
January 1, 2003 regarding disclosure requirements for
condensed financial statements for interim periods. Our
management has not yet determined whether they will voluntarily
change to the fair value based method of accounting for
stock-based employee compensation.






|         |                                                                  
|-------- | -----------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosure
    About the Market Risk

Our Consolidated Balance Sheets include certain
assets and liabilities whose fair values are subject to market
risks. However, as of December 31, 2002 we believe that the
amount of such risk is not significant to our financial
condition. We do not maintain available cash resources in
interest sensitive instruments, and we attempt to manage any
risk associated with accounts receivable through periodic
reviews and establishment of appropriate allowances as part of
our internal controls and policies.

Interest rate changes will directly affect our
borrowing costs, since our credit facilities bear interest at a
rate related to either the prime rate or the LIBOR rate.
However, as of December 31, 2002 we do not have any
outstanding borrowings under either of our credit facilities.

Our financial performance will be affected more
significantly by the pace of general economic activity (and in
particular, real estate related transactions), which fluctuates
in part in reaction to prevailing interest rates and mortgage
financing activity.

33



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##### Table of Contents








|        |                                                
|------- | -----------------------------------------------
|Item 8. | Financial Statements and Supplementary
    Data

FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES

INDEX TO FINANCIAL INFORMATION

|                                                                                                         |  |        |    | 
|-------------------------------------------------------------------------------------------------------- |  | ------ | -- | 
|                                                                                                         |  | Page  
|                                                                                                         |  | Number
|                                                                                                         |  |       
|Independent Auditors Report                                                                             |  |        | 35 | 
|Consolidated Balance Sheets as of
    December 31, 2002 and 2001                                         |  |        | 36 | 
|Consolidated Statements of Earnings for the years
    ended December 31, 2002, 2001 and 2000             |  |        | 37 | 
|Consolidated Statements of Stockholders
    Equity for the years ended December 31, 2002, 2001 and 2000 |  |        | 38 | 
|Consolidated Statements of Cash Flows for the
    years ended December 31, 2002, 2001 and 2000           |  |        | 39 | 
|Notes to Consolidated Financial Statements                                                               |  |        | 41 | 

34



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##### Table of Contents



INDEPENDENT AUDITORS REPORT

The Board of Directors and Stockholders

Fidelity National Information Solutions, Inc.:


We have audited the accompanying Consolidated
Balance Sheets of Fidelity National Information Solutions, Inc.
and Subsidiaries as of December 31, 2002 and 2001 and the
related Consolidated Statements of Earnings, Stockholders
Equity and Cash Flows for each of the years in the three-year
period ended December 31, 2002. In connection with our
audits of the Consolidated Financial Statements, we have also
audited the financial statement schedule included at
Schedule II. These Consolidated Financial Statements and
the financial statement schedule are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these Consolidated Financial Statements and the
financial statement schedule based on our audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

As discussed in Note 2 and Note 3 to
the Consolidated Financial Statements, on July 9, 2002, the
Company acquired 100% of Micro General Corporation (Micro
General), which was a majority-owned subsidiary of
Fidelity National Financial, Inc. (Fidelity), the
majority owner of the Company at the time of the acquisition.
The Company has accounted for the acquisition of the portion of
Micro General that was owned by Fidelity in a manner similar to
a pooling-of-interests, as the Company and Micro General were
entities under common control of Fidelity.

In our opinion, the Consolidated Financial
Statements referred to above present fairly, in all material
respects, the consolidated financial position of Fidelity
National Information Solutions, Inc. and Subsidiaries as of
December 31, 2002 and 2001, and the results of their
operations and their cash flows for each of the years in the
three-year period ended December 31, 2002 in conformity
with accounting principles generally accepted in the United
States of America. Also in our opinion, the related financial
statement schedule, when considered in relation to the basic
Consolidated Financial Statements taken as a whole, presents
fairly, in all material respects, the information set forth
therein.

As discussed in Note 2 and Note 7 to the
Consolidated Financial Statements, effective January 1,
2002, the Company adopted Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible
Assets, which resulted in a change in the method of
accounting for the amortization of goodwill.



| |         
| | --------
| | KPMG LLP

Los Angeles, California

February 28, 2003


35



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##### Table of Contents



FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share
data)


|                                                                    |                                                                                                                                                                                                                          |              |         |              |   |   |         |         |  
|------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------ | ------- | ------------ | - | - | ------- | ------- | -
|                                                                    |                                                                                                                                                                                                                          | December 31, |         | December 31,
|                                                                    |                                                                                                                                                                                                                          | 2002         |         | 2001        
|                                                                    |                                                                                                                                                                                                                          |              |         |             
|ASSETS                                                             
|Cash and cash equivalents                                           |                                                                                                                                                                                                                          | $            | 10,259  |              |   | $ | 12,909  |        
|Short-term investments                                              |                                                                                                                                                                                                                          |              | 11,799  |              |   |   |        |        
|Trade accounts receivable, less allowance for
    doubtful accounts |                                                                                                                                                                                                                          |              | 49,367  |              |   |   | 34,369  |        
|Trade accounts receivable due from affiliates                       |                                                                                                                                                                                                                          |              | 23,854  |              |   |   | 14,112  |        
|Prepaids and other current assets                                   |                                                                                                                                                                                                                          |              | 9,694   |              |   |   | 6,745   |        
|Deferred taxes, current portion                                     |                                                                                                                                                                                                                          |              | 8,554   |              |   |   | 12,040  |        
|                                                                    |                                                                                                                                                                                                                          |              |         |              |   |   |         |        
|                                                                    | Total current assets                                                                                                                                                                                                     |              |         | 113,527      |   |   |         | 80,175  |  
|Property, equipment and software, net                               |                                                                                                                                                                                                                          |              | 69,645  |              |   |   | 55,605  |        
|Goodwill, net                                                       |                                                                                                                                                                                                                          |              | 274,829 |              |   |   | 101,962 |        
|Intangible and other non-current assets                             |                                                                                                                                                                                                                          |              | 41,819  |              |   |   | 17,765  |        
|Deferred taxes, long-term portion                                   |                                                                                                                                                                                                                          |              | 9,088   |              |   |   | 19,890  |        
|                                                                    |                                                                                                                                                                                                                          |              |         |              |   |   |         |        
|Total assets                                                        |                                                                                                                                                                                                                          | $            | 508,908 |              |   | $ | 275,397 |        
|                                                                    |                                                                                                                                                                                                                          |              |         |              |   |   |         |        
|LIABILITIES AND STOCKHOLDERS
    EQUITY                           
|Accounts payable and accrued liabilities                            |                                                                                                                                                                                                                          | $            | 43,086  |              |   | $ | 29,423  |        
|Related party payables                                              |                                                                                                                                                                                                                          |              | 4,864   |              |   |   | 1,156   |        
|Income taxes payable                                                |                                                                                                                                                                                                                          |              | 2,347   |              |   |   | 6,532   |        
|Deferred revenue, current portion                                   |                                                                                                                                                                                                                          |              | 30,528  |              |   |   | 19,214  |        
|Current portion of notes payable                                    |                                                                                                                                                                                                                          |              | 2,113   |              |   |   | 5,114   |        
|Current portion of capital lease obligations                        |                                                                                                                                                                                                                          |              | 3,119   |              |   |   | 1,398   |        
|                                                                    |                                                                                                                                                                                                                          |              |         |              |   |   |         |        
|                                                                    | Total current liabilities                                                                                                                                                                                                |              |         | 86,057       |   |   |         | 62,837  |  
|Revolving credit facility with parent                               |                                                                                                                                                                                                                          |              |        |              |   |   | 18,653  |        
|Notes payable, long-term portion                                    |                                                                                                                                                                                                                          |              | 4,125   |              |   |   | 6,461   |        
|Capital lease obligations, long-term portion                        |                                                                                                                                                                                                                          |              | 4,104   |              |   |   | 1,212   |        
|Deferred revenue, long-term portion                                 |                                                                                                                                                                                                                          |              | 7,910   |              |   |   | 7,152   |        
|Other liabilities                                                   |                                                                                                                                                                                                                          |              | 2,585   |              |   |   | 3,436   |        
|                                                                    |                                                                                                                                                                                                                          |              |         |              |   |   |         |        
|Total liabilities                                                   |                                                                                                                                                                                                                          |              | 104,781 |              |   |   | 99,751  |        
|Minority interests                                                  |                                                                                                                                                                                                                          |              | 1,569   |              |   |   | 12,221  |        
|Preferred stock of subsidiary, held by outside
    parties          |                                                                                                                                                                                                                          |              | 7,062   |              |   |   | 7,062   |        
|Stockholders equity:                                               |                                                                                                                                                                                                                          |              |         |              |   |   |         |        
|                                                                    | Common stock, par value $0.001; 200,000,000
    shares authorized; issued 39,600,313 and outstanding 39,546,513
    as of December 31, 2002 and issued 30,840,828 and
    outstanding 30,787,028 as of December 31, 2001 |              |         | 39           |   |   |         | 31      |  
|                                                                    | Treasury stock 53,800 shares as of
    December 31, 2002 and 2001                                                                                                                                                        |              |         | (339         | ) |   |         | (339    | )
|                                                                    | Additional paid-in capital                                                                                                                                                                                               |              |         | 375,330      |   |   |         | 164,977 |  
|                                                                    | Retained earnings (accumulated deficit)                                                                                                                                                                                  |              |         | 22,443       |   |   |         | (8,288  | )
|                                                                    | Unearned compensation costs                                                                                                                                                                                              |              |         | (1,628       | ) |   |         |        |  
|                                                                    | Accumulated other comprehensive loss                                                                                                                                                                                     |              |         | (349         | ) |   |         | (18     | )
|                                                                    |                                                                                                                                                                                                                          |              |         |              |   |   |         |        
|Total stockholders equity                                          |                                                                                                                                                                                                                          |              | 395,496 |              |   |   | 156,363 |        
|                                                                    |                                                                                                                                                                                                                          |              |         |              |   |   |         |        
|Total liabilities and stockholders equity                          |                                                                                                                                                                                                                          | $            | 508,908 |              |   | $ | 275,397 |        
|                                                                    |                                                                                                                                                                                                                          |              |         |              |   |   |         |        

See accompanying notes to consolidated financial
statements.

36



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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share
data)


|                                                        |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |        |         | 
|------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------- | ------------------------ | ------ | ------- | ------- | ---- | ------ | ------- | ------- | - | ------ | ------ | ------- | 
|                                                        |                                                                                                                                   |                         
|                                                        |                                                                                                                                   | Year Ended December 31, 
|                                                        |                                                                                                                                   |                         
|                                                        |                                                                                                                                   | 2002                     |        | 2001    |         | 2000
|                                                        |                                                                                                                                   |                          |        |         |         |     
|Revenue:                                                |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|                                                        | Data                                                                                                                              |                          | $      | 148,083 |         |      | $      | 121,324 |         |   | $      | 75,656 |        
|                                                        | Data  related party                                                                                                              |                          |        | 9,751   |         |      |        | 2,027   |         |   |        |       |        
|                                                        | Solutions                                                                                                                         |                          |        | 63,634  |         |      |        | 26,481  |         |   |        | 3,567  |        
|                                                        | Solutions  related party                                                                                                         |                          |        | 117,773 |         |      |        | 106,142 |         |   |        | 68,563 |        
|                                                        | Services                                                                                                                          |                          |        | 72,927  |         |      |        | 38,648  |         |   |        | 12,985 |        
|                                                        |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|                                                        |                                                                                                                                   | Total revenue            |        |         | 412,168 |      |        |         | 294,622 |   |        |        | 160,771 | 
|Costs and expenses:                                     |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|                                                        | Cost of data revenue                                                                                                              |                          |        | 50,738  |         |      |        | 43,859  |         |   |        | 26,284 |        
|                                                        | Cost of solutions revenue                                                                                                         |                          |        | 76,687  |         |      |        | 64,539  |         |   |        | 33,360 |        
|                                                        | Cost of services revenue                                                                                                          |                          |        | 38,909  |         |      |        | 19,758  |         |   |        | 6,094  |        
|                                                        | Operating expenses (excluding $5.9 million
    of stock compensation costs in 2002 that are included in merger
    related costs) |                          |        | 182,636 |         |      |        | 127,071 |         |   |        | 76,428 |        
|                                                        | Merger related costs                                                                                                              |                          |        | 7,628   |         |      |        |        |         |   |        |       |        
|                                                        | Amortization of goodwill                                                                                                          |                          |        |        |         |      |        | 4,191   |         |   |        | 4,303  |        
|                                                        |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|                                                        |                                                                                                                                   | Total costs and expenses |        |         | 356,598 |      |        |         | 259,418 |   |        |        | 146,469 | 
|                                                        |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|Operating income                                        |                                                                                                                                   |                          | 55,570 |         |         |      | 35,204 |         |         |   | 14,302 |       
|Interest expense, net                                   |                                                                                                                                   |                          | 1,134  |         |         |      | 1,296  |         |         |   | 900    |       
|Other (income) expense, net                             |                                                                                                                                   |                          | (222   | )       |         |      |       |         |         |   | 578    |       
|                                                        |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|Earnings before income taxes and minority
    interests |                                                                                                                                   |                          | 54,658 |         |         |      | 33,908 |         |         |   | 12,824 |       
|                                                        |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|Income taxes                                            |                                                                                                                                   |                          | 21,267 |         |         |      | 12,928 |         |         |   | 2,380  |       
|Minority interests                                      |                                                                                                                                   |                          | 2,660  |         |         |      | 2,278  |         |         |   | 329    |       
|                                                        |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|Earnings from continuing operations                     |                                                                                                                                   |                          | 30,731 |         |         |      | 18,702 |         |         |   | 10,115 |       
|Discontinued operations:                                |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|                                                        | Loss from discontinued operations, net of tax                                                                                     |                          |        |        |         |      |        | 4,193   |         |   |        | 7,804  |        
|                                                        | Loss on disposal of discontinued operations, net
    of tax                                                                       |                          |        |        |         |      |        | 3,426   |         |   |        |       |        
|                                                        |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|Net earnings                                            |                                                                                                                                   | $                        | 30,731 |         |         | $    | 11,083 |         |         | $ | 2,311  |       
|                                                        |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|Earnings from continuing operations, per share          |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|                                                        | Basic                                                                                                                             |                          | $      | 0.88    |         |      | $      | 0.70    |         |   | $      | 0.56   |        
|                                                        |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|                                                        | Diluted                                                                                                                           |                          | $      | 0.84    |         |      | $      | 0.70    |         |   | $      | 0.56   |        
|                                                        |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|Earnings per share                                      |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|                                                        | Basic                                                                                                                             |                          | $      | 0.88    |         |      | $      | 0.41    |         |   | $      | 0.13   |        
|                                                        |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|                                                        | Diluted                                                                                                                           |                          | $      | 0.84    |         |      | $      | 0.41    |         |   | $      | 0.13   |        
|                                                        |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|Weighted average shares  basic                         |                                                                                                                                   |                          | 34,827 |         |         |      | 26,748 |         |         |   | 18,091 |       
|                                                        |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       
|Weighted average shares  diluted                       |                                                                                                                                   |                          | 36,769 |         |         |      | 26,829 |         |         |   | 18,156 |       
|                                                        |                                                                                                                                   |                          |        |         |         |      |        |         |         |   |        |       

See accompanying notes to consolidated financial
statements.

37



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##### Table of Contents



FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY

(In thousands)


|                             |                                                                                                    |              |        |          |   |            |    |              |  |              |      |               |   |               |         |         |  |   |         |        |   |   |        |        |   |   |      |      |   |   |         |         |  
|---------------------------- | -------------------------------------------------------------------------------------------------- | ------------ | ------ | -------- | - | ---------- | -- | ------------ |  | ------------ | ---- | ------------- | - | ------------- | ------- | ------- |  | - | ------- | ------ | - | - | ------ | ------ | - | - | ---- | ---- | - | - | ------- | ------- | -
|                             |                                                                                                    |              |        |          |   |            |    | Retained     |  |              |      | Accumulated   |   |              
|                             |                                                                                                    | Common Stock |        |          |   | Additional |    | Earnings     |  | Unearned     |      | Other         |   | Total        
|                             |                                                                                                    |              |        | Treasury |   | Paid-in    |    | (Accumulated |  | Compensation |      | Comprehensive |   | Stockholders
|                             |                                                                                                    | Shares       |        | Amount   |   | Stock      |    | Capital      |  | Deficit)     |      | Costs         |   | Loss          |         | Equity 
|                             |                                                                                                    |              |        |          |   |            |    |              |  |              |      |               |   |               |         |        
|Balance at December 31, 1999 |                                                                                                    |              | 9,652  |          |   | $          | 10 |              |  | $            |     |               |   | $             | 31,808  |         |  | $ | (11,747 | )      |   | $ |       |        |   | $ |     |      |   | $ | 20,071  |        
|                             | Shares issued for acquisitions                                                                     |              |        | 10,770   |   |            |    | 11           |  |              |      |              |   |               |         | 44,120  |  |   |         |       |   |   |        |       |   |   |      |     |   |   |         | 44,131  |  
|                             | Exercise of stock options and warrants                                                             |              |        |         |   |            |    |             |  |              |      |              |   |               |         | 1,620   |  |   |         |       |   |   |        |       |   |   |      |     |   |   |         | 1,620   |  
|                             | Shares issued for employee benefit plans                                                           |              |        |         |   |            |    |             |  |              |      |              |   |               |         | 219     |  |   |         |       |   |   |        |       |   |   |      |     |   |   |         | 219     |  
|                             | Compensation expense related to options granted
    to non-employees                               |              |        |         |   |            |    |             |  |              |      |              |   |               |         | 273     |  |   |         |       |   |   |        |       |   |   |      |     |   |   |         | 273     |  
|                             | Dividends paid to parent company                                                                   |              |        |         |   |            |    |             |  |              |      |              |   |               |         |        |  |   |         | (2,500 | ) |   |        |       |   |   |      |     |   |   |         | (2,500  | )
|                             | Net earnings                                                                                       |              |        |         |   |            |    |             |  |              |      |              |   |               |         |        |  |   |         | 2,311  |   |   |        |       |   |   |      |     |   |   |         | 2,311   |  
|                             |                                                                                                    |              |        |          |   |            |    |              |  |              |      |               |   |               |         |         |  |   |         |        |   |   |        |        |   |   |      |      |   |   |         |        
|Balance at December 31, 2000 |                                                                                                    |              | 20,422 |          |   |            | 21 |              |  |              |     |               |   |               | 78,040  |         |  |   | (11,936 | )      |   |   |       |        |   |   |     |      |   |   | 66,125  |        
|                             | Shares issued for acquisitions                                                                     |              |        | 10,335   |   |            |    | 10           |  |              |      |              |   |               |         | 72,552  |  |   |         |       |   |   |        |       |   |   |      |     |   |   |         | 72,562  |  
|                             | Exercise of stock options and warrants                                                             |              |        | 3        |   |            |    |             |  |              |      |              |   |               |         | 1,102   |  |   |         |       |   |   |        |       |   |   |      |     |   |   |         | 1,102   |  
|                             | Tax benefit associated with the exercise of stock
    options                                      |              |        |         |   |            |    |             |  |              |      |              |   |               |         | 3,600   |  |   |         |       |   |   |        |       |   |   |      |     |   |   |         | 3,600   |  
|                             | Shares issued for employee benefit plans                                                           |              |        | 80       |   |            |    |             |  |              |      |              |   |               |         | 720     |  |   |         |       |   |   |        |       |   |   |      |     |   |   |         | 720     |  
|                             | Compensation expense related to options granted
    to non-employees                               |              |        |         |   |            |    |             |  |              |      |              |   |               |         | 286     |  |   |         |       |   |   |        |       |   |   |      |     |   |   |         | 286     |  
|                             | Treasury shares purchased                                                                          |              |        | (53      | ) |            |    |             |  |              |      | (339          | ) |               |         |        |  |   |         |       |   |   |        |       |   |   |      |     |   |   |         | (339    | )
|                             | Warrants issued to parent company                                                                  |              |        |         |   |            |    |             |  |              |      |              |   |               |         | 1,242   |  |   |         |       |   |   |        |       |   |   |      |     |   |   |         | 1,242   |  
|                             | Stock dividend                                                                                     |              |        |         |   |            |    |             |  |              |      |              |   |               |         | 7,435   |  |   |         | (7,435 | ) |   |        |       |   |   |      |     |   |   |         |        |  
|                             | Translation adjustment                                                                             |              |        |         |   |            |    |             |  |              |      |              |   |               |         |        |  |   |         |       |   |   |        |       |   |   |      | (18  | ) |   |         | (18     | )
|                             | Net earnings                                                                                       |              |        |         |   |            |    |             |  |              |      |              |   |               |         |        |  |   |         | 11,083 |   |   |        |       |   |   |      |     |   |   |         | 11,083  |  
|                             |                                                                                                    |              |        |          |   |            |    |              |  |              |      |               |   |               |         |         |  |   |         |        |   |   |        |        |   |   |      |      |   |   |         |        
|Balance at December 31, 2001 |                                                                                                    |              | 30,787 |          |   |            | 31 |              |  |              | (339 | )             |   |               | 164,977 |         |  |   | (8,288  | )      |   |   |       |        |   |   | (18  | )    |   |   | 156,363 |        
|                             | Shares issued for acquisitions                                                                     |              |        | 7,673    |   |            |    | 7            |  |              |      |              |   |               |         | 177,834 |  |   |         |       |   |   |        |       |   |   |      |     |   |   |         | 177,841 |  
|                             | Exercise of stock options and warrants                                                             |              |        | 633      |   |            |    | 1            |  |              |      |              |   |               |         | 11,376  |  |   |         |       |   |   |        |       |   |   |      |     |   |   |         | 11,377  |  
|                             | Tax benefit associated with the exercise of stock
    options                                      |              |        |         |   |            |    |             |  |              |      |              |   |               |         | 7,461   |  |   |         |       |   |   |        |       |   |   |      |     |   |   |         | 7,461   |  
|                             | Shares issued for employee benefit plans                                                           |              |        | 51       |   |            |    |             |  |              |      |              |   |               |         | 865     |  |   |         |       |   |   |        |       |   |   |      |     |   |   |         | 865     |  
|                             | Compensation expense related to the exchange of
    vested and unvested stock options and warrants |              |        |         |   |            |    |             |  |              |      |              |   |               |         | 7,553   |  |   |         |       |   |   |        | (1,628 | ) |   |      |     |   |   |         | 5,925   |  
|                             | Shares issued to parent company for note
    conversion                                            |              |        | 403      |   |            |    |             |  |              |      |              |   |               |         | 5,264   |  |   |         |       |   |   |        |       |   |   |      |     |   |   |         | 5,264   |  
|                             | Translation adjustment                                                                             |              |        |         |   |            |    |             |  |              |      |              |   |               |         |        |  |   |         |       |   |   |        |       |   |   |      | (331 | ) |   |         | (331    | )
|                             | Net earnings                                                                                       |              |        |         |   |            |    |             |  |              |      |              |   |               |         |        |  |   |         | 30,731 |   |   |        |       |   |   |      |     |   |   |         | 30,731  |  
|                             |                                                                                                    |              |        |          |   |            |    |              |  |              |      |               |   |               |         |         |  |   |         |        |   |   |        |        |   |   |      |      |   |   |         |        
|Balance at December 31, 2002 |                                                                                                    |              | 39,547 |          |   | $          | 39 |              |  | $            | (339 | )             |   | $             | 375,330 |         |  | $ | 22,443  |        |   | $ | (1,628 | )      |   | $ | (349 | )    |   | $ | 395,496 |        
|                             |                                                                                                    |              |        |          |   |            |    |              |  |              |      |               |   |               |         |         |  |   |         |        |   |   |        |        |   |   |      |      |   |   |         |        

