Exhibit 99.8
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
On June 25, 2006, Fidelity National Title Group, Inc., referred to herein as FNT or New FNF, entered into a securities exchange and distribution agreement with Fidelity National Financial, Inc., referred to as FNF, as amended and restated as of September 18, 2006, under which FNF agreed to transfer substantially all of its assets (other than its ownership interest in Fidelity National Information Services, Inc., referred to FIS, and FNF Capital Leasing, Inc., referred to as FNF Leasing) in exchange for the assumption by FNT of certain liabilities of FNF and shares of FNT’s Class A Common Stock, par value $0.0001 per share. At the same time that FNF and FNT entered into the securities exchange and distribution agreement, FNF and FIS entered into an agreement and plan of merger, which provided that following the distribution under the securities exchange and distribution agreement, FNF would merge with and into FIS. As a result of the completion of the merger, on November 9, 2006, FNF’s separate corporate existence ceased and FIS was the surviving corporation.
Acquisitions among entities under common control are not considered business combinations and are to be accounted for at historical cost in accordance withEITF 90-5, Exchanges of Ownership Interests between Enterprises under Common Control. Furthermore, the substance of the proposed transactions and the merger is effectively a reverse spin-off of FIS by FNF in accordance withEITF 02-11, Accounting for Reverse Spinoffs. Accordingly, the historical financial statements of FNF will become those of FNT; however, the criteria to account for FIS as discontinued operations as prescribed bySFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assetswill not be met. This is primarily due to the continuing involvement of FNT with FIS and significant influence that FNT will have over FIS through common board members, common senior management and continuing business relationships. It is expected that FIS will continue to be included in FNF’s consolidated financial statements through October 24, 2006.
The following unaudited combined pro forma financial statements present FNF’s historical financial statements and adjusts them as if FNF were no longer reporting FIS in its consolidated balance sheet and results of operations. The unaudited pro forma combined statements of continuing operations for the years ended December 31, 2005, 2004 and 2003, and the nine month periods ended September 30, 2006 and 2005, are presented as if the reverse spin-off of FIS by FNF had been completed on January 1, 2005 and do not include expenses of approximately $18 million expected to be incurred in order to effect the proposed transactions, including fees paid to investment bankers, external legal counsel and external accountants. The unaudited pro forma combined balance sheet as of September 30, 2006, is presented as if the reverse spin-off of FIS by FNF had been completed as of September 30, 2006. These pro forma financial statements do not reflect adjustments related to the merger of FNF Leasing with and into a subsidiary of FIS, which occurred on October 26, 2006. The financial condition and results of operations of FNF Leasing are not material with respect to the unaudited combined pro forma financial statements. Total assets of FNF Leasing were $100.6 million, or 1.4% of pro forma total assets, at September 30, 2006, and $69.8 million at December 31, 2005. Pretax income was $0.8 million, or less than 1% of pro forma pretax income, for the nine months ended September 30, 2006, and $1.3 million or less than 1% of pro forma pretax income, for the year ended December 31, 2005.
These unaudited pro forma combined financial statements should be read in conjunction with FNF’s consolidated financial statements and accompanying notes incorporated by reference. The unaudited pro forma combined financial statements are not necessarily indicative of the results of operations or financial condition of FNT after the proposed transactions that would have been reported had the proposed transactions been completed as of the dates presented, and are not necessarily representative of the future consolidated results of operations or financial condition of FNT.
