FNF Fidelity National Financial Inc

Fidelity National Financial, Inc. Reports Second Quarter 2005 EPS of $1.07 JACKSONVILLE, Fla., July 27 /PRNewswire-FirstCall/ -- Fidelity National Financial, Inc. (NYSE:FNF), a Fortune 500 provider of products and outsourced services and solutions to financial institutions and the real estate industry, today reported operating results for the three-month and six-month periods ended June 30, 2005. 2nd Quarter 2005 2nd Quarter 2004 Net Earnings Net Earnings $190.0 million $222.1 million $1.07 per diluted share $1.26 per diluted share Six Months Ended June 30, 2005 Six Months Ended June 30, 2004 Net Earnings Net Earnings $634.5 million $372.3 million $3.58 per diluted share $2.12 per diluted share - Total revenue for the second quarter of 2005 was $2.43 billion, compared with $2.20 billion for the second quarter of 2004 - Total title and escrow revenue was $1.63 billion for the second quarter of 2005 versus $1.58 billion in the second quarter of 2004 - Direct title premiums were $583 million for the second quarter of 2005 compared with direct title premiums of $601 million for the second quarter of 2004 - Escrow and other title related fees were $299 million for the second quarter of 2005 versus $295 million for the second quarter of 2004 - Agency title premiums were $750 million for the second quarter of 2005 compared with agency title premiums of $680 million for the second quarter of 2004 (In thousands) 2nd Quarter 2005 2nd Quarter 2004 Agency Title Premiums $750,166 $680,492 Agent Commissions 576,205 529,974 Net 173,961 150,518 Agent Commission % 76.8% 77.9% - Specialty Insurance contributed $77 million for the second quarter of 2005 versus $58 million in the second quarter of 2004 - Revenue from Financial Institution Software and Services ("FISS"), was $405 million for the second quarter of 2005 versus $296 million for the second quarter of 2004; FISS gross revenue was $423 million for the second quarter of 2005 versus $315 million in the prior year quarter - FISS organic revenue growth was 9.2 percent for the second quarter of 2005 versus the second quarter of 2004 and 4.8 percent for the first six months of 2005 versus the first six months of 2004 - Lender Outsourcing Solutions ("LOS") revenue was $78 million for the second quarter of 2005 compared to $88 million for the second quarter of 2004 - Information Services ("IS") revenue was $176 million for the second quarter of 2005 compared with $148 million for the second quarter of 2004; the organic growth rate was 25.0 percent for the second quarter of 2005 versus the second quarter of 2004 and 16.0 percent for the six months ended June 30, 2005 versus the first six months of 2004 - The total provision for claim losses was $111 million for the second quarter of 2005 compared with $80 million for the second quarter of 2004 - Interest expense for the second quarter of 2005 was $47 million compared with $11 million for the second quarter of 2004 - Cash flow from operations was $452 million for the second quarter of 2005 compared with $405 million for the second quarter of 2004 "This was a very successful quarter for FNF on number of fronts," said Chairman and Chief Executive Officer William P. Foley, II. "Financially, we achieved more than a 15% pre-tax margin in our title insurance business as well as significant organic growth in FIS, including 9% organic growth in the FISS segment, 6% organic growth rate in our Default Management business and 25% organic growth in the Information Services segment. Strategically, we announced the formation of Fidelity National Title Group and the planned distribution of 17.5% of the shares of Fidelity National Title Group to FNF stockholders. We continue to expect to complete that distribution in the third quarter. Overall, we remain focused on growing our businesses, constantly improving profitability and maximizing the value of FNF's assets for our shareholders." The following