See accompanying notes to consolidated financial
statements.

38



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##### Table of Contents



FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

(In thousands)


|                                                         |                                                                                         |                                                                                 |                                                                                    |         |        |         |        |         |        |         |       |        |       |        |  
|-------------------------------------------------------- | --------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | ------- | ------ | ------- | ------ | ------- | ------ | ------- | ----- | ------ | ----- | ------ | -
|                                                         |                                                                                         |                                                                                
|                                                         |                                                                                         | Year Ended December 31,                                                        
|                                                         |                                                                                         |                                                                                
|                                                         |                                                                                         | 2002                                                                            |                                                                                    | 2001    |        | 2000   
|                                                         |                                                                                         |                                                                                 |                                                                                    |         |        |        
|Cash Flows from Operating Activities:                    |                                                                                         |                                                                                 |                                                                                    |         |        |         |        |         |        |         |       |       
|                                                         | Net earnings                                                                            |                                                                                 | $                                                                                  | 30,731  |        |         | $      | 11,083  |        |         | $     | 2,311  |      
|                                                         | Adjustments to reconcile net earnings to net cash
    provided by operating activities: |                                                                                 |                                                                                    |         |        |         |        |         |        |         |       |        |      
|                                                         |                                                                                         | Loss from discontinued operations, net                                          |                                                                                    |         |       |         |        |         | 7,619  |         |       |        | 7,804 |       
|                                                         |                                                                                         | Depreciation and amortization                                                   |                                                                                    |         | 21,994 |         |        |         | 12,441 |         |       |        | 7,930 |       
|                                                         |                                                                                         | (Gain) loss on disposal of property and equipment                               |                                                                                    |         | (448   | )       |        |         | 164    |         |       |        | 621   |       
|                                                         |                                                                                         | Provision for doubtful accounts                                                 |                                                                                    |         | 1,832  |         |        |         | 1,440  |         |       |        | 547   |       
|                                                         |                                                                                         | Stock compensation                                                              |                                                                                    |         | 5,946  |         |        |         | 465    |         |       |        | 358   |       
|                                                         |                                                                                         | Minority interest                                                               |                                                                                    |         | 2,660  |         |        |         | 2,278  |         |       |        | 329   |       
|                                                         |                                                                                         | Other                                                                           |                                                                                    |         | (147   | )       |        |         |       |         |       |        | 581   |       
|                                                         |                                                                                         | Changes in assets and liabilities, net of effects
    of business acquisitions: |                                                                                    |         |        |         |        |         |        |         |       |        |       |       
|                                                         |                                                                                         |                                                                                 | Accounts receivable                                                                |         |        | (11,181 | )      |         |        | (12,301 | )     |        |       | (89    | )
|                                                         |                                                                                         |                                                                                 | Prepaid and other assets                                                           |         |        | (10,079 | )      |         |        | (4,160  | )     |        |       | (2,125 | )
|                                                         |                                                                                         |                                                                                 | Accounts payable and other liabilities                                             |         |        | 3,138   |        |         |        | (3,388  | )     |        |       | 3,969  |  
|                                                         |                                                                                         |                                                                                 | Deferred revenue                                                                   |         |        | 9,246   |        |         |        | 6,682   |       |        |       | 2,347  |  
|                                                         |                                                                                         |                                                                                 | Tax benefit associated with the exercise of stock
    options                      |         |        | 14,209  |        |         |        | 5,854   |       |        |       |       |  
|                                                         |                                                                                         |                                                                                 | Income taxes                                                                       |         |        | (1,100  | )      |         |        | 4,093   |       |        |       | (70    | )
|                                                         |                                                                                         |                                                                                 | Related party receivables (payables)                                               |         |        | (6,034  | )      |         |        | 5,074   |       |        |       | (9,510 | )
|                                                         |                                                                                         |                                                                                 | Advance to (from) discontinued operations                                          |         |        |        |        |         |        | 3,550   |       |        |       | (940   | )
|                                                         |                                                                                         |                                                                                 |                                                                                    |         |        |         |        |         |        |         |       |       
|                                                         |                                                                                         |                                                                                 | Net cash provided by operating activities from
    continuing operations           |         |        | 60,767  |        |         |        | 40,894  |       |        |       | 14,063 |  
|                                                         |                                                                                         |                                                                                 |                                                                                    |         |        |         |        |         |        |         |       |       
|                                                         |                                                                                         |                                                                                 | Net cash used in operating activities from
    discontinued operations             |         |        |        |        |         |        | (4,856  | )     |        |       | (702   | )
|                                                         |                                                                                         |                                                                                 |                                                                                    |         |        |         |        |         |        |         |       |       
|Cash Flows from Investing Activities:                    |                                                                                         |                                                                                 |                                                                                    |         |        |         |        |         |        |         |       |       
|                                                         | Purchase of property, equipment and software                                            |                                                                                 |                                                                                    | (18,400 | )      |         |        | (15,336 | )      |         |       | (8,137 | )    
|                                                         | (Increase) decrease in notes receivable                                                 |                                                                                 |                                                                                    | 337     |        |         |        | (825    | )      |         |       | (370   | )    
|                                                         | Proceeds from sale of operating division                                                |                                                                                 |                                                                                    | 15,500  |        |         |        |        |        |         |       |       |      
|                                                         | Purchase of short-term investments                                                      |                                                                                 |                                                                                    | (11,799 | )      |         |        |        |        |         |       |       |      
|                                                         | Investment in joint venture                                                             |                                                                                 |                                                                                    |        |        |         |        |        |        |         |       | (1,450 | )    
|                                                         | Cash paid for business acquisitions, net                                                |                                                                                 |                                                                                    | (43,971 | )      |         |        | (5,780  | )      |         |       | 1,435  |      
|                                                         | Other                                                                                   |                                                                                 |                                                                                    | 350     |        |         |        |        |        |         |       | 100    |      
|                                                         |                                                                                         |                                                                                 |                                                                                    |         |        |         |        |         |        |         |       |       
|                                                         |                                                                                         |                                                                                 | Net cash used in investing activities from
    continuing operations               |         |        | (57,983 | )      |         |        | (21,941 | )     |        |       | (8,422 | )
|                                                         |                                                                                         |                                                                                 |                                                                                    |         |        |         |        |         |        |         |       |       
|                                                         |                                                                                         |                                                                                 | Net cash used in investing activities from
    discontinued operations             |         |        |        |        |         |        | (2,450  | )     |        |       | (2,545 | )
|                                                         |                                                                                         |                                                                                 |                                                                                    |         |        |         |        |         |        |         |       |       
|Cash Flows from Financing Activities:                    |                                                                                         |                                                                                 |                                                                                    |         |        |         |        |         |        |         |       |       
|                                                         | Proceeds from (repayment of) debt, net                                                  |                                                                                 |                                                                                    | (24,033 | )      |         |        | (6,838  | )      |         |       | 2,254  |      
|                                                         | Repayment of capital lease obligations                                                  |                                                                                 |                                                                                    | (1,851  | )      |         |        | (32     | )      |         |       | (65    | )    
|                                                         | Dividends paid to parent company                                                        |                                                                                 |                                                                                    |        |        |         |        |        |        |         |       | (2,500 | )    
|                                                         | Purchase of treasury stock, net of reissuance                                           |                                                                                 |                                                                                    |        |        |         |        | (528    | )      |         |       |       |      
|                                                         | Proceeds from stock options, warrants and
    employee benefit plans                    |                                                                                 |                                                                                    | 20,781  |        |         |        | 2,125   |        |         |       | 2,412  |      
|                                                         | Net change in cumulative translation adjustment                                         |                                                                                 |                                                                                    | (331    | )      |         |        | (18     | )      |         |       |       |      
|                                                         |                                                                                         |                                                                                 |                                                                                    |         |        |         |        |         |        |         |       |       
|                                                         |                                                                                         |                                                                                 | Net cash provided by (used in) financing
    activities from continuing operations |         |        | (5,434  | )      |         |        | (5,291  | )     |        |       | 2,101  |  
|                                                         |                                                                                         |                                                                                 |                                                                                    |         |        |         |        |         |        |         |       |       
|                                                         |                                                                                         |                                                                                 | Net cash used in financing activities from
    discontinued operations             |         |        |        |        |         |        |        |       |        |       | (343   | )
|                                                         |                                                                                         |                                                                                 |                                                                                    |         |        |         |        |         |        |         |       |       
|Net increase (decrease) in cash and cash
    equivalents |                                                                                         |                                                                                 | (2,650                                                                             | )       |        |         | 6,356  |         |        |         | 4,152 |       
|Cash and cash equivalents, beginning of year             |                                                                                         |                                                                                 | 12,909                                                                             |         |        |         | 6,553  |         |        |         | 2,401 |       
|                                                         |                                                                                         |                                                                                 |                                                                                    |         |        |         |        |         |        |         |       |       
|Cash and cash equivalents, end of year                   |                                                                                         | $                                                                               | 10,259                                                                             |         |        | $       | 12,909 |         |        | $       | 6,553 |       
|                                                         |                                                                                         |                                                                                 |                                                                                    |         |        |         |        |         |        |         |       |       

39



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##### Table of Contents



FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)

(In thousands)


|                                                                             |                                             |                                       |   |       |         |      |   |       |         |   |   |       |         |  
|---------------------------------------------------------------------------- | ------------------------------------------- | ------------------------------------- | - | ----- | ------- | ---- | - | ----- | ------- | - | - | ----- | ------- | -
|                                                                             |                                             |                                      
|                                                                             |                                             | Year Ended December 31,              
|                                                                             |                                             |                                      
|                                                                             |                                             | 2002                                  |   | 2001  |         | 2000
|                                                                             |                                             |                                       |   |       |         |     
|Supplemental Cash Flow Information:                                          |                                             |                                       |   |       |         |      |   |       |         |   |   |      
|                                                                             | Income taxes paid                           |                                       | $ | 8,862 |         |      | $ | 2,191 |         |   | $ | 3,873 |        
|                                                                             | Interest paid                               |                                       | $ | 1,940 |         |      | $ | 1,716 |         |   | $ | 989   |        
|                                                                            
|Supplemental Information on Non-Cash Investing
    and Financing Activities: |                                             |                                       |   |       |         |      |   |       |         |   |   |      
|                                                                             | Details of acquisitions:                    |                                       |   |       |         |      |   |       |         |   |   |       |        
|                                                                             |                                             | Fair value of assets acquired         |   | $     | 260,221 |      |   | $     | 138,939 |   |   | $     | 53,007  |  
|                                                                             |                                             | Less: cash paid for acquisitions, net |   |       | (43,971 | )    |   |       | (5,780  | ) |   |       | 1,435   |  
|                                                                             |                                             | liabilities
    assumed               |   |       | (38,409 | )    |   |       | (60,597 | ) |   |       | (10,311 | )
|                                                                             |                                             |                                       |   |       |         |      |   |       |         |   |   |      
|                                                                             |                                             | Equity issued                         |   | $     | 177,841 |      |   | $     | 72,562  |   |   | $     | 44,131  |  
|                                                                             |                                             |                                       |   |       |         |      |   |       |         |   |   |      
|                                                                             | Conversion of notes payable to common stock |                                       | $ | 5,264 |         |      | $ |      |         |   | $ |      |        
|                                                                             |                                             |                                       |   |       |         |      |   |       |         |   |   |      
|                                                                             | Assets acquired through capital lease       |                                       | $ | 6,378 |         |      | $ | 2,755 |         |   | $ |      |        
|                                                                             |                                             |                                       |   |       |         |      |   |       |         |   |   |      
|                                                                             | Assets acquired through notes issuance      |                                       | $ |      |         |      | $ |      |         |   | $ | 4,551 |        
|                                                                             |                                             |                                       |   |       |         |      |   |       |         |   |   |      

See accompanying notes to consolidated financial
statements.

40



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##### Table of Contents



FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

For the Years Ended December 31, 2002,
2001 and 2000


1.     Background and
Organization

Description of Business.Fidelity National Information
Solutions, Inc. (FNIS or the Company)
provides data, technology solutions and services needed by
lenders and real estate professionals. FNIS is the only national
provider whose offerings span the entire home purchase and
ownership life cycle, from contact through closing, refinancing
and resale. The products and services the Company provides
enable its customers to use information to improve their
business decision-making processes and to effectively manage
existing and prospective customer relationships. The
Companys product and service offerings include a full
spectrum of technology solutions, electronic partner networks,
loan origination systems, real estate data and tax services,
credit reporting services, flood compliance services, and
automated valuation and appraisal services. The Company is also
a data and service provider to the Multiple Listing Service
(MLS) systems industry. Its data, web services, MLS
systems, and production and management software serve more than
50% of the nations Realtors®. The Companys
common stock is traded on the NASDAQ National Market under the
symbol FNIS.

The Company is a majority-owned subsidiary of
Fidelity National Financial, Inc. (NYSE: FNF 
Fidelity). As of December 31, 2002, Fidelity
owned approximately 66% of the Companys outstanding common
stock.

Fidelity is the nations largest title
insurance and diversified real estate-related services company.
Fidelitys title insurance underwriters 
Fidelity National Title, Chicago Title, Ticor Title, Security
Union Title and Alamo Title  together issue
approximately 29 percent of all title insurance policies
issued nationally in 2001. The Company provides title insurance
in 49 states, the District of Columbia, Guam, Puerto Rico, and
the U.S. Virgin Islands and in Canada and Mexico.

Formation of the Company.The Company was formerly Vista
Information Solutions, Inc. (Vista), a publicly
traded company and a provider of software solutions to the real
estate industry, including hosting MLS applications.

On March 20, 2000, Fidelity consummated a
merger with Chicago Title Corporation, as a result of which
Fidelity acquired Chicago Title and Trust Company (Chicago
Title). Subsequent to the merger, Fidelity combined its
flood services (Fidelity Flood) and credit services
(Fidelity Credit) with the flood services
(Chicago Flood) and credit services (Chicago
Credit) of Chicago Title. The merged flood services
business (Fidelity National Flood, Inc. or
Flood) and the merged credit services business
(Fidelity National Credit Services, Inc. or
Credit) became wholly-owned subsidiaries of Chicago
Title. On January 3, 2001, Fidelity also acquired 100% of
the outstanding stock of International Data Management
Corporation (IDM).

On August 1, 2001, the Company, pursuant to
an Agreement and Plan of Reorganization and Merger dated
April 12, 2001, acquired IDM from Fidelity; and Market
Intelligence (MI), Flood and Credit (collectively,
the Chicago Subsidiaries) from Chicago Title, by
merging these four subsidiaries with and into four
previously-formed merger subsidiaries of the Company in
simultaneous reverse triangular mergers (collectively, the
Mergers). Concurrent with the Mergers, Fidelity
transferred 80% of the issued and outstanding stock of Fidelity
National Tax Service, Inc. (Tax, and together with
IDM, the Fidelity Subsidiaries) to the Company (the
Share Exchange). As a result of the Mergers and the
Share Exchange, MI, Credit, Flood and IDM became wholly-owned
subsidiaries of the Company, and Tax became a majority-owned
subsidiary of the Company.

In consideration for the Mergers and the Share
Exchange, the Company transferred to Chicago Title and Fidelity
11,703,801 shares and 5,507,671 shares of the Companys
common stock, respectively. Collectively, these shares of common
stock then constituted approximately 77% of the outstanding
capital stock of the Company. This transaction had the effect of
a reverse merger, following which the Company became a

41



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##### Table of Contents



FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

majority-owned subsidiary of Fidelity. As a
result, the accompanying Consolidated Financial Statements
issued prior to the year ended December 31, 2001 only
reflect the financial position, results of operations and cash
flows of the Fidelity Subsidiaries and the Chicago Subsidiaries
prior to the Mergers, as the Fidelity Subsidiaries and the
Chicago Subsidiaries were treated as the acquirer for accounting
purposes. Vistas results were included in the results of
operations since the closing of the business combination on
August 1, 2001.

The total purchase price of $34.8 million
was allocated to the tangible assets acquired, goodwill, and
liabilities assumed, at fair value, in the amounts of
$45.5 million, $29.7 million and $40.4 million,
respectively.

2.     Summary of
Significant Accounting Policies

The following describes the significant
accounting policies followed by the Company in preparing the
accompanying Consolidated Financial Statements.

Principles of
Consolidation and Basis of Presentation

The accompanying Consolidated Financial
Statements include the accounts of the Company and its
wholly-owned subsidiaries. All material inter-company
transactions and balances have been eliminated.

As a result of the merger with the Fidelity
Subsidiaries and the Chicago Subsidiaries on August 1, 2001
(see Note 1), the Consolidated Financial Statements of the
Company prior to the period ended December 31, 2001 reflect
the financial position, results of operations and cash flows of
the Fidelity and Chicago Subsidiaries prior to the merger, as
the Fidelity Subsidiaries and Chicago Subsidiaries were treated
as the acquirer for accounting purposes. The Companys
financial results for the year ended December 31, 2001
include the operations of the Fidelity Subsidiaries and Chicago
Subsidiaries for the full year of 2001 and Vistas
operations for the period from August 1, 2001, the
acquisition date, through December 31, 2001. The financial
results for the year ended December 31, 2000 include the
results of Fidelity Flood, Fidelity Credit and Tax
(collectively, the Fidelity Companies) for the full
year, and the results of the MI, Chicago Flood and Chicago
Credit from and after March 20, 2000, the date when Chicago
Title was acquired by Fidelity.

