##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                     to
 Commission File No. 001-34005
 
 Lender Processing Services, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    26-1547801(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)601 Riverside Avenue Jacksonville, Florida
    
    32204(Address of principal executive offices)
    
    (Zip Code)
 (904) 854-5100  (Registrants telephone number, including area code)
  þ o
  o o
  Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o  o þ




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##### 



PagePart I: FINANCIAL INFORMATION
    
    
    3Item 1. Consolidated Financial Statements (Unaudited).
    
    
    3Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009
    
    
    3Consolidated Statements of Earnings for the three months ended March 31, 2010 and 2009
    
    
    4Consolidated Statements of Comprehensive Earnings for the three months ended March 31, 2010 and 2009
    
    
    5Consolidated Statement of Equity for the three months ended March 31, 2010
    
    
    6Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009
    
    
    7Notes to Consolidated Financial Statements (Unaudited)
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    
    22Item 3. Quantitative and Qualitative Disclosures About Market Risk.
    
    
    33Item 4. Controls and Procedures.
    
    
    33Part II: OTHER INFORMATION
    
    
    34Item 1. Legal Proceedings.
    
    
    34Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
    
    
    35Item 6. Exhibits.
    
    
    35EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



Part I: FINANCIAL INFORMATION
 
 Item 1. Consolidated Financial Statements (Unaudited).
 
 LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
 March
    
    
    December31, 2010
    
    
    31, 2009 (1)(In thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    122,960
    
    
    $
    70,528Trade receivables, net of allowance for doubtful accounts of $25.7 million and $26.0 million, respectively
    
    
    395,581
    
    
    
    401,333Other receivables
    
    
    3,367
    
    
    
    3,770Prepaid expenses and other current assets
    
    
    29,413
    
    
    
    26,985Deferred income taxes, net
    
    
    46,123
    
    
    
    47,528Total current assets
    
    
    597,444
    
    
    
    550,144Property and equipment, net of accumulated depreciation of $151.4 million and $146.2 million, respectively
    
    
    118,310
    
    
    
    113,108Computer software, net of accumulated amortization of $128.1 million and $120.3 million, respectively
    
    
    193,225
    
    
    
    185,376Other intangible assets, net of accumulated amortization of $311.2 million and $304.4 million, respectively
    
    
    66,426
    
    
    
    72,796Goodwill
    
    
    1,166,142
    
    
    
    1,166,142Other non-current assets
    
    
    107,338
    
    
    
    109,738Total assets
    
    $
    2,248,885
    
    
    $
    2,197,304LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    75,100
    
    
    $
    40,100Trade accounts payable
    
    
    43,883
    
    
    
    38,166Accrued salaries and benefits
    
    
    28,786
    
    
    
    54,376Recording and transfer tax liabilities
    
    
    12,329
    
    
    
    15,208Due to affiliates
    
    
    
    
    
    
    3,321Income taxes payable
    
    
    28,890
    
    
    
    Other accrued liabilities
    
    
    158,393
    
    
    
    151,601Deferred revenues
    
    
    63,593
    
    
    
    66,602Total current liabilities
    
    
    410,974
    
    
    
    369,374Deferred revenues
    
    
    35,749
    
    
    
    37,681Deferred income taxes, net
    
    
    70,887
    
    
    
    65,215Long-term debt, net of current portion
    
    
    1,212,975
    
    
    
    1,249,250Other non-current liabilities
    
    
    19,691
    
    
    
    19,926Total liabilities
    
    
    1,750,276
    
    
    
    1,741,446Commitments and contingencies (note 8)Stockholders equity:Preferred stock $0.0001 par value; 50 million shares authorized, none issued at March 31, 2010 and
December 31, 2009, respectively
    
    
    
    
    
    
    Common stock $0.0001 par value; 500 million shares authorized, 97.4 million and 97.0 million shares issued
at March 31, 2010 and December 31, 2009, respectively
    
    
    10
    
    
    
    10Additional paid-in capital
    
    
    191,993
    
    
    
    173,424Retained earnings
    
    
    393,913
    
    
    
    330,963Accumulated other comprehensive loss
    
    
    (5,751
    )
    
    
    (7,630
    )Treasury stock $0.0001 par value; 2.2 million and 1.2 million shares at March 31, 2010 and December 31,
2009, respectively, at cost
    
    
    (81,556
    )
    
    
    (40,909
    )Total stockholders equity
    
    
    498,609
    
    
    
    455,858Total liabilities and stockholders equity
    
    $
    2,248,885
    
    
    $
    2,197,304
 
 (1)
    
    Derived from audited consolidated financial statements.  3




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LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(Unaudited)
 Three months endedMarch 31,2010
    
    
    2009(In thousands, except per share data)Processing and services revenues (note 3)
    
    $
    592,394
    
    
    $
    529,817Cost of revenues (note 3)
    
    
    396,022
    
    
    
    354,702Gross profit
    
    
    196,372
    
    
    
    175,115Selling, general, and administrative expenses (note 3)
    
    
    60,720
    
    
    
    71,178Operating income
    
    
    135,652
    
    
    
    103,937Other income (expense):Interest income
    
    
    623
    
    
    
    524Interest expense
    
    
    (18,845
    )
    
    
    (21,914
    )Other expense, net
    
    
    4
    
    
    
    (1
    )Total other income (expense)
    
    
    (18,218
    )
    
    
    (21,391
    )Earnings from continuing operations before income taxes and
equity in losses of unconsolidated entity
    
    
    117,434
    
    
    
    82,546Provision for income taxes
    
    
    44,918
    
    
    
    31,575Earnings from continuing operations before equity in losses
of unconsolidated entity
    
    
    72,516
    
    
    
    50,971Equity in losses of unconsolidated entity
    
    
    
    
    
    
    (37
    )Earnings from continuing operations
    
    
    72,516
    
    
    
    50,934Discontinued operation, net of tax
    
    
    
    
    
    
    (504
    )Net earnings
    
    
    72,516
    
    
    
    50,430Net earnings attributable to noncontrolling minority interest
    
    
    
    
    
    
    (384
    )Net earnings attributable to Lender Processing Services, Inc.
    
