UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14C

 

(RULE 14C-101)

 

SCHEDULE 14C INFORMATION

 

Information Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934

 

Check the Appropriate box:

 

 

Fidelity National Title Group, Inc.

(Name of Registrant as Specified in its Charter)

 

Payment of Filing Fee (Check the Appropriate box):

 

 

 

 

 

 

 

 

 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

FIDELITY NATIONAL TITLE GROUP, INC.

601 Riverside Avenue

Jacksonville, FL 32204

 

We Are Not Asking You for a Proxy and

You are Requested Not To Send Us a Proxy

 

 

To the Stockholders of Fidelity National Title Group, Inc.:

 

On June 25, 2006, Fidelity National Title Group, Inc., which we refer to as FNT, entered into a securities exchange and distribution agreement, as amended and restated as of September 18, 2006, with Fidelity National Financial, Inc., which we refer to as FNF, under which FNF agreed to transfer its interests in certain companies and certain other assets to FNT in exchange for the assumption by FNT of certain liabilities of FNF and the issuance to FNF of shares of FNT Class A Common Stock, par value $0.0001 per share, which we refer to as FNT Class A common stock. In connection with the transactions under the securities exchange and distribution agreement, which we refer to as the proposed transactions, FNF will receive that number of shares of FNT Class A common stock equal to (i) 33,563,829 plus (ii) the aggregate amount of cash and certain investment assets included in the transfer of assets (not to exceed $275 million for purposes of this calculation) divided by $23.50. FNF will also convert all of the FNT Class B Common Stock, par value $0.0001 per share, which we refer to as FNT Class B common stock, it holds into FNT Class A common stock. Immediately thereafter, the shares acquired by FNF from FNT, together with the converted shares, will be distributed to holders of FNF common stock and, as a result, such FNF stockholders will receive shares of our common stock representing approximately 85% of our common stock outstanding on a fully-diluted basis.

 

We believe that our stockholders will benefit in several ways from the proposed transactions, including the distribution by FNF of all shares of FNT common stock held by it. First, the distribution will increase our public float, which in the long term we anticipate may enhance the trading price of our common stock. Second, the proposed transactions may enhance our ability to issue our common stock to raise equity capital and fund acquisitions and for management incentives. Our ability to do so is currently limited because, for several tax-related reasons, FNF is unwilling to own less than 80% of our common stock. These factors and others are described further in this information statement.

 

In connection with the proposed transactions, our certificate of incorporation will be amended to, among other things, (a) increase the authorized number of shares of FNT Class A common stock from 300 million to 600 million, (b) eliminate the FNT Class B common stock and all provisions relating thereto, (c) remove all references to and any requirements resulting from FNF’s ownership of FNT common stock and (d) change our name to “Fidelity National Financial, Inc.” Following the proposed transactions, our common stock will be listed and traded on the New York Stock Exchange, under the symbol “FNF.” Further, we will amend the FNT 2005 Omnibus Incentive Plan to increase the number of shares available for grants thereunder by 15.5 million.

 

Our board of directors, after its independent evaluation and acting upon the unanimous recommendation of a special committee of our independent directors, approved the proposed transactions as contemplated under the securities exchange and distribution agreement. A copy of the securities exchange and distribution agreement, as amended, is attached to this information statement as Annex A.  

 

Under Delaware law, the approval of the holders of a majority of the outstanding shares of our common stock is required to approve the amendment to our certificate of incorporation. In addition, under the rules of the New York Stock Exchange, listed companies such as FNT are required to obtain stockholder approval prior to issuing securities to affiliates if the number of shares to be issued in the transaction exceeds one percent of the shares outstanding prior to the transaction.

 

On October 23, 2006, we will hold our annual meeting of stockholders, at which holders of record of our common stock will consider and vote on (1) the issuance of additional shares of FNT Class A common stock, (2) the adoption of an amendment to the FNT 2005 Omnibus Incentive Plan, which will increase the number of shares available for grants under the current plan, (3) the adoption of the FNT Annual Incentive Plan, (4) the charter amendments, (5) the election of certain directors of FNT and (6) the ratification of the appointment of KPMG LLP as FNT’s independent registered public accounting firm. Neither FNT nor FNF is soliciting proxies from FNT stockholders. You may, if you wish, attend the meeting and vote personally on all matters presented at the annual meeting. We recommend that FNT stockholders vote “FOR” the proposed transactions and the other annual meeting items.

 

FNF owns approximately 82% of our outstanding common stock as the result of its ownership of 100% of our outstanding FNT Class B common stock. Because of the greater voting rights of the FNT Class B common stock, the shares FNF holds represent 97.9% of the outstanding voting rights of our common stock. FNF will be present at the annual meeting and intends to vote “FOR” the proposed transactions and the other annual meeting items. You are invited to attend the FNT annual meeting, at which you will have the opportunity to vote, but your approval of the matters presented at the FNT annual meeting is not required.

 

Sincerely,

 

Raymond R. Quirk

Chief Executive Officer

 

This notice and the accompanying information statement are dated September 18, 2006 and are first being mailed to our stockholders on or about September 22, 2006. You should not assume that the information contained in this document is accurate as of any date other than that date, and the mailing of this document to you does not create any implication to the contrary.

FIDELITY NATIONAL TITLE GROUP, INC.

601 Riverside Avenue

Jacksonville, FL 32204

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON OCTOBER 23, 2006

 

We Are Not Asking You for a Proxy and
You are Requested Not To Send Us a Proxy

 

 

To the Stockholders of Fidelity National Title Group, Inc.:

 

The 2006 annual meeting of stockholders of Fidelity National Title Group, Inc., which we refer to as FNT, will be held on October 23, 2006, at 9:30 a.m., local time, in the Peninsular Auditorium at 601 Riverside Avenue, Jacksonville, Florida 32204. At the meeting, stockholders will vote on each of the following proposals:

 

 

 

 

 

 

 

 

FNT’s board of directors has unanimously adopted and approved the securities exchange and distribution agreement and the transactions contemplated thereby and determined that the transactions contemplated by the agreement are advisable and in the best interests of FNT and its stockholders. FNT’s board of directors recommends that FNT stockholders vote “FOR” Proposal 1 relating to the issuance of additional shares of FNT Class A common stock pursuant to the securities exchange and distribution agreement and “FOR” the other annual meeting proposals described above.