As described in Note 3, the Company acquired
Micro General Corporation (MGEN) on July 9,
2002, including a 51.6% majority ownership acquired from its
parent company, Fidelity. The acquisition of Fidelitys
majority interest in MGEN was accounted for in a manner similar
to a pooling-of-interests because the Company and MGEN were
entities under common control of Fidelity. As required by
generally accepted accounting principles in the U.S., the
accompanying Consolidated Financial Statements have been
prepared to give retroactive effect to the merger and
accordingly, all amounts contained herein have been prepared as
if the transaction took place on the first day of the years
presented.

Certain reclassifications have been made in the
2001 and 2000 Consolidated Financial Statements to conform to
the classifications used in 2002. These include those
adjustments and reclassification necessary to reflect the merger
of MGEN in a manner similar to a pooling-of-interests.

Management
Estimates

The preparation of these Consolidated Financial
Statements in conformity with accounting principles generally
accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the Consolidated Financial
Statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.

Cash and Cash
Equivalents

The carrying value of cash and cash equivalents
at December 31, 2002 and 2001 approximates their fair value
due to the short-term nature of these items. Cash equivalents
consist of instruments with an original maturity of 90 days
or less.

42



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##### Table of Contents



FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Investments

Short-term investments, consisting primarily of
money market instruments with an original maturity of one year
or less, are carried at cost, which approximate their fair value.

Accounts
Receivable

The carrying amounts reported in the balance
sheets for accounts receivable approximate their fair value.
Accounts receivable is reported net of allowance for doubtful
accounts representing managements estimate of those
balances that are uncollectible as of the balance sheet date.
The allowance for doubtful accounts was $5.9 million and
$3.4 million at December 31, 2002 and 2001,
respectively.



| |                                     
| | ------------------------------------
| | Property, Equipment and
    Software

Property and equipment are recorded at cost, less
accumulated depreciation and amortization. Depreciation and
amortization is computed primarily using the straight-line
method based on the estimated useful lives of the related
assets, which range from three to 25 years. Leasehold
improvements are amortized on a straight-line basis over the
lesser of the term of the applicable lease or the estimated
useful lives of such assets.



| |                                                      
| | -----------------------------------------------------
| | Software Development Costs and Purchased
    Software

Costs incurred in creating computer software to
be licensed or sold are charged to expense when incurred until
technological feasibility has been established. Technological
feasibility is established upon completion of a detail program
design or, in its absence, completion of a working model. Costs
incurred in developing software intended for internal use are
capitalized after the initial planning phase is completed.
Thereafter, certain software production costs are capitalized
and subsequently reported at the lower of amortized cost or net
realizable value. Software development costs are amortized based
on current and future revenue for each product with an annual
minimum equal to the straight-line amortization over the
remaining estimated economic life of the product. Estimated
economic life is generally three to ten years.

Software obtained through business acquisition to
be marketed and sold is recorded at fair value and amortized at
a rate that approximates its estimated future cash flow, which
is typically three to ten years.

Accumulated amortization for software development
costs and purchased software was $15.0 million and
$12.4 million at December 31, 2002 and 2001,
respectively. The net book value of software development costs
and purchased software were $40.6 million and
$13.6 million at December 31, 2002 and 2001,
respectively. The related amortization expense was
$2.6 million, $0.8 million and $0.8 million for
2002, 2001 and 2000, respectively.

The Company regularly assesses the recoverability
of the cost of its capitalized software development costs and
software obtained through acquisition based on an analysis of
the undiscounted cash flows generated by the underlying assets.



| |                                         
| | ----------------------------------------
| | Goodwill and Other Intangible
    Assets

Goodwill represents the excess of purchase price
over the fair value of assets acquired and the liabilities
assumed relating to acquisitions. Prior to 2002, goodwill was
amortized on a straight-line basis over five to 25 years.
In January 2002, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 142,
Goodwill and Other Intangible Assets and as a
result, has ceased to amortize goodwill. Instead, the Company
was required to perform a transitional impairment review of its
goodwill as of January 1, 2002 and an annual impairment
review thereafter. The Company has evaluated the impact of the
adoption of SFAS No. 142 and determined that no impairment
charge was required upon adoption of this standard. Its
impairment test was performed through comparison of the fair
value of the reporting units with the carrying value of their
assets. The Company will perform an impairment review on an
annual basis or when events or circumstances indicate potential
impairment. An annual goodwill impairment review was performed
by the

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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Company on its reporting units as of September
30, 2002 and it was determined that each reporting unit had a
fair value in excess of its carrying value. Accordingly, no
goodwill impairment has been recorded.

As described in Note 8, other intangible assets
primarily include contract values, service contracts with
Fidelity, trademarks, customer relationships and certain other
assets, and are amortized over the expected periods of benefit
of the assets. Multiple Listing System (MLS)
contracts are amortized over a ten to 25 year life on a
basis consistent with the expected renewal rate of the
underlying contracts. One trademark and a joint venture
agreement totaling $5.0 million possess characteristics
associated with an indefinite life and accordingly, are not
being amortized. The other intangible assets are amortized over
a two to 20 year life either on a straight-line basis or at
a rate that approximates its future expected cash flow.
Impairment of intangible assets is monitored on a continuing
basis, and is assessed based on the undiscounted cash flows
generated by the underlying assets.



| |                    
| | -------------------
| | Revenue Recognition

The Company recognizes revenue from the sale of
data or services when evidence of the arrangement exists,
delivery has occurred, the sales price has been determined and
collectibility is deemed probable, generally in the month in
which the report is delivered or in which information is
transmitted to the customer, in accordance with Staff Accounting
Bulletin No. 101, Revenue Recognition
(SAB 101). The Flood and Tax units of the
Company provide various services including life-of-loan
monitoring services. Revenue is recognized based on the
estimated fair value of services being provided upfront and over
the life of the loan. The amount recognized upfront is
approximately 75% for flood and 50% for tax of the total revenue
received. The amounts deferred are recognized ratably over the
estimated average life of the loan portfolio, which is
determined based on the Companys historical experience.

Revenue from the sale of software is recognized
in the month in which the revenue recognition criteria of
Statement of Position No. 97-2, Software Revenue
Recognition (SOP 97-2) are met, generally
the month in which the software is shipped to the customer.

The Company follows SOP 81-1,
Accounting for Performance of Construction-Type and
Certain Production-Type Contracts for software contracts
with significant customization. Revenue is recognized from
software contracts with customization using the percentage of
completion method of accounting whereby revenue is recognized
based on the stage of completion of individual contracts using
estimates of service days to total estimated service days.

System solutions sold to customers may involve a
selection of the following elements: computer hardware (sold or
leased), internally developed software, telecommunications
services, information security, training and customer support.
These system solutions services have been accounted for under
the provisions of SOP 97-2. Revenue recognition commences
at the point at which the Company has delivered to the customer
all elements essential to the functionality of the system
solutions. Accordingly, the Company defers and recognizes
revenue associated with these arrangements ratably over the
terms of the underlying agreements, commencing at contract
cutover. Cutover is generally defined as the point
at which the hardware is installed, software has been delivered,
training is completed, and the service is accessible to and
usable by the customer. Cash received prior to cutover is
deferred and recognized as revenue ratably over the life of the
contract. For certain sales, the Company provides 90 to
360 days initial maintenance and support to the customer.
Costs relating to this initial support period are accrued at the
time of the sale.

Certain other elements of the agreements, such as
ongoing maintenance, involve separately stated monthly fees.
Revenues associated with such other elements are recognized over
the periods during which the services are performed, generally
on a monthly basis.

Hardware may be sold or leased to the
Companys system solutions customers. Such hardware is a
standard, non-customized equipment that can be used for other
information processing applications. Leases of

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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

hardware are generally classified as
sales-type leases in accordance with the provisions
of SOP 97-2 and SFAS No. 13, Accounting for
Leases, and revenue is recognized upon delivery.

Revenues from providing management support and
consulting services are recognized as services are performed.



| |             
| | ------------
| | Income Taxes

The Company recognizes deferred tax assets and
liabilities for temporary differences between the financial
reporting basis and the tax basis of the Companys assets
and liabilities and expected benefits of utilizing net operating
loss and credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The impact
on deferred taxes of changes in tax rates and laws, if any, are
applied to the years during which temporary differences are
expected to be settled and reflected in the financial statements
in the period enacted.



| |                   
| | ------------------
| | Earnings Per Share

The Company presents basic earnings
per share, representing net earnings available to common
shareholders divided by the weighted average number of common
shares outstanding (excluding all common stock equivalents)
during the period, and diluted earnings per share,
representing the dilutive effect of all common stock
equivalents. The Company has granted certain options and
warrants which have been treated as common share equivalents for
the purpose of calculating diluted earnings per share.



| |              
| | -------------
| | Stock Options

The Company accounts for stock-based employee
compensation arrangements in accordance with Accounting
Principles Board Opinion No. 25 (APB
Opinion 25), Accounting for Stock Issued to
Employees, and related Interpretations, and complies with
the disclosure provisions of SFAS No. 123, Accounting
for Stock-Based Compensation. Under APB Opinion 25,
compensation expense is recognized over the vesting period based
on the difference, if any, on the date of grant between the
deemed fair value for accounting purposes of the Companys
stock and the exercise price. All options granted under the
Companys plans had an exercise price equal to the market
value of the underlying common stock at the date of grant;
therefore, no stock-based compensation cost is reflected in net
income for stock options issued to employees. The Company
accounts for stock-issued to non-employees in accordance with
the provision of SFAS No. 123 and EITF 96-18,
Accounting for Equity Instruments That Are Issued to Other
Than Employees for Acquiring, or in Conjunction with Selling,
Goods and Services.

SFAS No. 123, Accounting for Stock
Based Compensation provides an alternative fair value
approach in valuing employee stock options. This approach
requires the use of the Black-Scholes option
valuation model, which was not developed for use in valuing
employee stock options. This valuation model was developed for
the purpose of estimating the fair value of traded options,
which do not have vesting restrictions and are fully
transferable. In addition, the option valuation models require
the input of highly subjective assumptions including the
expected stock price volatility. Because the Companys
stock options have characteristics significantly different from
those of traded options and because changes in the subjective
input assumptions can materially affect the value of an
estimate, in managements opinion, the existing models do
not necessarily provide a reliable single measure of the fair
value of its employee stock options.

Pro forma information regarding net earnings and
earnings per share is required by SFAS No. 123, and has
been determined as if the Company had accounted for its employee
stock options under the fair value method of such statement. The
fair value for these options was estimated at the date of grant
using the

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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Black-Scholes option-pricing model. The
assumptions used in the model and the weighted average fair
value of each option granted for 2002 and 2001 are as follows:

|                                      |  |      |       |      |  |   |       |  
|------------------------------------- |  | ---- | ----- | ---- |  | - | ----- | -
|                                      |  | 2002 |       | 2001
|                                      |  |      |       |     
|Risk free interest rate               |  |      | 2.00  | %    |  |   | 4.33  | %
|Volatility                            |  |      | 71.83 | %    |  |   | 78.46 | %
|Dividend yield                        |  |      |      |      |  |   |      |  
|Weighted average expected life        |  |      | 3.35  |      |  |   | 5.00  |  
|Weighted average fair value of option |  | $    | 9.94  |      |  | $ | 4.88  |  

For purpose of pro forma disclosures, the
estimated fair value of the options is amortized into expense
over the options vesting period. The Companys pro
forma information follows (in thousands, except per share
amount):

|                                                                                                                                               |                       |                         |         |      |  |   |        |      | 
|---------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ----------------------- | ------- | ---- |  | - | ------ | ---- | 
|                                                                                                                                               |                       |                        
|                                                                                                                                               |                       | Year Ended December 31,
|                                                                                                                                               |                       |                        
|                                                                                                                                               |                       | 2002                    |         | 2001
|                                                                                                                                               |                       |                         |         |     
|Net earnings, as reported                                                                                                                      |                       | $                       | 30,731  |      |  | $ | 11,083 |     
|Add: Stock-based compensation expense included in
    reported net earnings, net of related tax effects                                        |                       |                         | 3,627   |      |  |   | 288    |     
|Deduct: Total stock-based employee compensation
    expense determined under fair value methods for all awards, net
    of related tax effects |                       |                         | (12,174 | )    |  |   | (2,235 | )   
|                                                                                                                                               |                       |                         |         |      |  |   |        |     
|Pro forma net earnings                                                                                                                         |                       | $                       | 22,184  |      |  | $ | 9,136  |     
|                                                                                                                                               |                       |                         |         |      |  |   |        |     
|Earnings per share:                                                                                                                            |                       |                         |         |      |  |   |        |     
|                                                                                                                                               | Basic  as reported   |                         | $       | 0.88 |  |   | $      | 0.41 | 
|                                                                                                                                               | Basic  pro forma     |                         | $       | 0.64 |  |   | $      | 0.34 | 
|                                                                                                                                               | Diluted  as reported |                         | $       | 0.84 |  |   | $      | 0.41 | 
|                                                                                                                                               | Diluted  pro forma   |                         | $       | 0.60 |  |   | $      | 0.34 | 

As discussed in Note 3, the Company incurred
$5.9 million ($3.6 million, net of tax) of non-cash
compensation charges in connection with the exchange of vested
and unvested MGEN options for FNIS options.

Concentration
of Credit Risk

Financial instruments that potentially subject
the Company to concentration of credit risk consist primarily of
cash equivalents, short-term investments and trade receivables.

The Company places its cash equivalents and
short-term investments with high credit quality financial
institutions and, by policy, limits the amounts of credit
exposure with any one financial institution.

The Company has certain concentration of credit
risk with respect to trade receivables and revenues. As of
December 31, 2002 and 2001, trade receivables from Fidelity
accounted for 33% and 29%, respectively, of the Companys
total trade receivables. In addition, the revenues from Fidelity
accounted for 31%, 37% and 43% of the Companys total
revenues for 2002, 2001 and 2000, respectively. Besides
Fidelity, concentration of credit risk with respect to trade
receivables and revenues is limited because a large number of
geographically diverse customers make up the Companys
customer base, thus spreading the credit risk. The Company
controls credit risk through credit approvals, credit limits and
monitoring procedures.

Segment
Information

The Company reports segment information in
accordance with SFAS No. 131 Disclosures about
Segments of an Enterprise and Related Information. The
Companys operating segments are presented consistently
with the way that its management organizes and evaluates
financial information for making

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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

operating decisions and assessing performance.
Certain prior year segment information has been reclassified to
conform to the 2002 presentation (see Note 16).

Recent
Accounting Pronouncements

In July 2001, the Financial Accounting Standards
Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 141,
Business Combinations and SFAS No. 142,
Goodwill and Other Intangible Assets. SFAS
No. 141 requires that all business combinations be
accounted for under the purchase method. The statement further
requires separate recognition of intangible assets that meet one
of two criteria. The statement applies to all business
combinations initiated after June 30, 2001.

SFAS No. 142 requires that an intangible
asset that is acquired shall be initially recognized and
measured based on its fair value. The statement also provides
that goodwill should not be amortized, but shall be tested for
impairment annually, or more frequently if circumstances
indicate potential impairment, through a comparison of fair
value to its carrying amount. SFAS No. 142 is generally
effective for fiscal periods beginning after December 15,
2001 and the amortization provisions of SFAS No. 142 are
effective for acquisitions subsequent to June 30, 2001. The
Company adopted SFAS No. 142 effective January 1, 2002
(See Notes 2 and 7).

In October 2001, the FASB issued SFAS
No. 144, Accounting for the Impairment of Long-Lived
Assets which addresses financial accounting and reporting
for the impairment or disposal of long-lived assets. While SFAS
No. 144 supersedes SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of, it retains many of the fundamental
provisions of that statement. SFAS No. 144 is effective for
fiscal years beginning after December 15, 2001. The
adoption of SFAS No. 144 did not have a material impact on
the Companys financial position, results of operations and
cash flows.

In April 2002, the FASB issued SFAS No. 145,
Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical
Corrections (SFAS 145). SFAS 145
rescinds SFAS 4, which required all gains and losses from
extinguishment of debt to be aggregated and, if material,
classified as an extraordinary item, net of related income tax
effect. Upon adoption of SFAS 145, the Company will be
required to apply the criteria in APB Opinion No. 30,
Reporting the Results of Operations  Reporting the
Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and
Transactions (Opinion No. 30), in determining
the classification of gains and losses resulting from the
extinguishment of debt. Additionally, SFAS 145 amends
SFAS 13 to require that certain lease modifications that
have economic effects similar to sale-leaseback transactions to
be accounted for in the same manner as sale-leaseback
transactions. SFAS 145 will be effective for fiscal years
beginning after May 15, 2002 with early adoption of the
provisions related to the rescission of SFAS 4 encouraged.
Upon adoption, companies must reclassify prior period items that
do not meet the extraordinary item classification criteria in
Opinion No. 30. The adoption of SFAS 145 as of
December 31, 2002 did not have a material impact on the
Companys consolidated financial statements.

In June 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit and Disposal
Activities. SFAS 146 nullifies Emerging Issues Task
Force (EITF) issue 94-3, Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring).
Under EITF issue 94-3, a liability for an exit cost is
recognized at the date of an entitys commitment to an exit
plan. Under SFAS 146, the liabilities associated with an
exit or disposal activity will be measured at fair value and
recognized when the liability is incurred and meets the
definition of a liability in the FASBs conceptual
framework. This statement is effective for exit or disposal
activities initiated after December 31, 2002. The Company
believes that the adoption of SFAS 146 will not have a
material impact on its consolidated financial statements.

In November 2002, the FASB issued Interpretation
No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness to Others (FIN 45), an

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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

interpretation of FASB Statements Nos. 5, 57
and 107 and a rescission of FASB Interpretation No. 34.
FIN 45 elaborates on the disclosures to be made by a
guarantor in its interim and annual financial statements about
its obligations under guarantees issued. FIN 45 also
clarifies that a guarantor is required to recognize, at
inception of a guarantee, a liability for the fair value of the
obligation undertaken. The initial recognition and measurement
provisions of FIN 45 are applicable to guarantees issued or
modified after December 31, 2002 and are not expected to
have an impact on the Companys financial position, results
of operations and cash flows.

In November 2002, the FASBs EITF issued
EITF 00-21 Revenue Arrangements with Multiple
Deliverables. EITF 00-21 addresses certain aspects of the
accounting by a vendor for arrangements under which it will
perform multiple revenue-generating activities. Specifically,
EITF 00-21 addresses how to determine whether an arrangement
involving multiple deliverables contains more than one unit of
accounting. In applying EITF 00-21, separate contracts with the
same entity or related parties that are entered into at or near
the same time are presumed to have been negotiated as a package
and should, therefore, be evaluated as a single arrangement in
considering whether there are one or more units of accounting.
That presumption may be overcome if there is sufficient evidence
to the contrary. EITF 00-21 also addresses how arrangement
consideration should be measured and allocated to the separate
units of accounting in the arrangement. The guidance in this
Issue is effective for revenue arrangements entered into in
fiscal periods beginning after June 15, 2003.
Alternatively, companies may elect to report the change in
accounting as a cumulative-effect adjustment. Early application
of this consensus is permitted. The Company has not yet adopted
EITF 00-21 and is currently analyzing its impact on the
Companys financial position, results of operations and
cash flows.

In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure 
an amendment of SFAS No. 123. This statement provides
alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee
compensation. This statement also amends the disclosure
requirements of SFAS No. 123 and APB Opinion No. 28,
Interim Financial Reporting, to require prominent
disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee
compensation and the effect of the method used on reported
results. Certain of the disclosure modifications are required
for fiscal years ending after December 15, 2002 and are
included in the Notes to these Consolidated Financial
Statements. The Company will implement SFAS No. 148
effective January 1, 2003 regarding disclosure requirements
for condensed financial statements for interim periods. The
Companys management has not yet determined whether they
will voluntarily change to the fair value based method of
accounting for stock-based employee compensation.

3.     Acquisitions/Dispositions

The following mergers and acquisitions occurred
during 2002 and 2001 and have been accounted for in the
accompanying Consolidated Financial Statements under the
purchase method of accounting for business combinations (except
for the acquisition of the majority interest of Micro General
Corporation as described below). The purchase price for the
business combinations were allocated based on the estimated fair
value of acquired assets and liabilities. The Company has yet to
obtain additional information related to the valuation of
certain assets and liabilities. However, the Company does not
believe the difference between the recorded book value and the
fair value ultimately assigned will be material.