table depicts monthly direct orders opened and closed in the title and escrow business for the second quarter of both 2005 and 2004: Month Direct Orders Opened Direct Orders Closed Closing % April 2005 302,800 203,500 67% May 2005 321,100 204,100 64% June 2005 366,200 230,100 63% Second Quarter 2005 990,100 637,700 64% Month Direct Orders Opened Direct Orders Closed Closing % April 2004 348,500 278,900 80% May 2004 284,300 251,000 88% June 2004 292,400 242,000 83% Second Quarter 2004 925,200 771,900 83% The following table depicts monthly commercial direct orders opened and closed in the title and escrow business for the first and second quarter of 2005: Open Closed Commercial Commercial Commercial Revenue Commercial Orders Orders (In thousands) Fee Per File 2nd Quarter 2005 14,600 8,800 $66,800 $7,600 1st Quarter 2005 15,000 9,000 $50,400 $5,600 "Order volumes were very strong in the second quarter, as we opened nearly 1 million orders," said President Randy Quirk. "Open order volumes accelerated as the quarter progressed and the commercial business continues to show strength, providing solid momentum across our title insurance business as we enter the third quarter." Fidelity National Financial, Inc., number 261 on the Fortune 500, is a provider of products and outsourced services and solutions to financial institutions and the real estate industry. FNF had total revenue of nearly $8.3 billion and earned more than $740 million in 2004, with cash flow from operations of nearly $1.2 billion for that same period. FNF is the nation's largest title insurance company, with nearly 31 percent national market share, and is also a provider of other specialty insurance products, including flood insurance, homeowners insurance and home warranty insurance. Through its majority-owned subsidiary Fidelity National Information Services, Inc. ("FIS"), the Company is a leading provider of technology solutions, processing services and information services to the financial services and real estate industries. FIS' software processes nearly 50 percent of all U.S. residential mortgages, it has processing and technology relationships with 45 of the top 50 U.S. banks and more than 2,800 small and mid-sized U.S. financial institutions and it has clients in more than 50 countries who rely on its processing and outsourcing products and services. FIS also provides customized business process outsourcing related to aspects of the origination and management of mortgage loans to national lenders and servicers. FIS offers information services, including property data and real estate-related services that are used by lenders, mortgage investors and real estate professionals to complete residential real estate transactions throughout the U.S. More information about the FNF family of companies can be found at http://www.fnf.com/ and http://www.fidelityinfoservices.com/. This press release contains statements related to future events and expectations and, as such, constitutes forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be different from those expressed or implied above. The Company expressly disclaims any duty to update or revise forward-looking unaudited statements. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to, the effect of governmental regulations, the economy, competition and other risks detailed from time to time in the "Management's Discussion and Analysis" section of the Company's Form 10-K and other reports and filings with the Securities and Exchange Commission. FIDELITY NATIONAL FINANCIAL, INC. SUMMARY OF EARNINGS (In thousands, except per share amounts and order information) Three months ended Six months ended June 30, June 30, 2005 2004 2005 2004 (Unaudited) (Unaudited) Direct title premiums $583,035 $601,444 $1,060,855 $1,066,392 Agency title premiums 750,166 680,492 1,260,946 1,286,825 Total title premiums 1,333,201 1,281,936 2,321,801 2,353,217 Escrow and other title-related fees 298,812 295,255 540,966 