 

FNT’s board of directors has fixed the close of business on September 11, 2006, as the record date for determining those stockholders entitled to vote at the FNT annual meeting. Accordingly, only stockholders of record at the close of business on that date are entitled to notice of, and to vote at, the FNT annual meeting. A complete list of our stockholders will be available for inspection at the FNT annual meeting.

Please review the information statement accompanying this notice for more complete information regarding the proposed transactions and the annual meeting.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the proposed transactions, passed upon the merits or fairness of the proposed transactions or determined if this information statement is accurate or complete. Any representation to the contrary is a criminal offense.

 

By Order of the Board of Directors

 

 

Todd C. Johnson

Secretary

 

This information statement is dated September 18, 2006 and is first being mailed to our stockholders on or about September 22, 2006.

 

Table of Contents

 

 

ANNEXES

 

 

Following are questions and related answers that briefly address some of the questions you may have regarding the securities exchange and distribution agreement and the proposed transactions as contemplated therein. These questions and answers may not contain all of the information relevant to you, do not purport to summarize all material information discussed in this information statement, and are subject to, and are qualified in their entirety by, the more detailed information contained in or attached to this information statement. Therefore, please read carefully this information statement, including the attached annexes, in its entirety.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Morrow & Co.

470 West Avenue

Stamford, CT 06902

(203) 658-9400

(800) 662-5200

 

This summary highlights selected information contained elsewhere in this information statement and the attached annexes. This summary does not purport to contain a complete statement of all material information relating to the securities exchange and distribution agreement, the transactions contemplated therein and the other matters being considered at our annual meeting, and is subject to, and qualified in its entirety by, the more detailed information contained in or attached to this information statement. Where appropriate, items in this summary contain a cross reference directing you to a more complete description included elsewhere in this information statement. You should carefully read this information statement in its entirety, as well as all annexes attached to this information statement. As your approval of the matters described in this information statement is neither required nor requested, we are not asking you for a proxy and you are requested not to send us a proxy.

 

Fidelity National Title Group, Inc., which we refer to as FNT, is one of the largest title insurance companies in the United States. Our title insurance underwriters — Fidelity National Title Insurance Company, which we refer to as Fidelity National Title, Chicago Title Insurance Company, which we refer to as Chicago Title, Ticor Title Insurance Company, which we refer to as Ticor Title, Security Union Title Insurance Company, which we refer to as Security Union Title and Alamo Title Insurance Company, which we refer to as Alamo Title — together issued approximately 29.0% of all title insurance policies issued nationally during 2005, as measured by premiums. Our title business consists of providing title insurance and escrow and other title-related products and services arising from the real estate closing process. Our operations are conducted on a direct basis through our own employees who act as title and escrow agents and through independent agents. In addition to our independent agents, our customers are lenders, mortgage brokers, attorneys, real estate agents, home builders and commercial real estate developers. We do not focus our marketing efforts on the homeowner.

 

We are a Delaware corporation formed on May 24, 2005. We are a majority owned subsidiary of Fidelity National Financial, Inc., which we refer to as FNF. FNF owns 143,176,041 shares, or approximately 82%, of our outstanding common stock, representing 97.9% of the voting rights of our common stock. Our principal executive offices are located at 601 Riverside Avenue, Jacksonville, Florida 32204. Our telephone number is (904) 854-8100.

 

The predecessors to FNT have primarily been title insurance companies, some of which have been in operation since the late 1800s. Many of these title insurance companies have been acquired in the last two decades. In 1984, our parent company, FNF, acquired a controlling interest in Fidelity National Title Insurance Company. During the 1990s, FNF acquired Alamo Title, Nations Title Inc., Western Title Company of Washington and First Title Corp. In 2000, FNF completed the acquisition of Chicago Title Corp., creating the largest title insurance organization in the world. In 2004, FNF acquired American Pioneer Title Insurance Company, which now operates under our Ticor Title brand. Chicago Title previously acquired Security Union Title in 1987 and Ticor Title in 1991. Our businesses have historically been operated as wholly-owned subsidiaries of FNF until October 2005, when FNF distributed to its stockholders a minority interest in FNT.

 

Additional information concerning our company is included in the reports that we periodically file with the U.S. Securities and Exchange Commission, which we refer to as the SEC, copies of which may be obtained as described in “Where You Can Find More Information” beginning on page 164.

 

FNF is a holding company that, through its operating subsidiaries, provides outsourced products and services to a variety of industries. During 2005, FNF completed certain strategic initiatives, including contributing its title operations to FNT (and in turn we became a majority-owned, publicly traded company); selling a minority interest in its subsidiary FIS; and agreeing to merge FIS into a separate publicly traded company, Certegy Inc., which we refer to as Certegy. Certegy is now known as FIS. Through FNT, FNF is one of the largest title insurance companies in the United States, with approximately 29.0% national market share. Through FIS, FNF provides industry leading data processing, payment and risk management services to financial institutions and retailers. Through other wholly-owned subsidiaries, FNF is a leading provider of specialty insurance products, including flood insurance, homeowners insurance and home warranty insurance.

 

Since February 1, 2006 when FNF closed its acquisition of an approximately 40% interest in Sedgwick CMS Holdings, Inc., which we refer to as Sedgwick CMS, FNF is now a provider of outsourced insurance claims management services to large corporate and public sector entities.

 

FNF has four reporting segments:

 

 

 

Under the securities exchange and distribution agreement, FNF has agreed to transfer to us its interests in the following assets, which we refer to as the contributed assets, and we have agreed to assume certain liabilities of FNF, which we refer to as the assumed liabilities. We refer to the contributed assets and the assumed liabilities collectively as the transferred business:

 

Contributed Assets

 

Specialty Insurance Business.  Through its insurance subsidiaries, including Fidelity National Insurance Company, FNF offers various property and casualty insurance policies and other contracts which include:

 

 

Insurance Claims Management.  On February 1, 2006, FNF completed the acquisition of an approximately 40% interest in Sedgwick CMS. Sedgwick CMS is a leading provider of outsourced insurance claims management services to large corporate and public sector entities. Since FNF’s acquisition of its interest in Sedgwick CMS, Sedgwick CMS has acquired VPA, Inc., a privately-held claims services organization, based in Calabasas, California, specializing in absence and disability benefit management programs for large employers. Additionally, Sedgwick CMS has acquired CompManagement, Inc. and its affiliated companies through a merger of a subsidiary of Sedgwick CMS with CompManagement, Inc.’s parent company, Security Capital Corporation, for a cash purchase price of approximately $191.5 million. Sedgwick CMS offers three core claims management product lines, which include worker’s compensation, liability and disability and operates in over 100 locations with more than 4,000 employees.