    $
    72,516
    
    
    $
    50,046Amounts attributable to Lender Processing Services, Inc.:Earnings from continuing operations, net of tax
    
    $
    72,516
    
    
    $
    50,550Discontinued operation, net of tax
    
    
    
    
    
    
    (504
    )Net earnings
    
    $
    72,516
    
    
    $
    50,046Net earnings per share  basic from continuing operations
    
    $
    0.76
    
    
    $
    0.53Net earnings per share  basic from discontinued operation
    
    
    
    
    
    
    Net earnings per share  basic
    
    $
    0.76
    
    
    $
    0.53Weighted average shares outstanding  basic
    
    
    95,532
    
    
    
    94,847Net earnings per share  diluted from continuing operations
    
    $
    0.75
    
    
    $
    0.53Net earnings per share  diluted from discontinued operation
    
    
    
    
    
    
    Net earnings per share  diluted
    
    $
    0.75
    
    
    $
    0.53Weighted average shares outstanding  diluted
    
    
    96,416
    
    
    
    95,284
  4




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LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Earnings
(Unaudited)
 Three months endedMarch 31,2010
    
    
    2009(In thousands)Net earnings attributable to Lender Processing Services, Inc.
    
    $
    72,516
    
    
    $
    50,046Other comprehensive earnings:Unrealized (loss) gain on other investments, net of tax
    
    
    (397
    )
    
    
    47Unrealized gain on interest rate swaps, net of tax (1)
    
    
    2,276
    
    
    
    685Other comprehensive earnings
    
    
    1,879
    
    
    
    732Comprehensive earnings attributable to Lender Processing Services, Inc.
    
    $
    74,395
    
    
    $
    50,778
 
 (1)
    
    Net of income tax expense of $1.4 million and $0.4 million for the three months ended
March 31, 2010 and 2009.  5




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LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
Consolidated Statement of Equity
(Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon
    
    
    Common
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    Treasury
    
    
    TotalShares
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Loss
    
    
    Shares
    
    
    Stock
    
    
    Equity(In thousands)Balances, December 31, 2009
    
    
    97,049
    
    
    $
    10
    
    
    $
    173,424
    
    
    $
    330,963
    
    
    $
    (7,630
    )
    
    
    (1,210
    )
    
    $
    (40,909
    )
    
    $
    455,858Net earnings attributable to Lender
Processing Services, Inc.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,516
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,516Cash dividends paid (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,566
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,566
    )Issuance of restricted stock
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of stock options and restricted
stock vesting
    
    
    375
    
    
    
    
    
    
    
    12,778
    
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    (330
    )
    
    
    12,448Income tax expense from exercise of stock
options
    
    
    
    
    
    
    
    
    
    
    (766
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (766
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    6,557
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,557Treasury stock repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,021
    )
    
    
    (40,317
    )
    
    
    (40,317
    )Unrealized loss on investments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (397
    )
    
    
    
    
    
    
    
    
    
    
    (397
    )Unrealized gain on interest rate swaps, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,276
    
    
    
    
    
    
    
    
    
    
    
    2,276Balances, March 31, 2010
    
    
    97,426
    
    
    $
    10
    
    
    $
    191,993
    
    
    $
    393,913
    
    
    $
    (5,751
    )
    
    
    (2,239
    )
    
    $
    (81,556
    )
    
    $
    498,609
 
 (1)
    
    Dividends of $0.10 per common share were paid on March 30, 2010.  6




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LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
 Three months ended March 31,2010
    
    
    2009(In thousands)Cash flows from operating activities:Net earnings attributable to Lender Processing Services, Inc.
    
    $
    72,516
    
    
    $
    50,046Adjustments to reconcile net earnings to net cash provided by operating activities:Depreciation and amortization
    
    
    23,654
    
    
    
    23,991Amortization of debt issuance costs
    
    
    1,148
    
    
    
    1,282Gain on sale of discontinued operation
    
    
    
    
    
    
    (2,574
    )Deferred income taxes, net
    
    
    5,917
    
    
    
    (651
    )Stock-based compensation
    
    
    6,557
    
    
    
    6,843Income tax expense (benefit) from exercise of stock options
    
    
    766
    
    
    
    (1,222
    )Equity in losses of unconsolidated entity
    
    
    
    
    
    
    37Noncontrolling minority interest
    
    
    
    
    
    
    384Changes in assets and liabilities, net of effects of acquisitions:Trade receivables
    
    
    5,752
    
    
    
    (25,871
    )Other receivables
    
    
    403
    
    
    
    4,622Prepaid expenses and other assets
    
    
    (4,109
    )
    
    
    (6,347
    )Deferred revenues
    
    
    (4,941
    )
    
    
    (479
    )Accounts payable, accrued liabilities and other liabilities
    
    
    1,377
    
    
    
    25,312Net cash provided by operating activities
    
    
    109,040
    
    
    
    75,373Cash flows from investing activities:Additions to property and equipment
    
    
    (12,265
    )
    
    
    (11,659
    )Additions to capitalized software
    
    
    (15,779
    )
    
    
    (10,912
    )Acquisition of title plants
    
    
    
    
    
    
    (5,764
    )Acquisitions, net of cash acquired
    
    
    
    
    
    
    490Proceeds from sale of discontinued operation, net of cash distributed
    
    
    
    
    
    
    (32,638
    )Net cash used in investing activities
    
    
    (28,044
    )
    
    
    (60,483
    )Cash flows from financing activities:Debt service payments
    
    
    (1,275
    )
    
    
    (76,276
    )Exercise of stock options and restricted stock vesting
    
    
    12,448
    
    
    