513,840 Total title and escrow 1,632,013 1,577,191 2,862,767 2,867,057 Financial Institution Software and Services 405,015 296,347 785,579 539,568 Lender Outsourcing Solutions 77,775 88,187 148,971 162,303 Information Services 176,366 147,817 331,171 289,840 Specialty Insurance 77,320 58,418 152,828 107,088 Interest and investment income 31,290 16,024 57,714 30,551 Realized gains and losses 21,699 8,678 25,582 21,151 Gain on sale of minority interest in FIS 0 0 318,209 0 Other 13,413 11,576 23,708 23,498 Total revenue 2,434,891 2,204,238 4,706,529 4,041,056 Personnel costs 808,115 721,537 1,555,192 1,358,133 Other operating expenses 449,707 422,357 843,524 758,083 Agent commissions 576,205 529,974 967,671 1,004,338 Depreciation and amortization 105,232 79,306 202,559 149,916 Claim loss expense 110,802 79,581 197,966 148,316 Interest expense 47,028 11,445 71,535 19,377 Total expenses 2,097,089 1,844,200 3,838,447 3,438,163 Earnings before income taxes 337,802 360,038 868,082 602,893 Income tax expense 130,053 136,814 210,388 229,099 Minority interest 17,707 1,171 23,155 1,500 Net earnings $190,042 $222,053 $634,539 $372,294 Net earnings per share - basic $1.10 $1.29 $3.67 $2.19 Net earnings per share - diluted $1.07 $1.26 $3.58 $2.12 Weighted average shares - basic 172,404 171,551 172,773 169,981 Weighted average shares - diluted 176,873 176,754 177,109 175,331 Direct operations orders opened 990,100 925,200 1,867,000 1,980,800 Direct operations orders closed 637,700 771,900 1,197,100 1,415,000 Fee Per File $1,373 $1,177 $1,325 $1,143 FIDELITY NATIONAL FINANCIAL, INC. SEGMENT INFORMATION (In thousands) Three Months Ended Title and Specialty June 30, 2005 Consolidated Eliminations Escrow Insurance Gross operating revenue $2,381,902 ($50,125) $1,632,013 $77,320 Interest and investment income 31,290 0 25,928 1,698 Realized gains and losses 21,699 0 17,184 72 Total revenue 2,434,891 (50,125) 1,675,125 79,090 Personnel costs 808,115 0 470,355 9,127 Other operating expenses 449,707 (30,710) 239,563 33,349 Agent commissions 576,205 (19,415) 595,620 0 Depreciation 32,638 0 17,096 57 Amortization 72,594 0 7,322 891 Claim loss expense 110,802 0 86,659 24,143 Interest expense 47,028 0 (136) 23 Total expenses 2,097,089 (50,125) 1,416,479 67,590 Pretax earnings 337,802 0 258,646 11,500 Pretax margin 13.9% -- 15.4% 14.5% Three Months Ended Title and Specialty June 30, 2004 Consolidated Eliminations Escrow Insurance Gross operating revenue $2,179,536 ($62,735) $1,569,799 $58,418 Interest and investment income 16,024 0 14,292 682 Realized gains and losses 8,678 0 6,138 25 Total revenue 2,204,238 (62,735) 1,590,229 59,125 Personnel costs 721,537 0 448,802 7,795 Other operating expenses 422,357 (29,773) 226,216 29,697 Agent commissions 529,974 (32,962) 562,936 0 Depreciation 29,826 0 15,390 43 Amortization 49,480 0 8,344 988 Claim loss expense 79,581 0 66,958 12,618 Interest expense 11,445 0 300 1 Total expenses 1,844,200 (62,735) 1,328,946 51,142 Pretax earnings 360,038 0 261,283 7,983 Pretax margin 16.3% -- 16.4% 13.5% Three Months Ended Corporate June 30, 2005 FISS LOS IS and Other Gross operating revenue $423,045 $97,190 $189,046 $13,413 Interest and investment income 1,381 332 481 1,470 Realized gains and losses 1,596 96 30 2,721 Total revenue 426,022 97,618 189,557 17,604 Personnel costs 225,154 35,092 44,705 23,682 Other operating expenses 76,145 42,899 78,889 9,572 Agent commissions 0 0 0 0 Depreciation 13,326 628 1,413 118 Amortization 44,511 10,907 8,950 13 Claim loss expense 0 0 0 0 Interest expense (1,017) 1 162 47,995 Total expenses 358,119 89,527 134,119 81,380 Pretax earnings 67,903 8,091 55,438 (63,776) Pretax margin 15.9% 8.3% 29.2% -- Three Months Ended Corporate June 30, 2004 FISS LOS IS and Other Gross operating revenue $314,578 $128,389 $159,359 $11,728 Interest and investment income 49 59 121 821 Realized gains and losses (64) 115 2,371 93 Total revenue 314,563 128,563 161,851 12,642 Personnel