Real Estate Holdings.   Through its subsidiary, Cascade Timberlands LLC, which we refer to as Cascade, FNF owns an interest in approximately 293,000 acres of productive timberlands located on the eastern side of the Cascade mountain range extending from Bend, Oregon toward the California border. FNF began to purchase equity interests in Cascade in March 2006. FNF has acquired approximately 71% of Cascade for an aggregate price of approximately $94 million.

 

Other Contributed Assets.   Pursuant to the securities exchange and distribution agreement, FNF has agreed to transfer to us its interest in certain other real estate holdings in Montana. Additionally, FNF has agreed to transfer to us all cash and certain investment assets held by FNF as of the date of completion of the proposed transactions (up to an aggregate of $275 million), and substantially all other properties, assets and rights of any nature, kind and description, tangible and intangible (including goodwill), whether real, personal or mixed, held by FNF immediately prior thereto. The contributed assets will not, however, include the shares of the capital stock of FNT, FIS or FNF Leasing held by FNF.

 

Assumed Liabilities

 

Pursuant to the securities exchange and distribution agreement, we have agreed to assume all of FNF’s liabilities, except (i) any liabilities of FNF to the extent FIS or any subsidiary of FIS or FNF Leasing or any subsidiary of FNF Leasing has, as of or prior to the closing under the securities exchange and distribution agreement, which we refer to as the closing, agreed in writing to be responsible for such liabilities, (ii) any liabilities of FNF to the extent arising out of or related to the ownership or operation of the assets or properties, or the operations or conduct of the business, of FIS or any subsidiary of FIS or FNF Leasing or any subsidiary of FNF Leasing, in each case to the extent FIS or any subsidiary of FIS or FNF Leasing or any subsidiary of FNF Leasing has, as of or prior to the closing, agreed to be responsible for such liabilities, (iii) any guaranties or other similar contractual liabilities of FNF in respect of a primary liability of FIS or any subsidiary of FIS or FNF Leasing or any subsidiary of FNF Leasing, (iv) certain limited tax liabilities, (v) any liabilities arising from the operation or conduct of the business of FNF after the date that is 30 days after the closing, if the merger has not been completed as of such date and (vi) any liabilities for transaction bonuses that may be paid to certain executive officers of FNF. We refer collectively to these liabilities to be assumed by FNT as the assumed liabilities.

 

Our Future Strategy

 

Following the asset contribution, we will no longer be purely a title insurance company. Instead, we will be a holding company which operates through its subsidiaries in several different industries. In addition, we expect to actively evaluate possible strategic transactions, including but not limited to potential acquisitions of other companies, business units and operating and investment assets. Any such acquisitions may or may not be in lines of business that are the same as or provide potential synergies with our existing operations. There can be no assurance, however, that any suitable acquisitions or other strategic opportunities will arise.

Pursuant to the securities exchange and distribution agreement, FNF has agreed to transfer to us the contributed assets in exchange for our assumption of the assumed liabilities and our issuance of that number of shares of FNT Class A common stock equal to (i) 33,563,829 plus (ii) the aggregate amount of cash and certain investment assets included in the transfer of assets (not to exceed $275 million for purposes of this calculation) divided by $23.50.

 

Immediately after the completion of FNF’s contribution of assets to FNT, the assumption by FNT of the assumed liabilities and the transfer of shares of FNT Class A common stock by FNT to FNF, which we refer to collectively as the asset contribution, FNF will convert all of the FNT Class B common stock it holds into FNT Class A common stock. Immediately after the asset contribution and the conversion of the FNT Class B common stock into FNT Class A common stock, FNF will distribute all of the FNT Class A common stock held by it, including the converted shares and the shares received from FNT, to the holders of FNF common stock. FNF will distribute to each holder of FNF common stock, as of the record date of the distribution, as a dividend shares of FNT common stock equal to that holder’s pro rata portion of all of the shares of FNT Class A common stock held by FNF immediately prior to the payment date. Fractional shares that would otherwise be received by FNF stockholders will

be aggregated and sold and the net cash proceeds of the sale will be distributed in lieu of fractional shares. We refer to the distribution to the stockholders of FNF of all FNT common stock held by FNF as the spin-off.

 

Immediately after the completion of the spin-off and the merger described below, we will amend our certificate of incorporation, which amendment we refer to as the charter amendments, to (i) increase the authorized number of shares of FNT Class A common stock from 300 million to 600 million, (ii) eliminate the FNT Class B common stock and all provisions relating thereto, (iii) remove all references to and any requirements resulting from FNF’s ownership of FNT common stock and (iv) change our name to “Fidelity National Financial, Inc.” Following completion of the proposed transactions, the symbol for our common stock on the NYSE will become “FNF.” Further, we will amend the omnibus incentive plan to increase the number of shares available for grants thereunder by 15.5 million.

 

The proposed transactions are part of a larger organizational restructuring of FNF. 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 we refer to as the merger agreement. The merger agreement provides that following the spin-off under the securities exchange and distribution agreement, FNF will merge with and into FIS, which we refer to as the merger. The merger is expected to be completed approximately two weeks following the occurrence of the spin-off in accordance with its terms. Shortly after the spin-off but prior to the merger, pursuant to the Leasing merger agreement, FNF Leasing will merge with and into a wholly owned subsidiary of FIS. Upon the completion of the merger, FNF’s separate corporate existence will cease and FIS will continue as the surviving corporation. In order to complete the proposed transactions, all of the conditions to the consummation of the merger of FNF and FIS and the Leasing merger must be satisfied or waived (other than (i) conditions that, by their terms, are to be satisfied on the closing date for such transactions, (ii) the completion of the spin-off and (iii) in the case of the merger, the completion of the Leasing merger). In addition, in order for the merger to be completed, the proposed transactions, including the spin-off, and the Leasing merger must be completed. After the completion of the proposed transactions and the Leasing merger, and immediately prior to the merger, FNF will have no assets other than its approximately 50.5% ownership position in FIS and its rights under certain agreements entered into pursuant to the securities exchange and distribution agreement.

