##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 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(State or other jurisdiction of incorporation or organization)
    
    26-1547801(I.R.S. Employer Identification No.)601 Riverside Avenue 
Jacksonville, Florida(Address of principal executive offices)
    
    32204(Zip Code)
 (904) 854-5100  (Registrants telephone number, including area code)
  þ o
  o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated
filer þ(Do not check if a smaller reporting company)
Smaller reporting company o  o þ




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##### 



PagePart I: FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements (Unaudited)Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008
    
    
    3Consolidated Statements of Earnings for the three and six months ended June 30, 2009 and 2008
    
    
    4Consolidated Statements of Comprehensive Earnings for the three and six months ended June 30, 2009 and 2008
    
    
    5Consolidated Statement of Equity for the six months ended June 30, 2009
    
    
    6Consolidated Statements of Cash Flows for the three and six months ended June 30, 2009 and 2008
    
    
    7Notes to Consolidated Financial Statements (Unaudited)
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosure About Market Risks
    
    
    37Item 4T. Controls and Procedures
    
    
    38Part II: OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    38Item 1A. Risk Factors
    
    
    39Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    40Item 4. Submission of Matters to a Vote of Security Holders
    
    
    41Item 6. Exhibits
    
    
    41EX-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)
 June
    
    
    December30, 2009
    
    
    31, 2008 (1)(In thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    62,243
    
    
    $
    125,966Trade receivables, net of allowance for doubtful accounts of $31.8 million and $27.2 million, respectively
    
    
    428,650
    
    
    
    344,848Other receivables
    
    
    7,143
    
    
    
    17,393Due from affiliates
    
    
    140
    
    
    
    2,713Prepaid expenses and other current assets
    
    
    23,395
    
    
    
    22,030Deferred income taxes, net
    
    
    40,757
    
    
    
    40,757Total current assets
    
    
    562,328
    
    
    
    553,707Property and equipment, net of accumulated depreciation of $135.7 million and $142.4 million, respectively
    
    
    108,705
    
    
    
    95,542Computer software, net of accumulated amortization of $105.0 million and $87.8 million, respectively
    
    
    169,530
    
    
    
    157,539Other
intangible assets, net of accumulated amortization of $289.2 million and $273.7 million, respectively
    
    
    79,929
    
    
    
    83,489Goodwill
    
    
    1,130,803
    
    
    
    1,091,056Other non-current assets
    
    
    112,608
    
    
    
    122,300Total assets
    
    $
    2,163,903
    
    
    $
    2,103,633LIABILITIES AND EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    77,649
    
    
    $
    145,101Trade accounts payable
    
    
    52,014
    
    
    
    31,720Accrued salaries and benefits
    
    
    41,661
    
    
    
    36,492Recording and transfer tax liabilities
    
    
    17,932
    
    
    
    14,639Due to affiliates
    
    
    1,921
    
    
    
    1,573Other accrued liabilities
    
    
    159,831
    
    
    
    101,612Deferred revenues
    
    
    45,970
    
    
    
    51,628Total current liabilities
    
    
    396,978
    
    
    
    382,765Deferred revenues
    
    
    46,839
    
    
    
    40,343Deferred income taxes, net
    
    
    26,733
    
    
    
    36,557Long-term debt, net of current portion
    
    
    1,330,481
    
    
    
    1,402,350Other non-current liabilities
    
    
    36,320
    
    
    
    39,217Total liabilities
    
    
    1,837,351
    
    
    
    1,901,232Commitments and contingencies (note 8)Equity:Lender Processing Services, Inc. stockholders equity:Preferred stock $0.0001 par value; 50 million shares authorized, none issued at June 30, 2009 and December
31, 2008, respectively
    
    
    
    
    
    
    Common stock $0.0001 par value; 500 million shares authorized, 96.5 million and 95.3 million shares issued
at June 30, 2009 and December 31, 2008, respectively
    
    
    10
    
    
    
    9Additional paid-in capital
    
    
    139,541
    
    
    
    111,849Retained earnings
    
    
    199,692
    
    
    
    93,540Accumulated other comprehensive loss
    
    
    (10,809
    )
    
    
    (13,667
    )Treasury stock $0.0001 par value; 469,556 and 19,870 shares at June 30, 2009 and December 31, 2008,
respectively
    
    
    (13,942
    )
    
    
    (582
    )Total Lender Processing Services, Inc. stockholders equity
    
    
    314,492
    
    
    
    191,149Noncontrolling minority interest
    
    
    12,060
    
    
    
    11,252Total equity
    
    
    326,552
    
    
    
    202,401Total liabilities and equity
    
    $
    2,163,903
    
    
    $
    2,103,633
 
 (1)
    
    Derived from audited consolidated financial statements.  3




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Earnings
(Unaudited)
 Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands, except per share data)Processing and services revenues (note 3)
    
    $
    613,171
    
    
    $
    453,347
    
    
    $
    1,142,988
    
    
    $
    896,907Cost of revenues (note 3)
    
    
    404,014
    
    
    
    293,464
    
    
    
    758,716
    
    
    
    581,850Gross profit
    
    
    209,157
    
    
    
    159,883
    
    
    
    384,272
    
    
    
    315,057Selling, general, and administrative expenses (note 3)
    
    
    65,431
    
    
    
    58,570
    
    
    
    136,609
    
    
    
    113,668Operating income
    
    
    143,726
    
    
    
    101,313
    
    
    
    247,663
    
    
    
    201,389Other income (expense):Interest income
    
    
    442
    
    
    
    303
    
    
    
    966
    
    
    
    563Interest expense
    
    
    (21,625
    )
    
    
    (38
    )
    
    
    (43,539
    )
    
    
    (56
    )Other expense, net
    
    
    (13
    )
    
    
    282
    
    
    
    (14
    )
    
    
    282Total other income (expense)
    
    
    (21,196
    )
    
    
    547
    
    
    
    (42,587
    )
    
    
    789Earnings from continuing operations before income taxes and
equity in losses of unconsolidated entity
    
    
    122,530
    
    
    
    101,860
    
    
    
    205,076
    
    
    
    202,178Provision for income taxes
    
    
    46,866
    
    
    
    39,522
    
    
    
    78,441
    
    
    
    78,445Earnings from continuing operations before equity in losses of
unconsolidated entity
    
    
    75,664
    
    
    
    62,338
    
    
    
    126,635
    
    
    
    123,733Equity in losses of unconsolidated entity
    
    
    
    
    
    
    (413
    )
    
    
    (37
    )
    
    
    (2,370
    )Earnings from continuing operations
    
    
    75,664
    
    
    
    61,925
    
    
    
    126,598
    
    
    
    121,363Discontinued operation, net of tax
    
    
    
    
    
    
    2,032
    
    
    
    (504
    )
    
    
    4,638Net earnings
    
    
    75,664
    
    
    
    63,957
    
    
    
    126,094
    
    
    
    126,001Noncontrolling minority interest
    
    
    (424
    )
    
    
    (411
    )
    
    
    (808
    )
    
    
    (723
    )Net earnings attributable to Lender Processing Services, Inc.
    