[Tables appear on the following pages]
1
New FNF
Unaudited Pro Forma Combined Balance Sheet
as of September 30, 2006
(In thousands)
Unaudited Pro Forma Combined Balance Sheet
as of September 30, 2006
(In thousands)
FIS | Other | ||||||||||||||||||
Historical | Pro Forma | Pro Forma | |||||||||||||||||
FNF | Adjustments(1) | Adjustments | Notes | Pro Forma | |||||||||||||||
(In thousands) | |||||||||||||||||||
ASSETS: | |||||||||||||||||||
Investments | $ | 4,327,988 | $ | 224,555 | $ | — | $ | 4,103,433 | |||||||||||
Cash and cash equivalents | 806,303 | 122,406 | — | 683,897 | |||||||||||||||
Trade receivables, net | 766,393 | 553,720 | — | 212,673 | |||||||||||||||
Goodwill | 4,861,734 | 3,787,382 | (73,555 | ) | (2) | 1,147,907 | |||||||||||||
Prepaid expenses and other assets | 1,014,170 | 641,461 | — | 372,709 | |||||||||||||||
Capitalized software | 704,567 | 626,499 | — | 78,068 | |||||||||||||||
Title plants | 325,340 | 6,060 | — | 319,280 | |||||||||||||||
Property and equipment, net | 529,433 | 299,448 | — | 229,985 | |||||||||||||||
Other intangible assets | 1,179,126 | 1,082,802 | — | 96,324 | |||||||||||||||
$ | 14,515,054 | $ | 7,344,333 | $ | (73,555 | ) | $ | 7,244,276 | |||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY: | |||||||||||||||||||
Liabilities: | |||||||||||||||||||
Accounts payable and accrued liabilities | $ | 1,591,636 | $ | 664,472 | $ | — | $ | 927,164 | |||||||||||
Deferred revenue | 516,612 | 388,380 | — | 128,232 | |||||||||||||||
Notes payable | 3,524,126 | 2,868,832 | — | 655,294 | |||||||||||||||
Reserve for claim losses | 1,203,792 | 7,099 | — | 1,196,693 | |||||||||||||||
Secured trust deposits | 875,317 | — | — | 875,317 | |||||||||||||||
Deferred tax liability | 337,490 | 302,397 | — | 35,093 | |||||||||||||||
Payable to Related party | — | (4,943 | ) | — | 4,943 | ||||||||||||||
Income taxes payable | 68,226 | 47,845 | — | 20,381 | |||||||||||||||
8,117,199 | 4,274,082 | — | 3,843,117 | ||||||||||||||||
Minority interests | 1,907,183 | 12,706 | 1,869,441 | (3) | 25,036 | ||||||||||||||
Stockholders’ equity | 4,490,672 | 3,057,545 | (1,942,996 | ) | 3,376,123 | ||||||||||||||
$ | 14,515,054 | $ | 7,344,333 | $ | (73,555 | ) | $ | 7,244,276 | |||||||||||
See accompanying notes to Unaudited Pro Forma Combined Financial Statements
2
New FNF
Unaudited Pro Forma Combined Statement of Continuing Operations
For the Nine Months Ended September 30, 2006
(In thousands, except per share data)
Unaudited Pro Forma Combined Statement of Continuing Operations
For the Nine Months Ended September 30, 2006
(In thousands, except per share data)
FIS | Other | |||||||||||||||||||
Historical | Pro Forma | Pro Forma | ||||||||||||||||||
FNF | Adjustments(1) | Adjustments | Notes | Pro Forma | ||||||||||||||||
Total revenue | $ | 7,634,090 | $ | (3,010,364 | ) | $ | 170,653 | (2 | ) | $ | 4,794,379 | |||||||||
Personnel costs | 2,632,935 | (1,245,945 | ) | 17,795 | (3 | ) | ||||||||||||||
3,860 | (4 | ) | 1,408,645 | |||||||||||||||||
Other operating expenses | 1,706,137 | (1,011,725 | ) | 94,417 | (4 | ) | 788,829 | |||||||||||||
Agent commissions | 1,537,489 | — | 58,441 | (5 | ) | 1,595,930 | ||||||||||||||
Depreciation and amortization | 404,770 | (318,304 | ) | — | 86,466 | |||||||||||||||