 

In connection with the original securities exchange and distribution agreement, Banc of America Securities LLC, which we refer to as Banc of America Securities, delivered to the FNT special committee a written opinion, dated June 25, 2006, as to the fairness, from a financial point of view and as of such date, to FNT of the aggregate number of shares of FNT Class A common stock to be issued by FNT pursuant to (and in exchange for the contributed assets described in) the original securities exchange and distribution agreement. We refer to the contributed assets described in the original securities exchange and distribution agreement as the original contributed assets, and the aggregate number of shares of FNT Class A common stock to be issued by FNT in the original securities exchange and distribution agreement as the aggregate stock consideration. The full text of the written opinion, dated June 25, 2006, of Banc of America Securities, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached as Annex B to this information statement and is incorporated by reference in its entirety into this information statement. FNT stockholders are encouraged to read the opinion carefully in its entirety. Banc of America Securities provided its opinion to the FNT special committee to assist the FNT special committee in its evaluation of the aggregate stock consideration to be issued by FNT under the original securities exchange and distribution agreement from a financial point of view. Banc of America Securities’ opinion does not address any other aspect of the proposed transactions or any related transactions and does not constitute a recommendation as to how any stockholder should vote or act in connection with the proposed transactions.

 

Banc of America Securities was not requested to, and did not, render to the FNT special committee an opinion in connection with the securities exchange and distribution agreement (as used in this section, as elsewhere in this information statement, the term securities exchange and distribution agreement refers to the securities exchange and distribution agreement as amended and restated as of September 18, 2006). Accordingly, Banc of America Securities’ opinion dated June 25, 2006 does not take into account any events

or developments after the date of such opinion, including any modifications to the proposed transactions or the consideration payable by FNT pursuant to the securities exchange and distribution agreement.

 

You should be aware that certain of our directors and officers have interests in the proposed transactions that differ from, or are in addition to, the interests of FNT stockholders. In particular, William P. Foley, II, the chairman of our board of directors, is also the chairman of the board of directors and chief executive officer of FNF, the controlling stockholder of FNT. Following the proposed transactions, Mr. Foley will be our Chief Executive Officer and the Executive Chairman of FIS. In connection with the proposed transactions, FNT will enter into a new employment agreement with Mr. Foley as described below and he will receive a grant of 475,000 shares of our restricted stock. Additionally, Mr. Foley currently holds 5,408,216 options to purchase FNF common stock, although 3,856,684 of such options will be exercised or cashed-out prior to the spin-off pursuant to the terms of the option letter agreement among FNF, William P. Foley, II, Alan L. Stinson and Brent B. Bickett. See “The Securities Exchange and Distribution Agreement — Additional Agreements” beginning on page 58. With respect to the FNF stock options held by Messrs. Foley, Stinson and Bickett at the time of the spin-off, 50% of such options will be replaced with FNT options and the remaining 50% of such options will be assumed by FIS pursuant to the terms of the merger agreement.

 

Certain of our other directors and executive officers hold options to acquire FNF common stock, some of which will be similarly replaced with options to acquire FNT common stock. In addition, most of our directors and executive officers own shares of FNF common stock and will receive shares of our Class A Common Stock in the spin-off. In particular, Mr. Foley owns, in the aggregate, 5,721,266 shares and 110,000 restricted shares of FNF common stock and will receive shares of our common stock in respect thereof in connection with the spin-off, with the shares to be received in respect of the restricted stock to be subject to the same restrictions.

 

Pursuant to his new employment agreement, Mr. Foley will serve as our Chief Executive Officer. Mr. Foley will receive an annual base salary of $500,000, with an annual cash bonus opportunity equal to 300% of his annual base salary for achieving targeted results, with higher or lower amounts payable depending on performance relative to those targets. In the event of a termination of Mr. Foley’s employment by FNT for any reason other than cause or disability, or in the event of a termination by Mr. Foley for good reason or for any reason during the 6-month period immediately following a change in control, he will receive (i) any accrued obligations, (ii) a prorated annual bonus, (iii) a lump-sum payment equal to 300% of the sum of his (x) annual base salary and (y) the highest annual bonus paid to him within the 3 years preceding his termination, (iv) immediate vesting and/or payment of all FNT equity awards, and (v) continued receipt of life and health insurance benefits for a period of 3 years, reduced by comparable benefits he may receive from another employer. The agreement expressly provides that no event or transaction which is entered into, is contemplated by, or occurs as a result of the securities exchange and distribution agreement or the merger agreement between FNF and FIS will constitute a change in control under the agreement.

 

It is intended that FNT will also enter in employment agreements with certain other FNT executive officers who, along with Mr. Foley, will serve as executive officers of both FNT and FIS. Specifically, FNT will enter into an employment agreement immediately following the spin-off with Alan L. Stinson and with Brent B. Bickett, both of whom will serve as dual executive officers. With respect to each of Messrs. Bickett and Stinson, the compensation committee has approved an annual base salary of $300,000, with an annual cash bonus opportunity equal to 150% of his annual base salary for achieving targeted results, with higher or lower amounts payable depending on performance relative to those targets. In addition, Messrs. Bickett and Stinson will each receive a grant of 130,000 shares of FNT restricted stock, with 3 year graded vesting (1/3 each year), immediately following the spin-off.

 

In connection with the proposed transactions, FIS will enter into a new employment agreement with Mr. Foley and he will also receive a grant of 830,000 options to purchase shares of FIS’s common stock, with 3 year graded vesting (1/3 each year) and a 7 year term, immediately following the merger. In addition, FIS will also enter into new employment agreements with, and grant options to, Mr. Stinson and Mr. Bickett.

 

In addition, the FNF Compensation Committee is evaluating paying transaction bonuses to a group of officers of FNF, including Messrs. Foley, Stinson, and Bickett. The purpose of the transaction bonus is to reward certain officers for their efforts towards successful completion of the merger and the proposed transactions. The merger is the final step of FNF’s long-term strategy, which has included previous acquisitions (Alltel Information Services for example) and reorganizations. The result of FNF’s long-term strategy has been the creation of significant value for shareholders and a rate of return that has consistently exceeded that of the S&P 500 since 1987. If FNF shareholders approve the proposed transactions and the Committee is confident that the transactions will close, the Committee will grant the transaction bonuses (the bonuses would be paid just prior to the closing of the spin-off). Although no bonus will actually be granted by the Committee until shortly prior to the spin-off, the Committee currently would expect to award Mr. Foley a bonus of $19.0 million and Messrs. Stinson and Bickett each a bonus of $2.2 million. The other officers would receive an aggregate of $1.6 million.