Micro General Corporation Acquisition.On April 29, 2002, the Company
announced a tender offer for all of the outstanding shares of
Micro General Corporation (MGEN), a majority-owned
subsidiary of Fidelity whereby each share of MGEN common stock
would be exchanged for shares of the Companys common
stock. The Company closed this tender offer on July 9, 2002
and received over 90% of the outstanding MGEN shares in response
to this offer. Also on July 9, 2002, the Company acquired
the remaining outstanding stock of MGEN through a short-form
merger. As a result of the tender offer and subsequent
short-form merger MGEN became a wholly-owned subsidiary of the
Company. The tender offer

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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

and merger were based on a fixed exchange ratio
of .696 shares of the Companys common stock for each share
of MGEN common stock. As a result, the Company issued 12,895,721
new shares of its common stock to acquire MGEN.

MGEN is a provider of production and workflow
software systems to the title and real estate industries. The
acquisition is expected to integrate MGENs production and
workflow software solutions into the Companys existing
solutions business segment in order to better position the
Company to execute its strategy. The Company also expects to
reduce its information technology costs through economies of
scale.

Prior to the merger, Fidelity held a controlling
interest in both MGEN and the Company. The acquisition of the
non-controlling equity interest of MGEN (48.4%) was accounted
for under the purchase method of accounting in accordance with
SFAS No. 141, Business Combinations. Under the
purchase method of accounting, assets acquired and liabilities
assumed are recorded at their fair values. Goodwill is created
to the extent that the merger consideration including certain
acquisition and closing costs exceeds the fair value of the net
assets acquired. The total number of shares issued in acquiring
the minority interest in MGEN was 6,243,223, valued at
$149.3 million, based upon the Companys average
closing price of $23.91 per share on the NASDAQ National Market
for the five day period beginning two days prior through two
days subsequent to April 29, 2002, the last trading day
before the public announcement of this offer. The total purchase
price of $153.2 million includes the fair value of warrants
of $3.3 million and transaction costs.

The following table summarizes the estimated fair
value of the assets acquired and liabilities assumed at the date
of acquisition (in thousands):

|                                            |                           |   |         |         |  
|------------------------------------------- | ------------------------- | - | ------- | ------- | -
|Current assets                              |                           | $ | 22,512  |        
|Property, equipment and software            |                           |   | 9,234   |        
|Intangible assets                           |                           |   | 11,306  |        
|Goodwill                                    |                           |   | 127,992 |        
|Other non-current assets                    |                           |   | 733     |        
|                                            |                           |   |         |        
|                                            | Total assets acquired     |   |         | 171,777 |  
|                                            |                           |   |         |        
|Current liabilities                         |                           |   | (8,545  | )      
|Notes payable and capital lease obligations |                           |   | (4,038  | )      
|Other long-term liabilities                 |                           |   | (5,946  | )      
|                                            |                           |   |         |        
|                                            | Total liabilities assumed |   |         | (18,529 | )
|                                            |                           |   |         |        
|                                            | Total purchase price      |   | $       | 153,248 |  
|                                            |                           |   |         |        

Of the $11.3 million of acquired intangible
assets, $9.5 million was assigned to contracts with
Fidelity in connection with maintaining, servicing and
developing Fidelitys software solutions. The related
useful life of the assets range from 30 months to
20 years (see Note 8). The remaining $1.8 million
was assigned to a maintenance and service contract for SoftPro,
a software application used in the real estate settlement
process, with an estimated useful life of 17 years.

The goodwill of $128.0 million is not
expected to be deductible for tax purposes.

The acquisition of Fidelitys interest in
MGEN (51.6%) is not considered a business combination because
the Company and MGEN were entities under common control of
Fidelity. As required by generally accepted accounting
principles, the Company, therefore, recorded this transaction in
a manner similar to the pooling-of-interests method of
accounting. Accordingly, all amounts contained herein have been
prepared as if the transaction took place on the first day of
the periods presented. Below is a reconciliation of income
statement data previously reported by the Company to the
combined amounts currently presented in the

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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

accompanying Consolidated Financial Statements
for the six months ended June 30, 2002 and the years ended
December 31, 2001 and 2000 (in thousands):

|                 |  |                                            |         |               |  |             |        |          |  |  |        |   |  |  |         | 
|---------------- |  | ------------------------------------------ | ------- | ------------- |  | ----------- | ------ | -------- |  |  | ------ | - |  |  | ------- | 
|                 |  |                                           
|                 |  | Six Months Ended June 30, 2002 (unaudited)
|                 |  |                                           
|                 |  | As Previously                              |         |              
|                 |  | Reported                                   |         | Micro General |  | Adjustments |        | Combined
|                 |  |                                            |         |               |  |             |        |         
|Total revenue    |  |                                            | 125,772 |               |  |             | 66,157 |          |  |  | (5,027 | ) |  |  | 186,902 | 
|Operating income |  |                                            | 17,286  |               |  |             | 7,353  |          |  |  | 441    |   |  |  | 25,080  | 
|Net earnings     |  |                                            | 10,227  |               |  |             | 4,351  |          |  |  | (1,500 | ) |  |  | 13,078  | 

|                 |  |                              |         |               |  |             |         |          |  |  |        |   |  |  |         | 
|---------------- |  | ---------------------------- | ------- | ------------- |  | ----------- | ------- | -------- |  |  | ------ | - |  |  | ------- | 
|                 |  |                             
|                 |  | Year Ended December 31, 2001
|                 |  |                             
|                 |  | As Previously                |         |              
|                 |  | Reported                     |         | Micro General |  | Adjustments |         | Combined
|                 |  |                              |         |               |  |             |         |         
|Total revenue    |  |                              | 182,440 |               |  |             | 117,951 |          |  |  | (5,769 | ) |  |  | 294,622 | 
|Operating income |  |                              | 14,109  |               |  |             | 21,095  |          |  |  |       |   |  |  | 35,204  | 
|Net earnings     |  |                              | 6,623   |               |  |             | 6,738   |          |  |  | (2,278 | ) |  |  | 11,083  | 

|                 |  |                              |        |               |  |             |        |          |  |  |      |   |  |  |         | 
|---------------- |  | ---------------------------- | ------ | ------------- |  | ----------- | ------ | -------- |  |  | ---- | - |  |  | ------- | 
|                 |  |                             
|                 |  | Year Ended December 31, 2000
|                 |  |                             
|                 |  | As Previously                |        |              
|                 |  | Reported                     |        | Micro General |  | Adjustments |        | Combined
|                 |  |                              |        |               |  |             |        |         
|Total revenue    |  |                              | 88,641 |               |  |             | 72,136 |          |  |  | (6   | ) |  |  | 160,771 | 
|Operating income |  |                              | 3,000  |               |  |             | 11,302 |          |  |  |     |   |  |  | 14,302  | 
|Net earnings     |  |                              | 647    |               |  |             | 1,993  |          |  |  | (329 | ) |  |  | 2,311   | 

In connection with this transaction, the Company
issued 1,008,896 options with an average exercise price of
$14.67 and 449,790 warrants with an average exercise price of
$6.68 in exchange for the outstanding MGEN options and warrants.
In accordance with Emerging Issues Task Force (EITF)
00-23, Issues Related to the Accounting for Stock
Compensation under APB Opinion No. 25 and FASB
Interpretation No. 44, the exchange of vested and
unvested stock options resulted in the Company recording
non-cash stock compensation charges of $5.9 million for the
year ended December 31, 2002. In connection with the
unvested options the Company also recorded an unearned
compensation cost, which is expensed over the vesting period of
the options. The balance remaining at December 31, 2002 was
$1.6 million. In 2002, the Company also expensed
transaction costs for legal, accounting, appraisal and financial
advisory services of $1.1 million related to this
transaction.

Risco, Inc.On
August 2, 2001, the Company acquired 100% of the
outstanding common shares of Risco, Inc. (Risco)
from Fidelity. The results of Riscos operations have been
included in the Consolidated Financial Statements since that
date. Risco is a multiple listing service vendor. In connection
with this acquisition, the Company issued 1,614,286 of its
common stock at $7.34 per share. The total purchase price was
$11.9 million and the Company recorded goodwill of
$3.4 million.

Reez.com.On
August 2, 2001, the Company purchased the assets and
liabilities of Reez.com (Reez) from Fidelity. The
results of Reezs operations have been included in the
Consolidated Financial Statements since that date. Reezs
software provides the realtor, consumer and settlement service
provider with an on-line platform to schedule, track and close
real estate transactions. As a result of this acquisition, the
Company issued 136,971 of its common stock at $7.34 per share.
The total purchase price was $1.0 million and the goodwill
in connection with the acquisition was immaterial.

SoftPro Corporation.On August 20, 2001, MGEN acquired
SoftPro Corporation (SoftPro), a provider of real
estate closing and title insurance automation software for the
independent title agent marketplace. The purchase price was
$1.75 million in cash and 336,034 shares of
MGENs common stock valued at $3.9 million.
SoftPros results of operations were included in the
Companys results of operations

50



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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

since the acquisition date as a result of the
pooling-of-interests accounting treatment of the MGEN
transaction.

Tax Services.On
October 10, 2001, the Company purchased the residual 20%
minority interest in Tax Services for $5.4 million in cash
that resulted in goodwill of $4.5 million.

RealEC Technologies.In November 2001, MGEN issued
153,893 shares of MGENs common stock, at $10.24 per
share, to two shareholders of RealEC Technologies
(RealEC) in exchange for 100% of the common stock of
RealEC. RealEC provides a standardized electronic platform which
lenders and realtors can utilize to order and receive products
and services from multiple vendors such as credit, flood,
appraisal, title and closing. As RealEC has outstanding
convertible preferred stock held by outside parties in an amount
of $7.1 million, MGEN owns 56% of RealEC on an as-if
converted basis assuming conversion of all convertible preferred
stock. RealECs results were consolidated with the
Companys results effective since the acquisition date as a
result of the pooling-of-interests accounting treatment of the
MGEN transaction.

XMLS Web Division of HomeSeekers.com.On December 3, 2001, the Company
purchased all the assets of HomeSeekers.coms XMLS Web
division in exchange for $3.2 million in cash. As a result
of this acquisition, the Company recorded goodwill of
$1.0 million.

ISDI.Net.On
January 2, 2002, the Company acquired ISDI.NET, LLC
(ISDI), a technology, systems integration and
consulting firm, in exchange for 275,000 shares of the
Companys common stock and $1.1 million in cash. Prior
to the acquisition, the Company advanced to ISDI
$1.0 million, which was included in Other Assets as of
December 31, 2001. As a result of this acquisition, the
Company recorded goodwill of $1.3 million. Under the
agreement, the owner of ISDI had the right to receive additional
consideration from the Company based on ISDIs earnings. In
2002, the Company issued approximately 60,000 shares of
common stock in exchange for such right.

Hansen Quality Loan Services, LLC.On May 28, 2002 the Company
acquired a 55% interest in Hansen Quality Loan Services, LLC
(Hansen), a provider of collateral risk assessment
and valuation services for real estate mortgage financing, for
$4.1 million in cash and a convertible note. The note is in
the amount of $4.1 million, bears interest at 4.5%, matures
in May 2005, and was convertible into shares of the
Companys stock at $28.00 per share. In December 2002 the
conversion feature of the note was eliminated by mutual consent
of the parties to the note. The total purchase price was
$8.3 million and the Company recorded goodwill of
$5.4 million. The Company has consolidated Hansens
results of operations since the acquisition date.

Comstock Net Services, Inc.On July 1, 2002 the Company
acquired Comstock Net Services, Inc. (Comstock), a
technology provider to real estate professionals, in exchange
for $1.8 million in cash and 213,323 shares of the
Companys stock. As a result of this acquisition the
Company recorded goodwill of $3.8 million. The Company has
included Comstocks results of operations since
July 1, 2002.

Eastern Financial Systems, Inc.On October 29, 2002 the Company
acquired all of the common stock of Eastern Financial Systems,
Inc. (Eastern), an industry leading mortgage loan
origination software provider in exchange for cash and stock.
Easterns results of operations have been included in the
Companys Consolidated Financial Statements since the
acquisition date. The acquisition is expected to move the
Company a step closer to offering more complete data exchange
and technical integration between the sales, mortgage lending
and settlement service process of a real estate transaction.

The total purchase price consisted of
approximately $36.7 million in cash (including transaction
costs) and 880,726 shares of the Companys common
stock with a value of approximately $16.8 million, based
upon the average closing price of $19.08 per share over a
five-day period using two days before and two days after the
measurement date.

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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

The following table summarizes the estimated fair
values of assets acquired and liabilities assumed at the date of
acquisition (in thousands):

|                                 |                           |   |        |        |  
|-------------------------------- | ------------------------- | - | ------ | ------ | -
|Current assets                   |                           | $ | 4,946  |       
|Property, equipment and software |                           |   | 8,767  |       
|Intangible asset                 |                           |   | 7,220  |       
|Goodwill                         |                           |   | 40,184 |       
|                                 |                           |   |        |       
|                                 | Total assets acquired     |   |        | 61,117 |  
|                                 |                           |   |        |       
|Current liabilities              |                           |   | (5,761 | )     
|Long-term debt                   |                           |   | (1,093 | )     
|Other long-term liabilities      |                           |   | (760   | )     
|                                 |                           |   |        |       
|                                 | Total liabilities assumed |   |        | (7,614 | )
|                                 |                           |   |        |       
|                                 | Total purchase price      |   | $      | 53,503 |  
|                                 |                           |   |        |       

The $7.2 million intangible asset was
assigned to the customer relationship acquired and has a useful
life of seven years. The goodwill of $40.2 million is
expected to be deductible for tax purposes.

HomeServices of America.In December 2002, the Company
completed a strategic, multi-year outsourcing and software
application services agreement with HomeServices of America
(HomeServices), a residential real estate company
and a Berkshire Hathaway affiliate. It acquired the TRIO®
software and certain other assets from HomeServices for a
purchase price of $2.0 million in cash, which is payable
50% upon closing and 50% upon attainment of certain requirements
under the agreement. The Company recorded goodwill of
approximately $0.4 million in connection with this
acquisition.

Environmental Risk Management Solutions.On March 25, 2002, the Company
sold its Environmental Risk Management Solutions business for
$15.5 million in cash, resulting in a gain of
$0.3 million. Proceeds from the sale were used to repay the
$12.6 million balance then outstanding under the
Companys revolving credit agreement with Fidelity. The
remaining proceeds of $2.9 million were added to general
working capital.

The following selected unaudited pro forma
results of operations for the year ended December 31, 2002
have been prepared to illustrate the effects of (i) the
acquisition of 55% ownership interest in Hansen on May 28,
2002, (ii) the acquisition of Comstock on July 1,
2002, and (iii) the acquisition of Eastern on
October 29, 2002, as if these transactions had been
completed January 1, 2002; and the pro forma results of
operations for the year ended December 31, 2001 have been
prepared to illustrate the effects of the Vista acquisition as
if this transaction had been completed January 1, 2001 (in
thousands, except per share amounts):

|                                                            |         |                         |         |        |  |   |         |        | 
|----------------------------------------------------------- | ------- | ----------------------- | ------- | ------ |  | - | ------- | ------ | 
|                                                            |         |                        
|                                                            |         | Year Ended December 31,
|                                                            |         |                        
|                                                            |         | 2002                    |         | 2001  
|                                                            |         |                         |         |       
|Total revenue                                               |         | $                       | 438,916 |        |  | $ | 336,231 |       
|Operating income                                            |         |                         | 60,929  |        |  |   | 27,942  |       
|Earnings from continuing operations                         |         |                         | 33,737  |        |  |   | 13,018  |       
|Net earnings                                                |         |                         | 33,737  |        |  |   | 5,399   |       
|Earnings from continuing operations per
    share  basic   |         | $                       | 0.95    |        |  | $ | 0.49    |       
|Earnings from continuing operations per
    share  diluted |         | $                       | 0.90    |        |  | $ | 0.49    |       
|Net earnings per share  basic                              |         | $                       | 0.95    |        |  | $ | 0.20    |       
|Net earnings per share  diluted                            |         | $                       | 0.90    |        |  | $ | 0.20    |       
|Shares used in calculating net earnings per share:          |         |                         |         |        |  |   |         |       
|                                                            | Basic   |                         |         | 35,668 |  |   |         | 26,748 | 
|                                                            | Diluted |                         |         | 37,610 |  |   |         | 26,829 | 

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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

4.     Discontinued
Operations

In December 2001, MGEN adopted a plan to
discontinue the operations of its wholly-owned subsidiary,
LDExchange, which was engaged in the wholesale international
long distance business. MGEN recorded a charge of
$5.3 million ($3.4 million, net of taxes) for the
disposal of LDExchange. The charge consisted primarily of the
write-off of discontinued assets, goodwill and the accrual for
costs associated with facility shutdown and severance.

The accompanying Consolidated Financial
Statements reflect the results of operations of LDExchange
reported as discontinued operations for all periods presented.
Net assets (liabilities) of discontinued operations and the
loss from discontinued operations consist of the following (in
thousands):

Balance sheet data:

|                                                           |  |              |        |      |  |   |        |  
|---------------------------------------------------------- |  | ------------ | ------ | ---- |  | - | ------ | -
|                                                           |  |             
|                                                           |  | December 31,
|                                                           |  |             
|                                                           |  | 2002         |        | 2001
|                                                           |  |              |        |     
|Current assets                                             |  | $            | 28     |      |  | $ | 1,064  |  
|Current liabilities                                        |  |              | (1,199 | )    |  |   | (3,035 | )
|                                                           |  |              |        |      |  |   |        |  
|Net current liabilities of discontinued operations         |  | $            | (1,171 | )    |  | $ | (1,971 | )
|                                                           |  |              |        |      |  |   |        |  
|Non-current assets                                         |  | $            |       |      |  | $ |       |  
|Non-current liabilities                                    |  |              | (90    | )    |  |   | (839   | )
|                                                           |  |              |        |      |  |   |        |  
|Net non-current liabilities of discontinued
    operations |  | $            | (90    | )    |  | $ | (839   | )
|                                                           |  |              |        |      |  |   |        |  

Income statement data:

|                                       |  |                         |   |      |  |      |        |   |  |   |        |  
|-------------------------------------- |  | ----------------------- | - | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                       |  |                        
|                                       |  | Year Ended December 31,
|                                       |  |                        
|                                       |  | 2002                    |   | 2001 |  | 2000
|                                       |  |                         |   |      |  |     
|Revenue                                |  | $                       |  |      |  | $    | 19,749 |   |  | $ | 41,105 |  
|Loss before income tax benefit         |  |                         |  |      |  |      | (6,221 | ) |  |   | (7,804 | )
|Income tax benefit                     |  |                         |  |      |  |      | 2,028  |   |  |   |       |  
|Loss from discontinued operations, net |  |                         |  |      |  |      | (4,193 | ) |  |   | (7,804 | )

The net liabilities of discontinued operations
are included in other current and non-current liabilities in the
accompanying Consolidated Balance Sheets.