Provision for claim losses | 357,210 | (425 | ) | — | 356,785 | |||||||||||||||
Interest expense | 183,536 | (141,930 | ) | — | 41,606 | |||||||||||||||
Total expenses | 6,822,077 | (2,718,329 | ) | 174,513 | 4,278,261 | |||||||||||||||
Earnings before income taxes and minority interests | 812,013 | (292,035 | ) | (3,860 | ) | 516,118 | ||||||||||||||
Income tax expense | 302,069 | (108,109 | ) | (1,436 | ) | 192,524 | ||||||||||||||
Earnings before minority interests | 509,944 | (183,926 | ) | (2,424 | ) | 323,594 | ||||||||||||||
Minority interest expense | 143,381 | 41 | (141,184 | ) | (6 | ) | 2,238 | |||||||||||||
Net income | $ | 366,563 | $ | (183,967 | ) | $ | 138,760 | $ | 321,356 | |||||||||||
Net income per share — basic | $ | 2.09 | $ | 1.47 | ||||||||||||||||
Pro forma weighted average shares — basic | 175,119 | 218,741(7 | ) | |||||||||||||||||
Net income per share — diluted | $ | 2.02 | $ | 1.45 | ||||||||||||||||
Pro forma weighted average shares — diluted | 180,123 | 222,130(7 | ) | |||||||||||||||||
See accompanying notes to Unaudited Pro Forma Combined Financial Statements
3
Unaudited Pro Forma Combined Statement of Continuing Operations
for the Year Ended December 31, 2005
for the Year Ended December 31, 2005
FIS | Other | |||||||||||||||
Historical | Pro Forma | Pro Forma | ||||||||||||||
FNF | Adjustments(1) | Adjustments | Pro Forma | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Total revenue | $ | 9,668,938 | $ | 2,776,245 | $ | 195,713 | (2) | $ | 7,088,406 | |||||||
Personnel costs | 3,224,678 | 1,276,557 | 5,147 | (3) | 1,953,268 | |||||||||||
Other operating expenses | 1,716,711 | 751,282 | 114,878 | (4) | 1,080,307 | |||||||||||
Agent commissions | 2,060,467 | — | 80,835 | (5) | 2,141,302 | |||||||||||
Depreciation and amortization | 406,259 | 299,637 | — | 106,622 | ||||||||||||
Provision for claim losses | 480,556 | 1,928 | — | 478,628 | ||||||||||||
Interest expense | 172,327 | 126,778 | — | 45,549 | ||||||||||||
Total expenses | 8,060,998 | 2,456,182 | 200,860 | 5,805,676 | ||||||||||||
Earnings before income taxes and minority interests | 1,607,940 | 320,063 | (5,147 | ) | 1,282,730 | |||||||||||
Income tax expense | 573,391 | 119,063 | (1,835 | ) | 452,493 | |||||||||||
Earnings before minority interests | 1,034,549 | 201,000 | (3,312 | ) | 830,237 | |||||||||||
Minority interest expense | 70,443 | 4,450 | (63,465 | )(6) | 2,528 | |||||||||||
Net income | $ | 964,106 | $ | 196,550 | $ | 60,153 | $ | 827,709 | ||||||||
Net income per share — basic | $ | 5.56 | $ | 3.78 | ||||||||||||
Pro forma weighted average shares — basic | 173,475 | (7) | 218,729 | (7) | ||||||||||||
Net income per share — diluted | $ | 5.55 | $ | 3.73 | ||||||||||||
Pro forma weighted average shares — diluted | 173,647 | (7) | 220,029 | (7) | ||||||||||||
See accompanying notes to Unaudited Pro Forma Combined Financial Statements
4
Unaudited Pro Forma Combined Statement of Continuing Operations
for the Year Ended December 31, 2004
for the Year Ended December 31, 2004
FIS | Other | |||||||||||||||
Historical | Pro Forma | Pro Forma | ||||||||||||||
FNF | Adjustments(1) | Adjustments | Pro Forma | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Total revenue | $ | 8,296,002 | $ | 2,345,633 | $ | 212,855 | (2) | $ | 6,163,224 | |||||||