 

 

We have fixed the close of business on September 11, as the record date for determining the FNT stockholders entitled to receive notice of or to vote at our annual meeting. Only holders of record of shares of FNT common stock at the close of business on that date will be entitled to vote at our annual meeting. At the close of business on the record date there were 174,323,398 shares of our common stock outstanding.

 

We expect that the proposed transactions will be approved at our annual meeting. If all conditions to the consummation of the merger are satisfied, we expect to complete the proposed transactions as soon as practicable after the satisfaction of the other conditions to the proposed transactions, including the receipt of a private letter ruling from the Internal Revenue Service, third party consents and regulatory approvals. There may be a substantial period of time between the approval of the proposed transactions at our annual meeting and the effectiveness of the proposed transactions. We currently anticipate that the proposed transactions will be completed in the fourth quarter of 2006.

 

As part of the consideration for the transfer by FNF to us of certain assets, we expect to issue approximately 45,265,956 shares of FNT Class A common stock, assuming that we receive cash and certain investment assets in an aggregate amount of $275 million from FNF in connection with the proposed transactions. Further, based on the number of shares of FNT Class B common stock held by FNF on the record date and to be converted to FNT Class A common stock in connection with the spin-off, we expect to issue approximately 143,176,041 additional shares of FNT Class A common stock to FNF. Upon completion of the proposed transactions, including the distribution by FNF to its stockholders of all shares of FNT common stock held by FNF, we expect that the stockholders of FNF will own approximately 85% of the then outstanding shares of FNT common stock.

FNT’s stockholders are not entitled to demand appraisal of, or to receive payment for, their shares of FNT common stock under the Delaware General Corporation Law in connection with the proposed transactions.

 

A number of conditions must be satisfied or waived on or prior to the closing under the securities exchange and distribution agreement (which we refer to as the closing) before the proposed transactions may be completed. These include, among others:

 

 

 

 

 

 

 

 

The securities exchange and distribution agreement may be terminated at any time prior to the closing, whether before or after receipt of the FNT stockholder approval:

 

 

 

 

FNF has requested an Internal Revenue Service ruling, and expects to receive a ruling from the Internal Revenue Service and an opinion of its special tax advisor, Deloitte Tax LLP, satisfactory to us, together to the effect that the proposed transactions (including the spin-off) will be tax free transactions under the Internal Revenue Code. Our stockholders (other than FNF) are not parties to the proposed transactions; therefore, there will be no tax consequences to them as a result of the proposed transactions.

 

Acquisitions among entities under common control such as the asset contribution are not considered business combinations and are to be accounted for at historical cost in accordance with EITF 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 with EITF 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 by SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets will not be met. This is primarily due to the continuing involvement of FNT with and significant influence that FNT will have over FIS subsequent to the merger 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 the date of the completion of the proposed transactions and the merger.

 

 

Under the securities exchange and distribution agreement, we have agreed that our board of directors, after the completion of the proposed transactions, will consist of our existing directors except that William G. Bone and William A. Imparato will resign and Douglas K. Ammerman, Thomas M. Hagerty, Daniel D. Lane and Cary H. Thompson will be appointed to join our board of directors.

 

In addition, William P. Foley, II will be our Chairman of the Board and Chief Executive Officer, Alan L. Stinson will be our Chief Operating Officer, Brent Bickett will be an executive officer of FNT, Peter T. Sadowski will be our Executive Vice President and General Counsel and Michael L. Gravelle will be our Executive Vice President, Legal.

 

 

At or prior to the closing, FNT and FNF will, and will cause their relevant subsidiaries to, terminate or amend certain specified intercompany agreements and, in the case of FNT, enter into certain specified additional agreements with FIS. Generally speaking, the intercompany agreements to which FNF is a party will either be terminated or assigned to FNT. Certain of the intercompany agreements between FIS and/or its subsidiaries, on the one hand, and FNT and/or subsidiaries, on the other, will require amendment to reflect the merger as well as other changes necessary to take into account changes in the relationship between the parties after the merger.

 

 

At or prior to the closing, (i) FNT and FIS will enter into the cross-indemnity agreement and (ii) FNF, FNT and FIS will enter into the tax disaffiliation agreement, both of which are described below under the caption “The Securities Exchange and Distribution Agreement and Related Documents—Additional Agreements” beginning on page 58.

 

 

In evaluating the proposed transactions or the securities exchange and distribution agreement, you should carefully read this information statement and especially consider the factors discussed in the section entitled “Risk Factors” beginning on page 21.

 

 

The insurance subsidiaries of FNF and FNT are subject to regulation under applicable state laws. Before a person can acquire control of a U.S. insurance company, prior written approval must be obtained from the insurance commissioner of the state where the insurer is domiciled. Generally, state statutes presume control to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, 10% or more (5% in Florida) of the voting securities of a domestic insurer. The state insurance commissioner reviewing an application to acquire control will consider such factors as the financial strength of the applicant, the integrity and management of the applicant’s board of directors and executive officers and the acquiror’s plans for the future operations of the domestic insurer. In connection with the proposed transactions, FNF and FNT are in the process of seeking exemptions from the requirements of the various state insurance laws from this approval process on the basis that the proposed transactions do not result in any new person acquiring control of the FNF or FNT insurance subsidiaries as such term is defined under the applicable state insurance laws. In the alternative, FNF and FNT will request approval for the proposed transactions from state insurance commissioners where necessary.

 

Additionally, on July 3, 2006, the California Insurance Commissioner issued a notice of proposed action and notice of public hearing relating to certain proposed regulations governing rate-making for title insurance. The hearing on the proposed regulations took place on August 30, 2006. If implemented, the proposed regulations would result in significant reductions in title insurance rates, which are likely to have a significant negative impact on FNT’s revenues in California. Further, the proposed regulations would give the California Insurance Commissioner the ability to set maximum allowable title insurance rates on a going-forward basis. It is possible that such maximum rates would be lower than the rates that FNT would otherwise set.

 

Stock Options

 

FNF stock options held by persons who, after the spin-off, will solely be employed by or serve as a director of FNT or an FNT affiliate will be replaced with FNT stock options granted under the omnibus incentive plan, with the same terms and conditions as the FNF options, but with equitable adjustments made to the exercise prices and the number of shares underlying the options to reflect the difference in value of FNF and FNT common stock.