    $
    75,240
    
    
    $
    63,546
    
    
    $
    125,286
    
    
    $
    125,278Amounts attributable to Lender Processing Services, Inc.:Earnings from continuing operations, net of tax
    
    $
    75,240
    
    
    $
    61,514
    
    
    $
    125,790
    
    
    $
    120,640Discontinued operation, net of tax
    
    
    
    
    
    
    2,032
    
    
    
    (504
    )
    
    
    4,638Net earnings
    
    $
    75,240
    
    
    $
    63,546
    
    
    $
    125,286
    
    
    $
    125,278Net earnings per share  basic from continuing operations
    
    $
    0.79
    
    
    $
    0.65
    
    
    $
    1.32
    
    
    $
    1.27Net earnings per share  basic from discontinued operation
    
    
    
    
    
    
    0.02
    
    
    
    
    
    
    
    0.05Net earnings per share  basic
    
    $
    0.79
    
    
    $
    0.67
    
    
    $
    1.32
    
    
    $
    1.32Weighted average shares outstanding  basic (1)
    
    
    95,819
    
    
    
    94,611
    
    
    
    95,334
    
    
    
    94,611Net earnings per share  diluted from continuing operations
    
    $
    0.78
    
    
    $
    0.65
    
    
    $
    1.31
    
    
    $
    1.25Net earnings per share  diluted from discontinued operation
    
    
    
    
    
    
    0.02
    
    
    
    
    
    
    
    0.05Net earnings per share  diluted
    
    $
    0.78
    
    
    $
    0.67
    
    
    $
    1.31
    
    
    $
    1.30Weighted average shares outstanding  diluted (1)
    
    
    96,133
    
    
    
    95,070
    
    
    
    95,709
    
    
    
    96,334
 
 (1)
    
    Weighted average shares outstanding data for the three and six months ended June 30, 2008 is
reflected on a pro forma basis (discussed in note 4).  4




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Comprehensive Earnings
(Unaudited)
 Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands)
    
    
    (In thousands)Net earnings attributable to Lender Processing Services, Inc.
    
    $
    75,240
    
    
    $
    63,546
    
    
    $
    125,286
    
    
    $
    125,278Other comprehensive earnings:Unrealized gain (loss) on other investments, net of tax
    
    
    (17
    )
    
    
    250
    
    
    
    30
    
    
    
    250Unrealized gain on interest rate swaps, net of tax
    
    
    2,143
    
    
    
    
    
    
    
    2,828
    
    
    
    Other comprehensive earnings
    
    
    2,126
    
    
    
    250
    
    
    
    2,858
    
    
    
    250Comprehensive earnings attributable to Lender
Processing Services, Inc.
    
    $
    77,366
    
    
    $
    63,796
    
    
    $
    128,144
    
    
    $
    125,528
  5




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statement of Equity
(Unaudited)
 Lender Processing Services, Inc. Stockholders EquityAdditional
    
    
    
    
    
    
    Accumulated Other
    
    
    
    
    
    
    
    
    
    
    NoncontrollingCommon
    
    
    Common
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    Treasury
    
    
    Minority
    
    
    TotalShares
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Earnings (Loss)
    
    
    Shares
    
    
    Stock
    
    
    Interest
    
    
    Equity(In thousands)Balances, December 31,
2008
    
    
    95,284
    
    
    $
    9
    
    
    $
    111,849
    
    
    $
    93,540
    
    
    $
    (13,667
    )
    
    
    (20
    )
    
    $
    (582
    )
    
    $
    11,252
    
    
    $
    202,401Net distribution to FIS
    
    
    
    
    
    
    
    
    
    
    (434
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (434
    )Net earnings
attributable to Lender
Processing Services,
Inc.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125,286
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125,286Net earnings
attributable to
noncontrolling minority
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    808
    
    
    
    808Dividends paid (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,134
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,134
    )Exercise of stock
options and restricted
stock vesting
    
    
    1,265
    
    
    
    1
    
    
    
    13,468
    
    
    
    
    
    
    
    
    
    
    
    (449
    )
    
    
    (13,360
    )
    
    
    
    
    
    
    109Tax benefit associated
with equity
compensation
    
    
    
    
    
    
    
    
    
    
    1,356
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,356Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    13,302
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,302Unrealized gain on
investments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30Unrealized gain on
interest rate swaps,
net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,828
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,828Balances, June 30, 2009
    
    
    96,549
    
    
    $
    10
    
    
    $
    139,541
    
    
    $
    199,692
    
    
    $
    (10,809
    )
    
    
    (469
    )
    
    $
    (13,942
    )
    
    $
    12,060
    
    
    $
    326,552
 
 (1)
    
    Dividends were paid at $0.10 per common share.  6




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
 Six months ended June 30,2009
    
    
    2008(In thousands)Cash flows from operating activities:Net earnings attributable to Lender Processing Services, Inc.
    
    $
    125,286
    
    
    $
    125,278Adjustments to reconcile net earnings to net cash provided by operating activities:Depreciation and amortization
    
    
    47,579
    
    
    
    44,576Amortization of debt issuance costs
    
    
    2,645
    
    
    
    Gain on sale of discontinued operation
    
    
    (2,574
    )
    
    
    Deferred income taxes, net
    
    
    (651
    )
    
    
    3,968Stock-based compensation
    
    
    13,302
    
    
    
    9,120Tax benefit associated with equity compensation
    
    
    (1,356
    )
    
    
    Equity in losses of unconsolidated entity
    
    
    37
    
    
    
    2,370Noncontrolling minority interest
    
    
    808
    
    
    
    723Changes in assets and liabilities, net of effects of acquisitions:Trade receivables
    
    
    (76,919
    )
    
    
    (63,750
    )Other receivables
    
    
    10,264
    
    
    
    (4,348
    )Prepaid expenses and other assets
    
    
    (11,599
    )
    
    
    4,511Deferred revenues
    
    
    (158
    )
    
    
    8,235Accounts payable and other liabilities
    
    
    97,606
    
    
    