Personnel costs | 2,786,297 | 1,073,395 | — | 1,712,902 | ||||||||||||
Other operating expenses | 1,599,124 | 719,770 | 118,559 | (4) | 997,913 | |||||||||||
Agent commissions | 2,028,926 | — | 94,296 | (5) | 2,123,222 | |||||||||||
Depreciation and amortization | 338,434 | 238,400 | — | 100,034 | ||||||||||||
Provision for claim losses | 311,916 | 133 | — | 311,783 | ||||||||||||
Interest expense | 47,214 | 4,496 | — | 42,718 | ||||||||||||
7,111,911 | 2,036,194 | 212,855 | 5,288,572 | |||||||||||||
Earnings from continuing operations before income taxes and minority interests | 1,184,091 | 309,439 | — | 874,652 | ||||||||||||
Income tax expense | 438,114 | 116,350 | — | 321,764 | ||||||||||||
Earnings from continuing operations before minority interest | 745,977 | 193,089 | — | 552,888 | ||||||||||||
Minority interest expense | 5,015 | 3,673 | — | 1,342 | ||||||||||||
Net income | $ | 740,962 | $ | 189,416 | $ | — | $ | 551,546 | ||||||||
Earnings per share from continuing operations — basic | $ | 4.28 | $ | 3.19 | ||||||||||||
Weighted average shares — basic | 172,951 | (8) | 172,951 | (8) | ||||||||||||
Earnings per share from continuing operations — diluted | $ | 4.28 | $ | 3.19 | ||||||||||||
Weighted average shares — diluted | 172,951 | (8) | 172,951 | (8) |
See accompanying notes to Unaudited Pro Forma Combined Financial Statements
5
Unaudited Pro Forma Combined Statement of Continuing Operations
for the Year Ended December 31, 2003
for the Year Ended December 31, 2003
FIS | Other | |||||||||||||||
Historical | Pro Forma | Pro Forma | ||||||||||||||
FNF | Adjustments(1) | Adjustments | Pro Forma | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Total revenue | $ | 7,715,215 | $ | 1,828,750 | $ | 269,163 | (2) | $ | 6,155,628 | |||||||
Personnel costs | 2,465,026 | 723,781 | — | 1,741,245 | ||||||||||||
Other operating expenses | 1,448,133 | 603,927 | 44,463 | (4) | 888,669 | |||||||||||
Agent commissions | 1,823,241 | — | 224,700 | (5) | 2,047,941 | |||||||||||
Depreciation and amortization | 227,937 | 143,958 | — | 83,979 | ||||||||||||
Provision for claim losses | 287,136 | — | — | 287,136 | ||||||||||||
Interest expense | 43,103 | 1,569 | — | 41,534 | ||||||||||||
6,294,576 | 1,473,235 | 269,163 | 5,090,504 | |||||||||||||
Earnings from continuing operations before income taxes and minority interests | 1,420,639 | 355,515 | — | 1,065,124 | ||||||||||||
Income tax expense | 539,843 | 137,940 | — | 401,903 | ||||||||||||
Earnings from continuing operations before minority interests | 880,796 | 217,575 | — | 663,221 | ||||||||||||
Minority interest | 18,976 | 14,518 | — | 4,458 | ||||||||||||
Net income | $ | 861,820 | $ | 203,057 | $ | — | $ | 658,763 | ||||||||
See accompanying notes to Unaudited Pro Forma Combined Financial Statements
6
Notes to Unaudited Pro Forma Combined Financial Statements
Notes to Unaudited Pro Forma Combined Balance Sheet as of September 30, 2006
This combined balance sheet includes the historical balance sheet of FNF and removes the historical balance sheet of FIS and FNF’s minority interest liability related to FIS and FNT as though the merger had occurred on September 30, 2006.