 

In addition, William P. Foley, II, Alan L. Stinson and Brent B. Bickett entered into an agreement with FNF on June 25, 2006, pursuant to which FNF has the right to cash out a certain number of the FNF stock options held by Messrs. Foley, Stinson and Bickett for their fair market value or require these individuals to exercise such options. To the extent FNF exercises its right under this agreement, it is required to do so immediately prior to the effective time of the spin-off or as near thereto as practicable. FNF’s right to cash out these FNF stock options or require such options to be exercised is subject to the right of Messrs. Foley, Stinson and Bickett to exercise such stock options if doing so would not adversely affect the tax treatment of the proposed transactions. With respect to the FNF stock options held by Messrs. Foley, Stinson and Bickett that are not subject to the agreement entered into with FNF, and with respect to FNF stock options held by other persons who, like Messrs. Foley, Stinson and Bickett, will be employed by or serve as a director of both FNT and FIS, whom we refer to as dual service providers, 50% of such options (to the extent outstanding at the closing) will be replaced with FNT options, as described above, and the remaining 50% of such options will be assumed by FIS and converted into FIS stock options pursuant to the terms of the merger agreement.

 

Restricted Stock

 

All holders of FNF restricted stock will receive FNT shares in connection with the spin-off in the same proportion as other FNF stockholders, with such shares subject to the same transfer restrictions and forfeiture conditions as the FNF restricted stock based upon continued service with FNT and its affiliates or FIS and its affiliates, as the case may be. In addition, FNF restricted stock granted to and held by persons who, after the spin-off, will solely be employed by or serve as a director of FNT or an FNT affiliate will be replaced with shares of FNT restricted stock pursuant to the terms of the securities exchange and distribution agreement, with the same terms and conditions as the FNF restricted stock based upon continued service with FNT and its affiliates. With respect to dual service providers, 50% of their FNF restricted stock will be replaced with FNT restricted stock and 50% will be converted into FIS restricted stock.

 

Under the securities exchange and distribution agreement, we have agreed to indemnify each person who, prior to the closing, was an officer or director of FNF to the same extent that such officer or director was indemnified by FNF under FNF’s charter and by-laws. We will also purchase and maintain for at least six years after date of closing a directors’ and officers’ insurance policy insuring directors, officers and employees of FNF and its subsidiaries (but not directors, officers or employees of FIS and its subsidiaries acting in their capacity as such) and providing coverage at least as favorable to the insured persons as FNF’s current director’s and officer’s insurance.

 

MARKET PRICE AND DIVIDEND INFORMATION

 

Our Historical Market Price

		Our Common Stock								FNF Common Stock
		High				Low				High				Low
Year Ended December 31, 2005
Quarter ended March 31			N/A				N/A			$	47.00			$	30.35	(a)
Quarter ended June 30			N/A				N/A				36.98				30.05
Quarter ended September 30			N/A				N/A				44.71				35.56
Quarter ended December 31		$	24.35			$	20.30				45.56				35.50	(b)
Year Ended December 31, 2006
Quarter ended March 31		$	25.73			$	21.72			$	39.86			$	35.15
Quarter ended June 30		$	23.75			$	19.54			$	43.53			$	34.82
Quarter ended September 30 (through September 15)		$	22.00			$	18.03			$	42.30			$	36.85

(a)		During the first quarter of 2005, FNF declared and paid a $10.00 special dividend.
(b)		During the fourth quarter of 2005, FNF distributed to its stockholders 17.5% of the outstanding shares of our common stock which resulted in a reduction in FNF’s stock price of $4.06 on the ex-dividend date.

 

FNT Dividend Information

Year Ended December 31, 2005		Our Dividends				FNF Dividends
Quarter ended March 31			N/A			$	10.25	(a)
Quarter ended June 30			N/A				0.25
Quarter ended September 30			N/A				0.25
Quarter ended December 31		$	0.25				0.25
Year Ended December 31, 2006
Quarter ended March 31		$	0.29			$	0.25
Quarter ended June 30		$	0.29			$	0.25
Quarter ended September 30 (through September 15)		$	0.29	(b)		$	0.25	(b)

(a)		During the first quarter of 2005, FNF declared and paid a $10.00 special dividend.

(b)		On July 20, 2006, FNT declared a quarterly cash dividend payable September 28, 2006, to stockholders of record as of September 14, 2006. On July 20, 2006, FNF declared a quarterly cash dividend payable September 29, 2006, to stockholders of record as of September 14, 2006.

 

FINANCIAL SUMMARY

 

Summary Historical Financial Data of FNT

		Six Months Ended
		June 30,								Year Ended December 31,
		2006(1)				2005(1)				2005(1)				2004(1)				2003(1)				2002				2001(2)(3)
		(In thousands, except per share data)
Statement of Earnings Data:
Direct title insurance premiums		$	952,301			$	1,017,396			$	2,184,993			$	2,003,447			$	2,105,317			$	1,557,769			$	1,252,656
Agency title insurance premiums			1,337,134				1,304,200				2,763,973				2,714,770				2,595,433				1,989,958				1,441,416
Total title premiums			2,289,435				2,321,596				4,948,966				4,718,217				4,700,750				3,547,727				2,694,072
Escrow and other title related fees			541,657				543,465				1,162,344				1,039,835				1,058,729				790,787				656,739
Total title and escrow			2,831,092				2,865,061				6,111,310				5,758,052				5,759,479				4,338,514				3,350,811
Interest and investment income			74,419				42,155				118,084				64,885				56,708				72,305				88,232
Realized gains and losses, net			20,613				21,922				44,684				22,948				101,839				584				946
Other income			22,429				20,020				41,783				43,528				52,689				55,927				50,476
			2,948,553				2,949,158				6,315,861				5,889,413				5,970,715				4,467,330				3,490,465
Personnel costs			918,656				904,603				1,897,904				1,680,805				1,692,895				1,260,070				1,036,236
Other operating expenses			443,228				447,818				935,263				849,554				817,597				633,193				558,263
Agent commissions			1,032,537				1,005,121				2,140,912				2,117,122				2,035,810				1,567,112				1,131,892
Depreciation and amortization			53,431				49,389				102,105				95,718				79,077				53,042				100,225
Provision for claim losses			171,738				150,677				354,710				259,402				248,834				175,963				134,527
Interest expense			23,700				724				16,663				3,885				4,582				8,586				15,695
			2,643,290				2,558,332				5,447,557				5,006,486				4,878,795				3,697,966				2,976,838
Earnings before income taxes and minority interest			305,263				390,826				868,304				882,927				1,091,920				769,364				513,627
Income tax expense			108,369				146,637				327,351				323,598				407,736				276,970				205,965
Earnings before minority interest			196,894				244,189				540,953				559,329				684,184				492,394				307,662
Minority interest			1,279				1,292				1,972				1,165				859				624				—
Cumulative effect of accounting change			—				—				—				—				—				—				5,709
Net earnings		$	195,615			$	242,897			$	538,981			$	558,164			$	683,325			$	491,770			$	301,953