5.     Comprehensive
Earnings

Comprehensive earnings for the years ended
December 31, 2002, 2001 and 2000 are as follows (in
thousands):

|                       |                                         |                         |        |      |   |      |        |     |   |   |       |   | 
|---------------------- | --------------------------------------- | ----------------------- | ------ | ---- | - | ---- | ------ | --- | - | - | ----- | - | 
|                       |                                         |                        
|                       |                                         | Year Ended December 31,
|                       |                                         |                        
|                       |                                         | 2002                    |        | 2001 |   | 2000
|                       |                                         |                         |        |      |   |     
|Net earnings           |                                         | $                       | 30,731 |      |   | $    | 11,083 |     |   | $ | 2,311 |  
|                       | Foreign currency translation adjustment |                         |        | (331 | ) |      |        | (18 | ) |   |       |  | 
|                       |                                         |                         |        |      |   |      |        |     |   |   |       |  
|Comprehensive earnings |                                         | $                       | 30,400 |      |   | $    | 11,065 |     |   | $ | 2,311 |  
|                       |                                         |                         |        |      |   |      |        |     |   |   |       |  

53



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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

6.     Property,
Equipment and Software

Property, equipment and software consist of the
following (in thousands):

|                                          |  |              |         |      |  |   |         |  
|----------------------------------------- |  | ------------ | ------- | ---- |  | - | ------- | -
|                                          |  |             
|                                          |  | December 31,
|                                          |  |             
|                                          |  | 2002         |         | 2001
|                                          |  |              |         |     
|Land                                      |  | $            | 532     |      |  | $ | 602     |  
|Building                                  |  |              | 3,619   |      |  |   | 2,074   |  
|Leasehold improvements                    |  |              | 4,264   |      |  |   | 3,136   |  
|Furniture and fixtures                    |  |              | 8,297   |      |  |   | 7,144   |  
|Computer hardware                         |  |              | 28,082  |      |  |   | 30,625  |  
|Computer software                         |  |              | 55,603  |      |  |   | 26,012  |  
|                                          |  |              |         |      |  |   |         |  
|                                          |  |              | 100,397 |      |  |   | 69,593  |  
|Accumulated depreciation and amortization |  |              | (30,752 | )    |  |   | (13,988 | )
|                                          |  |              |         |      |  |   |         |  
|                                          |  | $            | 69,645  |      |  | $ | 55,605  |  
|                                          |  |              |         |      |  |   |         |  



|   |         
|-- | --------
|7. | Goodwill

As described in Note 2, the Company adopted
SFAS No. 142 effective January 1, 2002. The following
table reconciles the reported net earnings for the years ended
December 31, 2002, 2001 and 2000, respectively, to its
adjusted amounts, excluding previously reported goodwill
amortization expense, which is no longer recorded under the
provision of SFAS No. 142 (in thousands, except per share
amounts):

|                                   |                                               |                         |        |      |  |      |        |      |  |   |       |      | 
|---------------------------------- | --------------------------------------------- | ----------------------- | ------ | ---- |  | ---- | ------ | ---- |  | - | ----- | ---- | 
|                                   |                                               |                        
|                                   |                                               | Year Ended December 31,
|                                   |                                               |                        
|                                   |                                               | 2002                    |        | 2001 |  | 2000
|                                   |                                               |                         |        |      |  |     
|Net earnings                       |                                               | $                       | 30,731 |      |  | $    | 11,083 |      |  | $ | 2,311 |     
|Add back: amortization of goodwill |                                               |                         |       |      |  |      | 4,191  |      |  |   | 4,303 |     
|                                   |                                               |                         |        |      |  |      |        |      |  |   |       |     
|Adjusted net earnings              |                                               | $                       | 30,731 |      |  | $    | 15,274 |      |  | $ | 6,614 |     
|                                   |                                               |                         |        |      |  |      |        |      |  |   |       |     
|Basic earnings per share:          |                                               |                         |        |      |  |      |        |      |  |   |       |     
|                                   | Net earnings per share                        |                         | $      | 0.88 |  |      | $      | 0.41 |  |   | $     | 0.13 | 
|                                   | Amortization of goodwill                      |                         |        |     |  |      |        | 0.16 |  |   |       | 0.24 | 
|                                   |                                               |                         |        |      |  |      |        |      |  |   |       |     
|                                   | Adjusted net earnings per share  basic       |                         | $      | 0.88 |  |      | $      | 0.57 |  |   | $     | 0.37 | 
|                                   |                                               |                         |        |      |  |      |        |      |  |   |       |     
|Diluted earnings per share:        |                                               |                         |        |      |  |      |        |      |  |   |       |     
|                                   | Net earnings per share                        |                         | $      | 0.84 |  |      | $      | 0.41 |  |   | $     | 0.13 | 
|                                   | Amortization of goodwill                      |                         |        |     |  |      |        | 0.16 |  |   |       | 0.24 | 
|                                   |                                               |                         |        |      |  |      |        |      |  |   |       |     
|                                   | Adjusted net earnings per share 
    diluted |                         | $      | 0.84 |  |      | $      | 0.57 |  |   | $     | 0.37 | 
|                                   |                                               |                         |        |      |  |      |        |      |  |   |       |     

The changes in the carrying amount of goodwill
for the year ended December 31, 2002 are as follows
(in thousands):

|          |  |            |         |          |  |       |         |              |  |   |        |      |  |   |         | 
|--------- |  | ---------- | ------- | -------- |  | ----- | ------- | ------------ |  | - | ------ | ---- |  | - | ------- | 
|          |  | Balance    |         |          |  |       |         | Balance     
|          |  | January 1, |         |          |  |       |         | December 31,
|Segment   |  | 2002       |         | Acquired |  | Other |         | 2002        
|          |  |            |         |          |  |       |         |             
|Data      |  | $          | 37,123  |          |  | $     |        |              |  | $ | (8,175 | )(1) |  | $ | 28,948  | 
|Solutions |  |            | 43,746  |          |  |       | 175,095 |              |  |   |       |      |  |   | 218,841 | 
|Services  |  |            | 21,093  |          |  |       | 5,947   |              |  |   |       |      |  |   | 27,040  | 
|          |  |            |         |          |  |       |         |              |  |   |        |      |  |   |         | 
|Total     |  | $          | 101,962 |          |  | $     | 181,042 |              |  | $ | (8,175 | )    |  | $ | 274,829 | 
|          |  |            |         |          |  |       |         |              |  |   |        |      |  |   |         | 



---



|    |                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------
|(1) | Represents a reduction in goodwill in connection
    with the sale of the Companys Environmental business. See
    Note 3.

54



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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



|   |                                            
|-- | -------------------------------------------
|8. | Intangible and Other Non-current
    Assets

Intangible and other non-current assets consist
of the following (in thousands):

|                                      |  |                       |  |              |        |      |  |   |        |  
|------------------------------------- |  | --------------------- |  | ------------ | ------ | ---- |  | - | ------ | -
|                                      |  |                       |  |             
|                                      |  |                       |  | December 31,
|                                      |  | Amortization          |  |             
|                                      |  | Period                |  | 2002         |        | 2001
|                                      |  |                       |  |              |        |     
|MLS contracts                         |  | 10 - 25 Years         |  | $            | 13,057 |      |  | $ | 13,057 |  
|Contracts with parent(1)              |  | 30 months to 20 years |  |              | 9,462  |      |  |   |       |  
|Trademark and joint venture agreement |  | Indefinite            |  |              | 5,206  |      |  |   | 3,400  |  
|Customer relationships                |  | 7 - 20 years          |  |              | 11,379 |      |  |   | 932    |  
|Other intangibles                     |  | Various               |  |              | 1,441  |      |  |   |       |  
|                                      |  |                       |  |              |        |      |  |   |        |  
|                                      |  |                       |  |              | 40,545 |      |  |   | 17,389 |  
|Accumulated amortization              |  |                       |  |              | (5,447 | )    |  |   | (1,429 | )
|                                      |  |                       |  |              |        |      |  |   |        |  
|Intangible assets, net                |  |                       |  |              | 35,098 |      |  |   | 15,960 |  
|Other non-current assets              |  |                       |  |              | 6,721  |      |  |   | 1,805  |  
|                                      |  |                       |  |              |        |      |  |   |        |  
|                                      |  |                       |  | $            | 41,819 |      |  | $ | 17,765 |  
|                                      |  |                       |  |              |        |      |  |   |        |  



| | 
| | 
| | 



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | MGEN, a wholly-owned subsidiary of the Company
    provides supporting services for SIMON and TEAM, real estate
    settlement software solutions used by Fidelity and its
    affiliates. In addition, the Company has been developing for
    Fidelity a new enterprise software solution, Net Global
    Solutions (NGS), which will eventually replace SIMON
    and TEAM. In connection with the Companys acquisition of
    MGEN on July 9, 2002, the maintenance and services contract
    with Fidelity associated with supporting SIMON, TEAM, and NGS,
    as well as the NGS deployment contract were valued at
    approximately $19.6 million, based on an independent
    valuation study. As the acquisition of the minority interest in
    MGEN was accounted for under the purchase accounting method, the
    Company recorded an intangible asset of $9.5 million,
    representing the minority interest (48.8%) portion of the fair
    value of the contracts. The estimated useful lives of SIMON and
    TEAM maintenance contract, NGS deployment contract and NGS
    maintenance contract are 30 months, 33 months and
    20 years, respectively.

Amortization expense for intangible assets for
the next five years is estimated to be as follows
(in millions):

|                        |  |        |     | 
|----------------------- |  | ------ | --- | 
|Year Ended December 31, |  | Amount
|                        |  |       
|2003                    |  | $      | 6.0 | 
|2004                    |  |        | 4.3 | 
|2005                    |  |        | 2.5 | 
|2006                    |  |        | 2.0 | 
|2007                    |  |        | 1.7 | 

55



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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



|   |                                             
|-- | --------------------------------------------
|9. | Accounts Payable and Accrued
    Liabilities

Accounts payable and accrued liabilities consist
of the following (in thousands):

|                                                  |  |              |        |      |  |   |        | 
|------------------------------------------------- |  | ------------ | ------ | ---- |  | - | ------ | 
|                                                  |  |             
|                                                  |  | December 31,
|                                                  |  |             
|                                                  |  | 2002         |        | 2001
|                                                  |  |              |        |     
|Trade accounts payable                            |  | $            | 19,780 |      |  | $ | 9,731  | 
|Accrued compensation and benefits                 |  |              | 12,183 |      |  |   | 11,275 | 
|Accrued rent                                      |  |              | 2,403  |      |  |   | 935    | 
|Accrued professional fees                         |  |              | 1,116  |      |  |   | 552    | 
|Acquisition purchase price payable                |  |              | 2,473  |      |  |   |       | 
|Net current liabilities of discontinued operation |  |              | 1,171  |      |  |   | 1,971  | 
|Other                                             |  |              | 3,960  |      |  |   | 4,959  | 
|                                                  |  |              |        |      |  |   |        | 
|                                                  |  | $            | 43,086 |      |  | $ | 29,423 | 
|                                                  |  |              |        |      |  |   |        | 



|    |                             
|--- | ----------------------------
|10. | Commitment and Contingencies

The Company leases equipment under agreements
that meet the criteria for capital lease classification. The
Company also leases its operating facilities under
non-cancelable operating leases. The facility leases require the
payment of taxes, maintenance, utilities and insurance.

Future annual minimum lease payments are as
follows:

|                                             |  |         |        |           |  |   |        | 
|-------------------------------------------- |  | ------- | ------ | --------- |  | - | ------ | 
|                                             |  | Capital |        | Operating
|                                             |  | Leases  |        | Leases   
|                                             |  |         |        |          
|2003                                         |  | $       | 2,618  |           |  | $ | 15,677 | 
|2004                                         |  |         | 2,982  |           |  |   | 14,993 | 
|2005                                         |  |         | 2,456  |           |  |   | 5,973  | 
|2006                                         |  |         | 1,265  |           |  |   | 4,308  | 
|2007                                         |  |         | 354    |           |  |   | 3,420  | 
|Thereafter                                   |  |         |       |           |  |   | 2,664  | 
|                                             |  |         |        |           |  |   |        | 
|Total future minimum lease payments          |  | $       | 9,675  |           |  | $ | 47,035 | 
|                                             |  |         |        |           |  |   |        | 
|Portion relating to interest                 |  |         | (2,452 | )         |  |   |        | 
|                                             |  |         |        |           |  |   |        | 
|Present value of net minimum lease payments  |  |         | 7,223  |           |  |   |        | 
|Less current portion                         |  |         | (3,119 | )         |  |   |        | 
|                                             |  |         |        |           |  |   |        | 
|Capital lease obligations, long term portion |  | $       | 4,104  |           |  |   |        | 
|                                             |  |         |        |           |  |   |        | 

Rent expense incurred under operating leases
during the years ended December 31, 2002, 2001 and 2000 was
$9.4 million, $6.2 million and $3.2 million,
respectively.

During 2002, the Company entered into a purchase
commitment for telecommunication services totaling
$20.0 million, extending through 2006, in connection with
services to be provided to Fidelity. The Company also entered
into an agreement to purchase a minimum of $7.0 million of
computer equipment prior to December 31, 2003.

In October 2001, the Company entered into a
strategic alliance agreement with Lexis-Nexis to acquire a 50%
ownership interest in their national real estate database. The
terms of the agreement require the Company to make annual
payments through October 2005 to complete the transaction. The
estimated payments to be made in the next three years are
$0.9 million, $1.2 million and $1.5 million,
respectively. These payments may be accelerated at the
Companys option.

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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Under the $75.0 million secured bank credit
facility as described in Note 11, the Company is required to pay
an annual commitment fee based on the usage of the line of
credit.

In the ordinary course of business, the Company
is involved in various pending and threatened litigation matters
related to its operations. Management believes that no actions,
other than those listed below, depart from customary litigation
incidental to the business of the Company and that the
resolution of all such litigation will not have a material
adverse effect on the Companys liquidity, financial
condition and results of operations.

A class action lawsuit was filed against the
Company in Los Angeles County Superior Court on January 3,
2000 alleging violations of state law and the
U.S. Telephone Consumer Protection Act (the TCPA) for
unsolicited advertising by facsimile. ACS Systems, Inc
(which merged with and into Micro General Corporation, effective
January 1, 2001) contracted with Datamart to advertise its
services by fax. Plaintiff alleges the facsimiles did not
contain the proper notice to the recipients to notify the sender
to discontinue the advertising as required by the TCPA.
Plaintiff alleges that the damages to the class are
$7.0 million if the violations of the statute were
unintentional and $21.0 million if the violations of the
statute were intentional. In March 2002, the court granted
judgment on the Companys summary judgment motion. The
plaintiffs have appealed and the Company has cross-appealed. The
issues that will be determinative of the outcome of this
litigation are issues of first impression. It is not
possible to predict with any certainty how the court will rule
on appeal. While the Company intends to continue to vigorously
defend the case, there is no assurance that the eventual outcome
of the case will not have a material adverse effect on the
Companys business, financial position and operating
results.

The three actions related to flood certifications
discussed below have been filed against the Company by insurers
alleging that they incurred losses based upon inaccurate flood
certifications. These actions were filed against various
subsidiaries and the allegations related to National Research
Center (NRC), which was acquired as part of the
Vista transaction.

On May 29, 2002 Travelers Indemnity filed a
complaint against NRC Insurance Services, Inc. in the
U.S. District Court, Eastern District of Missouri alleging
that NRC provided an erroneous flood certification when
Travelers underwrote a commercial location. Travelers Indemnity
seeks approximately $4.0 million plus expenses in damages.
An amended complaint was filed on January 15, 2003 adding
the Company and Vista Environmental Information, Inc., as
additional defendants. NRC and the other subsidiary defendants
filed their answer to the complaint on January 31, 2003.
While the Company intends to continue to vigorously defend the
case, there is no assurance that the eventual outcome of the
case will not have a material adverse effect on the
Companys business, financial position and operating
results.

On May 10, 2001, Pennsylvania Manufacturers
Association Indemnity Company, d/b/a PMA Group
(PMA) filed a complaint in the
U.S. District Court of New Jersey alleging that NRC
incorrectly issued a standard flood determination. PMA seeks
damages in the amount of $1.4 million, representing the
amount paid to its insured, Brandywine Senior Care, Inc.
(Brandywine) which seeks an additional amount in
excess of $2.3 million from PMA for alleged business income
loss. The obligation to pay business income loss is disputed by
PMA and is the subject of a Pennsylvania state court suit. If
PMA issues payment for business income loss, it will be added to
its claim for damages against NRC. The suit against NRC is
stayed pending resolution of the state court litigation between
PMA and Brandywine. While the Company intends to continue to
vigorously defend the case, there is no assurance that the
eventual outcome of the case will not have a material adverse
effect on the Companys business, financial position and
operating results.

On November 6, 2002, St. Paul
Fire & Marine filed a complaint against the Company in
the U.S. District Court, Eastern District of Missouri
alleging that NRC incorrectly issued a standard flood
determination, when St. Paul underwrote a commercial
location. Plaintiff seeks approximately $12.0 million in
damages. There has been no response to the suit because the
complaint has not been served on NRC. While the Company intends

57



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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

to continue to vigorously defend the case, there
is no assurance that the eventual outcome of the case will not
have a material adverse effect on the Companys business,
financial position and operating results.



|    |     
|--- | ----
|11. | Debt

Debt consists of the following as of
December 31, 2002 and 2001:

|                                                                                                |  |              |        |      |  |   |        |  
|----------------------------------------------------------------------------------------------- |  | ------------ | ------ | ---- |  | - | ------ | -
|                                                                                                |  |             
|                                                                                                |  | December 31,
|                                                                                                |  |             
|                                                                                                |  | 2002         |        | 2001
|                                                                                                |  |              |        |     
|Revolving credit facility with parent                                                           |  | $            |       |      |  | $ | 18,653 |  
|                                                                                                |  |              |        |      |  |   |        |  
|                                                                                               
|4.5% note payable to Hansen, due May 2005                                                       |  | $            | 4,125  |      |  | $ |       |  
|7.5% mortgage loan, due January 2007                                                            |  |              | 1,140  |      |  |   |       |  
|Convertible note with parent                                                                    |  |              |       |      |  |   | 5,265  |  
|Bank line of credit, interest rate at 3.3%, due
    January 2002                                |  |              |       |      |  |   | 1,600  |  
|Promissory notes related to equipment financing,
    with various interest rates and maturities |  |              | 973    |      |  |   | 4,710  |  
|                                                                                                |  |              |        |      |  |   |        |  
|Total notes payable                                                                             |  |              | 6,238  |      |  |   | 11,575 |  
|Less current portion                                                                            |  |              | (2,113 | )    |  |   | (5,114 | )
|                                                                                                |  |              |        |      |  |   |        |  
|Notes payable, long-term portion                                                                |  | $            | 4,125  |      |  | $ | 6,461  |  
|                                                                                                |  |              |        |      |  |   |        |  

Secured Bank Credit Facility.On December 20, 2002, the Company
and a group of banks entered into a credit facility agreement.
This credit facility, comprised of a revolving credit facility
and a standby letter of credit facility, provides for an
aggregate maximum line of credit of $75.0 million that
expires in December 2005, and is secured by the assets of the
Company. The maximum credit line can be increased to
$100.0 million under certain circumstances. As of
December 31, 2002, there were no amounts outstanding under
the facility.

Under this secured credit facility, the Company
may elect loan arrangements as either a Base Rate Loan or a
LIBOR Rate Loan. The Base Rate Loan bears an interest rate of
the greater of (a) the Prime Rate and (b) the Federal
Fund Rate plus 0.5%, plus an applicable margin of 0.25% to 0.75%
depending upon the Companys leverage ratio. Interest on
the Base Rate Loan is payable in arrears on the last business
day of each calendar quarter commencing March 31, 2003. The
LIBOR Rate Loans interest rate is LIBOR plus an applicable
margin of 1.50% to 2.00% depending upon the Companys
leverage ratio, and the Company may elect an interest period of
1, 2, 3 or 6 months. Interest on the LIBOR Rate Loan is
payable on the last day of the interest period elected, and if
the interest period is over 3 months, at the end of each
3 months interval during such interest period. The Company
is also required to pay a non-refundable commitment fee at a
rate ranging from 0.375% to 0.625% per annum based on the usage
of the credit facility.

The credit agreement imposes certain affirmative
and negative covenants on the Company relating to current debt
ratings, certain financial ratios related to liquidity, net
worth, investments, acquisitions and restricted payments, and
certain dividend restrictions. The Company is in compliance with
all of its debt covenants as of December 31, 2002.

Revolving Credit Facility with Parent.On September 24, 2001, the
Company entered into a revolving credit agreement with Fidelity.
The credit agreement provides for a maximum credit line of
$25 million that expires and is due in September 2006. The
credit facility bears interest at a rate of Prime plus 2.0%.
Amounts borrowed under the credit facility were used to replace
the existing obligations to Fidelity related to the merger. As
of December 31, 2001, $18.7 million was outstanding
under the credit facility. In March 2002, the Company repaid the
amounts borrowed under this facility using the proceeds from the
sale of its Environmental Risk Management Solutions business. As
of December 31, 2002, there were no amounts

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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

outstanding under this facility. In addition, as
a result of the $75.0 million secured bank credit agreement
entered in December 2002 as described above, this parent
facility became subordinated.

Hansen Note.In
connection with the acquisition of the 55% interest in Hansen on
May 28, 2002, the Company issued a convertible note in the
amount of $4.1 million. The note bears an interest rate of
4.5% per annum, matures in May 2005 and was convertible at any
time into shares of the Companys common stock at $28.00
per share. The conversion feature was subsequently eliminated by
mutual consent of the parties to the note.

Mortgage Loan.The
Company assumed a mortgage note in connection with the
acquisition of Eastern. This mortgage note was secured by a
building and certain assets of Eastern, bearing an interest rate
of 7.5% per annum, with monthly installment of $11,000 until
2007 and no prepayment penalty. The loan was paid in full in
February 2003.

Convertible Note with Parent.In 1999, MGEN entered into a
$5.3 million five-year convertible note with Fidelity. This
note bears an interest rate of 10% per annum, payable quarterly
and was due December 14, 2004. On July 24, 2002,
Fidelity exercised its option to convert this $5.3 million
convertible note into 403,120 shares of FNIS common stock.

Equipment Financing Arrangements.During 2001 and 2000, one of our
subsidiaries entered into a series of notes for equipment
financing arrangements with interest rates ranging from 5.67% to
11.30% and terms ranging from one to three years. These notes
are secured by an agreement which assigns the respective revenue
streams payable by Fidelity to the note holders in the event of
a default by this subsidiary on the respective notes.