    714Income tax (expense) benefit from exercise of stock options
    
    
    (766
    )
    
    
    1,222Dividends paid
    
    
    (9,566
    )
    
    
    (9,481
    )Treasury stock repurchases
    
    
    (26,427
    )
    
    
    Payments of contingent consideration related to acquisitions
    
    
    (2,978
    )
    
    
    Net cash used in financing activities
    
    
    (28,564
    )
    
    
    (83,821
    )Net increase (decrease) in cash and cash equivalents
    
    
    52,432
    
    
    
    (68,931
    )Cash and cash equivalents, beginning of period
    
    
    70,528
    
    
    
    125,966Cash and cash equivalents, end of period
    
    $
    122,960
    
    
    $
    57,035Supplemental disclosures of cash flow information:Cash paid for interest
    
    $
    25,839
    
    
    $
    28,763Cash paid for taxes
    
    $
    7,641
    
    
    $
    7,746Non-cash redistribution of assets to FIS
    
    $
    
    
    
    $
    434Non-cash consideration received from sale of discontinued operation
    
    $
    
    
    
    $
    40,310Non-cash consideration issued in acquisition of business
    
    $
    
    
    
    $
    (5,162
    )
  7




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##### Table of Contents



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




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##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 (2) Fair Value
 Fair Value of Financial Assets and Liabilities
  
    
    Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical
assets or liabilities in active markets that the Company has the ability to access.
    
    Level 2 Inputs to the valuation methodology include:
 
    
    quoted prices for similar assets or liabilities in active markets;
    
    quoted prices for identical or similar assets or liabilities in inactive markets;
    
    inputs other than quoted prices that are observable for the asset or liability; and
    
    inputs that are derived principally from or corroborated by observable market data by
correlation or other means.
 
    
    Level 3 Inputs to the valuation methodology are unobservable and significant to the fair
value measurement.
    Fair ValueClassification
    
    Carrying Value
    
    Level 1
    
    Level 2
    
    Level 3
    
    TotalCash and cash equivalents
    
    Asset
    
    $
    123.0
    
    
    $
    123.0
    
    
    $
    
    
    
    $
    
    
    
    $
    123.0Long-term debt (note 6)
    
    Liability
    
    
    1,288.1
    
    
    
    393.3
    
    
    
    918.8
    
    
    
    
    
    
    
    1,312.1Interest rate swaps (note 6)
    
    Liability
    
    
    9.5
    
    
    
    
    
    
    
    9.5
    
    
    
    
    
    
    
    9.5
  Fair ValueClassification
    
    Carrying Value
    
    Level 1
    
    Level 2
    
    Level 3
    
    TotalCash and cash equivalents
    
    Asset
    
    $
    70.5
    
    
    $
    70.5
    
    
    $
    
    
    
    $
    
    
    
    $
    70.5Long-term debt (note 6)
    
    Liability
    
    
    1,289.4
    
    
    
    390.7
    
    
    
    912.3
    
    
    
    
    
    
    
    1,303.0Interest rate swaps (note 6)
    
    Liability
    
    
    13.2
    
    
    
    
    
    
    
    13.2
    
    
    
    
    
    
    
    13.2
  9




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##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 Fair Value of Assets Acquired and Liabilities Assumed
  (3) Related Party Transactions
   
    
    Agreements to provide title agency services.These agreements allow us to provide services
to existing customers through loan facilitation transactions, primarily with large national
lenders. The arrangement involves providing title agency services which result in the
issuance of title policies on behalf of title insurance underwriters owned by FNF. Subject to
certain early termination provisions for cause, each of these agreements may be terminated
upon five years prior written notice, which notice may not be given until after the fifth
anniversary of the effective date of each agreement, which ranges from July 2004 through
September 2006 (thus effectively resulting in a minimum ten year term and a rolling one-year
term thereafter). Under these agreements, we earn commissions which, in the aggregate, are
equal to at least 87% of the total title premium from title policies that we place with
subsidiaries of FNF. The commissions we earn are subject to adjustment based on changes in
FNFs provision for claim losses, but under no circumstances are the commissions less than
87%. We also perform similar functions in connection with trustee sale guarantees, a form of
title insurance that subsidiaries of FNF issue as part of the foreclosure process on a
defaulted loan.
    
    Agreements to provide software development and services.Under these agreements, we are
paid for providing software development and services to FNF which consist of developing
software for use in the title operations of FNF.
    
    Arrangements to provide other data services.Under these arrangements, we are paid for
providing other data services to FNF, primarily consisting of data services required by the
FNF title insurance operations.
 10




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LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 
  2010 (1)
    
    
    2009 (2)Title agency commissions
    
    $
    
    
    
    $
    74.8Software development revenue
    
    
    
    
    
    
    13.4Other data related services
    
    
    
    
    
    
    3.4Total revenues
    
    $
    
    
    
    $
    91.6
 
 (1)
    
    Includes revenues generated from FIS under these agreements through February 28, 2010. The
revenues generated from FIS were less than $10,000 during the period from January 1, 2010 to
February 28, 2010. FIS ceased to be a related party of the Company on February 28, 2010. We
continue to generate revenues from contracts that were entered into while FIS was a related
party.(2)
    
    Includes revenues generated from FNF under these agreements through March 31, 2009. FNF
ceased to be a related party of the Company on March 15, 2009; however, it was impracticable
to estimate revenues received from FNF as of that date. We continue to generate revenues from
contracts that were entered into while FNF was a related party. 
    
    Title plant access and title production services.Under these agreements, we obtain access
to FNFs title plants for real property located in various states, including access to their
online databases, physical access to title records, use of space, image system use, and use
of special software, as well as other title production services. For the title plant access,
we pay monthly fees (subject to certain minimum charges) based on the number of title reports
or products ordered and other services received. For the title production services, we pay
for services based on the number of properties searched, subject to certain minimum use. The
title plant access agreement had an initial term of 3 years beginning in November 2006 and is
automatically renewable for successive 3 year terms unless either party gives 30 days prior
written notice. The title production services agreement can be terminated by either party
upon 30 days prior written notice.
    
