Lender Processing Services Reports Third Quarter 2012 Earnings

Adjusted EPS increased 20% from prior year to $0.71

Technology, Data and Analytics revenue increased 11% with growth across all lines of business

Investment in technology-driven solutions supports mortgage industry requirements

29 Oct, 2012, 16:03 ET from Lender Processing Services, Inc.

JACKSONVILLE, Fla., Oct. 29, 2012 /PRNewswire/ -- Lender Processing Services, Inc. (NYSE: LPS), a leading provider of integrated technology and services to the mortgage and real estate industries, today reported consolidated revenue of $512.7 million for the third quarter of 2012, a decrease of 1.3% from the prior year quarter, and GAAP net earnings of $58.3 million, or $0.69 per diluted share, an increase of 44% from the prior year quarter.

(Logo: http://photos.prnewswire.com/prnh/20120802/FL50731LOGO )

Third Quarter Highlights

  • Technology, Data and Analytics revenue of $192.0 million, up 11% from prior year
  • Adjusted earnings per diluted share of $0.71, including $0.02 per share loss from discontinued operations
  • EBITDA margin of 26.7%, up 460 basis points from prior year
  • Adjusted free cash flow of $69.2 million in the third quarter and $252.8 million year-to-date
  • Initiated debt refinancing to lower cost of capital and further strengthen the balance sheet
  • Completed conversion of 240,000 home equity loans to the MSP Servicing Technology platform

"Our strong third quarter results demonstrate LPS' continued delivery of high-value, technology-driven solutions to our clients to meet evolving compliance, loan quality and efficiency requirements," said Hugh Harris, president and chief executive officer of LPS.  "Our proven business model consistently generates strong cash flow allowing LPS to invest in innovative solutions that enhance the mortgage lending value chain, enable our clients to succeed, and drive long-term value for our shareholders through sustainable growth." 

"The positive quarterly results were driven by increased demand for LPS' technology solutions, record low interest rates resulting in strong refinance activity and the benefits of ongoing investments to expand our platforms.  Technology, Data and Analytics is our growth platform for the future, and we are very pleased with its strong performance this quarter," commented Chief Financial Officer Tom Schilling.  "Strong margins and cash flow resulted from our focus on high-return core markets, disciplined cost management and favorable revenue mix."

Operating income for the third quarter increased 19.4% to $112.4 million from the prior year period, while the operating margin increased to 21.9% from 18.1% in the third quarter of 2011.

Net cash provided by operating activities for the third quarter of 2012 was $85.7 million compared to $102.7 million in the prior year period, and $303.6 million in the first three quarters of 2012 compared to $329.6 million in the same period in 2011.  Adjusted free cash flow for the third quarter of 2012 decreased to $69.2 million from $76.6 million in the prior year due to changes in working capital, which offset the increase in net earnings.  Adjusted free cash flow is defined as net cash provided by operating activities minus certain non-recurring expenses and additions to property, equipment and computer software.    

Technology, Data and Analytics Segment  (TD&A)

Revenue for the Technology, Data and Analytics segment for the third quarter increased 11.2% from the prior year to $192.0 million as a result of growth in all lines of business.  Revenue from Servicing Technology increased 4.0% primarily due to loan growth on the MSP platform; Default Technology revenue increased 28.3% primarily reflecting market share gains achieved during 2011 and strong demand for professional services; and Origination Technology revenue increased 25.3% due principally to higher transaction volume on the Loan Quality Gateway platform resulting from elevated refinance activity and new client implementations. In addition, Data and Analytics revenue increased 7.5% driven by greater demand for data to support elevated origination volume.  Third quarter operating income increased to $60.4 million from $58.7 million in the same period in 2011 as a result of higher income from all TD&A sub-segments.