    6,000Net cash provided by operating activities
    
    
    204,270
    
    
    
    136,683Cash flows from investing activities:Additions to property and equipment
    
    
    (23,201
    )
    
    
    (9,376
    )Additions to capitalized software
    
    
    (25,206
    )
    
    
    (15,761
    )Acquisition of title plants
    
    
    (9,395
    )
    
    
    Acquisitions, net of cash acquired
    
    
    (16,403
    )
    
    
    (15,488
    )Proceeds from sale of discontinued operation, net of cash distributed
    
    
    (32,638
    )
    
    
    Net cash used in investing activities
    
    
    (106,843
    )
    
    
    (40,625
    )Cash flows from financing activities:Debt service payments
    
    
    (143,481
    )
    
    
    Stock options exercised
    
    
    109
    
    
    
    Tax benefit associated with equity compensation
    
    
    1,356
    
    
    
    Dividends paid
    
    
    (19,134
    )
    
    
    Net distributions to FIS
    
    
    
    
    
    
    (116,996
    )Net cash used in financing activities
    
    
    (161,150
    )
    
    
    (116,996
    )Net decrease in cash and cash equivalents
    
    
    (63,723
    )
    
    
    (20,938
    )Cash and cash equivalents, beginning of period
    
    
    125,966
    
    
    
    39,566Cash and cash equivalents, end of period
    
    $
    62,243
    
    
    $
    18,628Supplemental disclosures of cash flow information:Cash paid for interest
    
    $
    41,828
    
    
    $
    Cash paid for taxes
    
    $
    47,862
    
    
    $
    Non-cash contribution of stock compensation by FIS
    
    $
    
    
    
    $
    9,120Non-cash redistribution of assets to FIS
    
    $
    434
    
    
    $
    (13,801
    )Non-cash consideration received from sale of discontinued operation
    
    $
    40,310
    
    
    $
    Non-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
    8




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
 Principles of Consolidation
  Reporting Segments
   (2) Fair Value
 Fair Value Measurements
 
    
    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

    
    $
    62.2
    
    
    $
    62.2
    
    
    $
    
    
    
    $
    
    
    
    $
    62.2Long-term debt (note 6)
    
  Liability
    
    
    1,408.1
    
    
    
    373.3
    
    
    
    1,004.1
    
    
    
    
    
    
    
    1,377.4Interest rate swaps (note 6)
    
  Liability
    
    
    18.6
    
    
    
    
    
    
    
    18.6
    
    
    
    
    
    
    
    18.6
 9




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
 (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 and its
subsidiaries. Subject to certain early termination provisions for cause, each of these
agreements may be terminated upon five years prior written notice, which notice may not be
given until after the fifth anniversary of the effective date of each agreement, which ranges
from July 2004 through September 2006 (thus effectively resulting in a minimum ten year term
and a rolling one-year term thereafter). Under these agreements, we earn commissions which,
in aggregate, are equal to approximately 87% of the total title premium from title policies
that we place with subsidiaries of FNF. We also perform similar functions in connection with
trustee sale guarantees, a form of title insurance that subsidiaries of FNF issue as part of
the foreclosure process on a defaulted loan.
    
    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.
  Three months ended June 30,
    
    
    Six months ended June 30,2009(1)
    
    
    2008
    
    
    2009(1)
    
    
    2008Title agency commissions
    
    $
    
    
    
    $
    34.2
    
    
    $
    74.8
    
    
    $
    66.8Software development revenue
    
    
    
    
    
    
    14.3
    
    
    
    13.4
    
    
    
    28.1Other data related services
    
    
    
    
    
    
    3.6
    
    
    
    3.4
    
    
    
    7.1Total revenues
    
    $
    
    
    
    $
    52.1
    
    
    $
    91.6
    
    
    $
    102.0
 
 (1)
    
    Does not include revenues received from FNF under these agreements subsequent to March
15, 2009, as FNF ceased to be a related party of the Company on 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
 10




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
 plant access agreement has a 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 has 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.
    
    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 located on the Companys corporate headquarters campus which
we lease to FNF. 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.
 11




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
  Three months ended June 30,
    
    
    Six months ended June 30,2009(1)
    
    
    2008
    
    
    2009(1)
    
    
    2008Title plant information expense (2)
    
    $
    
    
    
    $
    2.1
    
    
    $
    4.1
    
    
    $
    4.7Corporate services (3)
    
    
    3.1
    
    
    
    13.9
    
    
    
    6.6
    
    
    
    27.6Licensing, leasing and cost sharing agreements (3)
    
    
    (0.7
    )
    
    
    (5.5
    )
    
    
    (1.9
    )
    
    
    (6.0
    )Total expenses
    
    $
    2.4
    
    
    $
    10.5
    
    
    $
    8.8
    
    
    $
    26.3
 
 (1)
    
    Does not include expense reimbursements paid to FNF under these agreements subsequent to
March 15, 2009, as FNF ceased to be a related party of the Company on that date. We continue
to incur expenses from contracts that were entered into while FNF was a related party.(2)
    
    Included in cost of revenues.(3)
    
    Included in selling, general, and administrative expenses.  Other related party transactions:
 FNRES Holdings, Inc. and Investment Property Exchange Services, Inc.
  12




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
 (4) Unaudited Net Earnings Per Share
 Earnings Per Share
 Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Amounts attributable to Lender Processing Services, Inc.:Earnings from continuing operations
    
    $
    75,240
    
    
    $
    61,514
    
    
    $
    125,790
    
    
    $
    120,640Discontinued operation
    
    
     ̄
    
    
    
    2,032
    
    
    
    (504
    )
    
    
    4,638Net earnings
    
    $
    75,240
    
    
    $
    63,546
    
    
    $
    125,286
    
    
    $
    125,278Weighted average shares outstanding  basic (1)
    
    
    95,819
    
    
    
    94,611
    
    
    
    95,334
    
    
    
    94,611Plus: Common stock equivalent shares
    
    
    314
    
    
    
    459
    
    
    
    375
    
    
    
    1,723Weighted average shares outstanding  diluted (1)
    
    
    96,133
    
    
    
    95,070
    
    
    
    95,709
    
    
    
    96,334Net earnings per share  basic from continuing operations
    
    $
    0.79
    
    
    $
    0.65
    
    
    $
    1.32
    
    
    $
    1.27Net earnings per share  basic from discontinued operation
    
    
    
    
    
    
    0.02
    
    
    
    
    
    
    