(1) This column represents the historical balance sheet of FIS as included in FNF’s consolidated balance sheet as of September 30, 2006.
(2) This amount represents an excess of FIS’ historical goodwill balance related to Certegy over that recorded at FNF. In connection with the merger of FIS and Certegy, FNF’s basis is $73.6 million lower than it would have been if FNF had applied purchase accounting to all stockholders’ interests. This basis difference was recorded as a reduction of goodwill and minority interests in FNF’s consolidation.
(3) This represents the elimination of FNF’s minority interest liability balance relating to FIS and FNT of $1,418.2 million and $451.2 million, respectively, which was carried on FNF’s balance sheet as of September 30, 2006.
Notes to Unaudited Pro Forma Combined Statements of Continuing Operations for the Nine Months Ended September 30, 2006 and Years Ended December 31, 2005, 2004 and 2003
These combined statements of continuing operations include the historical statements of continuing operations of FNF and remove the results of operations of FIS and FNF minority interest expense relating to FIS and FNT as though the transaction had occurred on January 1, 2005.
(1) This column represents the historical results of operations of FIS as included in FNF’s consolidated results of operations for the periods presented.
(2) This represents the intercompany revenues relating to various agreements recorded on FIS’s income statement that had already been eliminated from the consolidated results of operations of FNF. These revenues amounted to $170.7 million for the nine months ended September 30, 2006 and $195.7 million, $212.9 million, and $269.2 million for the years ended December 31, 2005, 2004, and 2003, respectively.
(3) This represents the compensation expense relating to the restricted stock granted immediately following the proposed transactions. At the closing, FNT granted 785,000 shares of restricted stock to certain executive officers and directors which will vest over 3 years. Total expense based on FNT’s closing market value of $19.67 per share is $15.4 million and is recorded as a pro forma adjustment of $5.1 million for the year ended December 31, 2005 and $3.9 million for the nine months ended September 30, 2006.
(4) This represents the intercompany expenses related to various agreements that were eliminated in the consolidated results of operations of FNF, but will be third-party expenses subsequent to the transaction. These expenses amounted to $98.3 million for the nine months ended September 30, 2006 and $114.9 million, $118.6 million, and $44.5 million for the years ended December 31, 2005, 2004 and 2003, respectively.
(5) This represents the additional agent commissions paid by FNF to FIS that were previously eliminated in the consolidated results of FNF, but will be a third-party expense subsequent to the transaction. These commissions amounted to $58.4 million in the nine months ended September 30, 2006 and $80.8 million, $94.3 million, and $224.7 million in the years ended December 31, 2005, 2004, and 2003, respectively.
(6) This represents the elimination of the minority interest expense recorded by FNF relating to its earnings in FIS and FNT of $44.8 million and $18.7 million for the year ended December 31, 2005 and $88.0 million and $53.2 million for the nine months ended September 30, 2006.
7
(7) Amounts in the Historical FNF column represent FNT historical weighted average shares for the nine months ended September 30, 2006 and the year ended December 31, 2005. Amounts in the Pro Forma column have been calculated as follows:
Nine Months Ended | Year Ended | |||||||
September 30, 2006 | December 31, 2005 | |||||||
Historical weighted average shares — basic | 173,475 | 173,463 | ||||||
Additional shares issued | 45,266 | 45,266 | ||||||
Pro forma weighted average shares — basic | 218,741 | 218,729 | ||||||
Historical weighted average shares — diluted | 173,648 | 173,575 | ||||||
Additional shares issued | 45,266 | 45,266 | ||||||
Additional dilution from options assumed | 2,591 | 2,792 | ||||||
Additional dilution from restricted stock | 625 | 396 | ||||||
222,130 | 222,029 | |||||||
(8) Pro forma weighted average shares for the year ended December 31, 2004 have been calculated using the number of outstanding shares of FNF common stock as of a date prior to FNF’s distribution of FNT stock on October 18, 2005.
8