Transaction Services Segment

Revenue for the Transaction Services segment for the third quarter decreased 7.9% from the prior year period to $320.7 million. Origination Services revenue increased 15.7% to $154.1 million from the prior year as a result of higher refinance origination volume that generated increased title and escrow orders, partially offset by lower appraisal volume as the Company exited lower margin contracts.  Default Services revenue decreased 22.5% to $166.7 million from the prior year quarter primarily reflecting lower transaction volumes due to industry-wide foreclosure delays.  Operating income increased 15.0% from the prior year quarter to $64.2 million, while the operating margin increased 400 basis points to 20.0% reflecting higher Origination Services contributions, favorable revenue mix and prudent cost management.

Corporate

Net corporate expenses in the third quarter of 2012 decreased to $12.1 million from $20.3 million in the prior year period primarily as a result of current period legal-related expenses being charged against our previously established legal and regulatory reserve.

Balance Sheet and Capital Resources

During the third quarter, the company initiated senior debt refinancing to lower the cost of capital and further strengthen the balance sheet by extending the maturity of long-term debt and reducing secured debt.  The Company commenced an offering of $600 million of Senior Notes due 2023 at a coupon of 5.75% issued at par value.  The net proceeds, along with cash on hand, is being used to repay $609 million of outstanding debt including $362 million of 8.125% Notes due 2016 and $247 million of Term Loan B under its senior credit facility, and pay fees and expenses.  The refinancing will result in annual net interest expense savings of approximately $9.0 million.  The Senior Note offering was completed on October 12, 2012.

The legal and regulatory accrual decreased by $6.7 million during the current quarter to $196.4 million, due to the payment of expenses that were previously recognized in our legal and regulatory reserve established in prior quarters. No reserves for legal and regulatory matters were added during the third quarter.

The company ended the third quarter with cash of $160.7 million compared to $138.5 million in the second quarter 2012.

Outlook

Based on the current environment, the company expects fourth quarter 2012 revenue to be in the range of $475 million to $495 million and adjusted net earnings per diluted share to be in the range of $0.65 to $0.69.

Earnings Conference Call and Webcast

LPS will host a conference call tomorrow at 10:00 a.m. ET with a live webcast on the Investor Relations section of its website at www.lpsvcs.com.  Earnings information, including this press release and our financial results presentation, is available on the website.  A replay of the webcast will be available on the website shortly after the call where it will be archived for one month.  A replay of the call will be available until November 6, 2012, by dialing 888-203-1112 (access code: 4041948).

About Lender Processing Services

LPS (NYSE: LPS) delivers comprehensive technology solutions and services, as well as powerful data and analytics, to the nation's top mortgage lenders, servicers and investors. As a proven and trusted partner with deep client relationships, LPS offers the only end-to-end suite of solutions that provides major U.S. banks and many federal government agencies the technology and data needed to support mortgage lending and servicing operations, meet unique regulatory and compliance requirements and mitigate risk.  These integrated solutions support origination, servicing, portfolio retention and default servicing. LPS' servicing solutions include MSP, the industry's leading loan-servicing platform, which is used to service approximately 50 percent of all U.S. mortgages by dollar volume. The company also provides proprietary data and analytics for the mortgage, real estate and capital markets industries. Lender Processing Services is a Fortune 1000 company headquartered in Jacksonville, Fla., employing approximately 8,000 professionals. For more information, please visit www.lpsvcs.com.

Use of Non-GAAP Financial Information

U.S. Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting.  GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements.  In addition to reporting financial results in accordance with GAAP, LPS reports several non-GAAP measures, including "EBITDA" (GAAP operating income plus depreciation and amortization); "EBITDA, as adjusted" (EBITDA adjusted for the impact of certain non-recurring adjustments, if applicable); "EBIT, as adjusted" or "adjusted operating income" (GAAP operating income adjusted for the impact of certain non-recurring adjustments, if applicable); "adjusted net earnings" (GAAP net earnings adjusted for the impact of certain non-recurring adjustments, if applicable, plus the after-tax purchase price amortization of intangible assets added through acquisitions); "adjusted net earnings per diluted share" or "adjusted EPS per diluted share" (adjusted net earnings divided by diluted weighted average shares); and "adjusted free cash flow" (net cash provided by operating activities less additions to property, equipment and computer software, as well as non-recurring adjustments, if applicable). LPS provides these measures because it believes that they are helpful to investors in comparing year-over-year performance in light of certain non-recurring and other charges, and to better understand our financial performance, competitive position and future prospects.  Non-GAAP measures should be considered in conjunction with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP measures.  A reconciliation of these non-GAAP measures to related GAAP measures is included in the attachments to this release.