12.     Earnings per
Share

The following table presents the computation of
basic and diluted earnings per share (in thousands, except for
share data):

|                                                                                                        |  |                         |        |      |  |      |        |  |  |   |        | 
|------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|                                                                                                        |  |                        
|                                                                                                        |  | Year Ended December 31,
|                                                                                                        |  |                        
|                                                                                                        |  | 2002                    |        | 2001 |  | 2000
|                                                                                                        |  |                         |        |      |  |     
|Net earnings, basic basis                                                                               |  | $                       | 30,731 |      |  | $    | 11,083 |  |  | $ | 2,311  | 
|Interest expense, net of income tax effect,
    applicable to convertible notes                         |  |                         | 180    |      |  |      |       |  |  |   |       | 
|                                                                                                        |  |                         |        |      |  |      |        |  |  |   |        | 
|Net earnings, diluted basis                                                                             |  | $                       | 30,911 |      |  | $    | 11,083 |  |  | $ | 2,311  | 
|                                                                                                        |  |                         |        |      |  |      |        |  |  |   |        | 
|Weighted average shares, basic basis                                                                    |  |                         | 34,827 |      |  |      | 26,748 |  |  |   | 18,091 | 
|Plus: Common stock equivalent shares assumed from
    conversion of options, warrants and notes payable |  |                         | 1,942  |      |  |      | 81     |  |  |   | 65     | 
|                                                                                                        |  |                         |        |      |  |      |        |  |  |   |        | 
|Weighted average shares, diluted basis                                                                  |  |                         | 36,769 |      |  |      | 26,829 |  |  |   | 18,156 | 
|                                                                                                        |  |                         |        |      |  |      |        |  |  |   |        | 
|Basic net earnings per share                                                                            |  | $                       | 0.88   |      |  | $    | 0.41   |  |  | $ | 0.13   | 
|                                                                                                        |  |                         |        |      |  |      |        |  |  |   |        | 
|Diluted net earnings per share                                                                          |  | $                       | 0.84   |      |  | $    | 0.41   |  |  | $ | 0.13   | 
|                                                                                                        |  |                         |        |      |  |      |        |  |  |   |        | 

Certain options, warrants and other convertible
instruments to purchase the Companys common stock were not
included in the computation of diluted earnings per share
because they are anti-dilutive. The number of shares excluded
were 623,000, 1,302,000 and 403,000 in 2002, 2001 and 2000,
respectively.

59



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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

13.     Income
Taxes

Income taxes consists of the following (in
thousands):

|         |         |                         |        |        |        |      |        |       |        |   |       |       |       |  
|-------- | ------- | ----------------------- | ------ | ------ | ------ | ---- | ------ | ----- | ------ | - | ----- | ----- | ----- | -
|         |         |                        
|         |         | Year Ended December 31,
|         |         |                        
|         |         | 2002                    |        | 2001   |        | 2000
|         |         |                         |        |        |        |     
|Current  |         |                         |        |        |        |      |        |       |        |   |       |      
|         | Federal |                         | $      | 10,166 |        |      | $      | 9,541 |        |   | $     | 2,334 |      
|         | State   |                         |        | 3,041  |        |      |        | 1,128 |        |   |       | 360   |      
|         |         |                         |        |        |        |      |        |       |        |   |       |      
|         |         | Total                   |        |        | 13,207 |      |        |       | 10,669 |   |       |       | 2,694 |  
|         |         |                         |        |        |        |      |        |       |        |   |       |      
|Deferred |         |                         |        |        |        |      |        |       |        |   |       |      
|         | Federal |                         |        | 8,896  |        |      |        | 2,066 |        |   |       | (275  | )    
|         | State   |                         |        | (836   | )      |      |        | 193   |        |   |       | (39   | )    
|         |         |                         |        |        |        |      |        |       |        |   |       |      
|         |         | Total                   |        |        | 8,060  |      |        |       | 2,259  |   |       |       | (314  | )
|         |         |                         |        |        |        |      |        |       |        |   |       |      
|         |         | $                       | 21,267 |        |        | $    | 12,928 |       |        | $ | 2,380 |      
|         |         |                         |        |        |        |      |        |       |        |   |       |      

The effective income tax rate differs from the
statutory income tax rate as follows:

|                                  |  |                         |      |      |  |      |      |   |  |  |       |  
|--------------------------------- |  | ----------------------- | ---- | ---- |  | ---- | ---- | - |  |  | ----- | -
|                                  |  |                        
|                                  |  | Year Ended December 31,
|                                  |  |                        
|                                  |  | 2002                    |      | 2001 |  | 2000
|                                  |  |                         |      |      |  |     
|Statutory income tax rate         |  |                         | 34.0 | %    |  |      | 34.0 | % |  |  | 34.6  | %
|State, net of federal benefit     |  |                         | 4.0  |      |  |      | 3.7  |   |  |  | 5.5   |  
|Goodwill                          |  |                         |     |      |  |      | 5.2  |   |  |  | 36.6  |  
|Non-deductible expenses and other |  |                         | 1.2  |      |  |      | (4.8 | ) |  |  | (29.0 | )
|                                  |  |                         |      |      |  |      |      |   |  |  |       |  
|Effective tax rate                |  |                         | 39.2 | %    |  |      | 38.1 | % |  |  | 47.7  | %
|                                  |  |                         |      |      |  |      |      |   |  |  |       |  

The deferred tax assets and liabilities at
December 31, 2002 and 2001 consist of the following (in
thousands):

|                               |                                 |              |        |        |   |   |        |        | 
|------------------------------ | ------------------------------- | ------------ | ------ | ------ | - | - | ------ | ------ | 
|                               |                                 |             
|                               |                                 | December 31,
|                               |                                 |             
|                               |                                 | 2002         |        | 2001  
|                               |                                 |              |        |       
|Deferred tax assets:           |                                 |              |        |        |   |   |        |       
|                               | Net operating loss carryforward |              | $      | 5,723  |   |   | $      | 18,387 | 
|                               | Deferred revenue                |              |        | 14,743 |   |   |        | 7,061  | 
|                               | Employee benefits               |              |        | 2,591  |   |   |        | 2,046  | 
|                               | Accruals                        |              |        | 35     |   |   |        | 2,438  | 
|                               | Bad debt                        |              |        | 3,265  |   |   |        | 3,093  | 
|                               | Other                           |              |        | 459    |   |   |        | 600    | 
|                               |                                 |              |        |        |   |   |        |       
|                               |                                 |              | 26,816 |        |   |   | 33,625 |       
|                               | Less: Valuation allowance       |              |        | (6,294 | ) |   |        |       | 
|                               |                                 |              |        |        |   |   |        |       
|Total deferred tax assets      |                                 |              | 20,522 |        |   |   | 33,625 |       
|                               |                                 |              |        |        |   |   |        |       
|                              
|Deferred tax liabilities:      |                                 |              |        |        |   |   |        |       
|                               | Amortization and depreciation   |              |        | 2,880  |   |   |        | 1,533  | 
|                               | Other                           |              |        |       |   |   |        | 162    | 
|                               |                                 |              |        |        |   |   |        |       
|Total deferred tax liabilities |                                 |              | 2,880  |        |   |   | 1,695  |       
|                               |                                 |              |        |        |   |   |        |       
|Net deferred tax assets        |                                 | $            | 17,642 |        |   | $ | 31,930 |       
|                               |                                 |              |        |        |   |   |        |       

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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Under SFAS No. 109, Accounting for
Income Taxes,deferred tax assets and liabilities are
determined based on differences between the financial reporting
and tax basis of assets and liabilities, and are measured using
enacted tax rates and laws that will be in effect when the
differences are expected to reverse. SFAS No. 109 provides
for the recognition of deferred tax assets if realization of
such assets is more likely than not. Based on the weight of
available evidence, the Company has provided a valuation
allowance against certain deferred tax assets. The valuation
allowance was based on the historical earnings patterns within
individual tax jurisdictions that make it uncertain that the
Company will have sufficient income in the appropriate
jurisdictions to realize the full value of the assets. The
Company will continue to evaluate the realizability of the
deferred tax assets on a quarterly basis.

As of December 31, 2002, the Company has
federal and state net operating loss carryforwards of
approximately $16.8 million. Although these loss
carryforwards are limited under Internal Revenue Code section
382, the Company anticipates full utilization of these loss
carryforwards within the statutory time limits. The
Companys net operating loss begins to expire in 2020.

14.     Stockholders
Equity

On July 24, 2002, Fidelity exercised its
option to convert a $5.3 million convertible note from MGEN
into 403,120 shares of the Companys common stock.

On September 28, 2001, the Companys
Board of Directors authorized the Company to purchase up to
1,000,000 shares of its common stock. Purchases may be made from
time to time by the Company in the open market, in block
purchases or in privately negotiated transactions. During 2001,
the Company repurchased a total of 53,800 shares of common stock
for $0.3 million at an average price of $6.30. No
repurchases have been made in 2002.

On September 24, 2001, the Company issued to
Fidelity a warrant to purchase 713,000 shares of the
Companys common stock at $10.00 per share. The fair value
of the warrant of $1.2 million was recorded as debt
issuance cost and is being amortized over five years.

As discussed in Note 3, on November 1,
2001, MGEN acquired RealEC. RealEC has Series A and
Series B preferred stock. These preferred stocks are
convertible, at the option of the holder, into common stock at a
conversion ratio of 1:1. Each share shall automatically be
converted into a share of common stock (a) upon the closing
of a firm commitment underwritten public offering; (b) upon
the vote or written consent of holder of not less than a
majority of the outstanding shares of preferred stock voting
together as a class, or (c) on the fifth anniversary date
the preferred stock was issued by RealEC. The shareholders of
these stocks are entitled to receive non-cumulative dividends at
the rate of $0.05 per annum per share of Series A preferred
stock, and at a rate of $0.065 per share of Series B
preferred stock.

On May 28, 2001, MGEN declared a stock
dividend of 10%, which was paid on June 1, 2001, to
stockholders of record as of that date. The portion of the
dividend attributable to the majority ownership in MGEN is
reflected in the accompanying Consolidated Financial Statements.

15.     Employee
Benefit Plans



| |                             
| | ----------------------------
| | Employee Stock Purchase Plan

In 2001, stockholders approved the adoption of an
Employee Stock Purchase Plan (ESPP). Under the terms
of the ESPP and subsequent amendments, eligible employees may
voluntarily purchase, at current market prices, shares of the
Companys common stock through payroll deductions. Pursuant
to the ESPP, employees may contribute an amount between 5% and
15% of their base salary and certain commissions. The Company
contributes, on a quarterly basis, one year after eligible
employees have contributed to the plan, an amount as specified
in the ESPP. Company contributions to the ESPP started during
the third quarter of 2002 and the amount expensed for the year
ended December 31, 2002 under the plan was approximately
$0.5 million.

61



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FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



| |                           
| | --------------------------
| | 401(k) Profit Savings Plan

The Company offers the Fidelity National
Financial, Inc. 401(k) Profit Sharing Plan (401(k)
Plan), a qualified voluntary contributory savings plan,
available to substantially all the Companys employees.
Eligible employees may contribute up to 15% of their pretax
annual compensation, up to the amount allowed pursuant to the
Internal Revenue Code. In 2002, the Company matched 50% of each
dollar of employee contribution up to six percent of the
employees total compensation. The Companys cost for
the 401(k) Plan for the years ended December 31, 2002, 2001
and 2000 was $1.7 million, $1.0 million and
$0.2 million, respectively.



| |                   
| | ------------------
| | Stock Option Plans

The Company has various stock option plans. In
2001, stockholders approved the adoption of the 2001 Stock
Incentive Plan (2001 Plan). With the approval of the
2001 Plan, the previous 1999 Stock Incentive Plan was
terminated. The 2001 Plan authorized up to 3,300,000 shares of
common stock, plus an additional 2,970,000 shares of common
stock as part of an automatic annual increase as allowed
throughout the life of the plan. The 2001 Plan provides for
grants of incentive stock options as defined in
Section 422 of the Internal Revenue Code of 1986, as
amended, nonqualified stock options, rights to purchase shares
of common stock (Purchase Rights) and deferred
shares. The term of options may not exceed 10 years from
the date of grant (five years in the case of an incentive stock
option granted to a person who owns or is deemed to own more
than 10% of the total combined voting power of all classes of
stock of the Company). The option exercise price pursuant to an
incentive stock option may not be less than 100% of the fair
market value on the date of grant (110% of fair value in the
case of an incentive stock option granted to a person who owns
more than 10% of the combined voting power of all classes of
stock).

Information regarding options granted and
outstanding for the years ended December 31, 2002 and 2001
are as follows:

|                          |                                                                |             |           |                |   |             |       |       |  |  |           |  | 
|------------------------- | -------------------------------------------------------------- | ----------- | --------- | -------------- | - | ----------- | ----- | ----- |  |  | --------- |  | 
|                          |                                                                | Option      |           | Weighted       |   |            
|                          |                                                                | Shares      |           | Average        |   |            
|                          |                                                                | Outstanding |           | Exercise Price |   | Exercisable
|                          |                                                                |             |           |                |   |            
|Balance December 31, 2000 |                                                                |             |          |                |   | $           |      |       |  |  |          | 
|                          | Options assumed in Mergers and Share exchange
    (See Note 1) |             |           | 435,112        |   |             |       | 33.02 |  |  |           |  | 
|                          | Granted                                                        |             |           | 3,022,500      |   |             |       | 7.40  |  |  |           |  | 
|                          | Exercised                                                      |             |           | (1,430         | ) |             |       | 5.46  |  |  |           |  | 
|                          | Cancelled                                                      |             |           | (126,273       | ) |             |       | 46.81 |  |  |           |  | 
|                          |                                                                |             |           |                |   |             |       |       |  |  |           | 
|Balance December 31, 2001 |                                                                |             | 3,329,909 |                |   |             | 9.25  |       |  |  | 1,494,694 | 
|                          | Granted                                                        |             |           | 2,717,696      |   |             |       | 17.29 |  |  |           |  | 
|                          | Exercised                                                      |             |           | (476,524       | ) |             |       | 8.84  |  |  |           |  | 
|                          | Cancelled                                                      |             |           | (299,513       | ) |             |       | 21.41 |  |  |           |  | 
|                          |                                                                |             |           |                |   |             |       |       |  |  |           | 
|Balance December 31, 2002 |                                                                |             | 5,271,568 |                |   |             | 12.62 |       |  |  | 3,089,928 | 
|                          |                                                                |             |           |                |   |             |       |       |  |  |           | 

At December 31, 2002, the Company had
granted 2.0 million shares in excess of the total number of
shares authorized as of that date. This includes stock options
issued in connection with July 2002 MGEN transaction. The
authorization of the excess shares will be obtained at the next
annual shareholders meeting. The Company believes approval
of the share authorization is probable since Fidelity owned
approximately 66% of the outstanding shares of the Company at
December 31, 2002.

62



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##### Table of Contents



FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

The following table summarizes information
related to stock options outstanding and exercisable as of
December 31, 2002:

|                         |                |                     |  |                  |           |          |  |            |      |          |  |   |       |  |  |  |           |  |  |   |       | 
|------------------------ | -------------- | ------------------- |  | ---------------- | --------- | -------- |  | ---------- | ---- | -------- |  | - | ----- |  |  |  | --------- |  |  | - | ----- | 
|                         |                |                    
|Options Outstanding      |                | Options Exercisable
|                         |                |                    
|                         |                | Weighted            |  | Weighted         |           |          |  | Weighted  
|                         |                | Average             |  | Average          |           |          |  | Average   
|                         |                | Number              |  | Remaining        |           | Exercise |  | Number     |      | Exercise
|Range of Exercise Prices |                | of Options          |  | Contractual Life |           | Price    |  | of Options |      | Price   
|                         |                |                     |  |                  |           |          |  |            |      |         
|                         | $ 0.01   0.01 |                     |  |                  | 8,692     |          |  |            | 8.64 |          |  | $ | 0.01  |  |  |  | 8,692     |  |  | $ | 0.01  | 
|                         | 4.08   5.88   |                     |  |                  | 21,138    |          |  |            | 6.83 |          |  |   | 4.67  |  |  |  | 16,494    |  |  |   | 4.37  | 
|                         | 6.28   9.61   |                     |  |                  | 2,762,549 |          |  |            | 8.59 |          |  |   | 7.42  |  |  |  | 2,240,066 |  |  |   | 7.47  | 
|                         | 10.29  15.44  |                     |  |                  | 400,008   |          |  |            | 8.18 |          |  |   | 11.72 |  |  |  | 123,538   |  |  |   | 12.20 | 
|                         | 15.66  23.17  |                     |  |                  | 1,861,759 |          |  |            | 9.38 |          |  |   | 18.97 |  |  |  | 506,258   |  |  |   | 19.99 | 
|                         | 24.82  39.67  |                     |  |                  | 207,466   |          |  |            | 9.27 |          |  |   | 25.99 |  |  |  | 184,924   |  |  |   | 25.78 | 
|                         | 42.84  57.75  |                     |  |                  | 8,169     |          |  |            | 5.36 |          |  |   | 49.88 |  |  |  | 8,169     |  |  |   | 49.88 | 
|                         | 69.12  69.12  |                     |  |                  | 1,787     |          |  |            | 5.33 |          |  |   | 69.12 |  |  |  | 1,787     |  |  |   | 69.12 | 
|                         |                |                     |  |                  |           |          |  |            |      |          |  |   |       |  |  |  |           |  |  |   |       | 
|                         | 0.01  69.12   |                     |  |                  | 5,271,568 |          |  |            | 8.85 |          |  |   | 12.62 |  |  |  | 3,089,928 |  |  |   | 10.95 | 
|                         |                |                     |  |                  |           |          |  |            |      |          |  |   |       |  |  |  |           |  |  |   |       | 

In 2001 and prior years, the Company granted
warrants for the purchase of common stock to Fidelity,
professional consultants and certain debt and equity holders as
follows:

|                                      |                                  |             |           |                |   |             |       |       |  |  |           |  | 
|------------------------------------- | -------------------------------- | ----------- | --------- | -------------- | - | ----------- | ----- | ----- |  |  | --------- |  | 
|                                      |                                  | Warrant     |           | Weighted       |   |            
|                                      |                                  | Shares      |           | Average        |   |            
|                                      |                                  | Outstanding |           | Exercise Price |   | Exercisable
|                                      |                                  |             |           |                |   |            
|Balance December 31, 2000 and 1999(1) |                                  |             | 200,970   |                |   | $           | 12.53 |       |  |  | 200,970   | 
|                                      | Granted                          |             |           | 713,000        |   |             |       | 10.00 |  |  |           |  | 
|                                      | Warrants assumed in acquisitions |             |           | 169,008        |   |             |       | 31.42 |  |  |           |  | 
|                                      |                                  |             |           |                |   |             |       |       |  |  |           | 
|Balance December 31, 2001             |                                  |             | 1,082,978 |                |   |             | 14.10 |       |  |  | 1,082,978 | 
|                                      | Warrants assumed in acquisitions |             |           | 172,260        |   |             |       | 1.95  |  |  |           |  | 
|                                      | Exercised                        |             |           | (157,140       | ) |             |       | 1.91  |  |  |           |  | 
|                                      | Cancelled                        |             |           | (23,482        | ) |             |       | 1.43  |  |  |           |  | 
|                                      |                                  |             |           |                |   |             |       |       |  |  |           | 
|Balance December 31, 2002             |                                  |             | 1,074,616 |                |   |             | 12.56 |       |  |  | 1,074,616 | 
|                                      |                                  |             |           |                |   |             |       |       |  |  |           | 




|    |                               
|--- | ------------------------------
|(1) | There was no activity in 2000.