costs 176,219 38,275 40,494 9,952 Other operating expenses 54,137 52,773 77,732 11,575 Agent commissions 0 0 0 0 Depreciation 11,682 374 2,075 262 Amortization 29,245 2,036 8,711 156 Claim loss expense 0 0 0 5 Interest expense 205 8 54 10,877 Total expenses 271,488 93,466 129,066 32,827 Pretax earnings 43,075 35,097 32,785 (20,185) Pretax margin 13.7% 27.3% 20.3% -- FIDELITY NATIONAL FINANCIAL, INC. SEGMENT INFORMATION (In thousands) Six Months Ended Title and Specialty June 30, 2005 Consolidated Eliminations Escrow Insurance Gross operating revenue $4,305,024 ($94,976) $2,862,767 $152,828 Interest and investment income 57,714 0 44,665 3,077 Realized gains and losses 343,791 0 22,359 68 Total revenue 4,706,529 (94,976) 2,929,791 155,973 Personnel costs 1,555,192 0 888,245 17,552 Other operating expenses 843,524 (57,290) 446,562 64,374 Agent commissions 967,671 (37,686) 1,005,357 0 Depreciation 66,020 0 34,790 74 Amortization 136,539 0 14,457 1,893 Claim loss expense 197,966 0 150,918 47,048 Interest expense 71,535 0 61 23 Total expenses 3,838,447 (94,976) 2,540,390 130,964 Pretax earnings 868,082 0 389,401 25,009 Pretax margin 18.4% -- 13.3% 16.0% Six Months Ended Title and Specialty June 30, 2004 Consolidated Eliminations Escrow Insurance Gross operating revenue $3,989,354 ($116,132) $2,851,084 $107,088 Interest and investment income 30,551 0 26,348 1,301 Realized gains and losses 21,151 0 18,395 125 Total revenue 4,041,056 (116,132) 2,895,827 108,514 Personnel costs 1,358,133 0 826,139 14,316 Other operating expenses 758,083 (50,561) 400,278 54,893 Agent commissions 1,004,338 (65,571) 1,069,909 0 Depreciation 56,930 0 30,123 51 Amortization 92,986 0 13,800 2,118 Claim loss expense 148,316 0 125,878 22,433 Interest expense 19,377 0 668 1 Total expenses 3,438,163 (116,132) 2,466,795 93,812 Pretax earnings 602,893 0 429,032 14,702 Pretax margin 14.9% -- 14.8% 13.5% Six Months Ended Corporate June 30, 2005 FISS LOS IS and Other Gross operating revenue $819,474 $186,657 $354,566 $23,708 Interest and investment income 1,381 732 828 7,031 Realized gains and losses 419 155 (140) 320,930 Total revenue 821,274 187,544 355,254 351,669 Personnel costs 450,940 68,678 88,843 40,934 Other operating expenses 136,097 85,507 147,103 21,171 Agent commissions 0 0 0 0 Depreciation 27,296 933 2,790 137 Amortization 89,453 12,552 18,068 116 Claim loss expense 0 0 0 0 Interest expense 3,075 3 219 68,154 Total expenses 706,861 167,673 257,023 130,512 Pretax earnings 114,413 19,871 98,231 221,157 Pretax margin 13.9% 10.6% 27.7% -- Six Months Ended Corporate June 30, 2004 FISS LOS IS and Other Gross operating revenue $568,674 $243,695 $311,295 23,650 Interest and investment income 74 146 203 2,479 Realized gains and losses (308) 201 2,644 94 Total revenue 568,440 244,042 314,142 26,223 Personnel costs 324,915 78,052 82,957 31,754 Other operating expenses 84,207 97,132 148,250 23,884 Agent commissions 0 0 0 0 Depreciation 21,691 748 4,034 283 Amortization 55,778 4,352 16,704 234 Claim loss expense 0 0 0 5 Interest expense 210 18 116 18,364 Total expenses 486,801 180,302 252,061 74,524 Pretax earnings 81,639 63,740 62,081 (48,301) Pretax margin 14.4% 26.1% 19.8% -- SUMMARY BALANCE SHEET INFORMATION (In thousands, except per share amounts) June 30, December 31, 2005 2004 Unaudited Cash and investment portfolio $5,029,881 $3,677,498 Goodwill 2,744,968 2,798,249 Capitalized software 474,642 440,780 Other intangible assets 658,804 672,185 Total assets 10,687,031 9,270,535 Notes payable 3,198,432 1,370,556 Reserve for claim losses 1,011,865 998,170 Secured trust deposits 1,057,166 735,295 Total stockholders' equity 3,457,360 4,700,091 Book value per share 19.99 27.24 DATASOURCE: Fidelity National Financial, Inc. CONTACT: Daniel Kennedy Murphy, Senior Vice President, Finance and Investor Relations of Fidelity National Financial, Inc., +1-904-854-8120, or Web site: http://www.fnf.com/

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