Forward-Looking Statements

This press release contains forward-looking statements that involve a number of risks and uncertainties. Those forward-looking statements include all statements that are not historical facts, including statements about our beliefs and expectations. Forward-looking statements are based on management's beliefs, as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to future economic performance and are not statements of historical fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.  The risks and uncertainties to which forward-looking statements are subject include, but are not limited to: our ability to adapt our services to changes in technology or the marketplace; the impact of adverse changes in the level of real estate activity (including among others, loan originations and foreclosures) on demand for certain of our services; our ability to maintain and grow our relationships with our customers; the effects of our substantial leverage on our ability to make acquisitions and invest in our business; the level of scrutiny being placed on participants in the foreclosure process; risks associated with federal and state enforcement proceedings, inquiries and examinations currently underway or that may be commenced in the future with respect to our default management operations, and with civil litigation related to these matters; the impact of continued delays in the foreclosure process on the timing and collectability of our fees for certain of our services; changes to the laws, rules and regulations that regulate our businesses as a result of the current economic and financial environment; changes in general economic, business and political conditions, including changes in the financial markets; the impact of any potential defects, development delays, installation difficulties or system failures on our business and reputation; risks associated with protecting information security and privacy; and other risks and uncertainties detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of the Company's Form 10-K and other filings with the Securities and Exchange Commission.

 

Exhibit A

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(Unaudited)

Three months ended September 30,

Nine months ended September 30,

2012

2011

2012

2011

(In thousands, except per share data)

Revenues

$        512,676

$         519,437

$       1,551,904

$       1,556,280

Expenses:

Operating expenses

375,716

404,423

1,150,905

1,175,381

Depreciation and amortization

24,516

20,822

72,538

66,445

Legal and regulatory charges

-

-

144,476

-

Exit costs, impairments and other charges

-

-

-

29,198

Total expenses

400,232

425,245

1,367,919

1,271,024

Operating income

112,444

94,192

183,985

285,256

Other income (expense):

Interest income

463

353

1,365

1,064

Interest expense

(16,112)

(22,986)

(48,969)

(50,961)

Other income (expense), net

14

(128)

173

(174)

Total other income (expense)

(15,635)

(22,761)

(47,431)

(50,071)

Earnings from continuing operations before income taxes

96,809

71,431

136,554

235,185

Provision for income taxes

36,110

26,787

60,973

88,195

Net earnings from continuing operations

60,699

44,644

75,581

146,990

Loss from discontinued operations, net of tax

(2,395)

(4,194)

(8,036)

(29,246)

Net earnings

$          58,304

$           40,450

$           67,545

$         117,744

-

-

Net earnings per share - diluted from continuing operations

$              0.71

$               0.53

$               0.88

$               1.71

Net loss per share - diluted from discontinued operations

(0.02)

(0.05)

(0.08)

(0.34)

Net earnings per share - diluted

$              0.69

$               0.48

$               0.80

$               1.37

Weighted average shares outstanding - diluted

84,948

84,415

84,774

86,108

 

 

Exhibit B

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

September 30,

December 31,

2012

2011

(In thousands)

Assets

Current assets:

Cash and cash equivalents

$        160,716

$        77,355

Trade receivables, net of allowance for doubtful accounts

308,359

345,048

Other receivables

3,652

1,423

Prepaid expenses and other current assets

33,726

33,004

Deferred income taxes

111,853

74,006

Total current assets

618,306

530,836

Property and equipment, net

112,463

121,245

Computer software, net

241,103

228,882

Other intangible assets, net

26,299

39,140

Goodwill

1,126,090

1,132,828

Other non-current assets

245,267

192,484

Total assets

$     2,369,528

$   2,245,415

Liabilities and Stockholders' Equity

Current liabilities:

Current portion of long-term debt

$           2,500

$        39,310

Trade accounts payable

37,655

43,105

Accrued salaries and benefits

79,042

64,383

Legal and regulatory accrual

196,446

78,483

Other accrued liabilities

158,659

168,627

Deferred revenues

53,210

64,078

Total current liabilities

527,512

457,986

Deferred revenues

25,724

34,737

Deferred income taxes, net

160,360

122,755

Long-term debt, net of current portion

1,074,500

1,109,850

Other non-current liabilities

36,375

32,099

Total liabilities

1,824,471

1,757,427

Stockholders' equity:

Preferred stock $0.0001 par value; 50 million shares authorized, none

-

-

issued at September 30, 2012 and December 31, 2011

Common stock $0.0001 par value; 500 million shares authorized, 97.4 million

10

10

shares issued at September 30, 2012 and December 31, 2011

Additional paid-in capital

253,285

250,533

Retained earnings

699,895

658,146

Accumulated other comprehensive loss

(3,427)

(1,783)

Treasury stock at cost; 12.7 million and 13.0 million shares at

September 30, 2012 and December 31, 2011, respectively

(404,706)

(418,918)

Total stockholders' equity

545,057

487,988

Total liabilities and stockholders' equity

$     2,369,528

$   2,245,415

 

Exhibit C

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Nine months ended September 30,

2012

2011

(In thousands)

Cash flows from operating activities:

Net earnings

$          67,545

$        117,744

Adjustments to reconcile net earnings to net 

cash provided by operating activities:

Depreciation and amortization

73,407

73,753

Amortization of debt issuance costs

3,317

8,901

Asset impairment charges

3,812

31,855

(Gain) loss on sale of discontinued operations

(6,688)

1,486

Deferred income taxes, net

776

11,985

Stock-based compensation cost

19,520

28,179

Income tax effect of equity compensation

(494)

588

Changes in assets and liabilities, net of effects of acquisitions:

Trade receivables

27,543

64,291

Other receivables

(1,748)

2,708

Prepaid expenses and other assets

(18,512)

(6,258)

Deferred revenues

10,605

(3,382)

Accounts payable, accrued liabilities and other liabilities

124,487

(2,249)

Net cash provided by operating activities

303,570

329,601

Cash flows from investing activities:

Additions to property and equipment

(16,109)

(25,970)

Additions to capitalized software

(56,088)

(55,501)

Purchases of investments, net of proceeds from sales

(17,604)

(14,918)

Acquisition of title plants and property records data

(33,600)

(15,686)

Acquisitions, net of cash acquired

(12,250)

(9,802)

Proceeds from sale of discontinued operations, net of cash distributed

16,206

-

Net cash used in investing activities

(119,445)

(121,877)

Cash flows from financing activities:

Borrowings

-

960,000

Debt service payments

(72,082)

(942,915)

Exercise of stock options and restricted stock vesting

(1,792)

(2,680)

Income tax effect of equity compensation

494

(588)

Dividends paid

(25,384)

(26,006)

Debt issuance costs paid

-

(22,059)

Treasury stock repurchases

-

(136,878)

Bond repurchases

-

(4,925)

Payment of contingent consideration related to acquisitions

(2,000)

-

Net cash used in financing activities

(100,764)

(176,051)

Net increase in cash and cash equivalents

83,361

31,673

Cash and cash equivalents, beginning of period

77,355

52,287

Cash and cash equivalents, end of period

$        160,716

$          83,960

Supplemental disclosures of cash flow information:

Cash paid for interest

$          54,774

$          48,672

Cash paid for taxes

$          46,853

$          49,181

 

Exhibit D

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

SUPPLEMENTAL FINANCIAL INFORMATION - UNAUDITED

(In thousands)

YEAR-TO-DATE(1)

QUARTER (1)

Q3-2012

Q3-2011

Q3-2012

Q2-2012

Q1-2012

Q4-2011

Q3-2011

Q2-2011

Q1-2011

1.