The following table summarizes information
related to warrants outstanding and exercisable as of
December 31, 2002:

|                         |               |           |  |                  |           |                |  |  |      |  |  |   |       | 
|------------------------ | ------------- | --------- |  | ---------------- | --------- | -------------- |  |  | ---- |  |  | - | ----- | 
|                         |               |           |  | Weighted         |           |               
|                         |               |           |  | Average          |           | Weighted      
|                         |               | Number of |  | Remaining        |           | Average       
|Range of Exercise Prices |               | Warrants  |  | Contractual Life |           | Exercise Price
|                         |               |           |  |                  |           |               
|$                        | 1.95   1.95  |           |  |                  | 105,270   |                |  |  | 0.30 |  |  | $ | 1.95  | 
|                         | 4.17   6.26  |           |  |                  | 12,446    |                |  |  | 2.11 |  |  |   | 4.47  | 
|                         | 10.00  13.06 |           |  |                  | 904,400   |                |  |  | 3.38 |  |  |   | 10.65 | 
|                         | 38.08  38.08 |           |  |                  | 5,714     |                |  |  | 8.50 |  |  |   | 38.08 | 
|                         | 72.45  72.45 |           |  |                  | 46,786    |                |  |  | 0.52 |  |  |   | 72.45 | 
|                         |               |           |  |                  |           |                |  |  |      |  |  |   |       | 
|                         | 1.95  72.45  |           |  |                  | 1,074,616 |                |  |  | 2.97 |  |  |   | 12.56 | 
|                         |               |           |  |                  |           |                |  |  |      |  |  |   |       | 

63



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##### Table of Contents



FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

16.     Segment
Information

Prior to 2002, the Company was organized into
three segments for management reporting purposes: Lender
Services, Professional Services and Corporate and Other.
Effective January 1, 2002, the Company revised the
structure of its internal organization and reporting in order to
further disaggregate its businesses by primary product/ service
category, which has expanded significantly as a result of the
Companys acquisition and product development strategies.
Consequently, the Companys reportable segments were
changed to reflect revisions in the manner in which management
organizes and evaluates internal financial information. The
Companys segment reporting is comprised of three principal
business segments consisting of Data, Solutions and Services.
Segment information for the years ended December 31, 2001
and 2000 has been revised to conform to the Companys 2002
presentation.

The Data segment provides information regarding
both real estate and consumers that can be aggregated, rendered,
repurposed or repackaged in order to meet customers
specific needs, consisting primarily of property valuation
services, real estate data and tax services, flood certification
and credit reporting. Solutions involve developing and supplying
business processes and technology for the real estate service
and lending industry and this segments primary offerings
include MLS outsourcing products and a suite of technology
products. The Services segments product and service
offerings combine manual intervention, outsourcing or process
improvement with one or more of our data and/or solutions
components.

For internal reporting purpose, the Company does
not allocate certain corporate expenses among segments,
including: finance, legal, human resources and other corporate
administrative expenses. The accounting policies of the segments
are the same as those described in Note 2. Sales between
segments or transfers that occurred in the ordinary course of
businesses have been eliminated from the segment information
provided. Assets are not allocated to segments for internal
reporting purposes. Substantially, all of the Companys
operating results and long-lived assets are in the United States.

Summarized information by segment as excerpted
from the internal management reports is as follows
(in thousands):

|                              |  |                              |         |           |  |          |         |           |  |       |        |  |  |   |         |   |  |   |         | 
|----------------------------- |  | ---------------------------- | ------- | --------- |  | -------- | ------- | --------- |  | ----- | ------ |  |  | - | ------- | - |  | - | ------- | 
|                              |  |                             
|                              |  | Year Ended December 31, 2002
|                              |  |                             
|                              |  |                              |         | Corporate |  |         
|                              |  | Data                         |         | Solutions |  | Services |         | and Other |  | Total
|                              |  |                              |         |           |  |          |         |           |  |      
|Revenue                       |  | $                            | 157,834 |           |  | $        | 181,407 |           |  | $     | 72,927 |  |  | $ |        |   |  | $ | 412,168 | 
|Depreciation and amortization |  |                              | 4,813   |           |  |          | 16,018  |           |  |       | 793    |  |  |   | 370     |   |  |   | 21,994  | 
|Interest expense, net         |  |                              | 66      |           |  |          | 836     |           |  |       | 25     |  |  |   | 207     |   |  |   | 1,134   | 
|Income taxes (benefit)        |  |                              | 16,774  |           |  |          | 7,051   |           |  |       | 4,885  |  |  |   | (7,443  | ) |  |   | 21,267  | 
|Net earnings (loss)           |  |                              | 26,237  |           |  |          | 11,029  |           |  |       | 7,640  |  |  |   | (14,175 | ) |  |   | 30,731  | 

|                              |  |                              |         |           |  |          |         |           |  |       |        |  |  |   |        |   |  |   |         | 
|----------------------------- |  | ---------------------------- | ------- | --------- |  | -------- | ------- | --------- |  | ----- | ------ |  |  | - | ------ | - |  | - | ------- | 
|                              |  |                             
|                              |  | Year Ended December 31, 2001
|                              |  |                             
|                              |  |                              |         | Corporate |  |         
|                              |  | Data                         |         | Solutions |  | Services |         | and Other |  | Total
|                              |  |                              |         |           |  |          |         |           |  |      
|Revenue                       |  | $                            | 123,351 |           |  | $        | 132,623 |           |  | $     | 38,648 |  |  | $ |       |   |  | $ | 294,622 | 
|Depreciation and amortization |  |                              | 4,140   |           |  |          | 5,450   |           |  |       | 2,851  |  |  |   |       |   |  |   | 12,441  | 
|Interest expense, net         |  |                              | 20      |           |  |          | 626     |           |  |       | 15     |  |  |   | 635    |   |  |   | 1,296   | 
|Income taxes (benefit)        |  |                              | 5,179   |           |  |          | 7,168   |           |  |       | 2,189  |  |  |   | (1,608 | ) |  |   | 12,928  | 
|Net earnings (loss)           |  |                              | 6,759   |           |  |          | 3,263   |           |  |       | 4,261  |  |  |   | (3,200 | ) |  |   | 11,083  | 

64



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##### Table of Contents



FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

|                              |  |                              |        |           |  |          |        |           |  |       |        |  |  |   |   |  |  |   |         | 
|----------------------------- |  | ---------------------------- | ------ | --------- |  | -------- | ------ | --------- |  | ----- | ------ |  |  | - | - |  |  | - | ------- | 
|                              |  |                             
|                              |  | Year Ended December 31, 2000
|                              |  |                             
|                              |  |                              |        | Corporate |  |         
|                              |  | Data                         |        | Solutions |  | Services |        | and Other |  | Total
|                              |  |                              |        |           |  |          |        |           |  |      
|Revenue                       |  | $                            | 75,656 |           |  | $        | 72,130 |           |  | $     | 12,985 |  |  | $ |  |  |  | $ | 160,771 | 
|Depreciation and amortization |  |                              | 4,767  |           |  |          | 2,965  |           |  |       | 198    |  |  |   |  |  |  |   | 7,930   | 
|Interest expense, net         |  |                              |       |           |  |          | 900    |           |  |       |       |  |  |   |  |  |  |   | 900     | 
|Income taxes                  |  |                              | 1,464  |           |  |          | 27     |           |  |       | 889    |  |  |   |  |  |  |   | 2,380   | 
|Net earnings                  |  |                              | 261    |           |  |          | 1,664  |           |  |       | 386    |  |  |   |  |  |  |   | 2,311   | 

17.     Related Party
Transactions

Technology
Services

The Company negotiated the rates it charges
Fidelity under a Master Services Agreement (MSA).
The MSA outlines the scope of services to be provided to
Fidelity and certain of the pricing and billing arrangements. It
requires that the Company provide services to Fidelity at prices
no higher than it charges to any direct competitor of Fidelity.
Certain projects are billed to Fidelity on a cost plus fixed
percentage profit basis. The remainder of the revenues from
Fidelity are derived from the provisioning of a variety of
products and services that are billed under one of the following
methods: time and expenses, monthly maintenance, and fees based
on per transaction, per user and per location. Subject to the
provisions of the agreement the current MSA expires
December 31, 2003.

Corporate
Services

Fidelity and the Company entered into a service
agreement on August 1, 2001, which is automatically
renewable each year. Under the agreement, the Company pays an
annual base fee, plus an hourly rate over the base, to Fidelity
for executive and general management, accounting, legal,
investment and administrative services. The amount of fees for
providing such services is based on estimated time incurred to
perform each of the functions and the estimated personnel costs
for the function performed. Such fees paid to Fidelity, included
in operating expense, were $1.5 million and
$0.5 million for 2002 and 2001, respectively.

The amounts payable to a related party of
$4.9 million and $1.2 million at December 31,
2002 and 2001, respectively, represent amounts paid by Fidelity
on behalf of the Company.

Transactions Related to
Products and Services

The Company provides supporting services for
SIMON and TEAM, real estate settlement software solutions used
by Fidelity and its affiliates. In addition, the Company has
been developing for Fidelity a new enterprise software solution,
NGS, which will eventually replace SIMON and TEAM. Revenue
derived from Fidelity and its affiliates in connection with the
development of NGS, supporting SIMON and TEAM and providing
other services was $117.8 million, $106.1 million and
$68.6 million in 2002, 2001 and 2000, respectively, and is
included in the Solutions segment.

In addition, included in the 2002 and 2001 Data
revenue were $9.8 million and $2.0 million,
respectively, related to sales of data products to Fidelity.

The amounts due from Fidelity as of
December 31, 2002 and 2001 related to the above
transactions were $23.9 million and $14.1 million,
respectively.



| |                                          
| | -----------------------------------------
| | Revolving Credit Facility with
    Parent

As described in Note 11, the Company entered into
a $25.0 million revolving credit agreement with Fidelity in
September 2001. The interest expense incurred for the amounts
borrowed under this facility was $0.2 million and
$0.7 million for the years ended December 31, 2002 and
2001, respectively.

65



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##### Table of Contents



FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



| |                                             
| | --------------------------------------------
| | Other Financing Arrangements with
    Parent

One of the Companys subsidiaries entered
into several notes related to equipment financing. These notes
are secured by agreements which assign the respective revenue
stream from Fidelity to the note holders in the event of a
default under the notes (see Note 11).

MGEN had a $5.3 million convertible note
payable to Fidelity. This note was converted into FNIS common
stock on July 24, 2002 (see Notes 3 and 11).



| |                                   
| | ----------------------------------
| | Other Transactions with
    Parent

As discussed in Note 3, on August 2,
2001, the Company issued to Fidelity 1,614,286 shares of
the Companys common stock for all the outstanding common
stock of Risco, Inc. In addition, on the same day, the Company
acquired all the assets and liabilities of Reez.com from
Fidelity in exchange for 136,971 shares of the
Companys common stock.



| |                            
| | ---------------------------
| | Transactions with Employees

IDM, a wholly-owned subsidiary of the Company,
entered into several transactions with IDM-Manila, a Philippines
company partially owned by the former owner of IDM, who is an
employee of the Company. IDM-Manila converts data into requested
formats as instructed by IDM. Additionally, IDM contracts with
IDM-Manila to maintain the Lexis-Nexis database. During 2002,
2001 and 2000, IDM paid to IDM-Manila approximately
$3.1 million, $1.7 million and $1.6 million,
respectively, for data entry. The fee is based on the number of
records converted.

On May 28, 2002, the Company purchased a 55%
interest in Hansen Quality Loan Services. The remaining 45%
interest is held by Hansen Quality Loan Services, the principal
of which is an employee of the Company. In connection with
acquisition, the Company issued a convertible note of
$4.1 million payable to Hansen Quality Loan Services. The
conversion feature was subsequently eliminated by mutual
agreement between the parties to the note. The Company also
granted a stock option for 136,000 shares of common stock
to this employee.

66



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##### Table of Contents








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure

None.




PART III




Items 10 Through 13.

Within 120 days after the close of its
fiscal year, the Company intends to file with the Securities and
Exchange Commission a definitive proxy statement pursuant to
Regulation 14A of the Securities Exchange Act of 1934, as
amended, which will include the election of directors, the
report of compensation committee on annual compensation, certain
relationships and related transactions and other business.




Item 14.     Controls
and Procedures

Within 90 days prior to the date of this
report, we carried out an evaluation, under the supervision and
with the participation of our principal executive officer and
principal financial officer, of the effectiveness of the design
and operation of our disclosure controls and procedures. Based
on this evaluation, our principal executive officer and
principal financial officer concluded that our disclosure
controls and procedures are effective in timely alerting them to
material information required to be included in our periodic SEC
reports. It should be noted that the design of any system of
controls is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that
any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote.

In addition, we reviewed our internal controls,
and there have been no significant changes in our internal
controls or in other factors that could significantly affect
those controls subsequent to the date of their last evaluation;
including any corrective actions with regard to significant
deficiencies and material weaknesses.




PART IV






|         |                                                                    
|-------- | -------------------------------------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K

(a) List of documents filed as part of this
report:



| |                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     Financial
    Statements.The following is a list of the Consolidated
    Financial Statements of Fidelity National Information Solutions,
    Inc. and Subsidiaries included in Item 8 of Part II:



| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | Independent Auditors Report                                                                            
|
| | Consolidated Balance Sheets as of
    December 31, 2002 and 2001                                        
|
| | Consolidated Statements of Earnings for the years
    ended December 31, 2002, 2001 and 2000            
|
| | Consolidated Statements of Stockholders
    Equity for the years ended December 31, 2002, 2001 and 2000
|
| | Consolidated Statements of Cash Flows for the
    years ended December 31, 2002, 2001 and 2000          
|
| | Notes to Consolidated Financial Statements                                                              



| |                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.     Financial
    Statement Schedules.The following is a list of financial
    statement schedules filed as part of this annual report on
    Form 10-K. All other schedules are omitted because they are
    no applicable or not required, or because the required
    information is included in the Consolidated Financial Statements
    or notes thereto.
|
| | Schedule II  Valuation and
    Qualifying Accounts                                                                                                                                                                                                                                                                                                               

67



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##### Table of Contents





| |                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------
| | 3.     Exhibit Index.The following exhibits are incorporated by reference or are
    set forth on pages to this Form 10-K:

|        |       |             |  |                                                                                                                                                                                                                                                                                                                                                                                                              
|------- | ----- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 2.1   |             |  | Agreement and Plan of Merger, dated
    October 18, 2002, by and among the Shareholders of Eastern
    Financial Systems, Eastern Financial Systems, Inc., EFS Merger
    Sub, Inc. and the Company (incorporated by reference to
    Exhibit 2.1 to the Companys Current Report on
    Form 8-K filed on November 13, 2002, file
    no. 000-20312).                                                       
|        | 3.1   |             |  | Amended and Restated Certificate of Incorporation
    of the Company (incorporated by reference to Exhibit 3.1 to
    the Companys Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2002, file no. 000-20312).                                                                                                                                                                              
|        | 3.2   |             |  | Restated By-Laws of the Company, as amended to
    date (incorporated by reference to Exhibit C to the DEF
    Schedule 14A filed by the Company on February 17,
    1998, file no. 000-20312).                                                                                                                                                                                                              
|        | 3.3   |             |  | Agreement and Plan of Reorganization and Merger,
    dated April 12, 2001, by and among the Company, Fidelity
    National Financial, Inc., and Chicago Title and Trust Company
    (incorporated by reference to Annex A to the DEFM
    Schedule 14A filed by the Company on June 29, 2001,
    file no. 000-20312).                                                                                       
|        | 4.1   |             |  | The Fidelity National Financial Group 401(k)
    Profit Sharing Plan (incorporated by reference to
    Exhibit 4.1 to the Companys Registration Statement on
    Form S-8 filed on February 21, 2002, file
    no. 333-83168).                                                                                                                                                                              
|        | 10.7  |             |  | DataMap, Inc. 1995 Stock Incentive Plan
    (incorporated by reference to Exhibit 99.2 to the
    Companys Registration Statement on Form S-8, filed on
    August 2, 1996, file no. 333-09417).                                                                                                                                                                                                            
|        | 10.42 |             |  | 1999 VISTA Information Solutions, Inc. Stock
    Option Plan (incorporated by reference to Exhibit 10.42 to
    the Companys Annual Report on Form 10-KSB for the
    year ended December 31, 1999, file no. 000-20312).                                                                                                                                                                                    
|        | 10.43 |             |  | Agreement for Purchase and Sale of Assets, dated
    July 28, 1999, by and among the Company, Vista DMS, Inc.
    and Moore North America, Inc., as amended by the Amendment to
    the Agreement for Purchase and Sale of Assets, dated
    December 17, 1999 (incorporated by reference to
    Exhibit 2 to the Companys Current Report on
    Form 8-K filed on January 3, 2000, file
    no. 000-20312).
|        | 10.51 |             |  | Purchase Warrant issued by the Company to
    Fidelity National Financial, Inc. (incorporated by reference to
    Exhibit 10.51 to the Companys Quarterly Report on
    Form 10-Q for the quarter ended September 30, 2001,
    file no. 000-20312).                                                                                                                                                        
|        | 10.52 |             |  | Confidential Settlement Agreement and Release,
    dated August 2000, between, inter alia, Moore North America,
    Inc. and Howard Latham (incorporated by reference to
    Exhibit 10.52 to the Companys Annual Report on
    Form 10-K for the year ended December 31, 2001, file
    no. 000-20312).                                                                                                    
|        | 10.53 |             |  | Employee Services Agreement, dated August 1,
    2001, between the Company and Fidelity National Management
    Services, LLC (incorporated by reference to Exhibit 10.53
    to the Companys Annual Report on Form 10-K for the
    year ended December 31, 2001, file no. 000-20312).                                                                                                                     
|        | 10.54 |             |  | Management and Support Services Agreement, dated
    August 1, 2001, between the Company and Fidelity National
    Financial, Inc. (incorporated by reference to Exhibit 10.54
    to the Companys Annual Report on Form 10-K for the
    year ended December 31, 2001, file no. 000-20312).                                                                                                                
|        | 10.56 |             |  | Confidential Separation Agreement and General
    Release of All Claims, dated August 14, 2001, by and
    between the Company, Fidelity National Financial, Inc. and
    Howard Latham (incorporated by reference to Exhibit 10.56
    to the Companys Annual Report on Form 10-K for the
    year ended December 31, 2001, file no. 000-20312).                                                           
|        | 10.57 |             |  | Asset Purchase Agreement, dated October 25,
    2002, between the Company and Homeseekers.com, Inc.
    (incorporated by reference to Exhibit 10.57 to the
    Companys Annual Report on Form 10-K for the year
    ended December 31, 2001, file no. 000-20312).                                                                                                                                           
|        | 10.58 |             |  | Asset Purchase Agreement, dated as of
    November 2, 2001, by and among the Company, ISDI.NET, LLC
    and the Members of ISDI.NET, LLC (incorporated by reference to
    Exhibit 10.58 to the Companys Annual Report on
    Form10-K for the year ended December 31, 2001, file
    no. 000-20312).                                                                                                       
|        | 10.59 |             |  | Strategic Alliance Agreement, dated as of
    October 8, 2001, by and between the Company and LexisNexis,
    a division of Reed Elsevier, Inc. (incorporated by reference to
    Exhibit 10.59 to the Companys Annual Report on
    Form 10-K for the year ended December 31, 2001, file
    no. 000-20312).                                                                                               

68



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##### Table of Contents



|        |       |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | ----- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 10.60 |             |  | Agreement for the Sale and Purchase of Stock,
    dated October 10, 2001, by and between the Company and
    Fidelity National Financial, Inc. (incorporated by reference to
    Exhibit 10.60 to the Companys Annual Report on
    Form 10-K for the year ended December 31, 2001, file
    no. 000-20312).                                                                                                                                                                                                                                                                                                          
|        | 10.61 |             |  | Change in Control Severance Agreement, dated
    April 20, 2001, by and between Vista Information Solutions,
    Inc. and Neil Johnson (incorporated by reference to
    Exhibit 10.61 to the Companys Annual Report on
    Form 10-K/ A for the year ended December 31, 2001,
    file no. 000-20312).                                                                                                                                                                                                                                                                                                               
|        | 10.62 |             |  | Employment Agreement, dated June 8, 2001, by
    and between Fidelity National Financial, Inc., and Brian
    Hershkowitz (incorporated by reference to Exhibit 10.62 to
    the Companys Annual Report on Form 10-K/ A for the
    year ended December 31, 2001, file no. 000-20312).                                                                                                                                                                                                                                                                                                                                
|        | 10.63 |             |  | Executive Employment Agreement, dated
    January 1, 2001, by and between Vista Information
    Solutions, Inc., and Howard Latham (incorporated by reference to
    Exhibit 10.63 to the Companys Annual Report on
    Form 10-K/ A for the year ended December 31, 2001,
    file no. 000-20312).                                                                                                                                                                                                                                                                                                                   
|        | 10.64 |             |  | Master Services and Intellectual Property
    Agreement, dated March 27, 2003, by and between Fidelity
    National Information Solutions, Inc. and Fidelity National
    Financial, Inc. (Portions of this Exhibit are omitted and were
    filed separately with the Secretary of the Commission pursuant
    to the Companys application requesting confidential
    treatment under Rule 406 of the Securities Act of 1933.)
    Schedules to the agreement other than the pricing schedules have
    been omitted. A copy of any Schedule will be submitted to the
    Commission supplementally upon request.(1)
|        | 10.65 |             |  | Amended and Restated Revolving Credit Agreement,
    dated December 19, 2002, by and between the Company and
    Fidelity National Financial, Inc.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10.65 | .1          |  | Revolving Subordinated Promissory Note, dated
    December 19, 2002, by and between Fidelity National
    Information Solutions, Inc. and Fidelity National Financial,
    Inc.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10.66 |             |  | Credit Agreement, dated December 20, 2002,
    by and among the Company, the lenders who are or may become a
    party to the Credit Agreement, Wachovia Bank, National
    Association and U.S. Bank, National Association.(1)                                                                                                                                                                                                                                                                                                                                                                                        
|        | 10.67 |             |  | Fidelity National Information Solutions, Inc.
    2001 Stock Incentive Plan.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 10.68 |             |  | Fidelity National Information Solutions, Inc.
    2001 Employee Stock Purchase Plan.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 10.69 |             |  | Employment Agreement dated July 9, 2002, by
    and between Fidelity National Information Solutions, Inc. and
    Dwayne Walker.(1),(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 10.70 |             |  | Employment Agreement dated January 1, 2003,
    by and between Fidelity National Information Solutions, Inc. and
    Patrick F. Stone.(1),(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 21.0  |             |  | Subsidiaries of the Registrant.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 23.0  |             |  | Consent of KPMG LLP.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 99.1  |             |  | Certification by Chief Executive Officer of
    Periodic Financial Reports Pursuant to 18 U.S.C.
    Section 1350.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 99.2  |             |  | Certification by Chief Financial Officer of
    Periodic Financial Reports Pursuant to 18 U.S.C.
    Section 1350.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  



---



| |     |                                                                                                                                                         
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Filed herewith.                                                                                                                                         
|
| | (2) | A management contract or compensatory plan or
    arrangement required to be filed as an exhibit to this report
    pursuant to Item 15(c) of Form 10-K.