    Agreements to provide administrative corporate support services to and from FIS and from
FNF. Historically, FNF provided to FIS certain administrative corporate support services
relating to general management, statutory accounting, claims administration, and other
administrative support services. Prior to the spin-off, as a part of FIS, we also received
these administrative corporate support services from FNF. In connection with the spin-off, we
entered into a separate agreement with FNF for the provision of certain of these
administrative corporate support services by FNF. In addition, prior to the spin-off, FIS
provided general management, accounting, treasury, payroll, human resources, internal audit,
and other corporate administrative support services to us. In connection with the spin-off,
we entered into corporate services agreements with FIS under which we receive from FIS, and
we provide to FIS, certain transitional corporate support services. The pricing for all of
these services, both from FNF and FIS, and to FIS, is on an at-cost basis. The term of the
corporate services agreements is two years, subject to early termination because the services
are no longer required by the party receiving the services or upon mutual agreement of the
parties and subject to extension in certain circumstances. Management believes the methods
used to allocate the amounts included in these financial statements for corporate services
are reasonable.
    
    Agreement to receive support services from Ceridian. Ceridian provides certain support
services to our human resources group, including Family and Medical Leave Act (FMLA)
administrative services, military leave administrative services and Consolidated Omnibus
Budget Reconciliation Act (COBRA) health benefit services. The FMLA and military leave
agreement had an initial term of 1 year beginning in January 2010 and is automatically
renewable for successive 1 year terms unless either party gives 90 days prior written notice,
or 30 days after written notice in the event of a breach. The COBRA agreement had an initial
term of 1 year beginning in January 2009 and is automatically renewable for successive 1 year
terms unless either party gives 90 days prior written notice, or 30 days after written notice
in the event of a breach.
 11




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##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 
    
    Corporate aircraft use agreements.Historically the Company has had access to certain
corporate aircraft owned or leased by FNF and by FIS. Pursuant to an aircraft interchange
agreement, LPS is included as an additional permitted user of corporate aircraft leased by
FNF and FIS. FNF and FIS also continue to be permitted users of any aircraft leased by LPS.
LPS was also added as a party to the aircraft cost sharing
agreement that was previously signed between FNF and FIS. Under this agreement, the Company and
FIS share the costs of one of FNFs aircraft that is used by all of the entities. The cost for
use of each aircraft under the aircraft interchange agreement is calculated on the same basis
and reflects the costs attributable to the time the aircraft is in use by the user. The aircraft
interchange agreement is terminable by any party on 30 days prior notice. The costs under the
aircraft cost sharing agreement are shared equally among FNF, FIS and the Company, and the
agreement remains in effect so long as FNF has possession or use of the aircraft (or any
replacement) but may be terminated at any time with the consent of FNF, FIS and the Company.
    
    Real estate management, real estate lease and equipment lease agreements.In connection
with the spin-off and the transfer of the real property located at the Companys corporate
headquarters campus from FIS to LPS, the Company entered into new leases with FNF and FIS, as
tenants, as well as a new sublease with FNF, as sub landlord, for office space in the
building known as Building V, which is leased by FNF and is located on the Companys
corporate headquarters campus. The Company also entered into a new property management
agreement with FNF with respect to Building V. Included in the Companys expenses are amounts
paid to FNF for the lease of certain equipment and the sublease of office space in Building
V, together with furniture and furnishings. In addition, the Companys financials include
amounts paid by FNF and FIS for the lease of office space located at the Companys corporate
headquarters campus and property management services for FNF for Building V.
    
    Licensing, cost sharing, business processing and other agreements.These agreements
provide for the reimbursement of certain amounts from FNF and FIS related to various
licensing and cost sharing agreements, as well as the payment of certain amounts by the
Company to FNF or its subsidiaries in connection with our use of certain intellectual
property or other assets of or services by FNF.
  2010 (1)
    
    
    2009 (2)Title plant information expense (3)
    
    $
    
    
    
    $
    4.1Corporate services (4)
    
    
    (0.1
    )
    
    
    3.5Licensing, leasing and cost sharing agreements (4)
    
    
    0.1
    
    
    
    (1.2
    )Total expenses
    
    $
    
    
    
    $
    6.4
 
 (1)
    
    Includes expense reimbursements paid to or received from FIS under these agreements through
February 28, 2010. FIS ceased to be a related party of the Company on February 28, 2010. We
continue to incur expenses and receive reimbursements under contracts that were entered into
while FIS was a related party.(2)
    
    Includes expense reimbursements paid to or received from FNF under these agreements through
March 31, 2009. FNF ceased to be a related party of the Company on March 15, 2009; however, it
was impracticable to estimate expense reimbursements paid to FNF as of that date. We continue
to incur expenses and receive reimbursements under contracts that were entered into while FNF
was a related party.(3)
    
    Included in cost of revenues.(4)
    
    Included in selling, general, and administrative expenses. 12




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LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
  Other related party transactions:
 FNRES Holdings, Inc. and Investment Property Exchange Services, Inc.
  (4) Net Earnings Per Share
  2010
    
    
    2009Amounts attributable to Lender Processing Services, Inc.:Earnings from continuing operations
    
    $
    72,516
    
    
    $
    50,550Discontinued operation
    
    
    
    
    
    
    (504
    )Net earnings
    
    $
    72,516
    
    
    $
    50,046Weighted average shares outstanding  basic
    
    
    95,532
    
    
    
    94,847Plus: Common stock equivalent shares
    
    
    884
    
    
    
    437Weighted average shares outstanding  diluted
    
    
    96,416
    
    
    
    95,284Net earnings per share  basic from continuing operations
    
    $
    0.76
    
    
    $
    0.53Net earnings per share  basic from discontinued operation
    
    
    