    0.05Net earnings per share  basic
    
    $
    0.79
    
    
    $
    0.67
    
    
    $
    1.32
    
    
    $
    1.32Net earnings per share  diluted from continuing operations
    
    $
    0.78
    
    
    $
    0.65
    
    
    $
    1.31
    
    
    $
    1.25Net earnings per share  diluted from discontinued operation
    
    
    
    
    
    
    0.02
    
    
    
    
    
    
    
    0.05Net earnings per share  diluted
    
    $
    0.78
    
    
    $
    0.67
    
    
    $
    1.31
    
    
    $
    1.30
 
 (1)
    
    Due to the nature and timing of the spin-off, the number of outstanding shares issued in
the initial formation and capitalization of the Company were the only shares outstanding
prior to the spin-off. As such, weighted average shares outstanding  basic for the three
and six months ended June 30, 2008 was calculated using the number of the outstanding shares
issued by LPS on July 2, 2008. Weighted average shares outstanding  diluted for the three
months ended June 30, 2008 was calculated using the number of dilutive common stock
equivalents converted into stock options and awards of our common stock on July 2, 2008.
Weighted average shares outstanding  diluted for the six months ended June 30, 2008 was
calculated as the average of the weighted average shares outstanding  diluted for the
three months ended March 31, 2008 and June 30, 2008.  (5) Acquisitions and Dispositions
  Tax Verification Bureau, Inc.
  13




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
  FNRES Holdings, Inc.
  Accounting for the Impairment or Disposal of Long-Lived
Assets
   McDash Analytics, LLC
  14




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
 (6) Long-Term Debt
  June 30,
    
    
    December 31,2009
    
    
    2008Term A Loan, secured, interest payable at LIBOR plus 2.50%
(2.81% at June 30, 2009), quarterly principal amortization,
maturing July 2013
    
    $
    525,000
    
    
    $
    665,000Term B Loan, secured, interest payable at LIBOR plus 2.50%
(2.81% at June 30, 2009), quarterly principal amortization,
maturing July 2014
    
    
    504,900
    
    
    
    507,450Revolving Loan, secured, interest payable at LIBOR plus 2.50%
(Eurocurrency Borrowings), Fed-funds plus 2.50% (Swingline
Borrowings) or Prime plus 1.50% (Base Rate Borrowings) (2.81%,
2.72% or 4.75%, respectively, at June 30, 2009), maturing July
2013. Total of $139.1 million unused (net of outstanding letters
of credit) as of June 30, 2009
    
    
    
    
    
    
    Senior unsecured notes, issued at par, interest payable
semiannually at 8.125%, due July 2016
    
    
    375,000
    
    
    
    375,000Other promissory notes with various interest rates and maturities
    
    
    3,230
    
    
    
    11,408,130
    
    
    
    1,547,451Less current portion
    
    
    (77,649
    )
    
    
    (145,101
    )Long-term debt, excluding current portion
    
    $
    1,330,481
    
    
    $
    1,402,350
  Interest Rate Swaps
 Accounting for Derivative
Instruments and Hedging Activities
  Amount
of Loss Recognized in OCE on DerivativeThree Months Ended
    
    Six Months EndedDerivatives in SFAS 133 Cash Flow Hedging Relationships
    
    June 30, 2009
    
    June 30, 2009Interest rate swap contract
    

    $1.3
    
    

    $5.2Amount of Loss Reclassified from Accumulated OCE into IncomeLocation Of Loss Reclassified
    
    Three Months Ended
    
    Six Months Endedfrom Accumulated OCE into Income
    
    June 30, 2009
    
    June 30, 2009Interest expense
    
    $
    (5.0
    )
    
    $
    (9.9
    )
  15




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
 Principal Maturities of Debt
  (7) Income Taxes
 Accounting for Uncertainty in Income Taxes .
 (8) Commitments and Contingencies
 Litigation
  
    
    These matters raise difficult and complicated factual and legal issues and are subject to
many uncertainties and complexities.
    
    In these matters, plaintiffs seek a variety of remedies including equitable relief in the
form of injunctive and other remedies and monetary relief in the form of compensatory
damages. In some cases, the monetary damages sought include punitive or treble damages. None
of the cases described below includes a specific statement as to the dollar amount of
damages demanded. Instead, each of the cases includes a demand in an amount to be proved at
trial.
    
    For the reasons specified above, it is not possible to make meaningful estimates of the
amount or range of loss that could result from these matters at this time. We review these
matters on an ongoing basis and follow the provisions of Statement of Financial Accounting
Standards No. 5, Accounting for Contingencies, when making accrual and disclosure decisions.
When assessing reasonably possible and probable outcomes, we base our decision on our
assessment of the ultimate outcome following all appeals.
    
    We intend to vigorously defend each of these matters, and we do not believe that the
ultimate disposition of these lawsuits will have a material adverse impact on our financial
position.
 National Title Insurance of New York, Inc. Litigation
  16




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
 Regulatory Matters
  Off-Balance Sheet Arrangements
  Escrow Arrangements
  (9) Stock Option Plans
 Prior to spin-off
   Post spin-off
  17




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
    Options
  Weighted AverageNumber of Shares
    
    Exercise PriceOutstanding as of December 31, 2008
    
    
    6,761,115
    
    
    $
    31.16Granted on May 14, 2009
    
    
    1,919,400
    
    
    
    28.37Exercised during the first six months of 2009 (1)
    
    
    (770,349
    )
    
    
    17.48Cancelled during the first six months of 2009
    
    
    (598,819
    )
    
    
    35.29Outstanding as of June 30, 2009
    
    
    7,311,347
    
    
    $
    31.53
 
 (1)
    
    The total intrinsic value of stock options exercised during the six months ended June 30,
2009 was $9.0 million.  18




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
  Options Outstanding
    
    Options ExercisableWeighted
    
    
    
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    Weighted
    
    Intrinsic
    
    
    
    
    
    Average
    
    Weighted
    
    IntrinsicRemaining
    
    Average
    
    Value at
    
    
    
    
    
    Remaining
    
    Average
    
    Value atRange of
    
    Number of
    
    Contractual
    
    Exercise
    
    June 30,
    
    Number of
    
    Contractual
    
    Exercise
    
    June 30,Exercise Prices
    
    Options
    
    Life
    
    Price
    
    2009
    
    Options
    
    Life
    
    Price
    
    2009(In thousands)
    
    
    
    
    
    
    
    
    
    
    
    
    
    (In thousands)$   0.00
    
    $
    13.67
    
    
    
    513,441
    
    
    
    4.98
    
    
    $
    12.29
    
    
    $
    8,588
    
    
    
    421,449
    
    
    