Revenues - Continuing Operations

Technology, Data and Analytics:

Technology

$   503,790

$   460,333

$  173,985

$  168,515

$161,290

$161,252

$156,414

$152,676

$151,243

Servicing Technology

331,207

314,249

111,572

111,284

108,351

107,103

107,273

103,676

103,300

Default Technology

101,790

86,536

36,163

34,051

31,576

33,752

28,185

29,201

29,150

Origination Technology

70,793

59,548

26,250

23,180

21,363

20,397

20,956

19,799

18,793

Data and Analytics

52,414

51,926

17,971

17,590

16,853

17,019

16,724

17,897

17,305

Total

556,204

512,259

191,956

186,105

178,143

178,271

173,138

170,573

168,548

Transaction Services:

Origination Services

451,548

367,911

154,057

150,741

146,750

151,527

133,099

105,856

128,956

Default Services

546,144

680,889

166,657

196,625

182,862

205,326

214,996

224,744

241,149

Total

997,692

1,048,800

320,714

347,366

329,612

356,853

348,095

330,600

370,105

Corporate

(1,992)

(4,779)

6

(264)

(1,734)

(1,292)

(1,796)

(1,513)

(1,470)

Total Revenue

$1,551,904

$1,556,280

$  512,676

$  533,207

$506,021

$533,832

$519,437

$499,660

$537,183

Revenue Growth from Prior Year Period

Technology, Data and Analytics:

Technology

9.4%

3.1%

11.2%

10.4%

6.6%

4.6%

0.1%

2.7%

6.9%

Servicing Technology

5.4%

3.3%

4.0%

7.3%

4.9%

5.8%

4.0%

0.7%

5.3%

Default Technology

17.6%

0.4%

28.3%

16.6%

8.3%

1.9%

-14.7%

15.1%

5.0%

Origination Technology

18.9%

6.3%

25.3%

17.1%

13.7%

3.4%

4.7%

-2.7%

20.2%

Data and Analytics

0.9%

-6.8%

7.5%

-1.7%

-2.6%

-13.7%

-8.1%

-3.9%

-8.5%

Total

8.6%

2.0%

10.9%

9.1%

5.7%

2.5%

-0.7%

2.0%

5.0%

Transaction Services:

Origination Services

22.7%

-13.7%

15.7%

42.4%

13.8%

-15.5%

-14.8%

-19.5%

-7.0%

Default Services

-19.8%

-18.6%

-22.5%

-12.5%

-24.2%

-23.0%

-22.5%

-20.4%

-12.9%

Total

-4.9%

-16.9%

-7.9%

5.1%

-10.9%

-20.0%

-19.7%

-20.1%

-10.9%

Corporate

n/m

n/m

n/m

n/m

n/m

n/m

n/m

n/m

n/m

Total Revenue

-0.3%

-11.5%

-1.3%

6.7%

-5.8%

-13.6%

-14.3%

-13.7%

-6.3%

Revenue Growth from Sequential Period

Technology, Data and Analytics:

Technology

9.4%

3.1%

3.2%

4.5%

0.0%

3.1%

2.4%

0.9%

-1.9%

Servicing Technology

5.4%

3.3%

0.3%

2.7%

1.2%

-0.2%

3.5%

0.4%

2.0%

Default Technology

17.6%

0.4%

6.2%

7.8%

-6.4%

19.8%

-3.5%

0.2%

-12.0%

Origination Technology

18.9%

6.3%

13.2%

8.5%

4.7%

-2.7%

5.8%

5.4%

-4.8%

Data and Analytics

0.9%

-6.8%

2.2%

4.4%

-1.0%

1.8%

-6.6%

3.4%

-12.3%

Total

8.6%

2.0%

3.1%

4.5%

-0.1%

3.0%

1.5%

1.2%

-3.1%

Transaction Services:

Origination Services

22.7%

-13.7%

2.2%

2.7%

-3.2%

13.8%

25.7%

-17.9%

-28.1%

Default Services

-19.8%

-18.6%

-15.2%

7.5%

-10.9%

-4.5%

-4.3%

-6.8%

-9.6%

Total

-4.9%

-16.9%

-7.7%

5.4%

-7.6%

2.5%

5.3%

-10.7%

-17.1%

Corporate

n/m

n/m

n/m

n/m

n/m

n/m

n/m

n/m

n/m

Total Revenue

-0.3%

-11.5%

-3.9%

5.4%

-5.2%

2.8%

4.0%

-7.0%

-13.1%

(1)

2011 revenues have been reclassified to conform to the current year presentation.

 

Exhibit E

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

NON-GAAP FINANCIAL INFORMATION - UNAUDITED

(In thousands, except per share data)

YEAR-TO-DATE

QUARTER

YEAR ENDED

Q3-2012

Q3-2011

Q3-2012

Q2-2012

Q1-2012

Q4-2011

Q3-2011

Q2-2011

Q1-2011

12/31/2011

1.

Operating Results - Continuing Operations

Consolidated

Revenues

$    1,551,904

$1,556,280

$      512,676

$      533,207

$      506,021

$    533,832

$      519,437

$      499,660

$      537,183

$   2,090,112

Operating Income (Loss), as reported

183,985

285,256

112,444

(22,760)

94,301

4,926

94,192

80,666

110,398

290,182

Adjustments:

Legal and Regulatory Charge (1)

144,476

-

-

144,476

-

78,484

-

-

-

78,484

Exit costs, Impairments and Other Charges (2)

-

29,198

-

-

-

27,714

-

9,887

19,311

56,912

Operating Income, as adjusted

328,461

314,454

112,444

121,716

94,301

111,124

94,192

90,553

129,709

425,578

Depreciation and Amortization

72,538

66,445

24,516

23,778

24,244

23,931

20,822

22,627

22,996

90,376

EBITDA, as adjusted

$       400,999

$   380,899

$      136,960

$      145,494

$      118,545

$    135,055

$      115,014

$      113,180

$      152,705

$      515,954

Operating Margin, as adjusted

21.2%

20.2%

21.9%

22.8%

18.6%

20.8%

18.1%

18.1%

24.1%

20.4%

EBITDA Margin, as adjusted

25.8%

24.5%

26.7%

27.3%

23.4%

25.3%

22.1%

22.7%

28.4%

24.7%

Technology, Data and Analytics

Revenues

$       556,204

$   512,259

$      191,956

$      186,105

$      178,143

$    178,271

$      173,138

$      170,573

$      168,548

$      690,530

Operating Income, as reported

172,244

162,563

60,377

57,901

53,966

51,341

58,715

49,526

54,322

213,904

Adjustments:

Exit costs, Impairments and Other Charges (2)