    
    
    
    Net earnings per share  basic
    
    $
    0.76
    
    
    $
    0.53Net earnings per share  diluted from continuing operations
    
    $
    0.75
    
    
    $
    0.53Net earnings per share  diluted from discontinued operation
    
    
    
    
    
    
    Net earnings per share  diluted
    
    $
    0.75
    
    
    $
    0.53
   13




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LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
  (5) Acquisitions and Dispositions
  NRC Rising Tide National Auction & REO Solutions, LLC
  RealEC Technologies, Inc.
  Tax Verification Bureau, Inc.
  14




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##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 FNRES Holdings, Inc.
   (6) Long-Term Debt
  March 31,
    
    
    December 31,2010
    
    
    2009Term A Loan, secured, interest
payable at LIBOR plus 2.00% (2.25% at
March 31, 2010), quarterly principal
amortization, maturing July 2013
    
    $
    420,000
    
    
    $
    420,000Term B Loan, secured, interest payable
at LIBOR plus 2.50% (2.75% at March 31,
2010), quarterly principal amortization,
maturing July 2014
    
    
    501,075
    
    
    
    502,350Revolving Loan, secured, interest
payable at LIBOR plus 2.00%
(Eurocurrency Borrowings), Fed-funds
plus 2.00% (Swingline Borrowings) or
Prime plus 1.00% (Base Rate Borrowings)
(2.25%, 2.09% or 4.25%, respectively, at
March 31, 2010), maturing July 2013.
Total of $138.9 million unused (net of
outstanding letters of credit) as of
March 31, 2010
    
    
    
    
    
    
    Senior unsecured notes, issued at par,
interest payable semiannually at 8.125%,
due July 2016
    
    
    367,000
    
    
    
    367,0001,288,075
    
    
    
    1,289,350Less current portion
    
    
    (75,100
    )
    
    
    (40,100
    )Long-term debt, excluding current portion
    
    $
    1,212,975
    
    
    $
    1,249,250
  Principal Maturities of Debt
  15




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##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 Interest Rate Swaps
   Amount of Loss Recognized in OCE on DerivativesDerivatives in Cash Flow Hedging Relationships
    
    2010
    
    2009Interest rate swap contract
    
    $
    1.2
    
    
    $
    3.9Amount of Loss Reclassified from Accumulated OCE into IncomeLocation of Loss Reclassified from Accumulated OCE into Income
    
    2010
    
    2009Interest expense
    
    $
    (4.7
    )
    
    $
    (4.9
    )
  (7) Income Taxes
  (8) Commitments and Contingencies
 Litigation
  16




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##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 Schneider, Kenneth, et al. vs. Lender Processing Services, Inc., et al.
  Regulatory Matters
  Off-Balance Sheet Arrangements
  Escrow Arrangements
  (9) Stock Option Plans
  17




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##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
      Options
  WeightedWeighted
    
    AverageAverage
    
    RemainingNumber
    
    Exercise
    
    Contractual
    
    Exercisableof Shares
    
    Price
    
    Life
    
    SharesOutstanding as of December 31, 2009
    
    
    6,806,710
    
    
    
    32.16Total Granted
    
    
    6,900
    
    
    
    37.62Exercised (1)
    
    
    (377,063
    )
    
    
    33.89Cancelled
    
    
    
    
    
    
    Outstanding as of March 31, 2010 (2)
    
    
    6,436,547
    
    
    
    32.06
    
    
    
    4.89
    
    
    
    2,987,717
 
 (1)
    
    The total intrinsic value of stock options exercised during the three months ended March 31,
2010 was $2.5 million.(2)
    
    The total intrinsic value of stock options outstanding as of March 31, 2010 was $36.7
million. The total intrinsic value of stock options exercisable as of March 31, 2010 was $15.3
million.  18




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##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 Restricted Stock
  (10) Segment Information
   Technology,
    
    
    LoanData and
    
    
    Transaction
    
    
    CorporateAnalytics
    
    
    Services
    
    
    and Other
    
    
    TotalResults from continuing operations:Processing and services revenues
    
    $
    179,462
    
    
    $
    415,285
    
    
    $
    (2,353
    )
    
    $
    592,394Cost of revenues
    
    
    105,795
    
    
    
    292,609
    
    
    
    (2,382
    )
    
    
    396,022Gross profit
    
    
    73,667
    
    
    
    122,676
    
    
    
    29
    
    
    
    196,372Selling, general and administrative expenses
    
    
    19,811
    
    
    
    23,857
    
    
    
    17,052
    
    
    
    60,720Operating income
    
    $
    53,856
    
    
    $
    98,819
    
    
    $
    (17,023
    )
    
    $
    135,652Depreciation and amortization
    
    $
    16,538
    
    
    $
    5,186
    
    
    $
    1,930
    
    
    $
    23,654Balance sheet data:Total assets
    
    $
    1,166,162
    
    
    $
    831,307
    
    
    $
    251,416
    
    
    $
    2,248,885Goodwill
    
    $
    760,081
    
    
    $
    406,061
    
    
    $
    
    
    
    $
    1,166,142
  Technology,
    
    
    LoanData and
    
    
    Transaction
    
    
    CorporateAnalytics
    
    
    Services
    
    
    and Other
    
    
    TotalResults from continuing operations:Processing and services revenues
    
    $
    159,879
    
    
    $
    374,523
    
    
    $
    (4,585
    )
    
    $
    529,817Cost of revenues
    
    
    90,463
    
    
    
    268,936
    
    
    
    (4,697
    )
    
    
    354,702Gross profit
    
    
    69,416
    
    
    
    105,587
    
    
    
    112
    
    
    
    175,115Selling, general and administrative expenses
    
    
    16,066
    
    
    
    27,359
    
    
    
    27,753
    
    
    
    71,178Operating income
    
    $
    53,350
    
    
    $
    78,228
    
    
    $
    (27,641
    )
    