    4.82
    
    
    $
    11.99
    
    
    $
    7,17613.68
    
    
    20.00
    
    
    
    167,154
    
    
    
    2.52
    
    
    
    18.30
    
    
    
    1,791
    
    
    
    167,154
    
    
    
    2.52
    
    
    
    18.30
    
    
    
    1,79120.01
    
    
    25.00
    
    
    
    13,590
    
    
    
    2.38
    
    
    
    22.78
    
    
    
    85
    
    
    
    13,590
    
    
    
    2.38
    
    
    
    22.78
    
    
    
    8525.01
    
    
    29.02
    
    
    
    2,082,016
    
    
    
    6.59
    
    
    
    28.27
    
    
    
    1,568
    
    
    
    162,616
    
    
    
    5.83
    
    
    
    27.05
    
    
    
    32029.03
    
    
    33.00
    
    
    
    38,730
    
    
    
    6.15
    
    
    
    32.37
    
    
    
    
    
    
    
    30,150
    
    
    
    6.42
    
    
    
    32.37
    
    
    
    33.01
    
    
    35.00
    
    
    
    1,918,860
    
    
    
    5.51
    
    
    
    34.57
    
    
    
    
    
    
    
    426,907
    
    
    
    5.51
    
    
    
    34.53
    
    
    
    35.01
    
    
    36.00
    
    
    
    529,099
    
    
    
    5.48
    
    
    
    35.17
    
    
    
    
    
    
    
    305,066
    
    
    
    5.48
    
    
    
    35.17
    
    
    
    36.01
    
    
    37.00
    
    
    
    373,072
    
    
    
    4.46
    
    
    
    36.20
    
    
    
    
    
    
    
    344,854
    
    
    
    4.46
    
    
    
    36.17
    
    
    
    37.01
    
    
    38.00
    
    
    
    1,675,385
    
    
    
    5.47
    
    
    
    37.20
    
    
    
    
    
    
    
    677,705
    
    
    
    5.47
    
    
    
    37.20
    
    
    
    $   0.00
    
    $
    38.00
    
    
    
    7,311,347
    
    
    
    5.64
    
    
    $
    31.53
    
    
    $
    12,032
    
    
    
    2,549,491
    
    
    
    5.06
    
    
    $
    30.18
    
    
    $
    9,372
  Restricted Stock
  (10) Segment Information
   Technology,
    
    
    LoanData and
    
    
    Transaction
    
    
    CorporateAnalytics
    
    
    Services
    
    
    and Other
    
    
    TotalResults from continuing operations:Processing and services revenues
    
    $
    171,889
    
    
    $
    448,044
    
    
    $
    (6,762
    )
    
    $
    613,171Cost of revenues
    
    
    98,929
    
    
    
    311,349
    
    
    
    (6,264
    )
    
    
    404,014Gross profit
    
    
    72,960
    
    
    
    136,695
    
    
    
    (498
    )
    
    
    209,157Selling, general and administrative expenses
    
    
    17,824
    
    
    
    27,064
    
    
    
    20,543
    
    
    
    65,431Operating income
    
    $
    55,136
    
    
    $
    109,631
    
    
    $
    (21,041
    )
    
    $
    143,726Depreciation and amortization
    
    $
    16,441
    
    
    $
    5,126
    
    
    $
    2,021
    
    
    $
    23,588Balance sheet data:Total assets
    
    $
    1,138,154
    
    
    $
    828,721
    
    
    $
    197,028
    
    
    $
    2,163,903Goodwill
    
    $
    753,731
    
    
    $
    377,072
    
    
    $
    
    
    
    $
    1,130,803
 19




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##### Table of Contents



LENDER PROCESSING SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
  Technology,
    
    
    LoanData and
    
    
    Transaction
    
    
    CorporateAnalytics
    
    
    Services
    
    
    and Other
    
    
    TotalResults from continuing operations:Processing and services revenues
    
    $
    141,744
    
    
    $
    315,314
    
    
    $
    (3,711
    )
    
    $
    453,347Cost of revenues
    
    
    81,397
    
    
    
    215,838
    
    
    
    (3,771
    )
    
    
    293,464Gross profit
    
    
    60,347
    
    
    
    99,476
    
    
    
    60
    
    
    
    159,883Selling, general and administrative expenses
    
    
    17,471
    
    
    
    27,154
    
    
    
    13,945
    
    
    
    58,570Operating income
    
    $
    42,876
    
    
    $
    72,322
    
    
    $
    (13,885
    )
    
    $
    101,313Depreciation and amortization
    
    $
    13,971
    
    
    $
    5,290
    
    
    $
    1,599
    
    
    $
    20,860Balance sheet data (including discontinued operation):Total assets
    
    $
    1,049,342
    
    
    $
    872,854
    
    
    $
    63,544
    
    
    $
    1,985,740Goodwill
    
    $
    697,226
    
    
    $
    389,380
    
    
    $
    
    
    
    $
    1,086,606
  Technology,
    
    
    LoanData and
    
    
    Transaction
    
    
    CorporateAnalytics
    
    
    Services
    
    
    and Other
    
    
    TotalResults from continuing operations:Processing and services revenues
    
    $
    331,768
    
    
    $
    822,567
    
    
    $
    (11,347
    )
    
    $
    1,142,988Cost of revenues
    
    
    189,392
    
    
    
    580,285
    
    
    
    (10,961
    )
    
    
    758,716Gross profit
    
    
    142,376
    
    
    
    242,282
    
    
    
    (386
    )
    
    
    384,272Selling, general and administrative expenses
    
    
    33,890
    
    
    
    54,423
    
    
    
    48,296
    
    
    
    136,609Operating income
    
    $
    108,486
    
    
    $
    187,859
    
    
    $
    (48,682
    )
    
    $
    247,663Depreciation and amortization
    
    $
    33,816
    
    
    $
    9,734
    
    
    $
    4,024
    
    
    $
    47,574
  Technology,
    
    
    LoanData and
    
    
    Transaction
    
    
    CorporateAnalytics
    
    
    Services
    
    
    and Other
    
    
    TotalResults from continuing operations:Processing and services revenues
    
    $
    277,568
    
    
    $
    626,378
    
    
    $
    (7,039
    )
    
    $
    896,907Cost of revenues
    
    
    155,507
    
    
    
    433,506
    
    
    
    (7,163
    )
    
    
    581,850Gross profit
    
    
    122,061
    
    
    
    192,872
    
    
    
    124
    
    
    
    315,057Selling, general and administrative expenses
    
    
    33,729
    
    
    
    52,498
    
    
    