-

8,887

-

-

-

7,971

-

6,585

2,302

16,858

Operating Income, as adjusted

172,244

171,450

60,377

57,901

53,966

59,312

58,715

56,111

56,624

230,762

Depreciation and Amortization

55,385

49,234

18,765

18,036

18,584

18,105

15,120

16,881

17,233

67,339

EBITDA, as adjusted

$       227,629

$   220,684

$        79,142

$        75,937

$        72,550

$      77,417

$        73,835

$        72,992

$        73,857

$      298,101

Operating Margin, as adjusted

31.0%

33.5%

31.5%

31.1%

30.3%

33.3%

33.9%

32.9%

33.6%

33.4%

EBITDA Margin, as adjusted

40.9%

43.1%

41.2%

40.8%

40.7%

43.4%

42.6%

42.8%

43.8%

43.2%

Transaction Services

Revenues

$       997,692

$1,048,800

$      320,714

$      347,366

$      329,612

$    356,853

$      348,095

$      330,600

$      370,105

$   1,405,653

Operating Income, as reported

191,641

189,567

64,177

76,010

51,454

70,752

55,824

52,610

81,133

260,319

Adjustments:

Exit costs, Impairments and Other Charges (2)

-

4,052

-

-

-

(236)

-

1,074

2,978

3,816

Operating Income, as adjusted

191,641

193,619

64,177

76,010

51,454

70,516

55,824

53,684

84,111

264,135

Depreciation and Amortization

14,153

13,984

4,767

4,694

4,692

4,850

4,726

4,650

4,608

18,834

EBITDA, as adjusted

$       205,794

$   207,603

$        68,944

$        80,704

$        56,146

$      75,366

$        60,550

$        58,334

$        88,719

$      282,969

Operating Margin, as adjusted

19.2%

18.5%

20.0%

21.9%

15.6%

19.8%

16.0%

16.2%

22.7%

18.8%

EBITDA Margin, as adjusted

20.6%

19.8%

21.5%

23.2%

17.0%

21.1%

17.4%

17.6%

24.0%

20.1%

Corporate and Other

Revenues

$          (1,992)

$     (4,779)

$                6

$           (264)

$        (1,734)

$       (1,292)

$        (1,796)

$        (1,513)

$        (1,470)

$        (6,071)

Operating Loss, as reported

(179,900)

(66,874)

(12,110)

(156,671)

(11,119)

(117,167)

(20,347)

(21,470)

(25,057)

(184,041)

Adjustments:

Legal and Regulatory Charge (1)

144,476

-

-

144,476

-

78,484

-

-

-

78,484

Exit costs, Impairments and Other Charges (2)

-

16,259

-

-

-

19,979

-

2,228

14,031

36,238

Operating Loss, as adjusted

(35,424)

(50,615)

(12,110)

(12,195)

(11,119)

(18,704)

(20,347)

(19,242)

(11,026)

(69,319)

Depreciation and Amortization

3,000

3,227

984

1,048

968

976

976

1,096

1,155

4,203

EBITDA, as adjusted

$        (32,424)

$    (47,388)

$       (11,126)

$       (11,147)

$       (10,151)

$     (17,728)

$       (19,371)

$       (18,146)

$        (9,871)

$       (65,116)

2.

Net Earnings - Reconciliation

Net Earnings (Loss)

$         67,545

$   117,744

$        58,304

$       (37,880)

$        47,121

$     (21,201)

$        40,450

$        21,365

$        55,929

$        96,543

Adjustments - Continuing Operations:

Legal and Regulatory Charge (1)

100,624

-

-

100,624

-

53,086

-

-

-

53,086

Exit costs, Impairments and Other Charges (2)

-

18,177

-

-

-

16,822

-

6,204

11,973

34,999

Total EBIT Adjustments to Continuing Operations

100,624

18,177

-

100,624

-

69,908

-

6,204

11,973

88,085

Adjustments - Discontinued Operations:

Impairment and Restructuring Charges, net

-

17,797

-

-

-

16,454

-

17,759

38

34,251

(Gain)/Loss on Disposal of Operations, net

-

1,486

-

-

-

(928)

1,486

-

-

558

Total Adjustments to Discontinued Operations

-

19,283

-

-

-

15,526

1,486

17,759

38

34,809

Adjustments - Non-operating:

Write-off of Debt Issuance Costs, net (3)

-

4,978

-

-

-

-

4,978

-

-

4,978

Prior Year Tax Benefit

-

-

-

-