		Six Months Ended
		June 30,								Year Ended December 31,
		2006(1)				2005(1)				2005(1)				2004(1)				2003(1)				2002				2001(2)(3)
		(In thousands, except per share data)
Per share amounts:
Basic earnings per share		$	1.13							$	3.11
Weighted average shares outstanding, basic basis			173,475								173,463	(4)
Diluted earnings per share		$	1.13							$	3.11
Weighted average shares outstanding, diluted basis			173,651								173,575	(4)
Unaudited pro forma net earnings per share — basic and diluted(5)						$	1.40							$	3.22
Unaudited pro forma weighted average shares outstanding — basic and diluted(5)							172,951								172,951
Dividends declared per share		$	0.58							$	0.25

(1)		Effective January 1, 2003, we adopted the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation”, using the prospective method of adoption in accordance with SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure”, and as a result recorded stock compensation expense of $5.7 million for the six months ended June 30, 2005 and $12.5 million, $5.4 million and $4.9 million for the years ended December 31, 2005, 2004 and 2003, respectively. Effective January 1, 2006, we adopted SFAS No. 123 (Revised), “Share-Based Payment,” and recorded stock compensation expense of $6.3 million in the first six months of 2006.

(2)		Effective January 1, 2002, we adopted SFAS No. 142 “Goodwill and Other Intangible Assets” and as a result, have ceased to amortize goodwill. Goodwill amortization in 2001 was $33.2 million.
(3)		During 2001, we recorded a $5.7 million, after-tax charge, reflected as a cumulative effect of a change in accounting principle, as a result of adopting Emerging Issues Task Force No. 99-20, “Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets.”

(4)		Because there were no outstanding shares prior to FNF’s distribution of our common stock (representing 17.5% of our outstanding shares) as a dividend to its stockholders, which was completed on October 17, 2005, basic and diluted weighted average shares outstanding for 2005 have been calculated using activity from October 18, 2005 to December 31, 2005 as if shares outstanding and common stock equivalents at October 18, 2005 had been outstanding for the entire year.

(5)		Unaudited pro forma net earnings per share is calculated using the number of outstanding shares of FNF on a date prior to the distribution of FNT shares to FNF stockholders.

		June 30,				December 31,
		2006				2005				2004				2003				2002				2001
		(In thousands)
Balance sheet data (at end of period):
Investments(1)		$	3,420,412			$	3,300,738			$	2,819,489			$	2,510,182			$	2,337,472			$	1,705,267
Cash and cash equivalents(2)			677,876				462,157				268,414				395,857				433,379				491,709
Total assets			6,199,666				5,900,533				5,074,091				4,782,664				4,494,716				3,848,300
Notes payable			573,197				603,262				22,390				54,259				107,874				176,116
Reserve for claim losses			1,130,444				1,063,857				980,746				932,439				887,973				881,053
Minority interests			5,392				4,338				3,951				2,488				1,098				239
Equity			2,551,178				2,480,037				2,676,756				2,469,186				2,234,484				1,741,387

(1)		Investments as of June 30, 2006 and December 31, 2005, 2004, 2003, 2002 and 2001 include securities pledged to secure trust deposits of $696.6 million, $656.0 million, $546.0 million, $448.1 million, $474.9 million and $319.1 million, respectively. Investments as of June 30, 2006, and December 31, 2005, include securities pledged relating to FNT’s securities lending program of $216.4 million and $120.2 million, respectively.

(2)		Cash and cash equivalents as of June 30, 2006 and December 31, 2005, 2004, 2003, 2002 and 2001 include cash pledged to secure trust deposits of $322.1 million, $234.7 million, $195.2 million, $231.1 million, $295.1 million and $367.9 million, respectively. Cash and cash equivalents as of June 30, 2006, and December 31, 2005, include cash pledged relating to FNT’s securities lending program of $222.5 million and $124.3 million, respectively.

		Six Months
		Ended June 30,				Year Ended December 31,
		2006				2005				2004				2003				2002				2001
		(In whole numbers)
Other non-financial data (unaudited):
Direct operations orders opened(1)			1,381,000				3,052,805				3,142,945				3,771,393				2,953,797				2,496,597
Direct operations orders closed(1)			910,100				2,169,656				2,249,792				2,916,201				2,141,680				1,685,147
Fee per closed file(1)		$	1,597			$	1,487			$	1,324			$	1,081			$	1,099			$	1,120

(1)		These measures are used by management to judge productivity and are a measure of transaction volume for our direct title businesses. An order is opened when we receive a customer order and is closed when the related real estate transaction closes, which typically takes 45-60 days from the opening of an order.

 

Summary Historical Financial Data of FNF

		Six Months
		Ended
		June 30,								Year Ended December 31,
		2006(1)				2005(1)				2005(1)(3)				2004(1)(4)				2003(1)(5)				2002				2001(2)(6)(7)
		(In thousands, except per share data)
Statement of Earnings Data:
Revenue		$	4,999,268			$	4,703,254			$	9,668,938			$	8,296,002			$	7,715,215			$	5,082,640			$	3,874,107
Expenses:
Personnel costs			1,769,772				1,555,192				3,224,678				2,786,297				2,465,026				1,476,430				1,187,177
Other operating expenses			1,095,405				840,249				1,716,711				1,599,124				1,448,133				945,829				711,151
Agent commissions			998,789				967,671				2,060,467				2,028,926				1,823,241				1,521,573				1,098,328
Depreciation and amortization			262,600				202,559				406,259				338,434				227,937				74,163				118,282
Provision for claim losses			238,567				197,966				480,556				311,916				287,136				179,292				134,724
Goodwill amortization			—				—				—				—				—				—				54,155
Interest expense			117,605				71,535				172,327				47,214				43,103				34,053				46,569
			4,482,738				3,835,172				8,060,998				7,111,911				6,294,576				4,231,340				3,350,386