    27,441
    
    
    
    113,668Operating income
    
    $
    88,332
    
    
    $
    140,374
    
    
    $
    (27,317
    )
    
    $
    201,389Depreciation and amortization
    
    $
    29,986
    
    
    $
    11,453
    
    
    $
    3,094
    
    
    $
    44,533
 (11) Subsequent Events
  Subsequent Events
 20




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##### Table of Contents



Except as otherwise indicated or unless the context otherwise requires, all references to
LPS, we, the Company, or the registrant are to Lender Processing Services, Inc., a Delaware
corporation that was incorporated in December 2007 as a wholly-owned subsidiary of FIS, and its
subsidiaries; all references to FIS, the former parent, or the holding company are to
Fidelity National Information Services, Inc., a Georgia corporation formerly known as Certegy Inc.,
and its subsidiaries, that owned all of LPSs shares until July 2, 2008; all references to former
FIS are to Fidelity National Information Services, Inc., a Delaware corporation, and its
subsidiaries, prior to the Certegy merger described below; all references to old FNF are to
Fidelity National Financial, Inc., a Delaware corporation that owned a majority of 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;
    
    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;
 21




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##### Table of Contents




    
    our other software and related service offerings, including our mortgage origination software, our real estate
closing and title insurance production software and our middleware application which
provides collaborative network connectivity among mortgage industry participants; and
    
    our data and analytics businesses, the most significant of which are our alternative property
valuations business, which provides a range of valuations other than traditional appraisals,
our aggregated property and loan data services, and our advanced analytic services, which assist
our customers in their loan marketing or loss mitigation efforts.
   
    
    settlement services, which consist of title agency services, in which we act as an agent
for title insurers, closing services, in which we assist in the closing of real estate
transactions, and lien recording and release services;
    
    appraisal services, which consist of traditional appraisal and appraisal management
services; and
    
    other origination services, which consist of 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 access to a nationwide network of independent
attorneys, mandatory title searches, posting and publishing, and recording and other
services;
    
    property inspection and preservation services, designed to preserve the value of
properties securing defaulted loans; and
    
    asset management services, providing disposition services for our customers real estate
owned properties through a network of independent real estate brokers, attorneys and other
vendors to facilitate the transaction.
   Recent Trends and Developments
  22




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23




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##### Table of Contents



24




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##### Table of Contents



Critical Accounting Policies
  Recent Accounting Pronouncements
 The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles
( The Hierarchy of Generally Accepted Accounting
Principles
 Subsequent Events
 Accounting for
Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies Business Combinations
 Recognition and Presentation
of Other-Than-Temporary Impairments Accounting for Certain
Investments in Debt and Equity Securities
 25




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##### Table of Contents



Interim Disclosures about Fair
Value of Financial Instruments Disclosures about Fair Value of
Financial Instruments Interim Financial
Reporting
 Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating Securities
 Disclosures about Derivative Instruments and
Hedging Activities-an amendment of FASB Statement No. 133.
 Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Fair Value Measurements Effective Date of FASB Statement No. 157
 26




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##### Table of Contents



Transactions with Related Parties
  Factors Affecting Comparability
  
    
    On July 2, 2008, we borrowed $1,235.7 million under bank credit facilities, including
$25.7 million under a revolving credit facility. We also issued senior notes in an aggregate
principal amount of $375.0 million. Prior to July 2, 2008 we had no debt and an insignificant amount of interest expense.
  Comparisons of three months ended June 30, 2009 and 2008
  Consolidated Condensed Results of Operations  Unaudited
 Three months ended June 30,
    
    
    
    
    
    
    
    
    
    As a % of Revenue
    
    
    Variance 2009 vs. 2008(in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    $
    
    
    %Processing and services revenues
    
    $
    613.2
    
    
    $
    453.3
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    159.9
    
    
    
    35.3
    %Cost of revenues
    
    
    404.0
    
    
    
    293.4
    
    
    
    65.9
    %
    
    
    64.7
    %
    
    
    (110.6
    )
    
    
    (37.7
    )%Gross profit
    
    
    209.2
    
    
    
    159.9
    
    
    
    34.1
    %
    
    
    35.3
    %
    
    
    49.3
    
    
    
    30.8
    %Gross margin
    
    
    34.1
    %
    
    
    35.3
    %Selling, general and administrative expenses
    
    
    65.4
    
    
    
    58.6
    
    
    
    10.7
    %
    
    
    12.9
    %
    
    
    (6.8
    )
    
    
    (11.6
    )%Operating income
    
    
    143.8
    
    
    
    101.3
    
    
    
    23.4
    %
    
    
    22.3
    %
    
    
    42.5
    
    
    
    42.0
    %Operating margin
    
    
    23.4
    %
    
    
    22.3
    %Other income (expense)
    
    
    (21.2
    )
    
    
    0.6
    
    
    
    3.5
    %
    
    nm
    
    
    
    (21.8
    )
    
    nmEarnings from continuing operations before income taxes and equity
in losses of unconsolidated entity
    
    
    122.6
    
    
    
    101.9
    
    
    
    20.0
    %
    
    
    22.5
    %
    
    
    20.7
    
    
    
    20.3
    %Provision for income taxes
    
    
    46.9
    
    
    
    39.5
    
    
    
    7.6
    %
    
    
    8.7
    %
    
    
    (7.4
    )
    
    
    (18.7
    )%Earnings from continuing operations before equity in losses of unconsolidated
entity, discontinued operations and noncontrolling minority interest
    
    
    75.7
    
    
    
    62.4
    
    
    
    12.3
    %
    
    
    13.8
    %
    
    
    13.3
    
    
    
    21.3
    %Equity in earnings (losses) of unconsolidated entity, discontinued operation and
noncontrolling minority interest
    
    
    (0.4
    )
    
    
    1.2
    
    
    nm
    
    
    nm
    
    
    nm
    
    
    nmNet earnings attributable to Lender Processing Services, Inc.
    