    $
    103,937Depreciation and amortization
    
    $
    17,375
    
    
    $
    4,608
    
    
    $
    2,003
    
    
    $
    23,986Balance sheet data:Total assets
    
    $
    1,115,028
    
    
    $
    788,151
    
    
    $
    180,112
    
    
    $
    2,083,291Goodwill
    
    $
    734,054
    
    
    $
    377,072
    
    
    $
    
    
    
    $
    1,111,126
 (11) Condensed Consolidating Financial Information
   19




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##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
   TotalParent
    
    
    Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    ConsolidatedCompany
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    AmountsAssets:Current assets
    
    $
    20,669
    
    
    $
    556,332
    
    
    $
    20,443
    
    
    $
    
    
    
    $
    597,444Investment in subsidiaries
    
    
    1,757,539
    
    
    
    
    
    
    
    
    
    
    
    (1,757,539
    )
    
    
    Non-current assets
    
    
    16,313
    
    
    
    1,618,990
    
    
    
    16,138
    
    
    
    
    
    
    
    1,651,441Total assets
    
    $
    1,794,521
    
    
    $
    2,175,322
    
    
    $
    36,581
    
    
    $
    (1,757,539
    )
    
    $
    2,248,885Liabilities and stockholders equity:Current liabilities
    
    $
    82,937
    
    
    $
    312,951
    
    
    $
    15,086
    
    
    $
    
    
    
    $
    410,974Total liabilities
    
    
    1,295,912
    
    
    
    437,836
    
    
    
    16,528
    
    
    
    
    
    
    
    1,750,276Total stockholders equity
    
    
    498,609
    
    
    
    1,737,486
    
    
    
    20,053
    
    
    
    (1,757,539
    )
    
    
    498,609Total liabilities and stockholders
equity
    
    $
    1,794,521
    
    
    $
    2,175,322
    
    
    $
    36,581
    
    
    $
    (1,757,539
    )
    
    $
    2,248,885
  TotalParent
    
    
    Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    ConsolidatedCompany (1)
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    AmountsProcessing and services revenues
    
    $
    
    
    
    $
    524,478
    
    
    $
    67,916
    
    
    $
    
    
    
    $
    592,394Operating expenses
    
    
    6,557
    
    
    
    383,875
    
    
    
    66,310
    
    
    
    
    
    
    
    456,742Operating income
    
    
    (6,557
    )
    
    
    140,603
    
    
    
    1,606
    
    
    
    
    
    
    
    135,652Total other income (expense)
    
    
    (18,845
    )
    
    
    341
    
    
    
    286
    
    
    
    
    
    
    
    (18,218
    )Earnings before income taxes
and equity in earnings of
consolidated entities
    
    
    (25,402
    )
    
    
    140,944
    
    
    
    1,892
    
    
    
    
    
    
    
    117,434Provision for income taxes
    
    
    (9,717
    )
    
    
    53,911
    
    
    
    724
    
    
    
    
    
    
    
    44,918Earnings before equity in
earnings of consolidated
entities
    
    
    (15,685
    )
    
    
    87,033
    
    
    
    1,168
    
    
    
    
    
    
    
    72,516Equity in income of
consolidated entities, net of tax
    
    
    88,201
    
    
    
    
    
    
    
    
    
    
    
    (88,201
    )

    
    
    Net earnings
    
    $
    72,516
    
    
    $
    87,033
    
    
    $
    1,168
    
    
    $
    (88,201
    )
    
    $
    72,516
 20




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LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
  TotalParent
    
    
    Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    ConsolidatedCompany
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    AmountsCash flows from
operating
activities:Net earnings
    
    $
    72,516
    
    
    $
    87,033
    
    
    $
    1,168
    
    
    $
    (88,201
    )
    
    $
    72,516Adjustment to
reconcile net
earnings to net
cash provided by
operating
activities:Non-cash expenses
and other items
    
    
    (79,435
    )
    
    
    29,207
    
    
    
    69
    
    
    
    88,201
    
    
    
    38,042Changes in assets
and liabilities,
net of effects from
acquisitions
    
    
    (20,531
    )
    
    
    13,276
    
    
    
    5,737
    
    
    
    
    
    
    
    (1,518
    )Net cash provided
by operating
activities
    
    
    (27,450
    )
    
    
    129,516
    
    
    
    6,974
    
    
    
    
    
    
    
    109,040Net cash used in
investing
activities
    
    
    
    
    
    
    (28,044
    )
    
    
    
    
    
    
    
    
    
    
    (28,044
    )Net cash used in
financing
activities
    
    
    (25,586
    )
    
    
    (2,978
    )
    
    
    
    
    
    
    
    
    
    
    (28,564
    )Net increase in
cash and cash
equivalents
    
    $
    (53,036
    )
    
    $
    98,494
    
    
    $
    6,974
    
    
    $
    
    
    
    $
    52,432Cash and cash
equivalents,
beginning of period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70,528Cash and cash
equivalents, end of period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    122,960
 (1)
    
    The Parent Company does not allocate corporate overhead to the Subsidiary Guarantors or Other
Subsidiaries.
 (12) Subsequent Events
  Dividend Declared
  Share Repurchases
  21




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##### Table of Contents



Except as otherwise indicated or unless the context otherwise requires, all references to
LPS, we, the Company, or the registrant are to Lender Processing Services, Inc., a Delaware
corporation that was incorporated in December 2007 as a wholly-owned subsidiary of FIS, and its
subsidiaries; all references to FIS, the former parent, or the holding company are to
Fidelity National Information Services, Inc., a Georgia corporation formerly known as Certegy Inc.,
and its subsidiaries, that owned all of LPSs shares until July 2, 2008; all references to former
FIS are to Fidelity National Information Services, Inc., a Delaware corporation, and its
subsidiaries, prior to the merger of Certegy, Inc. and former FIS; all references to old FNF are
to Fidelity National Financial, Inc., a Delaware corporation that owned a majority of former FISs
shares through November 9, 2006; and all references to FNF are to Fidelity National Financial,
Inc. (formerly known as Fidelity National Title Group, Inc.), formerly a subsidiary of old FNF but
now a stand-alone company.
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Overview
   
    
    our mortgage processing services, which we conduct using our mortgage servicing platform
and our team of experienced support personnel based primarily at our Jacksonville, Florida
data center;
 22