(b) Reports on Form 8-K.

The Company filed the following reports on
Form 8-K during the quarter ending December 31, 2002:



| |                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     Current Report on
    Form 8-K, filed on November 13, 2002, for the purpose
    of reporting, under Item 2, the acquisition of Eastern
    Financial Systems, Inc.                                                                                                                                                                   
|
| | 2.     Current Report on
    Form 8-K, filed on November 18, 2002, for the purpose
    of reporting, under Item 9, certain earnings and
    supplemental earnings information (calculated to give
    retroactive effect to the pooling-of-interests accounting method
    in connection with the acquisition of Micro General Corporation).

69



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



| |                                              
| | ---------------------------------------------
| | FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.



| |     |                     
| | --- | --------------------
| | By: | /s/ PATRICK F. STONE

| |                        
| | -----------------------
| |                        
| | Patrick F. Stone       
| | Chief Executive Officer

Date: March 28, 2003

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/ WILLIAM P. FOLEY, IIWilliam P. Foley, II |  | Chairman of the Board                                                                                     |  | March 28, 2003
|                                            
|/s/ PATRICK F. STONEPatrick F. Stone         |  | Chief Executive Officer and Director
    (Principal Executive Officer)                                    |  | March 28, 2003
|                                            
|/s/ WILLIE D. DAVISWillie D. Davis           |  | Director                                                                                                  |  | March 28, 2003
|                                            
|/s/ RICHARD J. FREEMANRichard J. Freeman     |  | Director                                                                                                  |  | March 28, 2003
|                                            
|/s/ EARL GALLEGOSEarl Gallegos               |  | Director                                                                                                  |  | March 28, 2003
|                                            
|Richard A. Mendenhall                        |  | Director                                                                                                  |  |               
|                                            
|/s/ CARY H. THOMPSONCary H. Thompson         |  | Director                                                                                                  |  | March 28, 2003
|                                            
|/s/ NEIL A. JOHNSONNeil A. Johnson           |  | Executive Vice President and
    Chief Financial Officer (Principal Financial and Accounting
    Officer) |  | March 28, 2003

70



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##### Table of Contents



CERTIFICATIONS

I, Patrick F. Stone certify that:



| |                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     I have reviewed
    this annual report on Form 10-K of Fidelity National
    Information Solutions, Inc.;                                                                                                                                                                                                                                       
|
| | 2.     Based on my
    knowledge, this annual report does not contain any untrue
    statement of a material fact or omit to state a material fact
    necessary to make the statements made, in light of the
    circumstances under which such statements were made, not
    misleading with respect to the period covered by this annual
    report;
|
| | 3.     Based on my
    knowledge, the financial statements, and other financial
    information included in this annual report, fairly present in
    all material respects the financial condition, results of
    operations and cash flows of the registrant as of, and for, the
    period presented in this annual report;                        
|
| | 4.     The
    registrants other certifying officer and I are responsible
    for establishing and maintaining disclosure controls and
    procedures (as defined in Exchange Act Rules 13a-14 and
    15d-14) for the registrant and we have:                                                                                                        



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures 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 annual report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.     The
    registrants other certifying officer and I have disclosed,
    based on our most recent evaluation, to the registrants
    auditors and the audit committee of registrants board of
    directors (or persons performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6.     The
    registrants other certifying officers and I have indicated
    in this annual report whether or not there were significant
    changes in internal controls or in other factors that could
    significantly affect internal controls subsequent to the date of
    our most recent evaluation, including any corrective actions
    with regard to significant deficiencies and material weaknesses.



| |     |                     
| | --- | --------------------
| | By: | /s/ PATRICK F. STONE

| |                        
| | -----------------------
| |                        
| | Patrick F. Stone       
| | Chief Executive Officer

Date: March 28, 2003

71



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##### Table of Contents



I, Neil A. Johnson, certify that:



| |                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     I have reviewed
    this annual report on Form 10-K of Fidelity National
    Information Solutions, Inc.;                                                                                                                                                                                                                                       
|
| | 2.     Based on my
    knowledge, this annual report does not contain any untrue
    statement of a material fact or omit to state a material fact
    necessary to make the statements made, in light of the
    circumstances under which such statements were made, not
    misleading with respect to the period covered by this annual
    report;
|
| | 3.     Based on my
    knowledge, the financial statements, and other financial
    information included in this annual report, fairly present in
    all material respects the financial condition, results of
    operations and cash flows of the registrant as of, and for, the
    period presented in this annual report;                        
|
| | 4.     The
    registrants other certifying officer and I are responsible
    for establishing and maintaining disclosure controls and
    procedures (as defined in Exchange Act Rules 13a-14 and
    15d-14) for the registrant and we have:                                                                                                        



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures 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 annual report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.     The
    registrants other certifying officer and I have disclosed,
    based on our most recent evaluation, to the registrants
    auditors and the audit committee of registrants board of
    directors (or persons performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | c) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6.     The
    registrants other certifying officers and I have indicated
    in this annual report whether or not there were significant
    changes in internal controls or in other factors that could
    significantly affect internal controls subsequent to the date of
    our most recent evaluation, including any corrective actions
    with regard to significant deficiencies and material weaknesses.



| |     |                    
| | --- | -------------------
| | By: | /s/ NEIL A. JOHNSON

| |                        
| | -----------------------
| |                        
| | Neil A. Johnson        
| | Chief Financial Officer

Date: March 28, 2003

72



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##### Table of Contents



SCHEDULE II

FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

Years Ended December 31, 2002, 2001 and
2000


(In thousands)


|                                              |      |            |   |           |  |             |   |             |  |            |   |       |     |  |   |       |     |  |   |       | 
|--------------------------------------------- | ---- | ---------- | - | --------- |  | ----------- | - | ----------- |  | ---------- | - | ----- | --- |  | - | ----- | --- |  | - | ----- | 
|                                              |      |            |   |           |  |             |   |            
|Column A                                      |      | Column B   |   | Column C  |  | Column D    |   | Column E   
|                                              |      |            |   |           |  |             |   |            
|                                              |      |            |   |           |  |             |   |            
|                                              |      |            |   | Additions |  |             |   |            
|                                              |      |            |   |           |  |             |   |            
|                                              |      | Balance at |   | Charge to |  |             |   |             |  | Balance at
|                                              |      | Beginning  |   | Costs and |  | Other       |   | Deductions  |  | End of    
|Description                                   |      | of Period  |   | Expenses  |  | (Described) |   | (Described) |  | Period    
|                                              |      |            |   |           |  |             |   |             |  |           
|Allowance for doubtful accounts               |      |            |   |           |  |             |   |             |  |            |   |       |     |  |   |       |     |  |   |      
|                                              | 2000 |            | $ | 256       |  |             | $ | 547         |  |            | $ | 1,175 | (1) |  | $ | 37    | (2) |  | $ | 1,941 | 
|                                              | 2001 |            |   | 1,941     |  |             |   | 1,440       |  |            |   | 2,000 | (1) |  |   | 2,001 | (2) |  |   | 3,380 | 
|                                              | 2002 |            |   | 3,380     |  |             |   | 1,832       |  |            |   | 656   | (1) |  |   |      |     |  |   | 5,868 | 
|                                             
|Valuation allowance  deferred tax
    assets |      |            |   |           |  |             |   |             |  |            |   |       |     |  |   |       |     |  |   |      
|                                              | 2000 |            |   | 5,107     |  |             |   |            |  |            |   |      |     |  |   | 1,886 | (4) |  |   | 3,221 | 
|                                              | 2001 |            |   | 3,221     |  |             |   |            |  |            |   |      |     |  |   | 3,221 | (4) |  |   |      | 
|                                              | 2002 |            |   |          |  |             |   |             |  |            |   | 6,294 | (3) |  |   |      |     |  |   | 6,294 | 



---



|    |                                                                                        
|--- | ---------------------------------------------------------------------------------------
|(1) | Represents balance assumed in connection with
    acquisitions.                        
|   
|(2) | Represents uncollectible amounts written-off.                                          
|   
|(3) | Represents valuation allowance for deferred tax
    assets resulting from acquisitions.
|   
|(4) | Represents the utilization of deferred tax assets
    against the current liability.   

II-1



---



##### Table of Contents






EXHIBIT INDEX

FIDELITY NATIONAL INFORMATION SOLUTIONS,
INC.

EXHIBIT INDEX TO ANNUAL REPORT


ON FORM 10-K


For the Fiscal Year Ended

December 31, 2002


|        |       |             |  |                                                                                                                                                                                                                                                                |  |                                                                                                                                                            |  |  |  | 
|------- | ----- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Exhibit |       |             |  |                                                                                                                                                                                                                                                                |  |                                                                                                                                                           
|Number  |       | Description |  | Method of Filing                                                                                                                                                                                                                                               |  | Page No.                                                                                                                                                  
|        |       |             |  |                                                                                                                                                                                                                                                                |  |                                                                                                                                                           
|        | 2.1   |             |  | Agreement and Plan of Merger, dated
    October 18, 2002, by and among the Shareholders of Eastern
    Financial Systems, Eastern Financial Systems, Inc., EFS Merger
    Sub, Inc. and the Company                                                            |  | Incorporate by reference to Exhibit 2.1 to
    the Companys Current Report on Form 8-K filed on
    November 13, 2002, file no. 000-20312                 |  |  |  | 
|        | 3.1   |             |  | Amended and Restated Certificate of Incorporation
    of the Company                                                                                                                                                                                           |  | Incorporated by reference to Exhibit 3.1 to
    the Companys Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2002, file no. 000-20312    |  |  |  | 
|        | 3.2   |             |  | Restated By-Laws of the Company, as amended to
    date                                                                                                                                                                                                        |  | Incorporated by reference to Exhibit C to
    the DEF Schedule 14A filed by the Company on
    February 17, 1998, file no. 000-20312                       |  |  |  | 
|        | 3.3   |             |  | Agreement and Plan of Reorganization and Merger,
    dated April 12, 2001, by and among the Company, Fidelity
    National Financial, Inc., and Chicago Title and Trust Company                                                                                |  | Incorporated by reference to Annex A to the DEFM
    Schedule 12A filed by the Company on June 29, 2001,
    file no. 000-20312                            |  |  |  | 
|        | 4.1   |             |  | The Fidelity National Financial Group
    401(k) Profit Sharing Plan                                                                                                                                                                                           |  | Incorporated by reference to Exhibit 4.1 to
    the Companys Registration Statement on Form S-8 filed
    on February 21, 2002, file no. 333-83168        |  |  |  | 
|        | 10.7  |             |  | DataMap, Inc. 1995 Stock Incentive Plan                                                                                                                                                                                                                        |  | Incorporated by reference to Exhibit 99.2 to
    the Companys Registration Statement on Form S-8,
    filed on August 2, 1996, file No. 333-09417).       |  |  |  | 
|        | 10.42 |             |  | 1999 VISTA Information Solutions, Inc. Stock
    Option Plan                                                                                                                                                                                                   |  | Incorporated by reference to Exhibit 10.42
    to the Companys Annual Report on Form 10-KSB for the
    year ended December 31, 1999, file no. 000-20312  |  |  |  | 
|        | 10.43 |             |  | Agreement for Purchase and Sale of Assets, dated
    July 28, 1999, by and among the Company, Vista DMS, Inc.
    and Moore North America, Inc., as amended by the Amendment to
    the Agreement for Purchase and Sale of Assets, dated
    December 17, 1999 |  | Incorporated by reference to Exhibit 2 to
    the Companys Current Report on Form 8-K filed on
    January 3, 2000, file no. 000-20312                    |  |  |  | 
|        | 10.51 |             |  | Purchase Warrant issued by the Company to
    Fidelity National Financial, Inc.                                                                                                                                                                                |  | Incorporated by reference to Exhibit 10.51
    to Companys Quarterly Report on Form 10-Q for the
    quarter ended September 30, 2001, file no. 000-20312 |  |  |  | 



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##### Table of Contents



|        |       |             |  |                                                                                                                                                                                        |  |                                                                                                                                                            |  |  |  | 
|------- | ----- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Exhibit |       |             |  |                                                                                                                                                                                        |  |                                                                                                                                                           
|Number  |       | Description |  | Method of Filing                                                                                                                                                                       |  | Page No.                                                                                                                                                  
|        |       |             |  |                                                                                                                                                                                        |  |                                                                                                                                                           
|        | 10.52 |             |  | Confidential Settlement Agreement and Release,
    dated August 2000, between, inter alia, Moore North America,
    Inc. and Howard Latham                                             |  | Incorporated by reference to Exhibit 10.52
    to the Companys Annual Report on Form 10-K for the
    year ended December 31, 2001, file no. 000-20312    |  |  |  | 
|        | 10.53 |             |  | Employee Services Agreement; dated August 1,
    2001, between the Company and Fidelity National Management
    Services, LLC                                                          |  | Incorporated by reference to Exhibit 10.53
    to the Companys Annual Report on Form 10-K for the
    year ended December 31, 2001, file no. 000-20312    |  |  |  | 
|        | 10.54 |             |  | Management and Support Services Agreement, dated
    August 1, 2001, between the Company and Fidelity National
    Financial, Inc.                                                     |  | Incorporated by reference to Exhibit 10.54
    to the Companys Annual Report on Form 10-K for the
    year ended December 31, 2001, file no. 000-20312    |  |  |  | 
|        | 10.56 |             |  | Confidential Separation Agreement and General
    Release of All Claims, dated August 14, 2001, by and
    between the Company, Fidelity National Financial Inc. and Howard
    Latham |  | Incorporated by reference to Exhibit 10.56
    to the Companys Annual Report on Form 10-K for the
    year ended December 31, 2001, file no. 000-20312    |  |  |  | 
|        | 10.57 |             |  | Asset Purchase Agreement, dated as of
    October 25, 2002, between the Company and Homeseekers.com,
    Inc.                                                                          |  | Incorporated by reference to Exhibit 10.57
    to the Companys Annual Report on Form 10-K for the
    year ended December 31, 2001, file no. 000-20312    |  |  |  | 
|        | 10.58 |             |  | Asset Purchase Agreement, dated as of
    November 2, 2001, by and among the Company, ISDI.NET, LLC
    and the Members of ISDI.NET, LLC                                               |  | Incorporated by reference to Exhibit 10.58
    to the Companys Annual Report on Form 10-K for the
    year ended December 31, 2001, file no. 000-20312    |  |  |  | 
|        | 10.59 |             |  | Strategic Alliance Agreement, dated as of
    October 8, 2001, by and between the Company and LexisNexis,
    a division of Reed Elsevier, Inc.                                        |  | Incorporated by reference to Exhibit 10.59
    to the Companys Annual Report on Form 10-K for the
    year ended December 31, 2001, file no. 000-20312    |  |  |  | 
|        | 10.60 |             |  | Agreement for the Sale and Purchase of Stock,
    dated October 10, 2001, by and between the Company and
    Fidelity National Financial, Inc.                                         |  | Incorporated by reference to Exhibit 10.60
    to the Companys Annual Report on Form 10-K for the
    year ended December 31, 2001, file no. 000-20312    |  |  |  | 
|        | 10.61 |             |  | Change in Control Severance Agreement, dated
    April 20, 2001, by and between Vista Information Solutions,
    Inc. and Neil Johnson                                                 |  | Incorporated by reference to Exhibit 10.61
    to the Companys Annual Report on Form 10-K/ A for the
    year ended December 31, 2001, file no. 000-20312 |  |  |  | 
|        | 10.62 |             |  | Employment Agreement, dated June 8, 2001, by
    and between Fidelity National Financial, Inc., and Brian
    Hershkowitz                                                              |  | Incorporated by reference to Exhibit 10.62
    to the Companys Annual Report on Form 10-K/A for the
    year ended December 31, 2001, file no. 000-20312  |  |  |  | 
|        | 10.63 |             |  | Executive Employment Agreement, dated
    January 1, 2001, by and between Vista Information
    Solutions, Inc., and Howard Latham                                                     |  | Incorporated by reference to Exhibit 10.63
    to the Companys Annual Report on Form 10-K/A for the
    year ended December 31, 2001, file no. 000-20312  |  |  |  | 



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##### Table of Contents



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|Exhibit |       |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |               
|Number  |       | Description |  | Method of Filing                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | Page No.      
|        |       |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |               
|        | 10.64 |             |  | Master Services and Intellectual Property
    Agreement, dated March 27, 2003, by and between the Company
    and Fidelity National Financial, Inc. (Portions of this Exhibit
    are omitted and were filed separately with the Secretary of the
    Commission pursuant to the Companys application requesting
    confidential treatment under Rule 406 of the Securities Act
    of 1933.) Schedules to the agreement other than the pricing
    schedules have been omitted. A copy of any Schedule will be
    submitted to the Commission supplementally upon request. |  | Filed herewith |  |  |  | 
|        | 10.65 |             |  | Amended and Restated Revolving Credit Agreement,
    dated December 19, 2002, by and between the Company and
    Fidelity National Financial, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                             |  | Filed herewith |  |  |  | 
|        | 10.65 | .1          |  | Revolving Subordinated Promissory Note, dated
    December 19, 2002, by and between Fidelity National
    Information Solutions, Inc. and Fidelity National Financial, Inc.                                                                                                                                                                                                                                                                                                                                                                                                    |  | Filed herewith |  |  |  | 
|        | 10.66 |             |  | Credit Agreement, dated December 20, 2002,
    by and among the Company, the lenders who are or may become a
    party to the Credit Agreement, Wachovia Bank, National
    Association and U.S. Bank, National Association                                                                                                                                                                                                                                                                                                                                                    |  | Filed herewith |  |  |  | 
|        | 10.67 |             |  | Fidelity National Information Solutions, Inc.
    2001 Stock Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | Filed herewith |  |  |  | 
|        | 10.68 |             |  | Fidelity National Information Solutions, Inc.
    2001 Employee Stock Purchase Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | Filed herewith |  |  |  | 
|        | 10.69 |             |  | Employment Agreement dated July 9, 2002, by
    and between Fidelity National Information Solutions, Inc. and
    Dwayne Walker                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | Filed herewith |  |  |  | 
|        | 10.70 |             |  | Employment Agreement dated January 1, 2003,
    by and between Fidelity National Information Solutions, Inc. and
    Patrick F. Stone                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Filed herewith |  |  |  | 
|        | 21.0  |             |  | Subsidiaries of the Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | Filed herewith |  |  |  | 
|        | 23.0  |             |  | Consent of KPMG LLP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | Filed herewith |  |  |  | 
|        | 99.1  |             |  | Certification by Chief Executive Officer of
    Periodic Financial Reports Pursuant to 18 U.S.C.
    Section 1350                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | Filed herewith |  |  |  | 
|        | 99.2  |             |  | Certification by Chief Financial Officer of
    Periodic Financial Reports Pursuant to 18 U.S.C.
    Section 1350                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | Filed herewith |  |  |  |