    $
    75.3
    
    
    $
    63.6
    
    
    
    12.3
    %
    
    
    14.0
    %
    
    $
    11.7
    
    
    
    18.4
    %Net earnings per share attributable to Lender Processing Services, Inc.  diluted
    
    $
    0.78
    
    
    $
    0.67
 Processing and Services Revenues
  27




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Cost of Revenues
  Gross Profit
  Selling General and Administrative Expenses
  Operating Income
  Other Income (Expense)
  Income Taxes
  Equity in Earnings (Losses) of Unconsolidated Entity, Discontinued Operations and
Noncontrolling Minority Interest
  Net Earnings and Net Earnings Per Share Attributable to LPS  Diluted
  28




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##### Table of Contents



Segment Results of Operations  Technology, Data and Analytics  Unaudited
 Three months ended June 30,
    
    
    
    
    
    
    
    
    
    As a % of Revenue
    
    
    Variance 2009 vs. 2008(in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    $
    
    
    %Processing and services revenues
    
    $
    171.9
    
    
    $
    141.7
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    30.2
    
    
    
    21.3
    %Cost of revenues
    
    
    98.9
    
    
    
    81.4
    
    
    
    57.5
    %
    
    
    57.4
    %
    
    
    (17.5
    )
    
    
    (21.5
    )%Gross profit
    
    
    73.0
    
    
    
    60.3
    
    
    
    42.5
    %
    
    
    42.6
    %
    
    
    12.7
    
    
    
    21.1
    %Gross margin
    
    
    42.5
    %
    
    
    42.6
    %Selling, general and administrative expenses
    
    
    17.8
    
    
    
    17.5
    
    
    
    10.4
    %
    
    
    12.4
    %
    
    
    (0.3
    )
    
    
    (1.7
    )%Operating income
    
    $
    55.2
    
    
    $
    42.8
    
    
    
    32.1
    %
    
    
    30.2
    %
    
    $
    12.4
    
    
    
    29.0
    %Operating margin
    
    
    32.1
    %
    
    
    30.2
    %
 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  Loan Transaction Services  Unaudited
 Three months ended June 30,
    
    
    
    
    
    
    
    
    
    As a % of Revenue
    
    
    Variance 2009 vs. 2008(in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    $
    
    
    %Processing and services revenues
    
    $
    448.0
    
    
    $
    315.3
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    132.7
    
    
    
    42.1
    %Cost of revenues
    
    
    311.3
    
    
    
    215.8
    
    
    
    69.5
    %
    
    
    68.4
    %
    
    
    (95.5
    )
    
    
    (44.3
    )%Gross profit
    
    
    136.7
    
    
    
    99.5
    
    
    
    30.5
    %
    
    
    31.6
    %
    
    
    37.2
    
    
    
    37.4
    %Gross margin
    
    
    30.5
    %
    
    
    31.6
    %Selling, general and administrative expenses
    
    
    27.1
    
    
    
    27.2
    
    
    
    6.0
    %
    
    
    8.6
    %
    
    
    0.1
    
    
    
    0.4
    %Operating income
    
    $
    109.6
    
    
    $
    72.3
    
    
    
    24.5
    %
    
    
    22.9
    %
    
    $
    37.3
    
    
    
    51.6
    %Operating margin
    
    
    24.5
    %
    
    
    22.9
    %
 Processing and Services Revenues
  Cost of Revenues
  Gross Profit
  Selling General and Administrative Expenses
  Operating Income
  Segment Results of Operations  Corporate and Other  Unaudited
  30




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##### Table of Contents



Comparisons of six months ended June 30, 2009 and 2008
  Consolidated Condensed Results of Operations  Unaudited
 Six months ended June 30,
    
    
    
    
    
    
    
    
    
    As a % of Revenue
    
    
    Variance 2009 vs. 2008(in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    $
    
    
    %Processing and services revenues
    
    $
    1,143.0
    
    
    $
    896.9
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    246.1
    
    
    
    27.4
    %Cost of revenues
    
    
    758.7
    
    
    
    581.8
    
    
    
    66.4
    %
    
    
    64.9
    %
    
    
    (176.9
    )
    
    
    (30.4
    )%Gross profit
    
    
    384.3
    
    
    
    315.1
    
    
    
    33.6
    %
    
    
    35.1
    %
    
    
    69.2
    
    
    
    22.0
    %Gross margin
    
    
    33.6
    %
    
    
    35.1
    %Selling, general and administrative expenses
    
    
    136.6
    
    
    
    113.7
    
    
    
    11.9
    %
    
    
    12.6
    %
    
    
    (22.9
    )
    
    
    (20.1
    )%Operating income
    
    
    247.7
    
    
    
    201.4
    
    
    
    21.7
    %
    
    
    22.5
    %
    
    
    46.3
    
    
    
    23.0
    %Operating margin
    
    
    21.7
    %
    
    
    22.5
    %Other income (expense)
    
    
    (42.6
    )
    
    
    0.8
    
    
    
    3.7
    %
    
    nm
    
    
    
    (43.4
    )
    
    nmEarnings from continuing operations before income taxes and equity
in losses of unconsolidated entity
    
    
    205.1
    
    
    
    202.2
    
    
    
    17.9
    %
    
    
    22.5
    %
    
    
    2.9
    
    
    
    1.4
    %Provision for income taxes
    
    
    78.5
    
    
    
    78.4
    
    
    
    6.9
    %
    
    
    8.7
    %
    
    
    (0.1
    )
    
    
    (0.1
    )%Earnings from continuing operations before equity in losses of unconsolidated
entity, discontinued operations and noncontrolling minority interest
    
    
    126.6
    
    
    
    123.8
    
    
    
    11.1
    %
    
    
    13.8
    %
    
    
    2.8
    
    
    
    2.3
    %Equity in earnings (losses) of unconsolidated entity, discontinued operations and
noncontrolling interest
    
    
    (1.3
    )
    
    
    1.5
    
    
    nm
    
    
    nm
    
    
    nm
    
    
    nmNet earnings attributable to Lender Processing Services, Inc.
    
    $
    125.3
    
    
    $
    125.3
    
    
    
    11.0
    %
    
    
    14.0
    %
    
    $
    0.0
    
    
    
    0.0
    %Net earnings per share attributable to Lender Processing Services, Inc.  diluted
    
    $
    1.31
    
    
    $
    1.30
 Processing and Services Revenues
  Cost of Revenues
  Gross Profit
  Selling General and Administrative Expenses
  31




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Operating Income
  Other Income (Expense)
  Income Taxes
  Equity in Earnings (Losses) of Unconsolidated Entity, Discontinued Operations and
Noncontrolling Minority Interest
  Net Earnings and Net Earnings Per Share Attributable to LPS  Diluted
  Segment Results of Operations  Technology, Data and Analytics  Unaudited
 Six months ended June 30,
    
    
    
    
    
    
    
    
    
    As a % of Revenue
    
    
    Variance 2009 vs. 2008(in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    $
    
    
    %Processing and services revenues
    
    $
    331.8
    
    
    $
    277.6
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    54.2
    
    
    
    19.5
    %Cost of revenues
    
    
    189.4
    
    
    