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##### Table of Contents




    
    our Desktop application, a workflow system that assists our customers in managing business
processes, which today is primarily used in connection with mortgage loan default management,
but which has broader applications;
    
    our other software and related service offerings, including our mortgage origination
software, our real estate
closing and title insurance production software and our collaborative electronic vendor network,
which provides connectivity among mortgage industry participants; and
    
    our data and analytics businesses, the most significant of which are our alternative
property valuations business, which provides a range of valuations other than traditional
appraisals, our aggregated property and loan data services, our fraud detection solutions and
our advanced analytic services, which assist our customers in their loan marketing, loss
mitigation and fraud prevention efforts.
   
    
    settlement services, which consist of title agency services, in which we act as an agent
for title insurers, and closing services, in which we assist in the closing of real estate
transactions;
    
    appraisal services, which consist of traditional appraisal and appraisal management
services; and
    
    other origination services, which consist of flood zone information, which assists lenders
in determining whether a property is in a federally designated flood zone, and real estate
tax services, which provide lenders with information about the tax status of a property.
  
    
    foreclosure management services, including administrative services to a nationwide network
of independent attorneys and trustees, mandatory title searches, posting and publishing, and
other services;
    
    property inspection and preservation services, designed to preserve the value of properties
securing defaulted loans; and
    
    asset management services, providing disposition services for our customers real estate
owned properties through a network of independent real estate brokers, attorneys and other
vendors to facilitate the transaction.
  Recent Trends and Developments
  23




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24




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Factors Affecting Comparability
  Critical Accounting Policies
  Recent Accounting Pronouncements
    25




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Related Party Transactions
  Results of Operations for the three months ended March 31, 2010 and 2009
  Consolidated Condensed Results of Operations  Unaudited
 Three months ended March 31,
    
    
    
    
    
    
    As a % of Revenue (1) (2)
    
    
    Variance 2010 vs. 2009 (1) (2)(in millions)
    
    2010 (1)
    
    
    2009 (1)
    
    
    2010
    
    
    2009
    
    
    $
    
    
    %Processing and services revenues
    
    $
    592.4
    
    
    $
    529.8
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    62.6
    
    
    
    11.8
    %Cost of revenues
    
    
    396.0
    
    
    
    354.7
    
    
    
    66.8
    %
    
    
    66.9
    %
    
    
    (41.3
    )
    
    
    (11.6
    )%Gross profit
    
    
    196.4
    
    
    
    175.1
    
    
    
    33.2
    %
    
    
    33.1
    %
    
    
    21.3
    
    
    
    12.2
    %Gross margin
    
    
    33.2
    %
    
    
    33.1
    %Selling, general and
administrative expenses
    
    
    60.7
    
    
    
    71.2
    
    
    
    10.2
    %
    
    
    13.5
    %
    
    
    10.5
    
    
    
    14.7
    %Operating income
    
    
    135.7
    
    
    
    103.9
    
    
    
    22.9
    %
    
    
    19.6
    %
    
    
    31.8
    
    
    
    30.6
    %Operating margin
    
    
    22.9
    %
    
    
    19.6
    %Other income (expense)
    
    
    (18.2
    )
    
    
    (21.4
    )
    
    
    3.1
    %
    
    
    4.0
    %
    
    
    3.2
    
    
    
    15.0
    %Earnings from continuing
operations before income taxes
and equity in losses of
unconsolidated entity
    
    
    117.4
    
    
    
    82.5
    
    
    
    19.8
    %
    
    
    15.6
    %
    
    
    34.9
    
    
    
    42.3
    %Provision for income taxes
    
    
    44.9
    
    
    
    31.6
    
    
    
    7.6
    %
    
    
    6.0
    %
    
    
    (13.3
    )
    
    
    (42.1
    )%Earnings from continuing
operations before equity in
losses of unconsolidated
entity, discontinued operation
and noncontrolling minority
interest
    
    
    72.5
    
    
    
    50.9
    
    
    
    12.2
    %
    
    
    9.6
    %
    
    
    21.6
    
    
    
    42.4
    %Equity in losses of
unconsolidated entity,
discontinued operation and
noncontrolling minority
interest
    
    
    
    
    
    
    (0.9
    )
    
    nm
    
    
    nm
    
    
    nm
    
    
    nmNet earnings attributable to
Lender Processing Services,
Inc.
    
    $
    72.5
    
    
    $
    50.0
    
    
    
    12.2
    %
    
    
    9.4
    %
    
    $
    22.5
    
    
    
    45.0
    %Net earnings per share
attributable to Lender
Processing Services, Inc. 
diluted
    
    $
    0.75
    
    
    $
    0.53
 
 (1)
    
    Columns may not total due to rounding.(2)
    
    Certain operating items are not material as a percentage of revenues, as indicated by nm. Processing and Services Revenues
  26




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##### Table of Contents



Cost of Revenues
  Gross Profit
  Selling General and Administrative Expenses
  Operating Income
  Other Income (Expense)
  Income Taxes
  Equity in Losses of Unconsolidated Entity, Discontinued Operation and Noncontrolling Minority
Interest, Net
  27




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Net Earnings and Net Earnings Per Share Attributable to LPS  Diluted
  Segment Results of Operations  Technology, Data and Analytics  Unaudited
 Three months ended March 31,
    
    
    
    
    
    
    
    
    
    As a % of Revenue (1)
    