		Six Months
		Ended
		June 30,								Year Ended December 31,
		2006(1)				2005(1)				2005(1)(3)				2004(1)(4)				2003(1)(5)				2002				2001(2)(6)(7)
		(In thousands, except per share data)
Earnings before income taxes, minority interest and cumulative effect of a change in accounting principle			516,530				868,082				1,607,940				1,184,091				1,420,639				851,300				523,721
Income tax expense			192,149				210,388				573,391				438,114				539,843				306,468				209,488
Earnings before minority interest and cumulative effect of a change in accounting principle			324,381				657,694				1,034,549				745,977				880,796				544,832				314,233
Minority interest			85,389				23,155				70,443				5,015				18,976				13,115				3,048
Earnings before cumulative effect of a change in accounting principle			238,992				634,539				964,106				740,962				861,820				531,717				311,185
Cumulative effect of a change in accounting principle, net of income taxes			—				—				—				—				—				—				(5,709	)
Net earnings		$	238,992			$	634,539			$	964,106			$	740,962			$	861,820			$	531,717			$	305,476
Per Share Data:
Basic earnings per share before cumulative effect of a change in accounting principle		$	1.37			$	3.67			$	5.58			$	4.33			$	5.81			$	4.05			$	2.41
Cumulative effect of a change in accounting principle, net of income taxes, basic basis			—				—				—				—				—				—				(.05	)
Basic net earnings per share		$	1.37			$	3.67			$	5.58			$	4.33			$	5.81			$	4.05			$	2.36
Weighted average shares outstanding, basic basis			174,647				172,773				172,839				171,014				148,275				131,135				129,316
Diluted earnings per share before cumulative effect of a change in accounting principle		$	1.32			$	3.58			$	5.43			$	4.21			$	5.63			$	3.91			$	2.34
Cumulative effect of a change in accounting principle, net of income taxes, diluted basis			—				—				—				—				—				—				(.05	)
Diluted net earnings per share		$	1.32			$	3.58			$	5.43			$	4.21			$	5.63			$	3.91			$	2.29
Weighted average shares outstanding, diluted basis			179,788				177,109				177,597				176,000				153,171				135,871				133,189
Dividends declared per share		$	0.50			$	10.50			$	11.00			$	0.79			$	0.54			$	0.32			$	0.26

(1)		Effective January 1, 2003, we adopted the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation”, using the prospective method of adoption in accordance with SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure”, and as a result recorded stock compensation expense of $17.1 million for the six months ended June 30, 2005, and $34.1 million, $21.8 million and $6.2 million for the years ended December 31, 2005, 2004 and 2003, respectively. Effective January 1, 2006, we adopted SFAS No. 123 (Revised), “Share-Based Payment,” and recorded stock compensation expense of $45.6 million in the first six months of 2006.

(2)		Effective January 1, 2002, we adopted SFAS No. 142 “Goodwill and Other Intangible Assets” and as a result, have ceased to amortize goodwill. Goodwill amortization in 2001 was $54.2 million.
(3)		FNF’s financial results for the year ended December 31, 2005 includes in revenue and net earnings a $318.2 million gain on sale relating to the issuance of subsidiary stock, approximately $100.0 million in

		additional income tax expense relating to the distribution to its stockholders of a 17.5% interest of FNT and additional minority interest expense related to the minority interest issued in FNT and FIS.
(4)		FNF’s financial results for the year ended December 31, 2004 include the results of various entities acquired on various dates during 2004.
(5)		FNF’s financial results for the year ended December 31, 2003 include the results of its acquisition of ALLTEL Information Services, Inc. for the period from April 1, 2003, the acquisition date, through December 31, 2003, and include the results of operations of various other entities acquired on various dates during 2003.
(6)		FNF’s financial results for the year ended December 31, 2001 include the results of the former operations of Vista Information Solutions, Inc. for the period from August 1, 2001, the acquisition date, through December 31, 2001. In the fourth quarter of 2001, FNF recorded certain charges totaling $10.0 million, after applicable taxes, relating to the discontinuation of small-ticket lease origination at FNF Capital and the wholesale international long distance business at Micro General Corporation.
(7)		During 2001, FNF recorded a $5.7 million, after-tax charge, reflected as a cumulative effect of a change in accounting principle, as a result of adopting Emerging Issues Task Force No. 99-20, “Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets.”

		June 30,				December 31,
		2006				2005				2004				2003				2002				2001
		(In thousands, except per share data)
Balance Sheet Data:
Investments(1)		$	4,311,173			$	4,564,189			$	3,346,276			$	2,689,817			$	2,565,815			$	1,823,512
Cash and cash equivalents(2)			806,306				513,394				331,222				459,655				482,600				542,620
Total assets			14,404,379				11,104,617				9,270,535				7,263,175				5,245,951				4,415,998
Notes payable			3,519,942				3,217,019				1,370,556				659,186				493,458				565,690
Reserve for claim losses			1,186,360				1,113,506				1,000,474				945,237				890,148				881,089
Minority interests and preferred stock of subsidiary			1,891,509				636,304				18,874				14,835				131,797				47,166
Stockholders’ equity			4,356,921				3,279,775				4,700,091				3,873,359				2,253,936				1,638,870
Book value per share(3)		$	24.72			$	18.84			$	27.24			$	23.50			$	17.13			$	12.65

(1)		Investments as of June 30, 2006 and December 31, 2005, 2004, 2003, 2002 and 2001 include securities pledged to secure trust deposits of $696.6 million, $656.0 million, $546.0 million, $448.1 million, $474.9 million and $319.1 million, respectively. Investments as of June 30, 2006, and December 31, 2005 include securities pledged relating to FNF’s securities lending program of $237.2 million and $138.7 million, respectively.

(2)		Cash and cash equivalents as of June 30, 2006 and December 31, 2005, 2004, 2003, 2002 and 2001 include cash pledged to secure trust deposits of $322.1 million, $234.7 million, $195.2 million, $231.1 million, $295.1 million and $367.9 million, respectively. Cash and cash equivalents as of June 30, 2006 and December 31, 2005 include cash pledged relating to FNF’s securities lending program of $243.9 million and $143.4 million, respectively.

(3)		Book value per share is calculated as stockholders’ equity at June 30, 2006 and December 31 of each year presented divided by actual shares outstanding at the end of each period presented.