    155.5
    
    
    
    57.1
    %
    
    
    56.0
    %
    
    
    (33.9
    )
    
    
    (21.8
    )%Gross profit
    
    
    142.4
    
    
    
    122.1
    
    
    
    42.9
    %
    
    
    44.0
    %
    
    
    20.3
    
    
    
    16.6
    %Gross margin
    
    
    42.9
    %
    
    
    44.0
    %Selling, general and administrative expenses
    
    
    33.9
    
    
    
    33.7
    
    
    
    10.2
    %
    
    
    12.2
    %
    
    
    (0.2
    )
    
    
    (0.6
    )%Operating income
    
    $
    108.5
    
    
    $
    88.4
    
    
    
    32.7
    %
    
    
    31.8
    %
    
    $
    20.1
    
    
    
    22.7
    %Operating margin
    
    
    32.7
    %
    
    
    31.8
    %
 Processing and Services Revenues
  32




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Cost of Revenues
  Gross Profit
  Selling General and Administrative Expenses
  Operating Income
  Segment Results of Operations  Loan Transaction Services  Unaudited
 Six months ended June 30,
    
    
    
    
    
    
    
    
    
    As a % of Revenue
    
    
    Variance 2009 vs. 2008(in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    $
    
    
    %Processing and services revenues
    
    $
    822.6
    
    
    $
    626.4
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    196.2
    
    
    
    31.3
    %Cost of revenues
    
    
    580.3
    
    
    
    433.5
    
    
    
    70.5
    %
    
    
    69.2
    %
    
    
    (146.8
    )
    
    
    (33.9
    )%Gross profit
    
    
    242.3
    
    
    
    192.9
    
    
    
    29.5
    %
    
    
    30.8
    %
    
    
    49.4
    
    
    
    25.6
    %Gross margin
    
    
    29.5
    %
    
    
    30.8
    %Selling, general and administrative expenses
    
    
    54.4
    
    
    
    52.5
    
    
    
    6.6
    %
    
    
    8.4
    %
    
    
    (1.9
    )
    
    
    (3.6
    )%Operating income
    
    $
    187.9
    
    
    $
    140.4
    
    
    
    22.8
    %
    
    
    22.4
    %
    
    $
    47.5
    
    
    
    33.8
    %Operating margin
    
    
    22.8
    %
    
    
    22.4
    %
 Processing and Services Revenues
  33




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##### Table of Contents



Cost of Revenues
  Gross Profit
  Selling General and Administrative Expenses
  Operating Income
  Segment Results of Operations  Corporate and Other  Unaudited
  Liquidity and Capital Resources
 Cash Requirements
    34




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##### Table of Contents



Operating Activities
  Investing Activities
   Financing Activities
   Financing
  35




---



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36




---



##### Table of Contents



Interest Rate Swaps
  Contractual Obligations
  Off-Balance Sheet Arrangements
  Escrow Arrangements
  
 Item 3. Quantitative and Qualitative Disclosure About Market Risks
   37




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##### Table of Contents



Item 4T. Controls and Procedures
   
 Part II: OTHER INFORMATION
 
 Item 1. Legal Proceedings
 Litigation
  
    
    These matters raise difficult and complicated factual and legal issues and are subject to
many uncertainties and complexities.
    
    In these matters, plaintiffs seek a variety of remedies including equitable relief in the
form of injunctive and other remedies and monetary relief in the form of compensatory
damages. In some cases, the monetary damages sought include punitive or treble damages. None
of the cases described below includes a specific statement as to the dollar amount of
damages demanded. Instead, each of the cases includes a demand in an amount to be proved at
trial.
    
    For the reasons specified above, it is not possible to make meaningful estimates of the
amount or range of loss that could result from these matters at this time. We review these
matters on an ongoing basis and follow the provisions of Statement of Financial Accounting
Standards No. 5, Accounting for Contingencies, when making accrual and disclosure decisions.
When assessing reasonably possible and probable outcomes, we base our decision on our
assessment of the ultimate outcome following all appeals.
    
    We intend to vigorously defend each of these matters, and we do not believe that the
ultimate disposition of these lawsuits will have a material adverse impact on our financial
position.
 38




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##### Table of Contents



National Title Insurance of New York, Inc. Litigation
 Barton v. National Title Insurance of New York, Inc. et
al. Gentilcore v. National Title Insurance of New York, Inc. et al. Martinez v. National Title Insurance of
New York, Inc. et al. Swick v. National Title Insurance of New York, Inc. et al. Davis v. National Title Insurance
of New York, Inc. et al. Pepe v. National Title Insurance of New York, Inc. et al. Kornbluth v.
National Title Insurance of New York, Inc. et al. Lamb v. National Title Insurance of New York, Inc. et
al. Blackwell
v. National Title Insurance of New York, Inc. et al. Magana v. National Title Insurance of New York,
Inc. et al. Moynihan v. National Title Insurance of New York, Inc. et al. Romero v. National Title Insurance
of New York, Inc. et al. Doolittle, Susan v. National Insurance of New York, Inc. et al.
 Regulatory Matters
  
 Item 1A. Risk Factors
 Efforts by the government, financial institutions and other parties to address the troubled mortgage market
and the current economic and financial environment could affect us.
  39




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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  40




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
   AuthorityShares Voted
    
    to VoteFor
    
    WithheldMarshall Haines
    
    
    68,887,419
    
    
    
    18,686,584James K. Hunt
    
    
    72,426,053
    
    
    
    15,147,950
   Votes
    
    PercentageShares Voted For
    
    
    86,211,187
    
    
    
    98.4
    %Shares Voted Against
    
    
    609,815
    
    
    
    0.7
    %Shares Voted Abstain
    
    
    753,001
    
    
    
    0.9
    %
  Votes
    
    PercentageShares Voted For
    
    
    80,019,512
    
    
    
    91.4
    %Shares Voted Against
    
    
    6,663,046
    
    
    
    7.6
    %Shares Voted Abstain
    
    
    886,145
    
    
    
    1.0
    %
  Votes
    
    PercentageShares Voted For
    
    
    72,494,649
    
    
    
    82.8
    %Shares Voted Against
    
    
    14,175,165
    
    
    
    16.2
    %Shares Voted Abstain
    
    
    903,889
    
    
    
    1.0
    %
 
 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.
 41




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##### Table of Contents



SIGNATURES
  Date: August 14, 2009
    Lender Processing Services, Inc.By:
    /s/ FRANCIS K. CHANFrancis K. ChanExecutive Vice President and Chief Financial Officer 42




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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.
 43