    
    Variance 2010 vs. 2009 (1)(in millions)
    
    2010 (1)
    
    
    2009 (1)
    
    
    2010
    
    
    2009
    
    
    $
    
    
    %Processing and services revenues
    
    $
    179.5
    
    
    $
    159.9
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    19.6
    
    
    
    12.3
    %Cost of revenues
    
    
    105.8
    
    
    
    90.5
    
    
    
    58.9
    %
    
    
    56.6
    %
    
    
    (15.3
    )
    
    
    (16.9
    )%Gross profit
    
    
    73.7
    
    
    
    69.4
    
    
    
    41.1
    %
    
    
    43.4
    %
    
    
    4.3
    
    
    
    6.2
    %Gross margin
    
    
    41.1
    %
    
    
    43.4
    %Selling, general and administrative expenses
    
    
    19.8
    
    
    
    16.1
    
    
    
    11.0
    %
    
    
    10.1
    %
    
    
    (3.7
    )
    
    
    (23.0
    )%Operating income
    
    $
    53.9
    
    
    $
    53.4
    
    
    
    30.0
    %
    
    
    33.3
    %
    
    $
    0.5
    
    
    
    0.9
    %Operating margin
    
    
    30.0
    %
    
    
    33.3
    %
 
 (1)
    
    Columns may not total due to rounding. Processing and Services Revenues
  Cost of Revenues
  Gross Profit
  Selling General and Administrative Expenses
  28




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##### Table of Contents



Operating Income
  Segment Results of Operations  Loan Transaction Services  Unaudited
 Three months ended March 31,
    
    
    
    
    
    
    
    
    
    As a % of Revenue (1)
    
    
    Variance 2010 vs. 2009 (1)(in millions)
    
    2010 (1)
    
    
    2009 (1)
    
    
    2010
    
    
    2009
    
    
    $
    
    
    %Processing and services revenues
    
    $
    415.3
    
    
    $
    374.5
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    40.8
    
    
    
    10.9
    %Cost of revenues
    
    
    292.6
    
    
    
    268.9
    
    
    
    70.5
    %
    
    
    71.8
    %
    
    
    (23.7
    )
    
    
    (8.8
    )%Gross profit
    
    
    122.7
    
    
    
    105.6
    
    
    
    29.5
    %
    
    
    28.2
    %
    
    
    17.1
    
    
    
    16.2
    %Gross margin
    
    
    29.5
    %
    
    
    28.2
    %Selling, general and administrative expenses
    
    
    23.9
    
    
    
    27.4
    
    
    
    5.8
    %
    
    
    7.3
    %
    
    
    3.5
    
    
    
    12.8
    %Operating income
    
    $
    98.8
    
    
    $
    78.2
    
    
    
    23.8
    %
    
    
    20.9
    %
    
    $
    20.6
    
    
    
    26.3
    %Operating margin
    
    
    23.8
    %
    
    
    20.9
    %
 
 (1)
    
    Columns may not total due to rounding. Processing and Services Revenues
  Cost of Revenues
  Gross Profit
  Selling General and Administrative Expenses
  Operating Income
  29




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##### Table of Contents



Segment Results of Operations  Corporate and Other
  Liquidity and Capital Resources
 Cash Requirements
     Operating Activities
  30




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##### Table of Contents



Investing Activities
   Financing Activities
  Financing
    31




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##### Table of Contents



Interest Rate Swaps
  32




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##### Table of Contents



Contractual Obligations
  Off-Balance Sheet Arrangements
  Escrow Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
    
 Item 4. Controls and Procedures
  33




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##### Table of Contents



Part II: OTHER INFORMATION
 
 Item 1. Legal Proceedings.
 Litigation
  Schneider, Kenneth, et al. vs. Lender Processing Services, Inc., et al.
  Regulatory Matters
  34




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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   Total
    
    ApproximateNumber of
    
    Dollar ValueShares
    
    (in millions) ofTotal
    
    Average
    
    Purchased
    
    Shares thatNumber of
    
    Price
    
    as Part
    
    May Yet BeShares
    
    Paid per
    
    of Publicly
    
    Purchased UnderPeriod
    
    Purchased
    
    Share
    
    Announced Plans
    
    the Plans (1)January 1 to
January 31, 2010
    
    
    406,000
    
    
    $
    40.48
    
    
    
    406,000
    
    
    $
    27.6
    (2)February 1 to
February 28, 2010
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    150.0
    (3)March 1 to March
31, 2010
    
    
    614,711
    
    
    $
    38.85
    
    
    
    614,711
    
    
    $
    126.1
    (3)Total
    
    
    1,020,711
    
    
    
    
    
    
    
    1,020,711
 
 (1)
    
    As of the last day of the respective month.(2)
    
    Reflects the amount remaining available under the $75.0 million authorization approved by our
Board of Directors on June 18, 2009.(3)
    
    Reflects the amount remaining available under the $150.0 million authorization approved by
our Board of Directors on February 5, 2010. 
 Item 6. Exhibits
  31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification by Chief Executive Officer of Periodic Financial Reports pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.32.2
    
    Certification by Chief Financial Officer of Periodic Financial Reports pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
 35




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##### Table of Contents



SIGNATURES
  Date: May 6, 2010
    Lender Processing Services, Inc.By:
    /s/ FRANCIS K. CHANFrancis K. ChanExecutive Vice President and Chief Financial Officer 36




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
FORM 10-Q
INDEX TO EXHIBITS
  ExhibitNo.
    
    Description31.1
    
    Certification of Jeffrey S. Carbiener, Chief Executive Officer of Lender Processing Services,
Inc., pursuant to rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Francis K. Chan, Chief Financial Officer of Lender Processing Services,
Inc., pursuant to rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Jeffrey S. Carbiener, Chief Executive Officer of Lender Processing Services,
Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Francis K. Chan, Chief Financial Officer of Lender Processing Services,
Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 37